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Jordan's Inter-Arab Relations: The Political Economy of Alliance Making
New York Chichester, West Sussex
1994
6 Jordanian-Iraqi Relations
It was the British who, in installing monarchs from the Hashemite family on the thrones of both Transjordan and Mesopotamia in 1921, established a strong base for modern political ties between Baghdad and Amman. Not until July 1958, when the Hashemites of Iraq were overthrown and replaced by a revolutionary nationalist regime, did bilateral ties deteriorate. Relations were cool if not strained throughout the 1960s as Iraq, preoccupied with domestic problems and state consolidation, remained a generally marginal force in inter-Arab politics. Baghdad did attempt to mediate between Jordan and the Palestinian resistance in 1970, but its 25,000-man strong expeditionary force stationed in Jordan remained aloof from the fighting when mediation efforts failed. 1 The history of the period under study involves only one major alliance shift: Jordan's move away from Syria and into a closer and closer economic, military, and political relationship with Iraq. As the empirical material in the case study below demonstrates, this major change was undertaken in large part for reasons related to the financial and budgetary support Iraq was willing and able to provide the kingdom at a time of economic crisis. The beginning of the Iran-Iraq war in 1980 served further to strengthen ties. Denied access to the Persian Gulf, Iraq was eager for imports from and through Jordan, and the Jordanian private sector, with state encouragement, responded with enthusiasm. Moreover, given the kingdom's traditional involvement in transit trade, Jordan was more than willing to expand its highway and port system (thanks to Iraqi grants and loans) to accommodate Iraqi needs.
That the war would drag on for years, leading to a drop in oil prices and a regional recession that ultimately led, not only to the suspension of Iraqi aid but also to a significant reneging on promised support from the other Gulf states, was something Jordanian policymakers could not have foreseen. However, in order to address its evolving economic crisis, the king sought to form an even closer, if expanded, alliance with his Iraqi partner after the war in the form of the quadripartite Arab Cooperation Council. Again, as the case study that follows will show, in this alliance decision as in Jordan's first move toward Iraq in 1979, considerations of economic security were paramount.
The Lean Years: 1975-1978
Political Developments
At the beginning of this period, although on the sidelines of power, Iraq was involved in a number of inter-Arab disputes. For example, press reports indicated that there were Iraqi incursions into Kuwait in early 1975. 2 On another front, in spring 1975, when settlement of the Iraqi-Iranian-Kurdish problem seemed to be at hand, Iraqi-Syrian tensions surfaced, as Baghdad complained about the low rate of water discharge from the Syrian Euphrates dam. Arab League mediation by Egypt and Saudi Arabia led Syria in June unilaterally to offer to supply Iraq with river water from the Euphrates; however, by spring 1976 a new dispute had arisen between the two over oil transit royalties and over Iraq's opposition to Syria's role in Lebanon. Iraq then responded by suspending oil pumping through Syria. 3 On November 2, Iraq closed the joint border and increased patrolling by heavily armed units. This move, reportedly an expression of its rejection of the decisions reached at the Cairo summit on the future of Lebanon, 4 marked a new stage in the deterioration of relations between the two. In response, as if the Kurds had not already suffered from sufficient cynical outside manipulation, the Syrians apparently became involved in supporting a new round of Kurdish anti-Iraqi guerrilla activity. 5
Iraqi-PLO ties were no better. With the exception of the strain in relations between Syria and the PLO in 1976 and 1977, PLO-Syrian relations were good during this period. Perhaps as a result, as the PLO tried to rein in some of its smaller or more radical factions, such as Abu Nidal's breakaway organization, Iraq gave them sanctuary. When the PLO, particularly Fateh, countered with more open and vocal criticism of the Ba'th for fostering schisms in its ranks, 6 the Iraqis responded by assassinating a number of Fateh or PLO moderates. For its part, Jordan accused Iraq of complicity in the November 1976 Palestinian guerrilla attack on the Amman Intercontinental Hotel, although this did not develop into an open clash. 7
Despite political and ideological differences between the two, by 1975 the security and economic rationale for cooperation with Jordan had become compelling (although Jordan's growing relationship with Syria, in part obstructed Iraqi overtures). For Iraq, with only limited access to the sea, Jordan represented an alternative to Syria as an overland route for the transshipment of imports and exports. In the post-1975 period, as Iraq began to emerge from relative isolation, it may have regarded Jordan as a useful "moderate" Arab partner. For its part, as the decade progressed, Jordan saw in Iraq not only a country that could offer strategic depth, but also a wealthy and economically diversified state that could provide the various kinds of support the aid-dependent kingdom needed. 8 By the mid-1970s, Iraqi development loans had not only begun to help indirectly to ease pressures on the budget; they also enabled Jordan to modernize some of its physical infrastructure, enhancing its ability to serve as a transport and transit center. Iraq also offered a huge potential market for Jordanian goods. These factors all work rather indirectly to enhance budget security. The advantage in the case of Iraq was that, particularly after the increase in oil prices in 1973, it also had the resources to provide direct financial assistance, the most central element in Jordanian budget security considerations.
Baghdad's major Arab concern in the mid-1970s was apparently to undermine Syrian influence in the Levant. Intimidation, however, was clearly not the formula for success. Perhaps as an alternative strategy, in early October 1977, the Iraqi delegation to the Arab Gulf countries' Conference of Trade Ministers presented a case for inter-Arab cooperation. It offered a number of agreements to promote joint action and to establish joint economic institutions, among them, an Arab market zone. Such a zone would have doubled the market size served by Iraqi exporters. It would also have reduced competition, especially in petrochemicals, from its Arab neighbors, and preferential tariffs would have appreciably reduced the economic penetration of the area by the Iranians, who had been far more active and successful than the Iraqis in regional trade. 9 Unfortunately for the Iraqis, the proposal was not acted upon.
In the meantime, despite a gradual increase in development loans (see below), diplomatic interaction between Jordan and Iraq in 1977 appears to have been limited to a visit to Iraq by Jordan's Youth and Culture Minister Fawwaz Sharaf in mid-July and a letter from King Husayn to Iraqi president Hasan al-Bakr in early October. While the August signing of a pact permitting Iraq to rent a section of the Aqaba port seemed to signal a warming of relations, in September, the execution by the Iraqis of a Jordanian student charged with working for Jordanian intelligence led to a full-scale propaganda war between the two. Amman responded by issuing an order forbidding its students to study in Iraq in the future. 10
The cautious Jordanian position on Egyptian President Sadat's November 1977 trip to Jerusalem and the subsequent Jordanian-PLO rapprochement also drew Iraqi fire. But in this as in other matters, Baghdad seemed more concerned about the effect of such developments on Syria and on its own standing in the Arab world than about the actual content of the policy. Of course, inter-Arab differences were largely, if temporarily, set aside as the September 1978 meetings at Camp David produced accords that ultimately served as the basis of an Egyptian-Israeli peace treaty. And, following Camp David, the number of visits between Jordanian and Iraqi officials increased markedly. On October 1, Iraq issued a call for an Arab League summit in Baghdad. Jordan's Interior Minister Sulayman 'Arar met with then second-in-command, Saddam Husayn, on October 4; Iraqi Foreign Minister Sa'dun Hammadi met with Jordanian Minister of State Hasan Ibrahim at the UN on October 5; and on the same day Iraqi Revolutionary Command Council (RCC) member Hikmat Ibrahim arrived in Amman with a message from Iraqi President al-Bakr for the king. 11
Only a few days earlier the RCC, the Iraqi ruling body, had issued a response to Camp David which had included a proposal that the Arab states set up a fund to provide for Egypt's financial needs (presumably to prevent it from going ahead with its peace treaty) and to insure the needs of the western, northern, and eastern fronts as well as those of the PLO and the people in the occupied territories. The Iraqi proposal suggested that the appropriations be no less than $9 billion a year, subject to the needs of the battle, for a period of ten years. 12 Not coincidentally, then, the Arab summit held in Baghdad on November 2-5 called for a $9 billion fund of support for the confrontation states: Jordan, Syria, and the PLO. According to Jordanian policymakers, Saddam was the primary mover behind the convening of the 1978 meeting and in convincing the Gulf countries to give money to the remaining confrontation states. 13 Saddam also reportedly offered to pay any amounts reneged upon by the other contributing states in addition to promising an Iraqi contribution of $520 million a year for ten years. 14
As noted in previous chapters, Jordan was in particularly dire financial straits at the time. The Gulf states had not forwarded all the assistance they had promised in 1974 at Rabat, despite a meeting held in Saudi Arabia in January 1977 in which the issue had supposedly been settled. Former Chief of the Royal Court and Prime Minister Mudar Badran described how, in 1976, for example, he had been forced to take serious measures to cut spending and to find money to pay the salaries of bureaucrats and the members of the armed forces. 15 Thus, in pushing for the 1978 summit and in focusing on aid to the confrontation states, Saddam had performed a very valuable service for the Jordanians. (In addition to the monetary incentive, however, it seems the king also formed a close personal relationship with Saddam as a result of their 1978 meeting.) Thus the king was made to feel the financial power of Iraq at a time when the Jordanian budget desperately needed funds. The fall of the shah only a few months later and the threat of Khomeini served as additional stimuli for Jordan's moving closer to Iraq, but the primary stimulus appears to have been related to budgetary considerations.
