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Jordan's Inter-Arab Relations: The Political Economy of Alliance Making
New York Chichester, West Sussex
1994
2 The Economy and Economic Policy in Jordan
While it is clear that myriad international factors may influence the foreign policy decisions of a country as economically and politically vulnerable as Jordan, this study attempts to posit a domestic political economy explanation, specifically, one based on the structure of state revenues, for Jordan's alliance or alignment shifts. However, the statistical data, to be presented below, alone do not demonstrate that budget security, as it has been defined here, has been a conscious, primary concern among policymakers. Nor do statistics indicate whether or to what extent decisionmakers have been constrained by societal or institutional forces that might push decisionmaking in another direction. To make this part of the budget security argument, the process of economic decisionmaking must be explored and several factors must be shown to be present.
In the first place, the decisionmakers must be shown to be aware of and responsive to the central role that external sources of income play in keeping the state solvent. Second, there must be substantial overlap between economic and political decisionmaking groups, or at least very close coordination and shared understandings of national priorities between them. Third, either societal forces that might lobby for their own interests must be in relative accord with the decisionmaking group (for reasons of material interests or ideology), or, the decisionmakers must enjoy relative autonomy from such societal forces so that they may proceed without significant concern for the preferences of such forces. The final necessary step in the argument is substantiated through the case studies: that as a consequence of a conscious awareness of the critical role that external sources of finance play in maintaining state security, foreign policy, particularly in the form of alliance and realignment decisions, has been used by decisionmakers precisely to reinforce or bolster the budget. At this point, however, a more thorough examination of the economic decisionmaking process in Jordan is required.
Approaches to Economic Decisionmaking
The three most common approaches to analyzing economic decisionmaking in Western industrialized states have focused on the systemic level, societal forces, and the state, respectively. The first, of course, gives primacy to a state's place and relative power position in the international system. A number of theoretical schools fit under such a classification, from the world systems theory of Wallerstein, which focuses on the processes and contradictions within international capitalism as the driving forces behind policy, to theories of economic interdependence which emphasize how increased interactions between countries may increase the sensitivity of one country to developments in another. 1
The second, or society-centered approach looks for explanations of state policy choices in the jockeying for power and influence by domestic, civil society forces. In such a schema policy outcomes are the result of the relative power and effective interest articulation of domestic social or economic groups. Jeffry Frieden, a proponent of this approach, argues for a purely economic or materialist basis for determining such interests; however, he also admits of other factors such as ideology and bureaucratic politics, which may also play a role. 2
Finally, there is the state-centered approach, which argues for examining the role of the state as structure and actor in determining or affecting policy choices. It examines policymakers and bureaucrats themselves, emphasizing how they respond to a variety of constraints and stimuli as they formulate and implement policy. The presumption of such an approach is that the policy preferences of such actors are at least partially separable from societal or interest group pressures and more closely approximate adherence to a "national interest"-directed conception of policy.
These three models have been used overwhelmingly in analyses of economic decisionmaking in advanced industrialized countries, with Frieden's work a notable exception. Even in Frieden's work, however, the discussion is of Latin America, and of states with long, independent histories. Can one apply the same approaches to the rest of the developing world, especially those countries in which the state apparatuses are relatively new and whose experiences with colonialism are much more recent? This chapter will examine Jordanian economic policymaking and evaluate it in the light of these three approaches. As the notes for this chapter indicate, beyond the historical and statistical information on the economy, the discussion relies heavily on personal interviews. Such an approach undoubtedly has its drawbacks, because, for reasons related at least in part to the authoritarian nature of the political system in Jordan until mid-1989, virtually no literature exists on the nature of the economic decisionmaking process in Jordan. Such is the case in most developing countries, where policymaking processes are far from transparent and where most policies are generally attributed to the personality and power of the individual leader. In the absence of other, less potentially subjective data, this chapter represents a first attempt at understanding the economic decisionmaking process in the Hashemite kingdom as part of the background necessary to make the argument about the centrality of preserving financial solvency, or budget security, to Jordan's foreign policy behavior.
External or System-Level Factors
Since its inception, the Hashemite Kingdom has relied heavily upon external revenue for its survival. This situation owes much to Jordan's strategic location, which, while it has shifted in importance over the years, has nonetheless continued to give Jordan its greatest value in the eyes of outside powers. Whether as a key land link in British imperial designs in the early period, or as a pro-Western buffer between the Arab states and Israel (which served both Western as well as certain Arab state interests), Jordan's geographic location in the Eastern Mediterranean and as a country bordering Israel, Saudi Arabia, Iraq and (nearly) Egypt has given it an importance of which most small and natural resource underendowed states could only dream. As a result, it has managed over the years to extract financial support of various kinds from concerned states, and this form of support has set patterns of economic development and decisionmaking that have continued to the present (with some changes beginning with political liberalization in 1989).
Originally carved out of the territory that was to have become the Palestine mandate, Transjordan was established in 1921 by the British as an hereditary monarchy of the Hashemite family from the Hijaz region of the Arabian peninsula. Control of this territory was intended to bolster British strategic interests in the Eastern Mediterranean, critical in guarding access to India as well as contiguous with oil-wealthy Iraq, which had also been placed under British mandate as part of the World War I settlement.
From its political birth more than 50 percent of the Transjordanian budget was provided by the British government. 3 The need for this support derived in large part from the newness of the state as well as from the weakness of the indigenous economic base: the country had a small population, limited agricultural land (located primarily in the Jordan Valley and the north), and limited natural resources (only phosphates and potash). To preserve the state and build it as an effective and stable military base in the region required an infusion of resources from outside. The influx into the East Bank of Palestinians driven or fleeing from their homes in 1948 and the incorporation of the rump of Eastern Palestine, what became known as the West Bank, in 1950 tripled the country's population and added valuable agricultural land. This development increased the country's resources over the long term, but in the short term served only to strain further the poor state's economic and administrative capacity. British subsidies continued to sustain the economy until 1956, when the British head of the armed forces, Glubb Pasha, was dismissed by a very young King Husayn, and the Arab states briefly stepped in to replace British subsidies in a bid to wean Jordan away from its pro-Western stance.
However, in the midst of an Arab nationalist wave that was sweeping the region, a coup attempt by members of the army in 1957 led the king to dismiss his Arab nationalist- oriented prime minister. This move triggered a termination of Arab state budget support for the amirate and the United States assumed the role of primary aid provider. Again the motives are related to larger strategic concerns. The Arab states withdrew aid as punishment for a domestic policy they understood as indicative of a move away from the 1956 commitment to Arab interests that the dismissal of Glubb had represented. The U.S. was willing to step in to play the former British role because its strategic interests included maintaining regional stability to ensure the free flow of oil. Part of maintaining such stability involved supporting the security of the state of Israel, and U.S. support for a pro-Western, conservative monarchy in Jordan clearly served that goal as well. U.S. aid continued until 1967, when Jordan accused the U.S. of backing Israel in the 1967 war. Thereafter, Arab aid again took its place, and rose to unprecedented levels following the oil boom of 1973.
Over the years, Jordan's external income has taken the form of general budgetary support, various types of aid for the military and security services, assistance in the form of grants or concessionary loans for development projects, payments from the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) to provide food, education, and health care to the Palestinian refugees registered with UNRWA and living in the kingdom (one-fourth to one-third of the total population, depending upon the period), remittances from its expatriates working abroad (one-third of the total work force before 1990), royalties for oil pipeline crossage, and payments for port facilities and overland transport.
Table 1 provides a breakdown of the external revenues of the central government. While exact statistics on individual country assistance contributions are not available, Saudi Arabia and Kuwait (as well as the United States until 1980) have been the primary donors. A more detailed discussion of Arab aid is provided in the case study chapters. Table 2 lists the amounts of foreign assistance and foreign loans, while Table 3 converts these numbers into percentages of total revenue and demonstrates how they compare with domestic revenue as a percentage of total revenue. The average over the sixteen-year period was 43 percent, although the secular trend is one of gradual decline.
| Other | Japan | Arab Fund ** | Saudia Arabia | U.S.A.I.D. | Kuwait | Germany | Total | Foreign Loans of (Part 1) | Foreign*** Assistance | Grand Total | Year |
| 1,219 | - | - | - | - | 587 | 170 | 1,976 | 5,000 | 15,407 | 22,383 | 1964/65 |
| 1,512 | - | - | - | - | 869 | 206 | 2,587 | - | 15,272 | 17,859 | 1965/66 |
| 940 | - | - | - | 75 | 1,011 | 139 | 2,165 | - | 9,883 | 12,048 | 1966 |
| 906 | - | - | 1,505 | 747 | 628 | 506 | 4,292 | - | 40,409 | 44,701 | 1967 |
| 1,145 | - | - | 1,500 | 265 | 174 | 1,367 | 4,451 | - | 40,199 | 44,650 | 1968 |
| 1,448 | - | - | 1,499 | 1,016 | 594 | 26 | 4,583 | - | 38,377 | 42,960 | 1969 |
| 411 | - | - | 500 | 1,309 | 265 | - | 2,485 | - | 35,424 | 37,909 | 1970 |
| 1,933 | - | - | 357 | 772 | 903 | 541 | 4,506 | 3,430 | 35,386 | 43,322 | 1971 |
| 2,197 | - | - | - | 1,940 | 763 | 2,500 | 7,400 | 1,103 | 44,455 | 52,958 | 1972 |
| 1,991 | - | - | - | 1,299 | 1,704 | 6,452 | 11,446 | - | 45,608 | 57,054 | 1973 |
| 2,573 | - | - | - | 3,250 | 4,093 | 5,296 | 15,212 | - | 58,824 | 74,036 | 1974 |
| 7,335 | - | - | - | 2,556 | 1,079 | 5,185 | 16,155 | - | 100,609 | 116,764 | 1975 |
| 7,523 | - | 1,755 | - | 2,714 | 2,441 | 2,755 | 17,188 | 2,700 | 66,238 | 86,126 | 1976 |
| 15,063 | 1,500 | 5,896 | 4,000 | 13,590 | 7,124 | 11,338 | 58,511 | - | 122,202 | 180,713 | 1977 |
| 14,693 | 3,250 | 6,500 | 5,700 | 13,930 | 8,200 | 8,874 | 61,147 | 29,550 | 81,699 | 172,396 | 1978 |
| 15,948 | 775 | 1,991 | 2,461 | 2,703 | 10,304 | 3,442 | 37,624 | - | 210,302 | 247,926 | 1979 |
| 19,231 | 1,939 | 2,410 | 5,001 | 17,513 | 11,717 | 4,695 | 62,506 | 9,060 | 209,304 | 280,870 | 1980 |
| 23,142 | 3,675 | 3,955 | 7,036 | 5,147 | 8,389 | 5,689 | 57,033 | 19,352 | 206,312 | 282,697 | 1981 |
| 25,892 | 5,406 | 1,690 | 2,510 | 6,425 | 3,313 | 2,365 | 47,601 | 17,670 | 199,582 | 264,853 | 1982 |
| 11,528 | 3,128 | 627 | 9,570 | 8,605 | 15,721 | 1,874 | 51,053 | 25,748 | 197,014 | 273,815 | 1983 |
| 10,808 | 7,943 | 4,464 | 9,538 | 1,250 | 11,673 | 222 | 45,898 | 76,298 | 106,108 | 228,304 | 1984 |
| 19,839 | 5,237 | 5,324 | 12,179 | 7,969 | 14,305 | 6,168 | 71,021 | 91,389 | 187,839 | 350,249 | 1985 |
| 20,086 | 14,479 | 5,720 | 6,036 | 12,110 | 4,767 | 4,838 | 68,036 | 91,732 | 143,707 | 303,475 | 1986 |
| 21,815 | 8,119 | 1,408 | 9,424 | 9,584 | 3,140 | 6,884 | 60,374 | 2,845 | 127,540 | 190,759 | 1987 |
| 37,649 | 3,900 | 4,989 | 5,894 | 4,412 | 3,962 | 3,320 | 64,126 | 36,995 | 164,000 | 265,121 | **** 1988 |
SOURCES: Ministry of Finance, Ministry of Planning, Central Bank of Jordan.
*For dollar exchange equivalents, see Appendix 1.
**Arab Fund for Economic and Social Development
***Includes Economic/Technical Assistance and Expected Loans & Economic/Technical Assistance.
****Preliminary.
SOURCE: Central Bank of Jordan, Yearly Statistical Series, Special Issue, October 1989, Table Number 38.
| Deficit (-) | Expenditures | Revenues | and | Receipts | ||||||
| Surplus (+) | Capital | Recurring | Total | Internal Loans | Foreign Loans | Loans Repaid | Foreign Assistance | Domestic Revenues | Total | Year |
| 2,587 | 9,166 | 34,458 | 43,624 | 0 | 6,976 | 0 | 15,407 | 23,828 | 46,211 | 1964/65 |
| -2,397 | 11,178 | 35,810 | 46,988 | 0 | 2,587 | 0 | 15,272 | 26,732 | 44,591 | 1965/66 |
| -3,242 | 10,360 | 28,240 | 38,600 | 0 | 2,165 | 0 | 9,883 | 23,310 | 35,358 | **1966 |
| 2,051 | 23,496 | 44,651 | 68,147 | 0 | 4,292 | 226 | 40,409 | 25,271 | 70,198 | 1967 |
| -9,502 | 23,334 | 57,186 | 80,520 | 0 | 4,451 | 99 | 40,199 | 26,269 | 71,018 | 1968 |
| -3,873 | 23,170 | 65,231 | 88,401 | 8,400 | 4,583 | 648 | 38,377 | 32,520 | 84,528 | 1969 |
| -7,906 | 21,678 | 59,028 | 80,706 | 4,200 | 2,485 | 431 | 35,424 | 30,260 | 72,800 | 1970 |
| 8,099 | 22,442 | 60,706 | 83,148 | 12,100 | 7,936 | 70 | 35,386 | 35,755 | 91,247 | 1971 |
| -800 | 30,985 | 70,467 | 101,452 | 5,000 | 8,503 | 135 | 44,455 | 42,559 | 100,652 | 1972 |
| -5,525 | 40,903 | 78,608 | 119,511 | 10,750 | 11,446 | 0 | 45,608 | 46,182 | 113,986 | 1973 |
| 2,318 | 43,019 | 103,603 | 146,622 | 9,000 | 15,212 | 160 | 58,824 | 65,744 | 148,940 | 1974 |
| 7,663 | 79,172 | 125,692 | 204,864 | 13,135 | 16,155 | 0 | 100,609 | 82,628 | 212,527 | 1975 |
| -55,771 | 76,590 | 185,894 | 262,484 | 13,000 | 19,888 | 0 | 66,238 | 107,587 | 206,713 | 1976 |
| 123 | 142,252 | 195,587 | 337,839 | 15,000 | 58,511 | 0 | 122,202 | 142,249 | 337,962 | 1977 |
| -14,626 | 148,619 | 212,891 | 361,510 | 16,000 | 90,697 | 0 | 81,699 | 158,488 | 346,884 | 1978 |
| -47,493 | 194,329 | 321,335 | 515,664 | 32,350 | 37,624 | 0 | 210,302 | 187,895 | 468,171 | 1979 |
| -38,128 | 227,092 | 336,053 | 563,145 | 18,000 | 71,566 | 0 | 209,304 | 226,147 | 525,017 | 1980 |
| -29,977 | 255,632 | 391,468 | 647,100 | 18,000 | 76,385 | 7,226 | 206,312 | 309,200 | 617,123 | 1981 |
| -38,300 | 250,577 | 442,968 | 693,545 | 28,200 | 65,271 | 0 | 199,582 | 362,192 | 655,245 | 1982 |
| 210 | 251,599 | 453,675 | 705,274 | 28,825 | 76,801 | 2,268 | 197,014 | 400,576 | 705,484 | 1983 |
| -42,374 | 232,713 | 488,092 | 720,805 | 25,500 | 122,196 | 9,620 | 106,108 | 415,007 | 678,431 | 1984 |
| 39,117 | 263,173 | 542,510 | 805,683 | 35,299 | 162,410 | 18,449 | 187,839 | 440,803 | 844,800 | 1985 |
| -75,924 | 410,816 | 570,526 | 981,342 | 74,778 | 159,768 | 12,777 | 143,707 | 514,388 | 905,418 | 1986 |
| -95,839 | 363,154 | 602,654 | 965,808 | 129,979 | 63,219 | 17,698 | 127,540 | 531,533 | 869,969 | 1987 |
| -128,118 | 384,595 | 661,085 | 1,045,680 | 88,281 | 101,121 | 23,000 | 164,000 | 541,160 | 917,562 | ***1988 |
SOURCE: Ministry of Finance.
*For dollar exchange equivalents, see Appendix 1.
**Nine months.
***Preliminary.
SOURCE: Central Bank of Jordan, Yearly Statistical Series, Special Issue, October 1989, Table Number 36.
| Year |
Foreign Assistance as % of Total Revenue |
Foreign Loans as % of Total Revenue |
Total contributions of Foreign Loans and Assistance |
Domestic Revenue % of Total Revenue |
| 1973 | 40.0 | 10.0 | 50.0 | 40.5 |
| 1974 | 39.5 | 10.2 | 49.7 | 44.1 |
| 1975 | 47.3 | 7.6 | 54.9 | 38.8 |
| 1976 | 32.0 | 9.6 | 41.6 | 52.0 |
| 1977 | 36.2 | 17.3 | 53.4 | 42.0 |
| 1978 | 23.5 | 26.1 | 49.6 | 45.6 |
| 1979 | 44.9 | 8.0 | 52.9 | 40.1 |
| 1980 | 39.8 | 13.6 | 53.4 | 43.0 |
| 1981 | 33.4 | 12.3 | 45.7 | 50.1 |
| 1982 | 30.4 | 9.9 | 40.3 | 55.2 |
| 1983 | 27.9 | 10.8 | 38.7 | 56.7 |
| 1984 | 15.6 | 18.0 | 33.6 | 61.1 |
| 1985 | 22.2 | 19.2 | 41.4 | 52.1 |
| 1986 | 15.8 | 17.6 | 33.4 | 56.8 |
| 1987 | 14.6 | 7.2 | 21.8 | 61.0 |
| 1988 | 17.8 | 11.0 | 28.8 | 58.9 |
As a result, the Jordanian economy has developed the following defining characteristics: limited development of indigenous productive forces; a standard of living far higher than the level of indigenous productive forces would have suggested or allowed for; state services and infrastructure far more extensive than the GDP would have permitted; and a very high percentage (nearly 50%) of the work force on the state payroll. Thus, the government came to be viewed as a source of money, salaries, contracts, and security, with the treasury, in effect, a built-in system of subsidies and buying favors. The state's continuing ability to ensure its collection of these external revenues or rents was its primary insurance for the high standard of living and services the country enjoyed.
Hence there is no question that Jordan's place in the international system--geopolitically as a buffer state or base and economically as an underindustrialized primary product (phosphates and potash) exporter--has dramatically shaped many of the policy constraints (and opportunities) that Jordanian policymakers have faced. However, such a framework of constraints and opportunities does not alone determine policy choice. In a situation such as Jordan's, the leadership could either have attempted to develop its indigenous productive base further, so as to lessen its dependence on or vulnerability to outside assistance, or remained reliant upon such sources, assuming that its strategic importance would continue to enable it to court and secure new sources of aid when necessary. What is now required is an examination of the state and societal levels in order to account more specifically for the route economic policymaking has taken over the years.
State, Society and the Economy
The previous section and its tables detailed the contribution of external sources to the Jordanian economy. What, in contrast, has been the contribution of the domestic sector to the economy? As Table 4 makes clear, import duties in particular, but indirect taxesin general, have been the largest components. Income tax, on the other hand, has remained below 15 percent, and has generally hovered around 11 or 12 percent.