AID (SEE ALSO AQABA PORT, BELOW)
Iraqi aid to Jordan during this period was irregular. The Iraqi Development Fund, like a number of its Gulf counterparts, was established in 1974 in the wake of the dramatic rise in oil prices. Talks held in June 1975 between the two sides reviewed a Jordanian request for a loan for electric power projects, which would have brought Iraq's financial commitment to Jordan to around $60 million. 16 Subsequently, Iraq agreed to make the electric power loan interest-free. 17 In early 1976 Iraq expressed a willingness to provide additional development financing for Jordan, and had begun studying a proposal requesting funds to help finance the $2.3 billion 1976-1980 five-year development plan. 18 On March 24 Iraq approved a $63 million loan to Jordan for various road construction projects, 19 all of which, of course, would directly benefit Iraq.
In August 1977 it was reported that Iraq was contributing $386,563 toward the establishment of agricultural cooperatives for fertilizer and fodder storage in Jordan. 20 About a year later, on October 5, 1978 Iraq granted Jordan $30 million in aid because of Husayn's stance on Camp David. 21 And following December 1978 trade talks, it was announced that the Iraqi government would extend a 15 million dinar 22 loan to the Arab Potash Company and another 5 million dinar loan to the chemical fertilizer company. 23
TRADE
Bilateral trade figures in 1974 showed Jordanian exports to Iraq of $4.8 million and imports from Iraq of $2.55 million. 24 Just over a year later, the two countries signed an agreement calling for an increase of bilateral trade to $19 million for 1975. 25 In meetings in June 1975, both sides expressed a desire to raise the level of exchange to $12 million each. 26 Jordan's exports in fact did rise in 1975 to $7.5 million, although imports from Iraq dropped slightly to $1.52 million. 27 In March 1976 the bilateral foreign trade targets were further increased to $13.7 million, although the trade levels remained about the same in 1976 as they had been in 1975. 28 Similar trends continued, as bilateral trade for 1977 reached only about $15 million. 29
In June 1975, Iraqi Minister of Industry and Minerals, Taha al-Jazrawi (later better known as Taha Yasin Ramadan), led an Iraqi team to Jordan to discuss Iraqi investment in Jordanian development projects, joint ventures, and other forms of bilateral economic cooperation. 30 The minutes of the joint committee meeting called for the establishment of a tomato juice factory 31 and exploration of the possibility of Iraqi participation of 10-20 percent in the capital in the Jordan Fertilizer Company. The two sides were also looking into raising the level of Iraqi participation in the Arab Mining Company, which was to give priority to Jordanian potash products. 32 In the joint committee meeting in May 1977 there were more discussions of the tomato juice factory; however, at the time of the joint committee meeting in April 1978, it was still in the discussion stage. A free zone project was also mentioned for which the Iraqis were to be compensated for the land used in the amount of 150,000 dinars. 33
AQABA PORT AND TRANSIT TRADE
On March 31, 1975, the two countries signed an accord whereby Iraq was permitted to use the Aqaba port for importing goods at a rate of 300,000 tons per year. 34 To supervise the Iraqi imports, the Iraqi State Overland Transport Company opened an office in Aqaba during the first week in June 1975. 35 According to an agreement several months later, Jordan was to increase the tonnage of Iraqi imports and exports allowed through Aqaba port to 350,000 tons annually for 1976 and was working to increase this to 400,000 tons for 1977, eventually to reach at least 600,000 tons at the time of the completion of a new pier. 36
Jordan had also agreed to build four new jetties with supplementary equipment according to the following conditions which clearly indicate the extent of Iraqi interest and participation in Jordanian infrastructure development: the Iraqi government would give Jordan an interest free loan to cover 50 percent of the costs, as long as the size of the loan did not exceed $25.9 million; the work would be completed during the last quarter of 1977; there would be regular consultations between the two about the progress of the project; the payback of the loan would take place through paying 50 percent yearly of the returns on the Iraqi goods, beginning one year after the completion of the jetties; Iraqi imports and exports would have priority in using the new jetties; the Jordanian government would build a 50-kilometer road between Azraq and H-5 37 and widen and improve the road between H-5 and the Iraqi border (180 kilometers); the Jordanian government would build a Ma'an--Ras al-Naqab--Mafraq road of 74 kilometers; and the Iraqi government would give Jordan a $13.8 million loan at 2.5 percent to cover the costs of the road. Iraq subsequently agreed to forego the interest on about $46 million of these loans for port and highway construction. 38 Following talks with Jordan's Minister of Finance in August, the Iraqis agreed to rent a 50,000 meter-square area at the Aqaba port as a free zone for storing imports and exports. 39
In mid-November 1977 Syria ceased issuing transit passes, thus closing the border to goods bound for Iraq. Combined with the earlier disruption of the Iraqi-Turkish railway, this move rendered Aqaba of even greater importance to the Iraqis. In mid-February 1978 Iraqi Transport Minister Dr. Mukarram Jamal Talabani left for Amman to discuss means of facilitating the transport of merchandise to and from Iraq through Jordan. 40 In the April trade talks that followed, the joint committee stressed the importance of encouraging the use of Aqaba port for the transit of agricultural and industrial goods to and from Iraq. 41
Summary
The record of political relations during this period is quite mixed as Iraq, preoccupied with a domestic Kurdish insurgency, seemed to involve itself in regional affairs in largely disruptive or subversive ways. However, the economic record is quite different. Beginning in 1975, as its feuding with Syria heated up, Iraq began to show interest in increasing its access to the port of Aqaba. To that end, it began to provide support for various forms of infrastructural development that both increased the port's capacity and facilitated moving goods through it. By the time bilateral political relations began to improve in 1978, a basis of trade and infrastructural links had already been established between Jordan and Iraq. The most significant development from the point of view of Jordan's concern with budget security, however, was the Iraqi push for greater Arab economic support of the confrontation states at the November 1978 summit. At a critical time of decline in expected Arab aid, Iraq stepped in to offer and promote support. Iraqi actual and potential largess served as the foundation for Jordan's gradual alignment shift away from Syria in the next two years.