| Non-Tax | Revenues | Indirect | Taxes | Direct | Taxes | |||||||||
| Other | Interest & Profits | Post Telgr. Telph. | Total | Add'l. Tax | Fees | Licences | Excise | Import Duties | Total | Other | Income Tax | Total | Grand Total | Year |
| 3,206 | 3,484 | 1,246 | 7,936 | -- | 2,765 | 1,054 | 3,866 | 6,187 | 13,872 | 614 | 1,406 | 2,020 | 23,828 | 1964/65 |
| 2,984 | 1,831 | 1,396 | 6,211 | -- | 2,598 | 1,481 | 5,033 | 8,899 | 18,011 | 603 | 1,907 | 2,510 | 26,732 | 1965/66 |
| 2,369 | 1,705 | 1,309 | 5,383 | -- | 1,752 | 1,259 | 4,598 | 8,356 | 15,965 | 144 | 1,818 | 1,962 | 23,310 | 1966 |
| 3,883 | 1,829 | 1,287 | 6,999 | -- | 1,852 | 1,010 | 5,054 | 8,199 | 16,115 | 102 | 2,055 | 2,157 | 25,271 | 1967 |
| 3,289 | 2,883 | 1,004 | 7,176 | -- | 1,497 | 1,410 | 5,519 | 8,846 | 17,272 | 44 | 1,777 | 1,821 | 26,269 | 1968 |
| 3,820 | 4,641 | 1,067 | 9,528 | -- | 1,808 | 2,173 | 6,084 | 10,650 | 20,715 | 38 | 2,239 | 2,277 | 32,520 | 1969 |
| 2,970 | 4,819 | 1,011 | 8,800 | 1,353 | 1,540 | 1,876 | 5,094 | 9,103 | 18,966 | 23 | 2,471 | 2,494 | 30,260 | 1970 |
| 6,176 | 5,120 | 1,155 | 12,451 | 1,507 | 2,211 | 2,132 | 6,872 | 7,684 | 20,406 | 53 | 2,845 | 2,898 | 35,755 | 1971 |
| 9,875 | 3,832 | 1,102 | 14,809 | 1,920 | 2,693 | 2,552 | 7,780 | 9,543 | 24,488 | 60 | 3,202 | 3,262 | 42,559 | 1972 |
| 5,430 | 5,330 | 1,300 | 12,060 | 2,396 | 3,956 | 3,904 | 7,773 | 12,191 | 30,220 | 55 | 3,847 | 3,902 | 46,182 | 1973 |
| 12,130 | 8,470 | 1,563 | 22,163 | 2,900 | 4,120 | 4,975 | 8,985 | 16,850 | 37,830 | 364 | 5,387 | 5,751 | 65,744 | 1974 |
| 11,418 | 10,831 | 2,234 | 24,483 | 3,646 | 7,668 | 5,910 | 10,657 | 20,902 | 48,783 | 85 | 9,277 | 9,362 | 82,628 | 1975 |
| 6,143 | 10,099 | 2,275 | 18,517 | 5,286 | 12,664 | 10,605 | 9,097 | 39,985 | 77,637 | 2,094 | 9,339 | 11,433 | 107,587 | 1976 |
| 8,653 | 12,422 | 3,453 | 24,510 | 6,407 | 8,367 | 13,103 | 9,875 | 63,995 | 101,747 | 2,749 | 13,243 | 15,992 | 142,249 | 1977 |
| 13,257 | 14,358 | 7,592 | 35,207 | 6,176 | 13,404 | 13,296 | 6,999 | 61,354 | 101,229 | 3,491 | 18,561 | 22,052 | 158,488 | 1978 |
| 12,246 | 15,689 | 8,866 | 36,801 | 8,007 | 17,061 | 15,591 | 10,567 | 72,060 | 123,286 | 5,424 | 22,384 | 27,808 | 187,895 | 1979 |
| 18,331 | 21,173 | 11,978 | 51,482 | 10,118 | 19,541 | 18,902 | 13,210 | 78,031 | 139,802 | 8,084 | 26,779 | 34,863 | 226,147 | 1980 |
| 18,544 | 45,017 | 12,667 | 76,228 | 11,525 | 36,543 | 25,175 | 16,888 | 94,069 | 184,200 | 8,791 | 39,981 | 48,772 | 309,200 | 1981 |
| 25,178 | 53,166 | 20,721 | 99,065 | 12,688 | 37,997 | 24,807 | 24,109 | 109,748 | 209,349 | 10,106 | 43,672 | 53,778 | 362,192 | 1982 |
| 24,101 | 59,496 | 23,374 | 106,971 | 13,466 | 42,042 | 25,753 | 35,301 | 120,569 | 237,131 | 10,457 | 46,017 | 56,474 | 400,576 | 1983 |
| 39,888 | 36,348 | 33,333 | 109,569 | 16,550 | 44,512 | 28,719 | 37,192 | 118,047 | 245,020 | 11,717 | 48,701 | 60,418 | 415,007 | 1984 |
| 41,283 | 43,964 | 38,270 | 123,517 | 15,426 | 42,427 | 28,285 | 45,811 | 117,945 | 249,894 | 12,980 | 54,412 | 67,392 | 440,803 | 1985 |
| 119,836 | 39,726 | 45,595 | 205,157 | 14,205 | 41,277 | 29,970 | 51,611 | 112,003 | 249,066 | 12,235 | 47,930 | 60,165 | 514,388 | 1986 |
| 127,265 | 37,020 | 41,785 | 206,070 | 14,710 | 50,079 | 32,971 | 58,295 | 108,544 | 264,599 | 15,536 | 45,328 | 60,864 | 531,533 | 1987 |
| 114,400 | 36,000 | 51,000 | 201,400 | 16,300 | 47,000 | 35,560 | 60,300 | 116,700 | 275,860 | 19,100 | 44,800 | 63,900 | 541,160 | 1988 |
In order to understand this phenomenon, one must look more closely at the division between the public and private sectors in Jordan. The picture that emerges is that of a domestic economy with a public sector component that is deceptively large for a country with an avowedly free-market orientation such as Jordan. And, not surprisingly, the large size of the public sector is directly related to the state's reliance on external sources of revenue.
In the first place, employment in the bureaucracy and the perquisites that attend it have, especially since the early 1970s, been an important form of distribution and cooptation, as well as security apparatus maintenance. In other words, a gradual bloating of the bureaucracy has played an important domestic security (workforce absorption) function. In Jordan, this issue is even more salient because of the ethnic division that reinforces or underlies the public/private sector divide. Since the civil war of 1970-71, the state has pursued an unwritten policy of preferential recruitment of Transjordanians (native East Bankers) as opposed to Palestinians into the state administrative and security bureaucracies. This complemented the army recruitment policy: until conscription was initiated in 1976, the army was largely a Transjordanian preserve, and even thereafter remained so for career officers. The 1980s did witness the entry of more Transjordanians into the private sector, and therefore, the ethnic lines between public and private sector are no longer as clear as they once were. Nonetheless, the perception remains among many Jordanians that East Bankers control the bureaucracy and Palestinians control the country's wealth. Given the often problematic relationship between the Jordanian government and its Palestinian citizens, this division of labor takes on even greater political salience and sensitivity.
Attempts to estimate public versus private sector contribution to the economy are complicated in Jordan by the fact that official statistics do not differentiate between pure private sector concerns and publicly owned enterprises. For example, the Jordan Phosphate Mines Company is listed as a private sector firm because it takes the form of a shareholding company. In fact, however, the public sector has contributed 90 percent of the company's paid-up capital and holds the management and decisionmaking positions. 4 In any case, the greatest expansion in the public sector came during part of the period under consideration here (the 1970s and early 1980s), not surprisingly, with the surge in oil money and Arab aid. In mid-1986 it was estimated that the public sector employed 45 percent of the country's work force, contributed 50 percent of capital formation, and was responsible for 30 percent of exports. 5
Table 5, which provides figures on the industrial origin of GDP as well as the various categories' percentage contributions, further elucidates why private sector income tax has contributed so little to total domestic revenues. If one tries to divide the government sector from the private sector, a rough, if perhaps somewhat low, calculation can be made by combining government services with mining and quarrying (public sector companies) and electricity (also public sector). The other categories do have some public sector contribution--for instance, in the realm of transport and communications, the national airline, Royal Jordanian, and local transport services were government-owned during this period. Using such a formula, the average of state sector GDP contributions suggested by Table 6 is between 35.6 percent and 40.9 percent, and should be viewed as a clear underestimate. Accordingly, the private sector can be credited with producing at most only 50-60 percent of GDP. Even here, caution is in order because much ostensibly private sector activity is in fact dependent upon government contracts, thus further diminishing the real private sector contribution to GDP.
| Net Nat'l Product at Factor Cost(3) | GNP at Market Price(2) | GNP at Market Price(3) | GNP at Factor Cost | Other Svcs | Producer of Govt Svcs | Fin. Real Estate & Bus. Svcs | Trans. and Commun. | Whlsl & Retail Trade, Rest. & Hotels | Constr. | Elec & Water Supply | Min. and Quar. | Agr., Forst. & Fish. | Year |
| 141.2 | 160.6 | 149.0 | 135.5 | 21.4 | 19.7 | 1.5 | 12.0 | 28.0 | 5.5 | 1.0 | 12.3 | 34.1 | 1964 |
| 157.2 | 180.5 | 167.6 | 151.0 | 23.6 | 21.4 | 2.1 | 12.6 | 31.4 | 7.9 | 1.7 | 16.2 | 34.1 | 1965 |
| 157.6 | 185.7 | 170.5 | 149.6 | 25.3 | 22.0 | 2.8 | 14.4 | 28.9 | 9.3 | 2.0 | 17.3 | 27.6 | 1966 |
| 120.6 | 142.5 | 131.2 | 115.6 | 3.0 | 24.5 | 12.3 | 8.2 | 23.1 | 6.1 | 1.2 | 13.8 | 23.4 | 1967 |
| 140.9 | 166.4 | 156.1 | 138.2 | 4.7 | 36.4 | 15.0 | 12.9 | 25.6 | 9.7 | 1.5 | 16.2 | 16.2 | 1968 |
| 168.8 | 197.4 | 183.4 | 162.5 | 5.9 | 40.5 | 13.8 | 14.4 | 34.3 | 10.7 | 1.6 | 18.8 | 22.5 | 1969 |
| 159.6 | 187.0 | 174.4 | 154.7 | 6.6 | 42.5 | 18.0 | 14.3 | 32.2 | 7.7 | 1.9 | 15.9 | 15.6 | 1970 |
| 171.3 | 199.4 | 186.2 | 166.0 | 6.5 | 43.6 | 18.4 | 14.6 | 33.0 | 7.4 | 2.2 | 16.4 | 23.9 | 1971 |
| 188.5 | 221.0 | 207.2 | 182.8 | 7.5 | 45.9 | 19.6 | 17.3 | 35.7 | 9.2 | 2.5 | 18.5 | 26.6 | 1972 |
| 203.8 | 241.5 | 218.3 | 188.9 | 8.5 | 46.7 | 20.9 | 17.9 | 38.1 | 15.2 | 2.8 | 21.2 | 17.6 | 1973 |
| 265.9 | 279.3 | 247.3 | 242.4 | 9.9 | 54.3 | 22.5 | 22.8 | 42.3 | 16.8 | 3.0 | 40.5 | 30.3 | 1974 |
| 354.5 | 376.0 | 312.1 | 303.1 | 11.8 | 65.2 | 30.0 | 24.9 | 66.9 | 19.2 | 3.1 | 56.0 | 26.0 | 1975 |
| 505.0 | 562.4 | 421.6 | 378.4 | 14.7 | 81.7 | 33.8 | 32.5 | 80.1 | 26.6 | 3.9 | 67.8 | 37.3 | 1976 |
| 568.7 | 660.1 | 514.2 | 439.9 | 15.3 | 84.4 | 48.0 | 35.9 | 94.2 | 36.8 | 5.5 | 78.1 | 41.7 | 1977 |
| 678.2 | 781.0 | 632.2 | 551.2 | 16.2 | 95.0 | 67.0 | 59.3 | 102.6 | 51.0 | 7.2 | 94.3 | 58.6 | 1978 |
| 806.4 | 921.3 | 753.0 | 668.6 | 16.1 | 129.1 | 91.1 | 62.9 | 123.6 | 70.5 | 10.1 | 121.6 | 43.6 | 1979 |
| 1051.3 | 1190.1 | 984.3 | 893.2 | 19.8 | 170.2 | 105.9 | 79.7 | 166.5 | 97.5 | 17.1 | 167.1 | 69.4 | 1980 |
| 1293.9 | 1482.7 | 1164.2 | 1041.1 | 24.3 | 191.2 | 111.2 | 102.7 | 196.7 | 110.6 | 21.0 | 208.3 | 75.1 | 1981 |
| 1431.0 | 1673.4 | 1321.2 | 1169.6 | 28.2 | 218.5 | 129.2 | 123.5 | 210.9 | 121.9 | 25.3 | 230.3 | 81.8 | 1982 |
| 1485.3 | 1770.3 | 1422.7 | 1242.3 | 28.7 | 232.0 | 135.6 | 138.4 | 228.0 | 126.8 | 28.3 | 214.5 | 110.0 | 1983 |
| 1550.1 | 1853.6 | 1498.4 | 1315.0 | 37.4 | 238.4 | 144.5 | 143.5 | 241.3 | 127.0 | 33.5 | 250.8 | 98.6 | 1984 |
| 1526.5 | 1881.8 | 1605.9 | 1390.6 | 41.6 | 264.0 | 154.7 | 146.7 | 262.7 | 114.1 | 35.2 | 252.9 | 118.7 | 1985 |
| 1551.7 | 1919.4 | 1639.9 | 1401.1 | 40.5 | 295.9 | 167.3 | 157.2 | 232.0 | 113.0 | 42.0 | 242.1 | 111.1 | 1986 |
| 1496.0 | 1867.9 | 1686.3 | 1447.3 | 44.0 | 308.8 | 171.8 | 160.6 | 235.8 | 101.3 | 45.4 | 252.4 | 127.2 | *1987 |
| 1497.2 | 1865.7 | 1702.6 | 1449.6 | 46.3 | 320.2 | 172.8 | 159.0 | 244.5 | 81.3 | 41.8 | 243.8 | 139.9 | **1988 |
SOURCE: Department of Statistics.