From Egypt's Peace to Iraq's War: 1979-1980
Political Developments
The visit of Iraqi Foreign Minister Hammadi to Amman in November 1978 signaled the beginning of a real improvement in political relations, and Baghdad's success in pushing for and convening the November summit catapulted it to a new and central place in Arab politics. For example, Jordan's Minister of State for Foreign Affairs, Hasan Ibrahim, consulted with (then still second-in-command) Saddam in early March 1979 on problems between the two Yemens. This meeting was followed by King Husayn's visit to Baghdad on the heels of a trip to Syria. Syrian-Iraqi relations, generally characterized by feuding and acrimony, had warmed dramatically in the shadow of Camp David. In the meantime, of course, the other major regional development, the overthrow of the Shah of Iran, had raised the anxiety level in Iraq, as it pondered what the ramifications of the transformation in Iran might be.
On June 30, 1979 Saddam himself arrived in Amman for two days of talks with Husayn, the first time a top Iraqi leader had visited the Jordanian capital since before the 1958 revolution. Only two weeks later Saddam assumed the Iraqi presidency and wasted little time in making a bid for greater regional influence in the vacuum left by the Shah's departure. In a speech on February 8, 1980, marking the anniversary of the 1963 revolution, Saddam proposed a charter governing inter-Arab relations. According to the Iraqi president, the charter's purpose was to bolster, not replace, Arab commitments such as the joint defense pact. The pact included such principles as mutual understanding, settling inter-Arab disputes through dialogue, and renouncing the use of force. It also rejected foreign military alliances and the presence of foreign troops on Arab soil, at a time when the U.S. had proposed a Rapid Deployment Force to protect the flow of oil. Saddam dispatched envoys to various Arab capitals in mid-February to discuss the charter's implementation, and the proposals found sympathetic ears in both Amman and Riyadh. 42 King Husayn and Crown Prince Sa'd of Kuwait subsequently went to Baghdad for security consultations related to the charter.
In the meantime, it was becoming increasingly clear that Iraq was determined to cement links with Jordan. In mid-May, King Husayn visited Baghdad and "unprecedented cordiality was shown" between the two leaders. Border skirmishes with Iran had erupted periodically since the spring, and the two reportedly had reached agreement on Jordanian-Iraqi military cooperation in the event of an external attack on either. For Iraq, cementing the link with Amman was a critical development, ensuring that it would not be isolated politically or economically in its struggles with Iran and Syria. 43
In the summer the two leaders had several personal meetings in addition to numerous contacts by telephone and letter. Saddam had also consolidated his ties with Saudi Arabia through an August 5-6 visit with a group of senior advisers, the first time an Iraqi leader had been in the Saudi capital since the 1958 Iraqi revolution. 44 At the end of the talks, which purported to deal with the Israeli annexation of Jerusalem, the Saudis reportedly committed themselves to support Iraq in the increasingly likely event of a war with Iran. 45 King Husayn, hoping for and presumably confident of, a swift Iraqi victory, was one of the few important Arab leaders to support Saddam's adventure openly once the war officially began in September. The king consulted regularly with the Iraqi leader regarding the situation on the front, put Jordan's medical facilities at Iraq's disposal on October 1, and visited Saddam several times in the fall. In November Jordan hosted an Arab League summit on the regional economy which, in further showcasing Iraqi power, led to a Syrian boycott and a massing of Syrian troops on the Jordanian border. This was the final stage in the deterioration of Syrian-Jordanian relations. Jordan was now clearly in the Iraqi camp.
Economic Developments
AID
During this period, Iraqi financial assistance exhibited a marked increase. On March 2, 1979, the Iraqi government donated $16,700 to build mosques and in mid-August it provided a loan of 2 million dinars to Jordanian cooperative societies. 46 Only a few days later Iraq awarded $2.7 million to finance a housing project for journalists in Amman, as Saddam personally handed the sum to the president of the Jordanian Press Association, Rakan al-Majali. 47 Other loans were made to finance the construction of an alternative road from Amman to Zarqa ($8.4 million), additional housing projects ($5 million), a technical college offering degrees in engineering and related subjects at Mu'ta ($50 million) near Kerak, and $3.34 million each for the Royal Scientific Society and several philanthropic societies. 48
The trend continued and touched numerous economic and social sectors in Jordan. For example, in May the Iraqi government gave $167,000 to a home for the elderly; on July 28 it was announced that the Iraqi Women's Union had given a sum of $16,700 to the Queen Alia Fund; and on August 11 an Iraqi government contribution of $500,000 to the Ibrahimiyyah College on the West Bank was confirmed. 49 In early September it was announced that $100 million of additional financial assistance would be given to economic projects, above and beyond the substantial grants made earlier in the year for transport and port improvement schemes. 50 On September 8 it was reported that the Iraqis had contributed $227,000 to build a mosque in the northern town of al-Husn, just south of Irbid. 51 Only a week later, Iraq provided scholarships for 80 Jordanian students for vocational education in Iraq, agreed to finance the construction of a microwave link between the two raising the number of direct telephone lines from six to 6,000, and on September 23 contributed $500,000 to the civil aviation center. 52 In mid-September two loans from Iraq were approved, both from the Iraqi Fund for External Development. The first, $13.36 million, was for setting up a free zone at Aqaba and the second, $5 million, for financing a housing program in Irbid. 53
TRADE
In March 1979 the Iraqi-Jordanian joint economic committee agreed to increase trade to $33.4 million per year. 54 The two sides agreed to simplify the process of clearing goods through customs, to encourage tourism, and to give Jordanian agricultural products priority in local marketing. 55 Just over a year later, in late April 1980 a series of bilateral talks was held covering the fields of economy, culture, technology, transport, water, education, industry, and trade cooperation. As a result, on May 1 a new agreement for economic and technical cooperation between the two governments was signed, according to which, trade between the two was to be increased to $41.6 million per year in each direction. 56 By the time of the outbreak of war with Iran, Iraq had become the largest market for Jordanian exports, with an increase between 1979 and 1980 of some 269%. Jordan's most important exports to Iraq included washing powders and pharmaceuticals, as well as building materials, plastic goods, woven fabrics, and fruit and vegetables. 57
INDUSTRY AND JOINT PROJECTS
A number of joint ventures were discussed in early 1979. In February Iraq and Jordan concluded talks about establishing a joint food canning industry. In March the issue of the tomato paste factory project was again raised and the Iraqis promised to make a final decision on the matter as soon as possible. 58 Agreement on a tourist bus route between Amman and Baghdad was signed on July 21 for four trips a week from each capital. However, there appear to have been delays, and in the end, not until November 13, 1980 was it announced that a twice-daily coach service between Amman and Baghdad, operated by Jordan's JETT bus company and Iraq's General Establishment for Passenger Transport, using existing bus fleets, was to start operations on December 1, 1980. 59
In September 1980, at a meeting of the joint industrial committee, in response to an Iraqi request, the Jordanians provided a list of domestic industries and projects they wanted to develop. The Iraqis were interested in projects the Jordanians sought to undertake jointly, especially in mining, food, building, textiles (weaving), engineering, and chemicals. The two sides agreed to set up a joint industrial holding company that would conduct technical and economic studies, and implement projects in the form of specialized branch companies. 60
AQABA PORT AND TRANSIT TRADE
The growing economic and security importance of Aqaba to Iraq and the Jordanian enthusiasm for taking advantage of Iraqi interest in developing the port as an economic boon to the kingdom became increasingly clear during this period. By early February 1980 companies from both Kuwait and Jordan had signed haulage contracts with the Iraqi State Establishment for Specialized Transport to allow imports to be transited through Mina Shuwaykh (Kuwait) and Aqaba because of congestion at Iraq's ports. 61 In late February it was announced that Iraq intended to hire Jordanian vehicles (and provide fuel) to transport half the goods it imported through the Gulf of Aqaba, some 1 million tons a year. 62 Even the U.S. Department of Commerce was reportedly stressing to businessmen the advantages of Aqaba as a transit and warehouse base for exports going to other Middle Eastern countries, like Iraq. 63 Meanwhile, in mid-February the Iraqi government had approved in principle a grant of $13.2 million to Jordan to raise the standard of services and bolster the projects of the Free Zone Company in the Aqaba Free Zone. 64
On May 1 several Aqaba-related loans and grants were announced. First were loans of $50 million for a road linking Aqaba with Azraq, (to be used by trucks taking goods to Iraq), $13.3 million for expansion of the Free Zone, and $10 million for port development. At the time Iraq was transshipping 2 million tons of imports a year through Aqaba, one-half of which were carried by Jordanian trucks and two local companies on behalf of Iraqi ministries. 65 Only a few weeks later, a joint company dubbed the Iraqi-Jordanian Land Transport Company (IJLTC) was officially founded, with its primary mandate to buy and operate vehicles to transship Iraqi imports arriving at the port of Aqaba. 66 Iraq expected to use the port for about 10 percent of its imports by 1980 because of congestion at Basra. 67
Aqaba's importance further increased with the outbreak of war. Iraq's own ports of Basra, Umm al-Qasr and Faw were very close to the border with Iran and hence were subject to Iranian bombing. The Jordanian port, on the other hand, was more than 300 miles from the Iraqi border, and 800 miles from the areas where the fiercest fighting was taking place. The swift development of even greater Iraqi dependence upon Aqaba as a transit center and on Jordan as an economic partner after the beginning of the war was clearly facilitated by the pre-1980 highway and port infrastructural expansion projects detailed above. 68
EUPHRATES RIVER WATER
Talks were held with Iraq in July 1979 regarding the feasibility of channeling drinking and irrigation water from the Euphrates to water-poor Jordan. Projections of water supplies likely to reach Jordan from a completed Maqarayn dam on the Syrian-Jordanian border indicated that less water than originally planned was likely to be drawn. 69 Moreover, that project remained in the planning stages, with an uncertain but seemingly gloomy future. Hence the interest in an alternative water source.
Forced to choose between relations with Iraq and Syria, Jordan chose gradually to move into the Iraqi camp for sound financial reasons. The Baghdad summits and Saddam's role in them in mobilizing Arab financial support for the confrontation states, along with his own promises of support, must have seemed a budgetary dream come true for the Jordanians. Political relations continued to warm and King Husayn was an early and strong supporter of the Iraqi war effort in the fall of 1980. Developments on the economic front had laid the foundations for such a trend. Trade levels increased and a series of joint economic projects were initiated to further reinforce ties. Just as, if not more, important, unrequited aid from a variety of official and non-official Iraqi sources poured into Jordan, with Iraqi state development aid largely targeting the further expansion of Aqaba port and access to it. The Aqaba link only increased in importance with the outbreak of war with Iran and Iraq's effective loss of the Gulf as an import and export lane. Jordan could only have been expected to take further economic advantage of Iraqi interest.
Iraq at War: 1981-1984
Political Developments
Husayn visited Iraq in March, May, and August 1981 for talks and briefings on the situation at the front. In late January 1982, after discussions with Saddam, King Husayn announced that he had opened the door to volunteers from the Jordanian Army to fight with Iraq. On February 1 the cabinet ordered the establishment of a committee under the prime minister to follow up on the volunteer initiative and to make the necessary financial and administrative arrangements. The cabinet also decided to open a special account in the central bank to receive donations from various organizations and individuals for what were called the Yarmuk Forces. Jordan reportedly opened sixteen training centers and volunteers began heading for Iraq in February. 70 In total, about 3,000 men went to fight alongside the Iraqis. Nevertheless, the king's seemingly enthusiastic support for Saddam's war effort did not lead him to commit regular Jordanian army troops to the front, and shortly after the June 1982 Israeli invasion of Lebanon, Husayn reportedly flew to Iraq to suggest that Saddam use the Lebanon war an excuse for calling for a ceasefire in the Gulf. 71
Meanwhile, in April 1982 Syria had closed its borders with Iraq and at the end of the month Iran had mounted a major offensive in southern Khuzistan against the remaining lands held by Iraqi troops in the Ahwaz salient, including the town of Khorramshahr. On May 23 the Iranians broke through the defenses of the town and on May 25 the Iraqis admitted that they were withdrawing all their troops from the town. Following this success the Iranians proceeded to push into Iraqi territory. The combination of falling oil income and the increasing costs of war had begun to take their toll on the Iraqi economy. The fall of Khorramshahr and the subsequent Iranian invasion of Iraq in July 1982 made clear that all available resources had to be devoted to the war effort. 72 By early 1983 it was reported that payments for foreign contracts had fallen behind schedule and that no major new development projects were being undertaken. By late 1983, inflation was running between 30% and 50%. 73 The implications of these developments for bilateral economic relations will be discussed below.
In the meantime, Husayn made brief visits to Baghdad on February 10 and June 4, 1983, and on November 23 for talks that reportedly focused primarily on the fighting in the Palestinian refugee camps in northern Lebanon between Yasir 'Arafat's men and Syrian-sponsored troops. 74 In early 1984 there were several visits back and forth, between Iraqi Foreign Minister Tariq 'Aziz and Jordan's Foreign Minister Tahir al-Masri and Chief of the Royal Court Marwan al-Qasim. In March, in the wake of a new Iranian offensive, Jordan's Minister of the Interior Sulayman 'Arar and Minister of Trade and Industry Jawad 'Anani went to Baghdad, not only for economy-related meetings, but also in order to sign a border demarcation agreement, according to which Iraq ceded 50 square kilometers to Jordan to settle a dispute that dated back to the mandate period. 75
The king made several visits in 1984, the final one on October 16, only a few weeks following Jordan's September 25 reestablishment of diplomatic ties with Egypt. Iraq had also been discussing the need for Egypt to return to the Arab fold, and there was speculation at the time that Iraq, too, might resume ties at any moment. 76 In seeming confirmation, in the first week of October Iraq lifted the ban on the entry of Egyptian newspapers. 77 Ultimately, however, the restoration of ties did not materialize until after the 1987 Amman summit gave the official green light. Nonetheless, Iraq continued to strengthen its other links with Egypt, including receiving and buying military supplies (a relationship that had begun even before Sadat was assassinated in 1981), not to mention receiving personnel.
Economic Developments
AID
A Jordanian delegation arrived in Baghdad on January 2, 1981 for talks on bilateral cooperation in trade, transport, education, and scientific research. Minutes were signed on January 6 which included a working plan for the establishment of Mu'tah University near Kerak. In May 1980 Iraq had provided an $50 million loan for the expenses associated with establishing this military/technical university. 78 In a slightly new twist, in early February 1981 Saddam gave a $100 million grant to the Jordanian Ministry of Information. This was one of the first, but certainly not the last, of such moves by the Iraqi president. It became a pattern in the 1980s as he carefully sought to cultivate journalists throughout the region. Stories of gifts of cars and money to journalists visiting Iraq were not uncommon.