*For dollar exchange equivalents, see Appendix 1.
** Preliminary
NOTE: (1) = GNP at factor cost + net indirect taxes.
(2) = (1) + net factor income from abroad.
(3) = (2) - (consumption of fixed capital + net indirect taxes)
SOURCE: Central Bank of Jordan, Yearly Statistical Series, Special Issue, October 1989, Table Number 47.
| Year | Gov't Services |
Mining & Quarrying |
Electricity & Water |
Total |
| 1973 | 24.7 | 11.2 | 1.0 | 36.9 |
| 1974 | 22.4 | 16.7 | 1.0 | 39.1 |
| 1975 | 21.5 | 18.4 | 1.0 | 40.9 |
| 1976 | 21.5 | 17.9 | 1.0 | 40.4 |
| 1977 | 19.1 | 17.7 | 1.2 | 38.0 |
| 1978 | 17.2 | 17.1 | 1.3 | 35.6 |
| 1979 | 19.3 | 18.1 | 1.5 | 38.9 |
| 1980 | 19.0 | 18.7 | 1.9 | 39.6 |
| 1981 | 18.3 | 20.0 | 2.0 | 40.3 |
| 1982 | 18.6 | 19.6 | 2.1 | 40.3 |
| 1983 | 18.6 | 17.2 | 2.2 | 37.6 |
| 1984 | 18.1 | 19.0 | 2.5 | 39.6 |
| 1985 | 18.9 | 17.2 | 2.5 | 39.5 |
| 1986 | 21.1 | 17.2 | 2.9 | 41.2 |
| 1987 | 21.3 | 17.4 | 3.1 | 41.8 |
| 1988 | 22.0 | 16.8 | 2.8 | 41.6 |
SOURCE:Author's calculations from Table 5.
After reviewing these figures both the importance of external sources of income, particularly foreign grants and loans, as well as the smaller contribution of the domestic private sector to the economy and to the budget should be clear. What reality of economic policymaking do these characteristics reflect or underpin? While the role of system-level factors has been made clear as a set or framework of conditioning constraints, which of the other two models--the society-centered or the state-centered approach--best captures the "how" of economic policymaking in Jordan?
In order to answer this question, the next sections will examine the various players or putative players in the economic policymaking process necessary to evaluate the applicability of the two approaches: the king and crown prince, the cabinet and ministers, and the private sector.
Assessing a Society-Centered Approach:
The Role of the Private Sector
Support for the society-centered approach requires a demonstration that actors outside the state apparatus have played an effective role in influencing economic decisionmaking. In Jordan, in large part because of the longstanding state of martial law (to be discussed at greater length in the next section) civil society organizing of the kind generally required to articulate such interests was, until 1989, largely circumscribed by the state. However, two institutions with potential clout and interest in the economic policy arena, the chambers of commerce and industry, have been in existence throughout much of the kingdom's history. This section first examines their activity and input.
The Jordanian Chamber of Commerce is in fact a federation of local chambers of commerce. Prior to the incorporation of the West Bank into the Hashemite Kingdom following the 1948 Arab-Israeli war, there were a number of local chambers of commerce and industry on both banks. In 1953 the establishment of chambers in Jenin and Jericho raised the number to 11, with chambers already in existence in Amman (1923), Jerusalem (1936), Irbid, Nablus, Kerak, Ramallah, Tulkarm, Hebron, and Bethlehem (all in the 1940s). The federation was founded in December 1955, as the representative of the private sector in all economic, commercial, and service fields. By the late 1980s (following the disengagement from the West Bank) the federation counted 70,000 members belonging to branches in Amman, Zarqa, Irbid, Mafraq, Ma'an, Aqaba, Ramtha, Kerak, Tafila, Madaba, Salt, Jerash, and al-Mazar. 6
The Amman Chamber of Industry established itself as a separate entity in 1962. Its members are public, private, and mixed sector companies, and membership totaled about 6,000 at the end of 1990. Recently, subassociations have been formed in the chamber for banking, insurance, farmers, transportation, shipping, contractors, land transport, and the like. The chamber serves as a forum for formulating and expressing the views of the industrial sector in the kingdom. Its members serve on a number of boards and committees, in some case as mandated by law and in others by invitation, as is the case with the Chamber of Commerce. 7
Members also participate in joint trade delegations and in the drafting of trade protocols. 8
The annual reports of the Chamber of Commerce provide some insights into the influence that the institutionalized private sector has had on policymaking. Aside from a few notes regarding meetings with representatives of foreign chambers of commerce, the summaries of meetings held with ministers seem to be the best indicator of formal access by the chambers to the government. By members' own admission, the government consulted the Chamber of Industry only infrequently during the 1970s. 9
Although the record is incomplete, it would appear that the fifteen-year period witnessed less than twenty such formal meetings. Those of January 1980, May 1980, September 1985, and December 1986 were with the prime minister to discuss general problems. In March 1988 members met with the Crown Prince to discuss issues related to the role of the private sector and development. Several meetings in late 1979 and 1980 dealt with merchants' concerns over claims of price violations and with their fears that honest merchants' reputations would be hurt. Meetings in July 1979, January 1984, 1985 (month not specified), and February 1987 dealt with income tax or customs fees concerns. In a number of cases, it was decided that joint committees of various sorts should be established to address the issue or as liaisons. The fact that such committees are not mentioned subsequently indicates that they had either short or unproductive lives or both. 10
Both merchants and industrialists claimed that they had grown increasingly vocal during the period of serious economic decline prior to the beginning of the political liberalization in mid-1989. Rather than simply waiting to read the text of a new law in the Official Gazette, industrialists began to initiate projects and make suggestions to the government. 11
In general, however, it seems clear that formal meetings were few and effective input quite limited, at least until the beginning of the liberalization in 1989. Although the respective chambers' members were some of the wealthiest men in the kingdom, their official lobbying organization seems not to have served them particularly well.
What of other possible sources of private sector influence, for example, that of members of the private sector who reach positions of power in the government as ministers? Here, several examples are instructive. Traditionally, Zayd al-Rifa'i, prime minister from 1973-76 and 1985-89, was viewed as a businessman and his return to the prime ministry in 1985 was heralded roundly as a sign that the government would place priority on energizing the private sector. However, a brief examination of the record and discussions with businessmen dispel any notion that Rifa'i was a godsend for them. In the first place, it was during Rifa'i's first government that the bases of much government intervention were laid. For example, during this period the Ministry of Supply was created to take responsibility for providing such basic commodities as rice, sugar, and meat at subsidized prices. At the time it was argued that the security of the country required such moves. Nonetheless, while a number of wealthy merchants have been able to capitalize on the creation of this ministry, in general, members of the private sector view many of this ministry's functions as obstacles to their attempts to diversify imports.
Even during Rifa'i's second government, however, initial promises of reforms and deregulation were left unfulfilled. 12
For example, in response to the concerns of the private sector, the cabinet decided on September 13, 1986 to form a Higher Economic Advisory Council, to which Hamdi Tabba', the President of the Chamber of Commerce, was appointed, to study economic conditions and to make proposals and recommendations aimed at: 1) coordinating economic, financial, and monetary policies at the time of their drafting and implementation; 2) developing policies to encourage savings and investment and to channel local and foreign investment; 3) organizing and developing the financial markets; and 4) deepening coordination between the public and private sectors in implementing the development plan. In short, the council was to serve as a bridge between the government and the private sector, even in the case of individual problems. The Council had its first meeting on December 4, 1986. 13
However, much to the dismay of the private sector, that was the council's only meeting during Rifa'i's prime ministership; as of the summer of 1992 it had met only twice since the change of government in April 1989. 14
Former Industry and Trade ministers Hamdi Tabba' and Walid 'Asfur and former Finance Minister Basil Jardaneh were also cited as examples of men from the private sector who came to government and seemed to lose their will to work for the private sector. Indeed, one interviewee related a story regarding the attempt by the government to impose a production tax on industrialists, a unilateral move that caused a furor in the fall of 1991. A businessman who had occasion to dine with the finance minister raised with him the issue of consultation with the private sector before launching such a policy. Jardaneh reportedly responded, "Do I have to consult the private sector every time I make a decision?" 15
Only Industry and Trade Minister Raja'i al-Mu'ashshir, also from the private sector, seemed to continue to work for its interests, particularly for industry, while he held his portfolio. 16
Members of the Chamber of Industry also had high praise for Mudar Badran, (a product of the intelligence apparatus, and hardly a man of the private sector), saying that he was very supportive of industry. They also mentioned former Chief of the Royal Court and former Prime Minister, the late 'Abd al-Hamid Sharaf, who reportedly spent long hours in consultation with chamber members and supported the business community during his brief time in office. However the industrialists in particular sang the praises of Crown Prince Hasan, who, in his role as advocate of economic development and increasing employment, has been, at least on a rhetorical level, very pro-industry.
In short, it would be inaccurate to conclude that, in practice, Rifa'i or any of the other private sector ministers demonstrated a pro-private sector bias in their policies or accomplishments. Why is this the case? One charge made by private sector businessmen was that the middle-level bureaucracy, suspicious of the private sector, was responsible for thwarting a number of the reforms Rifa'i had sought to implement. 17
Another was that this was an indication of the lack of a coherent economic policy, even by the ministers most clearly identified with the private sector. Still others claimed that the overall effect of assuming a government position was that it forced officials in effect to "step outside" of themselves and their respective class or other interests, an argument in keeping with a state-centered approach.
Whatever the explanation offered, most of those interviewed agreed that, as the records of the chambers indicate, the private sector has not been very successful in influencing policy. Owners of large businesses have always had access to the ministries, but they have usually approached ministers as individuals, rather than as a group representing sectoral concerns. Former Finance Minister 'Awdah insisted that the government and the private sector were keen to create an institutional infrastructure to formalize the consultation relationship, whereby research would be conducted that would benefit the sector and that the government could use as well. Nonetheless, the experience of the Higher Council established under Rifa'i suggests that at some level in government such attempts have been and will be resisted, or at least not acted upon.