In late February Jordan's Minister of Labor Jawad 'Anani went to Baghdad for three days of talks aimed at expanding cooperation in the spheres of labor and social security. During his stay he signed an agreement according to which Iraq offered a loan of $3.3 million to the Jordanian Social Security Corporation to meet the basic requirements of social security in Jordan. 79 Iraqi money continued to flow during the spring of 1981: on March 16 Baghdad contributed 200,000 dinars to the Federation of Charitable Societies; on March 25 the Iraqi Awqaf Ministry contributed 55,000 dinars to a number of Islamic centers; and on April 4 it gave 1 million dinars to the Queen Alia Fund. 80
To help fund the Jordanian five-year plan, the Iraqis agreed to provide $10 million for the thermal power station at Aqaba and $5 million for the Amman sewage and waste system project, through a loan from the Iraqi Development Fund. 81 In November it was reported that Iraq, which had been urging Jordan to diversify its arms suppliers, would help to pay for a $200 million SAM-6 anti-aircraft missile system that the kingdom planned to buy from the Soviet Union. 82 However, these were among the last exhibitions of Iraqi generosity.
TRADE
At the beginning of this period Jordanian suppliers were quick to seize upon the export and market opportunities offered by an Iraq at war. Jordanian firms reportedly received preferential treatment from the Iraqi government, with tenders of 15 percent more than the lowest bid accepted. 83 Jordan's Trocon (TransOrient Engineering and Contracting Company) was appointed the main contractor for stages eight and nine of the Baghdad University expansion scheme. 84 In early summer 1981 a $13.3 million contract to build irrigation and drainage networks for the Kamaliyyah project also went to an unidentified Jordanian company, 85 and in September, Jordan's International Contracting and Investment Company (Icico) won a $7.5 million contract to build an agricultural museum in Baghdad. Icico was already working on a $25.4 million contract to build high-rise apartment buildings for the Baghdad municipality. 86 Trade statistics showed Jordanian exports to Iraq up from $86.7 million in 1980 to $184.8 million in 1981. At the same time, imports remained low: $6.8 million in 1980, dropping to $2.2 million in 1981. 87
Despite Arab assistance, which was itself declining, the war was beginning to take its toll on Baghdad. In mid-1982, Iraq suddenly closed its markets to Jordanian products and canceled all contracts with Jordanian merchants, transport companies, and contractors as part of an austerity program aimed at cutting imports in half. By 1983 "only those projects capable of aiding the war effort or expanding Iraq's potential for increased oil production and export were receiving funds." 88 Jordanian exports to Iraq suffered considerably. While Jordanian exports to Iraq in 1982 remained close to their 1981 level at $193.8 million, in 1983 they dropped to only $72.8 million. During the same period, Iraqi exports to Jordan, which stood at only $2.7 million in 1982, jumped to $13 million in 1983. 89 In an attempt to preserve markets and protect Jordanian suppliers from potentially disastrous results, in late March 1983 (about the time of the drop in Arab aid to Iraq) 90 the Jordanian government made $65 million in short-term credit available to finance Iraqi imports of Jordanian goods: $45 million of the Jordanian credit was to be used to pay for Iraqi imports of Jordanian-made goods; the remainder was to support the service sector and joint ventures.
In August 1983, probably in response to the import credit agreement, Iraq's State Organization for Consumer Goods signed purchase agreements with 102 Jordanian companies for goods valued at $13.5 million. 91 About a month later, the Jordanian Ministry of Trade and Industry proposed that to reduce the Iraqi trade deficit, Jordanian companies buy $35 worth of goods from Iraq for every $100 of Jordanian goods bought by Iraq. Iraq would finance its purchases through confirmed letters of credit. The proposal promised not only to help correct the trade imbalance, but also to enable Iraq to dispose of surplus goods while also reducing the cash Iraq needed to finance its imports from Jordan. 92
In late December, in response to Iraq's continuing budget problems, Amman agreed to provide Baghdad with another $125 million in credit for 1984, again, to be used to buy Jordanian goods or to pay debts owed Jordanian companies working in Iraq. This credit was offered on terms similar to those of the previous year: half of the amount was to be at repaid at 6 percent interest, while the remainder was interest free. 93 Probably as a direct result, shortly thereafter, clothing export contracts valued at a total of $5.5 million were won by representatives of Jordanian firms in Iraq. 94 As a further measure to facilitate trade with a financially strapped Iraq, in May 1984 Jordan's Arab Potash Company proposed a commodity agreement according to which the Iraqis would pay in sulfur. 95
INDUSTRY AND JOINT PROJECTS
Plans for joint ventures continued in the early part of this period, before the severe economic problems set in. For example, the joint ministerial meetings in April 1981 again discussed establishing a Joint Iraqi-Jordanian Company for Industry as well as possible Iraqi participation in Jordanian projects in yarn and weaving and in a cement factory in the south. The Jordanians presented a draft of bylaws for the joint industrial company and the yarn and weaving company, the capital for which was to reach 4 million dinars: Jordan was to provide 2.1 million and the Iraqis 1.9 million. As for the Southern Cement Company, the Jordanian side suggested that the Iraqis contribute 15-20 percent of the capital. The Iraqis welcomed in principle the establishment of the Iraqi-Jordanian Company for Industry and participation in both projects. They then further suggested establishing a joint food canning plant to support trade and help lead to greater economic integration. 96 An agreement on the industrial company was finally signed in September 1982. 97
AQABA PORT AND TRANSIT TRADE
By early 1981 Jordan had already become the main supply route for war materiel and civilian goods imported by Iraq, and appeared to be holding up well under the strain of massive expansion. 98 Pressure on the Aqaba port following the closure of Iraq's Gulf ports in late 1980 was substantial, as an average of 80 vessels with Iraq-bound cargo were waiting to unload at any given time. The resulting delays reached up to three months. In late December, therefore, the Iraqi government dispatched a special committee to Aqaba to organize the unloading of perishable and vital cargoes. 99 To facilitate transit and trade further, in March 1981 a delegation from the Iraqi Development Fund met with officials from the Jordanian Ministry of Public Works to discuss financing both the $62.3 million 140-kilometer desert highway from Suwaqa (south of the capital) to Ma'an and the $30 million 90-kilometer road from Juwaydah to Muwaqqar and Azraq. 100
In October 1981 Jordan reported agreement on $4.5 million of a May 13, 1980 $10 million loan from the Iraqi Development Fund for a project to increase the absorptive capacity of the Aqaba port. There was also an agreement to increase the volume of Iraqi goods received at Aqaba port to 3 million tons. 101 A further indication of the importance of the overland routes and the desire for expansion came in May 1982 when a team of Iraqi experts visited Jordan to discuss building a railway between Aqaba and Baghdad, primarily to transport goods between the port and the capital. 102
In August 1982 it was announced that the IJLTC had postponed plans to double its fleet to 1,500 vehicles. Negotiations with several firms had been underway; however, the company decided to concentrate instead on increasing the efficiency of the existing fleet. 103 This may well have been in response to Iraq's new austerity measures. However, the company did announce profits of $36.7 million for 1982. It had carried 940,000 tons of goods in 1982 and planned to increase this to 1.5 million tons in 1983. 104
OIL
While Jordan had long received its petroleum needs from Tapline from Saudi Arabia, the war's disruption of Iraqi refining capabilities as well as Baghdad's increasing budgetary difficulties, which rendered making payments for imports in foreign currency increasingly difficult, ultimately led to the introduction of oil as a critical commodity in the bilateral relationship. By late fall 1980, damage to Iraqi oil installations from Iranian bombing was already extensive. The 140,000 b/d Basra refinery and the 100,000 b/d Dura refinery were reported to be nonfunctioning. Other early victims of Iranian air attacks included the Khor al-Zubayr petrochemical complex, the Faw oil terminal, the 30,000 b/d Kirkuk refinery, pumping stations on the trans-Syrian pipeline, oil stations at Khor al-Amaya and al-Bakr, the 10,500 b/d Khanaqin refinery, and a sulfur plant in al-Dura. 105 Domestic shortages of refined products were being met by imports from neighboring countries, including Turkey.