A number of other reasons lie behind the apparent lack of influence by the private sector. First of all, and not surprising, the private sector, although small, is not unified in its interests. For instance, the Chamber of Commerce is likely to lobby for imports and for lower standards or specifications on imports, while the Chamber of Industry will resist (presumably because of fear of competition). The Chamber of Commerce might have a difference with the Banking Association over interest rates, and the Chamber of Industry might seek a preferential rate over the commercial sector based on the fact that they provide employment and bring in foreign exchange. 18
A simplistic way of understanding this problem would be to think of the merchants in Jordan as importers and the industrialists as exporters. In a country that has depended heavily on customs duties for its domestic revenues and experienced pressures to protect national industry, the contradictions should be obvious.
However, it would also be inaccurate to conclude that the two major branches of the private sector--merchants and industrialists--are internally unified in their interests and demands. For example, among the industrialists there are those who concentrate on the Jordanian market while others are export-oriented. Beyond this, because of the country's paucity of resources, most of Jordan's industrialists are also importers of most of the raw materials needed for their industry. Moreover, if one takes concrete examples, family or economic interests cut across sectoral divisions. Many families first made their money in commerce and then used the profits to open industries. Thus, even within families, there have been conflicts of interest. 19
Interviewees also mentioned that private sector members have not always been clear on where their interests lie. The implication was that their understanding of the market and the country's economic system was not sufficiently sophisticated as to allow them to determine their interests vis-á-vis a certain policy, much less formulate plans to achieve them. This also appears to be changing gradually. More and more of Jordan's businessmen are college graduates, many of them from the U.S. or Europe, and are therefore much better equipped to identify and lobby for their interests.
A related problem is that of the existing institutional structures themselves. Members of the two chambers join the same councils, sit on the same boards, and, according to interviewees, usually have a clash of interests. Even in ad hoc meetings to contest a certain government policy, representatives of the two often clash. Moreover, within the chambers themselves, while democracy may work on the board of directors, the directors view themselves as a distinct or elite group among their peers. Some believe this elite would view a fuller development of the chambers' infrastructures as a threat to its authority. 20
A further problem is the state sector perception of the private sector. State sector employees tend to view private businessmen as selfish and unconcerned with the national interest. Moreover, as early as the 1950s, the private sector was largely a merchant sector that had already developed a dependence on the state. As one official explained, "the government would receive aid, it would spend the aid, and the traders would import. They made their calculations based on how much the government would be spending": that is, they waited to see which sectors would be targeted by government spending and then moved their activities in that direction. As a result the sector became "parasitic," heavily dependent upon implementing government-commissioned projects. 21
Finally, government bureaucrats reportedly treat the private sector as if it were a single unit (despite the obvious contradictions and divisions mentioned above), and do not want to deal with it unless it is united, which is virtually impossible. 22
Consequently, private sector influence was likely to be substantial only if there was a confluence of interests among a number of groups, so that a kind of "ganging up" process took place.
The Palestinian/East Bank division of labor has also hurt the private sector. According to interviewees, a Palestinian businessman with a problem would have been unlikely to receive sympathy or assistance from the Transjordanian bureaucrat with whom he dealt. According to interviews, at times, there was almost a perverse pleasure taken in private sector problems or losses. This began to change in the 1980s, however, as many Transjordanians joined the business community and began to feel more directly the problems with the bureaucracy.
More serious perhaps is the degree of seeming autonomy exercised by government bureaucrats, to be discussed further in the next section. Interviewees, whether public or private sector, were unanimous in their assessment that the bureaucracy was reluctant to surrender any of its authority. It therefore serves as a brake on, if not a complete obstacle to, many changes the private sector would like to see implemented. One prominent interviewee noted that some bureaucrats had openly admitted their fears that changes or reforms in procedures might jeopardize their jobs. 23
Mid-and lower-level managers rely on the gifts and bribes they derive from their role or interference in business. Hence, policies that threaten to undercut their position are likely to be opposed. 24
Related to this problem is that ministers generally cannot force mid-to lower-levels of the bureaucracy to act. One can go to the crown prince and present a problem, and he may then raise the issue with the relevant minister. However, that will often be the end of the story because ministers can only rarely guarantee that decisions will be implemented. One interviewee said that while he did not question the sincerity of various ministers or their understanding of policies, he nevertheless doubted their political authority and their ability to bring the bureaucracy to heel. 25
Compounding this problem is the fact that although Jordan has long had a civil service system, some ministers, nonetheless have tended to appoint people from their own town or village, without regard for talent or qualifications. Hence, often there is little understanding of what needs to be accomplished in a particular job.
Another more general problem is that the government has in effect over the years "trained" Jordanians, not to challenge it, but to depend on it for a whole range of services. 26
The phenomenon of the "parasitic" private sector has already been noted. However, part of the explanation for private sector inactivity must be attributed to years of martial law (1957-1990) and political repression. In a situation in which complaints were often (mis)read, whether deliberately or not, as potential assaults upon the security of the state, few people had the courage or the power to speak out. Such an atmosphere is hardly conducive to open and effective expressions of discontent, preferences, or challenging initiatives.
Finally, and this problem is perhaps most significant for the argument of this book, the size of the private sector's contribution to the economy, as well as its dependence upon the state for a good deal of its activity, have not given it much bargaining power vis-á-vis the state. If one looks at the GDP figures, one finds that the real productive sectors of the economy—phosphate, potash, fertilizer, and cement—are public sector companies. Another major chunk of GDP is contributed by the bureaucracies. 27
Add to this the "ethnic division of labor" overlay, (Palestinians vs. Transjordanians) with its security considerations, both domestic and external, and one has yet another reason why the state might exhibit little interest in most private sector concerns.
Is one then to conclude that the private sector exercises minimal influence over government policy? A degree of caution is still in order, but all indicators point to a "yes" response, if one means influence by large numbers of people and/or through institutionalized channels. Private sector influence, however, does appear to have been irregularly exercised on an individual and ad hoc basis. This personalized style of business and politics is the norm in Jordan, a family- and tribally-organized country where everyone knows virtually everyone else. The rather small group of decisionmakers is bound by a network of family, school, regional, or business ties. This form of articulation of interests does not give coherent voice to a particular sector; however, it is not at all difficult for certain, select businessmen to gain the ear of the relevant minister, or even the crown prince or the king, as individuals. 28
That said, it would be wrong to leave the impression that private businessmen in Jordan constitute a sector repressed and under siege, despite the many criticisms of state financial and economic policy they may express. Red tape and bureaucratic inertia are certainly facts of life; nevertheless, Jordan has a substantial stratum of successful businessmen, who are aware that part of the reason for their success lies not only in the availability of contracts from the state, but also in the relatively stable domestic climate that the state provided during the years of authoritarian rule and martial law. Moreover, as three of the case studies demonstrate, when the very health of the private sector was at stake in the early 1980s, the state initiated a policy of export credits to Iraq in addition to making overtures to expand trade ties with both Syria and Egypt. It is unlikely that the impetus for such policies would have come from anywhere but the private sector, even if the concerns were not articulated in formal form through the Chambers of Commerce or Industry.
Assessing a State-Centered Approach
The previous section has argued that while individual businessmen do have access to top economic decisionmakers, societal or economic sectors do not play a clear and consistent role in articulating or advocating their interests as part of the economic policymaking process. Part of the explanation for this situation was demonstrated to be the role played by certain levels of the state bureaucracy. The next step is to examine state institutions and official policymakers to determine whether a state-centered approach provides a better framework for understanding how economic policy is made in Jordan. The discussion here proceeds from top to bottom of the hierarchy, beginning with the palace and ending with the state bureaucracy.
As one former top policymaker stated unequivocally in response to a question regarding the foreign policymaking process, "over the last four decades there has been only one ruler in Jordan." In the absence of democracy, decisions have been those of the king, often in conjunction with several key advisers. On issues of foreign policy the king, the crown prince, the prime minister, and the chief of the royal court are the decisionmaking circle. The cabinet, as a body, is not involved, although its members may be consulted for their reactions or comments. 29
Interviewees for this study indicated that the king himself is not particularly interested in economic matters, certainly not in details. He rarely has an economic briefing. However, when he does, he reportedly focuses primarily on issues related to the military budget. Former Labor Minister Jawad 'Anani contended that in foreign policy, the major goal was to secure aid for the budget and to finance the military. In addition, always present, even primary, in the king's calculations are the sociopolitical underpinnings of the regime—the Transjordanian/Palestinian divide mentioned at the beginning of the chapter. The king has periodic meetings with the leaders of the kingdom's important tribes, often in connection with state support. In the case of the budget, the king's uppermost concern has been paying the salaries of the army and the security apparatus, whose members have traditionally been largely recruited from these tribes and who have long been regarded as the bedrock of support for the monarchy. In this case, the role of societal factors has been greater than the previous section would have suggested. 30
The "how" questions related to the economy have generally been handled by Crown Prince Hasan and, to a lesser extent, the prime minister. 31
This is clear, not only from the testimony of those involved in the process, but also from the content of public statements and the type of events in which he participates. For example, the crown prince is much more likely to be involved in a conference on development or give a speech on the importance of Jordan's regional economic role than the king. A number of interviewees credited the crown prince for taking a special interest in and encouraging industry, for example. 32
But his influence extends even further, for whenever the crown prince attends a meeting, the other relevant ministers also feel obliged to attend, which is not necessarily the case otherwise. The role of the prime minister was also described as key, but his input varies depending upon the political or economic conditions at any given time. For example, at the time of the first round of interviews for this study (fall 1991) Prime Minister Tahir al-Masri, although an economist by training, was absorbed in the Madrid peace conference and was therefore not available to deal with domestic economic issues.
Beyond these three figures—the king, the crown prince, and the prime minister—the economic decisionmaking group differs from the foreign policy group. The king has certain advisers and confidants both within and outside government whose friendship and proximity give them access, and hence, the opportunity to lobby for certain policies. The king is described as an arbiter by nature, preferring not to interfere in policy details. However, if a complaint is voiced frequently enough—either by officials or by nonofficial confidants—he will likely come to view it as a general problem. He may then draw the cabinet's attention to it and if it is not solved, may replace the relevant minister. 33
However, for domestic economic matters to have an influence on upper level decisionmaking they must be of real consequence—large loans, the devaluation of the dinar, and the like—so as to sweep consideration of them up to the highest levels. 34
The Economic Security Committee
One key factor that affected the development of the economy and the process of economic decisionmaking in the kingdom was the presence of a martial law regime during most of the 1957-1990 period. While a complete analysis of the role of martial law in state economic and political development is the topic for another book, it is important to keep in mind as one considers the decisionmaking process, the participants in it, and the access and influence of those not officially a part of policymaking bodies.
Symptomatic of the conditions that existed under martial law were the establishment, development, and activities of what was called the Economic Security Committee (ESC). This body was originally founded in 1967 at the suggestion of Central Bank Governor Dr. Khalil al-Salim to address the economic problems created by the occupation of the West Bank. With martial law already in place giving the state sweeping powers, adding such a committee seemed like a natural step. 35 Composed of the Minister of Finance, the Minister of Trade and Industry, the Minister of Transport, and the Governor of the Central Bank, and standing in effect above or outside the law, the committee initially served to help solve problems faced especially by the government and some of the public companies and institutions. For example, how was one to deal with a situation in which a meeting of the board of directors of a company was to be held, but the occupation prevented the gathering of a quorum? Or, what did one do with the bank deposits on the East Bank of those living under occupation, or vice versa?
Hence, for issues about which Jordanian law was deficient, the ESC's activities were critical. Gradually, however, the committee's "mandate" broadened. It began to act as a kind of extraordinary legislative council, since the legislature itself was largely inoperative after 1967 and then suspended in 1974. The committee was permitted to make decisions that overturned existing laws, even those that had been passed after the occupation and that had taken the post-June 1967 reality into account. In this way, the committee came to be used to bypass existing law when it was problematic or inconvenient from the point of view of the decisionmakers or their confidants. For example, if the prime minister wanted something done quickly or something done that was officially illegal, he could refer it to the committee. The committee also made decisions about liquidating companies, borrowing to the ceiling of the Central Bank and then legalizing more borrowing, allowing the Central Bank to deposit with other banks to support the currency, issuing more currency than had been permitted, evicting people from commercial establishments, and allowing someone who would otherwise have been forbidden, to sit on the board of directors of a company 36 In the days of increasing political repression in 1988, its decisions also dissolved the boards of a number of public shareholding companies including those of the major daily newspapers.
Many of the rulings the committee made are open to criticism, not only on legal grounds, but also on economic and financial ones. Some of its decisions were intended to benefit a particular person, company or bank, to enable them to undertake an activity that was against the law, or to avoid procedures dictated by the law. 37 Moreover, only a few of the ESC's decisions were ever published in the Official Gazette, the newspaper in which all legislation is supposed to appear. Most were confidential, and for specific purposes; they were usually not general edicts. Economic columnist Fahd al-Fanek noted that he had once criticized an accounting firm for its evaluation of government accounts, charging that the JD reserve level was below what it should have been by law. The company made a variety of excuses, but no action was taken. Fanek later discovered that the ESC had passed an unpublished decree allowing for a lower JD reserve level. 38
Perhaps the most damaging step approved by the committee was that of allowing the ceiling on export credits to Iraq to be raised in the mid-1980s, an issue discussed in detail in the chapter on Jordanian-Iraqi relations 39 The resultant problems Jordan had with Iraq over this issue were at least in part responsible for the plunge of the dinar in 1988 and the country's subsequent economic woes. Thus a number of the committee's edicts came to jeopardize the very economic security the committee was originally founded, at least in name, to uphold.
Comprising only a handful of ex officio cabinet members who were chosen by the prime minister in consultation with the king, the ESC appears to have been the institutionalized form of an inner circle for economic policy. With the king, by all reports, concerned with only the very highest level of exchange, budgetary grants and military assistance, it seems likely that most of the rest of state economic policy was left in the hands of this group of men. Their power derived from both the cabinet positions they held and their closeness to the king and the prime minister at the time, to whom they owed their appointment. It is therefore probably to this group (and their supporters or allies outside the committee) that one can trace ideas for foreign economic policy initiatives. Their involvement in lowering the JD reserves level would certainly suggest such a role, and they were probably also the impetus behind the efforts to reinvigorate trade ties with Syria and Egypt in l983, which we will examine later in the case studies. In retrospect, this was probably the most important economic decisionmaking body during the period under study.
The Role of the Ministers
The type of regime that produces and perpetuates an institution such as the ESC is clearly one that is uninterested in or incapable of decentralizing decisionmaking. And, indeed, even for what would appear to be relatively minor matters, economic decisionmaking is highly centralized in the kingdom. Most decisions—whether important or relatively minor—are made at the cabinet level or even above, not even at the level of individual ministers. For example, in 1983 a new set of regulations regarding business and contracting was promulgated. From then on, the prime minister's office, not the relevant minister or undersecretary, was to make the final decision on the award of all contracts over JD 4 million. 40
Another example of this extreme centralization may be found in the content of a memorandum of complaint and a meeting held between members of the Chamber of Commerce and the prime minister on March 24, 1986. The complaint concerned difficulties faced by businessmen, including, specifically, the increase in customs on wall-to-wall carpeting, shoes, and refrigerators. As a result of that meeting the prime minister himself ordered the customs tariff on rugs to be adjusted by 50 percent. 41
Part of the reason for the lack of ministerial involvement is that ministerial appointments in Jordan generally owe to considerations of domestic political balancing along ethnic and regional lines. All cabinets must meet certain unofficial but well-known formulae. As a result, most ministers are appointed because of ethnicity, tribal/family background, or regional provenance, not because of expertise in the field of their appointment, although there are certainly numerous notable exceptions. In such a system, where a minister's background in his/her field has generally been only a secondary consideration, a minister's power derives from a number of sources. The first is the degree of support s/he enjoys from the prime minister. The prime minister is appointed by the king and the cabinet ministers by the prime minister. They therefore have no automatic political base in the parliament or outside, as would be the case in a normal parliamentary system. Beyond his or her ties with the decisionmaking group, a minister's power is often determined by such factors as the degree to which s/he has developed ties in the bureaucracy (both within his or her own ministry and elsewhere), and his/her own energy and involvement. If the minister is somewhat detached, or not active at the cabinet level, then it is unlikely s/he can accomplish very much. Another source of power lies in the ministry itself. For example, the Ministry of Finance is potentially very powerful, since it includes the customs bureau, the income tax bureau, the budget, and the land and surveys bureau—all the departments responsible for domestic revenue. 42
At least part of the problem with ensuring implementation below the cabinet level is that many individual ministers prefer not to take responsibility, opting to leave certain issues to the cabinet. 43 . If that is the case at the level of the minister, one can imagine what happens (or doesn't happen) at lower levels. As is the case for bureaucrats everywhere, there is no incentive (and in this case, also no authoriy) to make decisions without prior approval from above, even on very minor matters. The same holds true for the joint economic committees established between Jordan and most Arab states, discussed in detail in the case studies. With the exception of the ministers, the members are mere bureaucrats. If the relevant minister does not take an interest in solving a problem, no action will be taken. In general, then, because of the lack of authority to make decisions there is little or no follow-up. 44
In addition to the issue of authority and responsibility is the problem of the lack of a guiding program or policy. In more general terms, however, one reason for the lack of a coherent policy is that there have not been political parties steering the government. The appointment of the prime minister has always been the king's prerogative, not a response to election results, even since the political liberalization of 1989. One can point to instances in which the economy played a role in the appointment of a prime minister, as in the dismissal of 'Ubaydat and his replacement by Rifa'i in 1985, but neither could be said to represent a coherent economic and/or political program. Ministers or prime ministers may be known for a series of actions, but there generally is not a particular philosophy in their statements or speeches. 45
As a result they often loose sight of the larger picture. Nor do ministers generally resign in protest over a particular policy. 46
More often, ministers "are resigned" for causing a problem, failing to resolve an issue, or for reasons of domestic political jockeying.
While some interviewees agreed that ministerial changes are disruptive, given the lack of a program, it is not necessarily the case that a change in minister will mean a complete change in the ministry. After all, the other mid- and lower-level bureaucrats remain in place. Instead, the change of ministers will often mean that projects in which the former minister was involved may simply be set aside as the new minister begins to establish his own priorities. 47
The Parliament
Traditionally, Jordan's parliament was largely a rubber-stamp institution with little effective voice in policymaking. Moreover, during part of the period under study, the parliament was suspended (1974-1984), and a group of reduced size, the National Consultative Council appointed by the king, operated in lieu of a legislative body. Even when parliament was operative, the ban on political parties imposed in 1957 meant that there were no organized political groups to represent popular interests. The closest approximation to such institutions were professional associations—the unions of doctors, lawyers, engineers, and the like. They did hold their own elections and played an indirect political role. 48
However, as we have seen, the two official representatives of the private sector, the chambers of commerce and industry, appear not to have played such a role.
With the beginning of political liberalization, businessmen expressed optimism that the way would finally be open for them to voice their interests more effectively, and organizations such as the Free Liberals and the Group of 70 began to coalesce around vague business interests. 49
However, for a variety of reasons these organizations were apparently stillborn. At the time of this writing, none of the more than twenty registered political parties could be said to represent business interests, nor is there even a loose coalition or bloc in parliament associated with private sector concerns. The parliament as it now stands, and certainly as it stood in the past, reflects largely religious, tribal, or regional interests. In the 1989 elections, for example, some of the most powerful industrialists who ran for parliament did not win seats. Those who did, however, were victorious, not because of their business ties, but primarily because of their tribal or family affiliation. 50
In the 1993 elections, tribal affiliations were even more salient. Only in the wake of the 1993 elections was it announced that a new organization, the Arab Common Market Party, would soon be established specifically to articulate the interests of the business community.
The Bureaucracy
Businessmen and former ministers alike noted the obstructive role often played by members of the bureaucracy. The avoidance of responsibility by mid-and lower-level bureaucrats was mentioned earlier. In addition, bureaucrats are generally without job descriptions or instruction manuals and often have little idea what they are supposed to accomplish. However, also key to understanding the role of the bureaucracy in the policymaking and implementing process is the Transjordanian/Palestinian demographic divide discussed earlier. Transjordanian employment in the bureaucracy both symbolically and concretely embodies East Banker economic and political solidarity against the potential dominance of the Palestinians. In effect, they view themselves as protectors of the system (and the public sector in particular) against political change of most any sort. As noted in the previous section, there is a general suspicion of the private sector. Therefore, proposed economic reforms must not be seen to benefit business at the expense of the public sector, which accounts for nearly 50 percent of the country's employment (150,000 strong civil service, and 150,000-strong military) and is continually working to protect its interests. It has traditionally advocated greater state intervention and has been skeptical, if not fearful, of the idea of administrative or bureaucratic reform. Its members, most of whom are from the middle and lower classes, are dependent upon their salaries from the government and generally have no other options for employment. 51
One example of the obstructionist role bureaucrats may play may be found in the case of the drafting of Law 219 of January 1, 1989, The Companies Law (Temporary). The private sector had been consulted on the text of the law, which contained many positive elements from its point of view. However, when the law was finally promulgated, it also included a provision that companies were not to be permitted to keep profits for reinvestment. For a state that claimed it wanted to encourage private sector investment, this was certainly a strong disincentive to the potential investor. The provision was reportedly the result of the influence of "one or two individuals" with more of a socialist than a free market orientation, who wanted to make sure that the profits were divided among the shareholders. Thus, despite the input of the private sector, bureaucratic intervention in the latter stages of the drafting of the legislation led to the inclusion of a very damaging provision. 52
Hence, while an examination of the empirical evidence suggests that state institutions and officials below the cabinet level play little role in economic policy making, they nonetheless can play a key and often obstructive role in implementation or follow-up. Rather than acting in a specifically and state-leadership defined "national interest" mid-level bureaucrats seem frequently to have behaved in a very self-interested way, aimed at preserving the role and importance of their jobs. This is a key modification to the state-centered approach which views these actors as being "above politics." Indeed, their input in pursuit of their interests, seems to have had a more consistent impact on implementation than the efforts of the private sector.
Private Sector Input vs. State Direction and Control: Development Planning and Foreign Trade
Before concluding this chapter, two specific aspects of the economic policymaking process will be examined briefly to illustrate further the contrast between private sector initiative and the role of the state. Planning was chosen because of the apparently important role it plays in determining state development and investment priorities and because of the degree of institutionalized private sector input, while foreign trade is examined because of its importance to external economic relations, a critical subject of the case studies.