As a result, in the Iraqi-Jordanian joint committee meeting of October 1981, the two sides examined the issue of cooperation in oil exporting and refining. Jordan expressed its willingness to refine an additional 2,000 tons daily of crude oil at the Jordan Petroleum Refinery Company's (JPRC) Zarqa plant for the Iraqi Oil Marketing Establishment if the oil was ensured by Saudi Arabia through Tapline. Only two months earlier, Jordan had offered to help build a terminal a few kilometers south of Aqaba for the proposed Iraqi 1,400-kilometer oil pipeline, but at that point, the Iraqis had called the proposal unfeasible. 106 However, in February 1983 Jordan's Minister of Trade and Industry Walid 'Asfur announced that Iraq had agreed in principle to export Iraqi crude oil through Jordan via a special pipeline to be constructed for that purpose. Two other pipelines were also under discussion at the time: an expansion of the pipeline through Turkey and a new line through Saudi Arabia to the Red Sea. 107 The Jordanian pipeline was to be laid from the Iraqi oilfields across the northern part of the kingdom to its terminal in Aqaba. 108 Details of this proposed pipeline were further discussed during meetings in January 1984. 109 At the time, Jordan was still receiving its petroleum needs from Saudi Arabia through Tapline. However, this supply was scheduled to end in 1985 and Jordan's oil bill was expected to reach $700 million. 110 Hence, in addition to seeking additional realms for lucrative expanded cooperation with Iraq, the Jordanians may well have been testing the waters regarding future (subsidized) oil deliveries from Iraq after the Tapline agreement ended.
Bechtel was the prospective contractor for the project, but there were concerns about the political strings that might be attached to the financing. Jordan was to bear two-thirds of the estimated $1 billion cost of the project and collect transit fees on the oil pumped through the pipeline. However, a potential sticking point in obtaining financing arose when Jordan and Iraq insisted that they would refuse to repay loans if the pipeline was destroyed by sabotage. Both countries believed that if the U.S. undertook the financing, it was much less likely that Israel, which they saw as the primary threat, would strike the pipeline. 111
Further evidence of the reality and the potential for cooperation based on oil came at the end of March 1984 when Jordan's Trocon was reportedly about to sign an oil barter agreement with Iraq for payment due on a $110 million contract. Rumors had circulated during the previous two years about Jordanian contractors' receiving payment in oil for Iraqi debt, but the Trocon deal was the first confirmed instance of JPRC using oil from a source other than Saudi Arabia (Tapline). Conclusion of the deal was dependent upon JPRC's agreeing to a price for the oil. 112 In April 1984 a formal and broader oil barter agreement was signed with Iraq and was expected to relax some pressure on Jordan's foreign currency reserves. Jordan was to receive 10,000 barrels of Iraqi crude oil per day in exchange for providing commodities and services. The Iraqi deal was estimated to be worth $110 million and was to last for one year. 113 By June the first quantities of crude had arrived in Jordan.
Discussions of financing for the proposed Iraqi-Jordanian oil pipeline continued in the spring and summer of 1984. The contractor, Bechtel, had requested that the Export-Import Bank consider financing Iraq's one-third share in the project as well as Jordan's two-thirds share. The bank initially appeared more likely to provide funding for only the Jordanian share, although the U.S. Department of State was known to be pushing for a favorable outcome on the financing of the Iraqi portion. 114 At the end of June 1984 it appeared that final negotiations on a full contract award would begin in early July. 115 Ex-Im ultimately committed itself to finance $500 million; the other half of the financing was expected to be raised from other Western sources.
In August 1984 a joint Jordanian-Iraqi team went to London to discuss with American, British, and French financial institutions possible Western loans to build the pipeline. Following the London talks, however, Western press reports focused on the differences between the Arabs on the one side and the Western financiers on the other regarding security for the project. The Americans were evidently not forthcoming on the issue of providing the guarantees sought by the Jordanians and Iraqis. 116 The project was unraveling. The combination of Israeli threats and insufficient security guarantees from the U.S. led Iraq to announce the postponement of the project. 117 Perhaps not surprisingly, then, on September 27 Iraq and two foreign companies signed a contract to implement the first stage of laying an Iraqi pipeline to export crude oil across Saudi territory to the Red Sea port of Yanbu'. 118 Jordan had lost out on the oil pipeline, but the principle and practice of Iraqi payment in oil for services and imports had been established and served to tie the two economies even more closely together.
In the summer of 1981, several possible areas of cooperation with Iraq were being discussed, the largest of which was the proposed scheme for supplying Euphrates water to Jordan. 119 The following March, Iraq reiterated its willingness to provide Jordan (as well as Kuwait and other Gulf states) with water. The cost of the 650 kilometers of pipe, pumping stations, water purification plants, storage tanks, and power supply was estimated at $1 billion for the first stage; a second pipe was projected to be needed ten years thereafter. 120 Jordan's other option for increasing its meager water supplies, the Maqarayn or al-Wahdah dam, had not progressed, most recently, because of tensions in the political relationship with Syria. The proposed pipeline was eventually to carry about five cubic meters of water a second from the Euphrates, although there were concerns in Baghdad that the river's future levels would be affected by dams planned in Syria and Turkey. 121
Summary
Political relations continued to be close during this period. Husayn remained a staunch supporter of Iraq's war effort, going so far as to assemble a volunteer force to fight with the Iraqis. Nonetheless, the king was not alone in the region in his anxiety over the continuation of a war the Arabs had assumed would be of short duration. As the battle dragged on and the political ramifications and the negative economic impact of the war became clearer, the king undertook what mediation he could to encourage the Iraqis to take steps to end the fighting.
On the economic front, 1981 began as a good year with aid, loans, and joint projects high on the bilateral agenda. However as the war continued, and Iraq grew harder pressed economically, particularly after Arab aid to Baghdad dropped, Iraqi aid to Jordan also dwindled, and Jordanian private sector activity, which had boomed after the initial outbreak of war, faced the impact of serious Iraqi austerity measures by mid-1982. To support its exporters, Jordan introduced an export credit program for 1983; and by 1984 it had reached an oil barter agreement with the Iraqis to address further the issue of payments for Jordanian products. Had the war ended shortly thereafter these stopgap measures might have worked. But as the next section demonstrates, Jordan had unwittingly allowed itself to be drawn into a deeper but transformed economic relationship that ultimately severely threatened the very national economic security the relationship had initially been strengthened to serve.
Iraq at War: 1985 to the 1988 Ceasefire
Political Developments
Husayn visited Baghdad at the end of January 1985 for consultations on what became known as the Palestinian-Jordanian February 11 Accord, which provided the bases for a joint approach to future Middle East peace talks. Mid-March witnessed the most spectacular meeting in recent regional history as, only three hours after Egyptian President Husni Mubarak's arrival in Amman for talks, he and the king headed for Iraq. The timing of the visit was significant--the war had recently heated up with the shelling of Basra and other Iraqi cities--as was the fact that it was the first visit by an Egyptian president to Iraq since Camp David, to which Iraq, at least rhetorically, had led the opposition. 122 In response, during the following week, there were attacks on Royal Jordanian offices in three European capitals, apparently by Syrian agents.