Planning
Planning was initiated in the kingdom in 1957 with the establishment of a Reconstruction Council attached directly to the prime ministry and composed of the prime minister and ten members, including representatives (not ministers) of economic ministries and the private sector. In 1962 the council was reconstituted to include three members of the private sector, the governor of the Central Bank and the general director of the Agricultural Loan Corporation, while the representation of the ministries was raised to the deputy minister level. 53 Economic planning began as a kind of investment plan, since the free market nature of the Jordanian economy gave the state little control over private sector activity and investment. Since it was not possible to force goals or enforce targets on the private sector, planning was therefore mostly a public sector exercise. The investment plan initially consisted of a project list and emphasized project implementation. 54
As time went on, the process gradually developed toward more comprehensive planning in the form of an economic and social plan. In 1971, the Reconstruction Council was renamed the National Planning Council and was reorganized internally and administratively into seven sectoral departments, each of which had representatives from the ministries, as well as government and private institutions. Each department was charged with studying sectoral development programs and projects, working to coordinate them in a comprehensive plan, and then monitoring and evaluating the programs after they were selected. Particularly after the beginning of the civil war in Lebanon, some policymakers in Jordan began to express the belief that the country could assume Lebanon's regional role, but that it needed a great deal of infrastructure and investment to do so. Subsequently, planning began to include longer term goals related to phosphates, fertilizers, and potash plants, road networks, sewage, communications, and water networks. 55
One significant result of the dramatic increase in state investment was a rapid expansion of the public sector and of external debt. Consequently, as the planning goals grew more complex, in 1984 the National Planning Council was upgraded to the Ministry of Planning.
The various stages involved in the planning process are planning, funding, implementation, monitoring, and evaluation. First, input from the various concerned groups is taken at the sectoral level to give the planners a sense of what they are working with. This input is then passed on to the committee level, just below the level of the prime minister. There is also input from the governorate and program level, (the next two levels below the committee level). The Ministry of Planning also conducts broad economic surveys or studies and sends them to the prime minister for evaluation. The input and revision process is interactive, consisting of several steps that involve correction and re-correction. However, at this stage the very real and critical constraints (almost always financial) become apparent, and in the end, national priorities overcome local ones, thus dampening the effect of local input. 56
In addition to the participation of a few members of the private sector on the planning council, as early as 1972-75, university professors became involved in the process. Gradually, they participated in what amounted to brainstorming sessions, although the actual calculations and linear programming were conducted by a local consulting firm. By the time of the 1986 plan, the outside consultations were the most extensive to date, probably because of the regional economic downturn and the government's belief that increasingly hard choices required at least the semblance of involvement of the public in decisionmaking. The general committee that formulated the plan included 400 people—representatives from the various governorates and most major economic and social constituencies—and the discussions were held at the universities: Jordan, Yarmuk, JUST ( Jordan University of Science and Technology), and Mu'tah. The crown prince also made a point of visiting the governorates to look into implementation and coordination of activities for this plan.
As for the role of other ministries in the process, until the early 1980s, the role of the Ministry of Finance, for example, was secondary, as it was concerned with incoming revenues, not with soliciting funds or with determining how the revenues were to be spent. Planning was more concerned with finance and development. According to former National Planning Council head and former Finance Minister 'Awdah's account, symptomatic of the problems he and other technocrats faced upon assuming the finance portfolio was that there was the lack of a unified repository of information on the country's indebtedness: some figures were available at the Ministry of Planning and some at the Central Bank, but the Ministry of Finance itself had very little information on Jordan's indebtedness. 57
What then of planning's accomplishments? Neither policies nor economic planning were pursued consistently: this point was stressed repeatedly and almost universally in interviews. Perhaps not surprisingly, then, even those involved in the process described planning as having had very little to do with past economic or development achievements. What accounted for the successes, primarily of the 1960s and 1970s, for better or for worse, were factors largely beyond Jordan's control: external aid, high levels of remittances, the regional oil boom, and so on. People often bragged that the economy had outperformed expectations, but as one key official noted, "in the planning process, understating is just as bad as overstating." 58
However, as noted above, bureaucratic organization or lack thereof, as well as problems in government accounting methods, have led to unrealistic assessments of funds and costs. Here, two examples should suffice as illustrations. Officials in the Ministry of Finance used to treat foreign loans as revenue, not as financing to be repaid. Second, the budgets of the autonomous public institutions (among them the Ports Corporation, the Jordan Valley Authority, and the Telecommunications Corporation) were not reflected in the central government budget: in some cases, only the subsidy or the support was included, not the full cost. 59
Hence, while the planning process has over the years increasingly drawn on the expertise of diverse groups of people outside of government, its influence on the economic direction of the country seems quite limited. General economic policy lines, to the degree that they are set and clear—and most of those interviewed contended they were not—are formulated at the top, not in the course of the planning process. Moreover, Jordan's plans have generally been little more than statements of intent or wish lists, sometimes achieved, but often not, because of the nature of the domestic economy and because of bureaucratic inefficiencies that plagued planning as well as other ministries.
Foreign Trade
How is decisionmaking carried out in Jordan's bilateral economic relations with its Arab neighbors? In the first place, as one might suspect from the discussion above, decisionmaking is conducted at the cabinet level or above. The Ministry of Planning, for instance, does not become involved in the details of trade. General guidelines may be set to the effect that the country needs to promote exports or to diversify. (For trade statistics for the period under study, see Tables 7 and 8.)
| Year | Syria | Saudi Arabia | Iraq | Kuwait | Egypt | Total Imports |
| 1973 | 7,799,513 | 3,427,263 | 866,919 | 187,002 | 2,753,855 | 108,200,000 |
| 1974 | 5,806,531 | 3,692,830 | 875,647 | 446,556 | 7,108,136 | 156,507,000 |
| 1975 | 6,509,033 | 22,905,711 | 698,016 | 578,121 | 6,241,839 | 234,013,000 |
| 1976 | 7,449,687 | 34,449,550 | 756,789 | 386,368 | 9,675,052 | 339,539,000 |
| 1977 | 11,096,607 | 37,144,194 | 756,415 | 646,295 | 9,589,201 | 454,417,000 |
| 1978 | 11,930,407 | 43,448,742 | 1,115,716 | 991,116 | 8,544,913 | 458,826,000 |
| 1979 | 11,427,320 | 69,141,410 | 1,892,743 | 723,763 | 9,450,090 | 589,523,000 |
| 1980 | 10,475,485 | 114,123,661 | 2,174,155 | 605,011 | 4,818,580 | 715,977,000 |
| 1981 | 12,506,305 | 175,783,719 | 762,539 | 517,297 | 3,502,013 | 1,047,504,000 |
| 1982 | 10,404,172 | 233,475,244 | 982,390 | 1,046,358 | 4,608,545 | 1,142,493,000 |
| 1983 | 16,955,768 | 210,963,256 | 4,778,831 | 764,684 | 4,609,462 | 1,103,310,000 |
| 1984 | 7,341,802 | 208,773,508 | 6,001,801 | 3,333,164 | 6,628,065 | 1,071,340,000 |
| 1985 | 5,892,969 | 159,058,051 | 72,950,931 | 2,893,059 | 4,315,380 | 1,074,445,000 |
| 1986 | 10,198,874 | 49,669,994 | 80,273,805 | 2,400,106 | 9,166,093 | 850,199,000 |
| 1987 | 8,652,203 | 76,761,231 | 99,400,613 | 16,956,448 | 9,621,725 | 915,545,000 |
| 1988 | 9,768,212 | 74,291,073 | 117,367,429 | 22,956,448 | 9,742,925 | 1,022,469,000 |
| 1989 | 19,526,000 | 31,983,000 | 212,661,000 | 29,782,000 | 18,455,000 |
SOURCE: HKJ Annual Statistical Abstract, selected years.
| Year | Syria | Saudi Arabia | Iraq | Kuwait | Egypt | Total Exports |
| 1973 | 2,585,233 | 2,560,000 | 1,007,701 | 1,572,716 | 443,857 | 14,010,000 |
| 1974 | 2,873,562 | 5,540,362 | 1,616,654 | 2,277,265 | 1,259,884 | 39,437,000 |
| 1975 | 3,674,043 | 4,761,035 | 2,450,238 | 2,393,816 | 1,034,782 | 40,075,000 |
| 1976 | 6,392,263 | 7,466,438 | 2,327,505 | 3,281,512 | 1,186,525 | 49,552,000 |
| 1977 | 7,541,718 | 15,090,517 | 4,303,586 | 2,795,955 | 1,070,047 | 60,253,000 |
| 1978 | 10,425,425 | 17,695,224 | 3,445,489 | 4,210,777 | 1,584,089 | 64,129,000 |
| 1979 | 12,264,133 | 19,371,780 | 12,719,029 | 4,436,540 | 194,144 | 82,556,000 |
| 1980 | 13,618,570 | 19,717,779 | 28,347,329 | 5,342,815 | 2,665 | 120,107,000 |
| 1981 | 10,760,016 | 20,881,894 | 63,471,888 | 6,812,526 | 16,750 | 169,026,000 |
| 1982 | 8,396,344 | 27,625,470 | 66,579,811 | 6,726,365 | 39,225 | 185,581,000 |
| 1983 | 3,566,530 | 35,212,476 | 26,010,854 | 10,453,555 | 15,165 | 160,085,000 |
| 1984 | 2,912,258 | 38,658,795 | 67,754,939 | 10,393,416 | 309,853 | 261,055,000 |
| 1985 | 3,900,976 | 39,083,460 | 65,850,384 | 7,734,298 | 3,032,916 | 255,346,000 |
| 1986 | 4,570,193 | 27,817,046 | 42,457,559 | 8,812,631 | 3,978,563 | 225,615,000 |
| 1987 | 7,201,379 | 26,204,464 | 59,865,417 | 8,613,109 | 13,447,840 | 248,773,000 |
| 1988 | 3,289,930 | 31,430,235 | 64,690,445 | 9,399,231 | 7,199,654 | 324,788,000 |
| 1989 | 7,983,000 | 47,712,000 | 123,936,000 | 15,503,000 | 10,754,000 | |
| 1990 | 8,415,000 | 46,815,000 | 118,544,000 | 11,056,000 | 10,622,000 |
*For dollar exchange equivalents, see Appendix 1.
SOURCE: HKJ Annual Statistical Abstract, selected years.
However, guidelines have never been more specific than that. The five-year plans may discuss individual commodities or the need to expand markets, and at the end of the plans there are calls for specific projects, but prescriptions for particular countries are not included.
60
It is the Ministry of Trade and Supply (which is the heir to, with the same terms of reference as, the Ministry of the National Economy) that monitors developments in bilateral trade. As part of its efforts to implement trade policy the ministry joined with other institutions such as the Chamber of Industry to establish the Jordan Trade Centers Corporation, a government institution with some private sector backing, which promotes and oversees the workings of Jordanian trade centers in other countries. The Ministry of Trade and Industry signs the bilateral trade protocols, but thereafter it is the Trade Centers Corporation that determines the commodities to be put on individual country lists, the accounts, and is then responsible for follow-up. 61
In the case study countries examined in this work, general economic agreements and/or joint committees govern relations. While the joint committees meet regularly during periods of good political relations, final decisions have rarely been worked out at these meetings. Most often the decisions are first made at a higher level or are referred back to this level at home before new commitments are made. 62
Nevertheless, the joint economic committees have played a number of important roles. First, they have provided a framework for discussions and decisions furthering Arab economic (if not political) integration. It was for this reason that they were launched, at least from the Jordanian perspective. 63
Second, the joint committees work to ensure more or larger markets for Jordanian products. Finally, they are a means of obtaining needed inputs for the production process in Jordan. 64
How successful have these committees been? Their workings and accomplishments are detailed in the case studies. However, a few general comments are in order here. A common refrain heard from those involved was that they had achieved very little or at least, far less than could have been the case, largely for reasons related to the state of bilateral political relations, a proposition considered in the case studies. A further argument is that there has been no follow-up to committee recommendations, which is the responsibility of the relevant ministries. It is here that implementation often breaks down. 65
The Jordanian bureaucracy has served as an obstacle or at best as a nonfacilitator on the level of implementation of the agreements of the joint committees. Obstruction as a means of preserving perceived interests has been discussed above. However, it was also suggested that individual bureaucrats may not be experienced enough to understand the importance of the relations and the proposals involved. Moreover, bilateral relations may not have developed to a point where vested sectoral or regional interests lobby for particular policies. 66
Or, as the examination of the role of the private sector indicated above, domestic sectoral interests have probably not developed sufficient coherence or organization to lobby for their interests.
Despite the efforts of the joint committees to expand markets for Jordanian goods, the private sector also has its complaints about the bilateral agreements. The primary criticism is that they eliminate competition, for they work in the following way. The committee sets levels of imports and exports in addition to specifying which will enjoy tariff reductions or be tariff-free. Any product not listed in the agreements is then difficult to trade because the merchant cannot obtain the same exemptions. As a result, through individual lobbying, merchants compete so that their product(s) will be included in the product list of the agreement. This process makes the private sector largely dependent on the government in the realm of inter-Arab trade, 67
although critics of the private sector contend that they have accepted this reliance on the government and undertake few independent initiatives to find markets.
These arguments and others will be examined in the course of the case studies. At this point the most salient point is that the state has played the leading role in the development of bilateral trade. The private sector's activity, at least until the beginning of economic and political liberalization in 1989, has been largely reactive rather than proactive. It has often waited (or been forced to wait) for agreements to be concluded by the government, and then had its input in the form of individual or small group lobbying for the inclusion of a particular product on a bilateral exchange agreement list. Again, neither the experience of planning or bilateral trade argues for the existence or operation in Jordan of coherent societal (non-state) articulators of economic interests.
Conclusions
Jordan's strategic significance to a range of actors led not only to its initial establishment as a modern state, but also to its continuing ability to draw on that range of actors for substantial support in the form of grants-in-aid for the military, the bureaucracy, and development as well as a host of concessional loans and other forms of budgetary assistance through the years. Whether as a result of inertia, lack of experience, or conscious policy choice based on evaluation of domestic political and economic trade-offs, in its early decades (outside the realm of this study) the state leadership appears to have been content to develop a heavy reliance on external sources of support rather than choosing to push more actively for expansion of the domestic productive base.
The state therefore gradually evolved as primarily a distributor or an allocator (of the rents collected from outside) rather than an extractor of resources from within. 68
Arguably, the longer this relationship between state and citizen continued, the more set people's expectations of the state's distributive role were and the more difficult breaking such a pattern or attempting to encourage new patterns became. What also appears to have developed through the emergence of the allocator-recipient relationship is a degree of state autonomy from the citizenry, both in the realm of economic and political decisionmaking. Although martial law and its many constraints was clearly a key factor in discouraging demands for popular input into decisionmaking processes, as long as the state was "providing for its own" through distribution of rents from abroad, dissatisfaction was less likely to have been expressed.
Given such a pattern of development, not only did the state enjoy relative autonomy from the input of societal forces, as the case study chapters will now demonstrate, it also made or had to make as a primary, conscious focus of its foreign policy, the collection of funds that enabled it to continue to play its allocative role, a role that underpinned the regime itself. Therefore, economic policymaking during most of the period under study, certainly when it concerned external issues, but also to a large extent when the realm was the domestic, was the preserve of a handful of decisionmakers whose primary focus was securing state revenue sources and finessing or overcoming economic constraints so that the distributive policies, particularly those that affected the critical military and security bureaucracies, could continue. The state-centered approach outlined at the beginning of the chapter emphasized the influence of state political structures and institutions as critical to shaping economic decisionmaking. The argument made here builds on this approach but is somewhat different. Here it is argued that the nature of the Jordanian economy, especially the structure or composition of state revenues, played a key, and frequently the decisive, role in influencing the course of Jordan's foreign policy.
Note 1: G. John Ikenberry, David A. Lake, and Michael Mastanduno, "Introduction: Approaches to Explaining American Foreign Economic Policy," International Organization 42 (1): 4. Back.
Note 2: Jeffry A. Frieden, Debt, Development, and Democracy: Modern Political Economy and Latin America, 1965-1985 (Princeton: Princeton University Press, 1991), chapter 1. Back.
Note 3: A. Konikoff, Transjordan: An Economic Survey (Jerusalem: Economic Research Institute for the Jewish Agency for Palestine, 1946) p. 94. Back.
Note 4: Fahd al-Fanek, "Is Jordan Ready for Privatization?" Jordan Times, August 31, 1986. Back.
Note 6: Amman Chamber of Commerce, Accomplishments and Activities of the Amman Chamber of Commerce During the Period 1983-85 (in Arabic) (Amman, 1986), p. 6. Back.
Note 7: Amman Chamber of Industry, Amman Chamber of Industry: Organization and Functions (Amman, 1991) p. 1. Back.
Note 8: Interview with Khaldun Abu Hassan, president of the Amman Chamber of Industry, November 2, 1991. Back.
Note 9: Interview with 'Ali al-Dajani, long-time official of the Amman Chamber of Industry, November 2, 1991. Back.
Note 10: Federation of Jordanian Chambers of Commerce, Annual Reports, selected years, 1978-1990. Back.
Note 11: Dajani interview. Back.
Note 12: Interview with former Minister of Labor, former Minister of Supply, and former Minister of Industry and Trade, Jawad 'Anani, July 20, 1992; and interview with Dr. Safwan Bataynah, former economic adviser to Prime Minister Zayd Rifa'i, October 3, 1991. Back.
Note 13: Federation of Jordanian Chambers of Commerce, Annual Report for the Year 1986 (Amman, 1987), p. 77. Back.
Note 14: Interview with Tawfiq Qa'war, prominent businessman, July 17, 1992. Back.
Note 15: Interview, July 1992. Back.
Note 16: Abu Hassan interview; Dajani interview. Back.
Note 17: Qa'war interview. Back.
Note 18: Qa'war interview. Back.
Note 19: 'Anani interview. This is gradually changing, however, as more businessmen concentrate on a single sector. Moreover, the market is growing and therefore the division of labor between trade and industry is becoming clearer. Back.
Note 20: 'Anani interview. Back.
Note 21: Interview with Dr. Safwan Tuqan, Deputy Minister of Planning, November 19, 1991. Back.
Note 22: Interview with Wasif 'Azir, former director of the Jordan Phosphates Company and General Manager of the Business Bank, Amman June 22, 1992. Back.
Note 23: Interview, summer 1992. Back.
Note 24: Interview with Zaki Ayyubi, prominent businessman, June 23, 1992. Back.
Note 25: Ayyubi interview. Back.
Note 26: Interview with Muhammad 'Asfur, President of the Federation of Jordanian Chambers of commerce, July 15, 1992. Back.
Note 27: Interview with economist Fahd al-Fanek, July 21, 1992. Back.
Note 28: Qa'war interview. Back.
Note 29: Interview with former Foreign Minister and former Prime Minister Tahir al-Masri, July 14, 1992; interview with Tahir Kan'an, former Minister of Planning and Minister of Occupied Territories Affairs, June 22, 1992. Back.
Note 30: 'Anani interview. Back.
Note 31: Al-Masri interview. Back.
Note 32: One interviewee used the phrase al-quwa al-muharrikah, the "driving force" to describe the crown prince's involvement in economic affairs. Another refered to him as amir al-tanmiyah, literally, the prince of development. Back.
Note 33: 'Anani interview. Back.
Note 34: Kan'an interview. Back.
Note 35: Al-Fanek interview. Back.
Note 36: Al-Fanek interview. Back.
Note 37: Unpublished opinion piece written by Fahd al-Fanek that was rejected by the Jordanian censor. Photocopy provided the author by Fanek. Back.
Note 38: Al-Fanek interview. Back.
Note 39: For a full discussion, see chapter 6. Back.
Note 40: Economist Intelligence Unit, Syria and Jordan: Quarterly Economic Report, no. 4, 1983, p. 24. Back.
Note 41: Federation of Jordanian Chambers of Commerce, Annual Report for the Year 1986 (in Arabic) (Amman, 1987), p. 35. Back. .
Note 42: Tuqan interview; al-Fanek interview. Back.
Note 43: Tuqan interview. Back.
Note 44: Bataynah interview. Back.
Note 45: Al-Masri interview. Back.
Note 46: 'Azir interview. Back.
Note 47: 'Azir interview. Back.
Note 48: Laurie Brand, Palestinians in the Arab World: Institution Building and the Search for State (New York: Columbia University Press, 1988), pp. 177-179. Back.
Note 49: 'Azir interview. Back.
Note 50: Interview with Ma'an al-Nusur, Ministry of Planning, November 10, 1991. Back.
Note 51: Al-Masri interview. Back.
Note 52: 'Azir interview. Back.
Note 53: Several unpublished, undated papers provided the background material for this section: "A Pamphlet on the Historical Development of the Planning Apparatus," and "The Experience with Planning in Jordan," both from the Ministry of Planning. Back.
Note 54: Interview with Musa Abu Mayzar, long-time employee of the Ministry of Planning, November 24, 1991. Back.
Note 55: Abu Mayzar interview. Back.
Note 56: Abu Mayzar interview. Back.
Note 57: Interview with the former Head of the National Planning Council and former Minister of Finance Hanna 'Awdah, December 2, 1991. Back.
Note 58: Tuqan interview. Back.
Note 59: Tuqan interview. Back.
Note 60: Interview with Rima Khalaf, Director of the Jordan Trade Centers Corporation, October 26, 1991. Back.
Note 61: Khalaf interview. Back.
Note 62: Tuqan interview. Back.
Note 63: Interview with former Prime Minister Zayd al-Rifa'i, July 11, 1992. Back.
Note 64: Interview with Samir 'Umaysh, Ministry of Industry and Trade, October 5, 1991. Back.
Note 65: Bataynah interview. Back.
Note 66: Interview with Munir Hamarneh, economist at the Council for Arab Economic Unity, Amman, October 7, 1991. Back.
Note 67: 'Asfur interview. Back.
Note 68: See Giacomo Luciani, "Allocation vs. Production States," in Giacomo Luciani ed., The Arab State (Los Angeles: University of California Press, 1990), pp. 65-84. Back.
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