In late December 1985, Prime Minister Zayd al-Rifa'i and RCC member Taha Yasin Ramadan signed an agreement whereby a higher committee was to be formed by the two countries along the lines of what had been set up between Syria and Jordan ten years earlier. A number of subcommittees were also established to deal with economic and trade issues as well as with industrial cooperation, energy, transportation, communications, and educational and technical cooperation. 123
Husayn's primary quest during this period continued to be to find a way to end the Iran-Iraq war: the political, economic, commercial, and human toll on the Arab world at large and on Jordan in particular had already reached unacceptable levels. State security threats by Iran, internal instability, drops in expatriate remittances, the decline in Gulf state liquidity and commerce--all had adversely affected the region. The swift defeat of Iran that the king, the Saudis, and the Iraqis had envisioned in the early autumn of 1980 had developed instead into a bloody and costly stalemate.
Husayn briefly visited Baghdad on May 2, accompanied by top political and economic ministers. Bilateral consultations at the foreign minister level took place throughout the summer and Husayn returned to Baghdad at the end of July for a brief meeting, in preparation for the extraordinary Arab summit (to be held in Casablanca in August), and then again in late October. At the time, Syrian-Jordanian reconciliation was underway and Husayn was no doubt eager to reassure the Iraqis about those developments. Husayn was also reportedly involved in trying once again to bring about an Iraqi-Syrian reconciliation. An Arab League team was formed at Casablanca for that purpose; however, according to Ramadan, by the end of December, no progress had been made. 124
The king made official visits to Baghdad on May 13 and 26, ostensibly for a round of talks on the war, but it is just as likely that the talks were part of his efforts to achieve a Syrian-Iraqi rapprochement. He returned to Baghdad for the same purpose on July 19. The two communicated indirectly through envoys and directly by telephone until the king returned on November 28. By this time, however, the attempts at Syrian-Iraqi mediation had again come to naught. Nonetheless, in the spring of 1987 there were rumors, naturally denied, of a meeting between the Syrian and Iraqi leaders on the Jordanian border. Asad and Saddam reportedly did meet in early May at a desert post close to the triangular frontiers of Jordan, Saudi Arabia, and Iraq. But reconciliation continued to prove elusive.
By late summer contacts were underway to convene a summit to discuss the Iran-Iraq war and to try to forge a unified Arab position. Up to that point, Syria had been the major obstacle to convening such a summit because of its support for Iran. In a major triumph for King Husayn, the summit was finally held in early November in Amman. Agreement on the question of the Gulf war was reached as was the position that each Arab state was free to restore relations with Egypt as it saw fit. In the wake of the summit, which Syria did attend, Iraq restored diplomatic relations with Egypt on November 13.
The most important development of the period was that on July 18, 1988, Iran unconditionally accepted Security Council Resolution 598, and immediate steps were taken to implement a cease-fire in the Gulf war. In mid-August Husayn, accompanied by other Hashemite princes as well as other members of the political elite, went to Baghdad not only for talks, but also to congratulate Saddam on his "great victory" in the war. Following these bilateral talks Saddam reportedly presented Husayn with 169 Iranian tanks out of appreciation for his support during the war. 125
Economic Developments
At the beginning of this period, in 1985, Iraq faced the prospect of rescheduling $1.952 billion in principal of previously rescheduled debt to its main creditors: France, Japan, and West Germany. To make matters worse, it was estimated that it was likely to run a record $3.9 billion balance of payments deficit without taking into account any foreign debt repayments. The country had virtually no reserves and budget cutting was not considered a viable option. Budgetary appropriations were directed primarily at completing ongoing schemes already labeled as strategic. The prospect of increased revenues from crude oil through the planned pipelines to Saudi Arabia and Turkey was the only economic bright spot. 126
TRADE
Up to this point, Jordan had benefited in three major ways from the Iran-Iraq war. The first was through the expansion of Aqaba port into a major import-export facility, serving primarily, but by no means exclusively, Iraq. The second was in the form of the expansion of its transport sector as a result of trucking goods to and from the port. Third was the opening up of the Iraqi market to Jordanian products, to the point where by late 1985 Iraq was absorbing one-third of Amman's exports. (Although if phosphates were excluded the figure was closer to 50 percent.) A quarter of the crude oil handled by the Zarqa refinery was from Iraq, and it was this oil that enabled the government through the central bank to repay Jordanian companies that had provided goods or services to Baghdad. 127
A January 23, 1985 protocol provided for an increase in the trade quota to $41.3 million each for Amman and Baghdad, and for an Iraqi promise to import Jordanian tomato paste, no less than 100 million eggs, and 22,000 tons of phosphates. 128 Beginning May 1, Jordan put at Iraq's disposal another $80 million--$10 million per month--in what amounted to export credits: 50 percent was to be for goods of Jordanian origin and 50 percent for services. By May 31, 1985, Jordan's financing of Iraqi imports through the Central Bank had reached $429 million. 129 The sixth session of the Jordanian-Iraqi joint ministerial committee, held at the end of 1985, called for trade exchange to increase to $750 million in 1986 (a seven-fold increase over the 1984 level), although trade statistics for 1985 showed only $170 million in exports to, and (because of the oil) $188 million in imports from, Iraq. 130
Meetings a year later called for an increase and diversification of trade so that the volume would reach $800 million in 1987, 131 and $900 million for 1988. 132 In the event, exports jumped from $123.7 million in 1986 to $192 million in 1988; imports, on the other hand, skyrocketed from $233.4 million in 1986 to $348 million in 1988. 133 Nonetheless, these figures were still well below the targets set by the joint committee.
The Export Credits Scandal. Trade was certainly booming but trouble was brewing. The problem was first publicly acknowledged in early 1988. A special committee from the Jordan Chamber of Industry's Board of Directors had been formed to study the results of the classification of the products exported to Iraq and those products for which letters of credit had been opened. According to the trade protocols, Iraq was permitted to import Jordanian manufactures of up to a ceiling of $185 million using the Jordanian export credits. However, it was found that a large percentage of these exports were in fact not Jordanian products. 134 Only goods with at least 40 percent of their value added in Jordan were eligible for Central Bank financing. The non-Jordanian products were simply being relabeled as Jordanian to take advantage of the government financing provisions. The Iraqi demand for consumer goods in the mid-1980s after several years of war was tremendous, and the Jordanian private sector's desire to make money was evidently too intense to abide by the law. While no one officially admitted this in interviews, it seems likely, given the relationship between the government and the private sector in Jordan, that Jordanian monitoring of deals had been insufficient, and that powerful individual businessmen probably enjoyed either the tacit support or the willful ignorance of the powers that should have been overseeing such matters.
This problem brought into stark relief Jordan's dependence on its leading trade partner and had a clear and negative impact on the business environment and the economy. 135 It was estimated that Iraq's private sector had opened letters of credit of $240 million in excess of the figure allowed under the protocol after Baghdad lifted the restrictions on private traders as part of a general liberalization of the Iraqi economy. Jordanian officials blamed the Iraqis for inadequate supervision by their government, but the Jordanian private sector was hardly blameless. In talks in April, Iraqi officials suggested that Jordan increase its imports from Iraq or cancel the exports orders, but this solution was viewed as unsatisfactory. 136
The Central Bank of Jordan was supposed to reimburse local exporters for goods going to Iraq worth $185 million. About $130 million had been paid when the licenses were frozen at the beginning of May after it was revealed that letters of credit totaling $450-500 million had been taken out in the first three months of the year. This freeze naturally caused financing problems for Jordanian manufacturers who had stockpiled large amounts of raw materials on the strength of Iraqi orders. Many businessmen were dependent upon the Iraqi market and, in the fashion of a private sector that has long relied upon the state for contracts and support, they urged the Jordanian government to step in. However, an all-time low level of foreign currency reserves at the time made the government reluctant to intervene. Conversely, because of the Iraqi war effort, and the desire to provide both "butter" and "guns," Baghdad preferred to remain aloof. 137
The Central Bank then moved to crack down on Jordanian exporters unwilling or unable to await the findings of the government committee examining the validity of letters of credit (LCs), who had tried to sidestep the export finance problem by arranging barter deals with their Iraqi counterparts. The customs department was instructed not to clear any imports from Iraq not specified in a January 1988 exchange agreement between the two central banks. The agreement specified three categories of imports: oil; barley and dates; and transformers, electrical equipment, and veterinary drugs. No other imports were to be cleared without express authorization from the Central Bank. 138
Jordanian teams went to Iraq for further discussions of the problem in June and July. By August 28, following the Gulf war cease-fire, an agreement was reached to finance the Jordanian exports in excess of the 1988 trade agreement. However, the problem was not officially solved until late October. Iraq agreed to settle letters of credit worth $75 million in excess of the 1988 trade quota agreement of $185 million. Sulfur exports were to cover $15.5 million worth of state-sector purchases. Three stages were agreed upon for covering $50 million in private sector imports: 45 percent of the value of each LC was to be paid from the 1988 protocol; 30 percent of the LC's value was to be forwarded to the 1989 protocol; and the rest was to be paid by the importer after two years. 139 On September 21 the government announced that exports to Iraq would be resumed in early October. 140 But, as we shall see below, the damage was already done, the combined pressures on the Jordanian economy were simply too great, and in the fall of 1988, the Jordanian dinar's value dropped precipitously, constituting the greatest challenge to the country's economic security to date, and ultimately ushering in a new economic and political era.
INDUSTRY AND JOINT PROJECTS
In late August 1985 the two countries' ministers of industry met to discuss increased industrial cooperation. The meetings included the founding session of the Iraq-Jordanian Industrial Company (IJIC). The IJIC was officially established in January 1986 with capital of $20 million, shared equally. Plans were made for the company to begin producing tomato paste in the Jordan Valley and pickled vegetables in Numaniyyah, Iraq by the end of 1986. 141 In January 1987 the IJIC announced its intention to buy a tomato paste factory in Jordan (for about $3.2 million) and a vegetable pickling plant in Iraq for about the same amount. On February 21, 1988, the IJIC decided to establish a Baghdad-based company, to be capitalized at $25.8 million. 142
In January 1985 contacts were underway to organize and coordinate further the process of transporting, unloading, and storing goods destined for Iraq through the port of Aqaba. Re-exports of wheat, barley, and corn were expected to rise to 3.5 million tons in 1985, as compared with 2.6 million in 1984, and several Jordanian companies succeeded in winning contracts to ship, handle, and transport grain in 1985. 143 Despite the already strong relationship, Jordan's Ministry of Transportation continued to promote Aqaba to the Iraqis. Adding to Aqaba's appeal were the facts that transportation costs had been held steady and a free trade zone had recently come into operation.
In addition to the Jordanian-Iraqi connection, Aqaba had also become a key transit point for war materiel going from Egypt to Iraq and for Egyptian workers going to and from Jordan and Iraq. Jordan's restoration of relations with Egypt in September 1984 had provided the necessary political underpinnings to develop further the infrastructural requirements for increased Egyptian-Jordanian-Iraqi cooperation, in the short term to support the Iraqi war effort but in the longer term to increase regional economic cooperation and integration. Indeed, in early November Jordan's Transportation Minister Farhi 'Ubayd announced that Jordan and Iraq had agreed to establish a land-sea route linking the three countries. The line, which was to connect Baghdad and Aqaba by land and Aqaba and Sinai by sea, was to improve communications and transport, as well as boost Arab trade and contribute to Arab economic integration.
As a natural consequence, in February 1986 Jordanian officials discussed the possibility of setting up a joint transport company with Egypt and Iraq. In April the relevant Egyptian committee approved the contract establishing the Arab Bridge Company for Maritime Navigation, the proposed Egyptian-Iraqi-Jordanian joint venture. The company was to engage in all aspects of shipping and maritime transport, including the purchase, sale, operation, and ownership of all types of vessels and means of maritime transportation and sea equipment. The headquarters were to be in Amman and the $6 million capital was to be shared equally among the three. 144
By the end of the war, the number of ships that docked annually at Aqaba port had risen from 1,500 to 2,500, and the Jordanians were concerned about protecting their investments and ensuring continued revenues once the Persian Gulf was no longer threatened. Indeed, the port had already begun to develop its infrastructure to accommodate such new Iraqi exports as sulfur and super triphosphate. To allay Jordanian concerns following the cease-fire in the Iran-Iraq war, the Iraqi government confirmed at the highest levels that the port of Aqaba would remain a principal port for Iraqi imports and exports in the coming years. In return, Amman committed itself to continue to build jetties to process Iraqi commodities and to maintain its practice of exempting these commodities from fines owing to delays, just as had been the case during the war. Iraqi commodities were also to continue to receive import and export priority, and be exempted from storage fees. At that point the number of trucks operating on the Aqaba-Baghdad line totaled 12,500, meaning that Aqaba received 800-1,000 trucks daily, carrying 25,000- 35,000 tons of cargo. 145
OIL
Oil cooperation further increased during this period, as Iraq became a major supplier to Jordan. On January 23, 1985 the two countries concluded a protocol on bilateral cooperation in prospecting for, extracting, refining, and distributing oil. 146 In August it was announced that a new berth for exports of Iraqi oil would come into operation at Aqaba by the end of the year, although it was not actually ready until mid-April 1986. About 10,000 tons a day of crude and fuel oil, transported overland from Iraq, were to be exported through the berth, built at a cost of $8 million. 147
Jordan also began to receive limited quantities of finished oil products from Iraq in 1985, first LPG and fuel oil, and then eventually crude oil. As part of the trade protocol, the JPRC was encouraged to import as much as possible from Iraq. 148 By the end of 1985 oil imports from Iraq had reached about 25,000 b/d, meeting 1/3 of Jordan's needs (up from 1/6 of its needs at the beginning of the arrangement). 149 Saudi Arabia and Kuwait stepped in to supply oil to Iraq's other customers. It was confirmed in May 1986 that Kuwait and Saudi Arabia were in effect giving Iraq oil for its customers. In exchange, Iraq agreed to "return" the oil eventually. 150
Political relations remained close and expanded during this period with the crystallization of a Jordanian-Iraqi-Egyptian axis, which had evolved out of a personnel, material, and materiel transport and supply relationship begun even before the assassination of Anwar al-Sadat. Very early in the war effort, Egypt had begun supplying Iraq with weaponry and personnel, and Jordan had served as the transit country. The establishment of the sea-land transport line among the three was further evidence of the importance and raison d'etre of the relationship.
On the economic front, however, the news was less positive. A cease-fire in the Gulf war was not reached until August 1988, and in the meantime, the Jordanian export credits program had been so abused by both the Iraqis and the Jordanian private sector that the ceiling was violated by several hundred million dollars. Before the end of the war, Iraq was uninterested in dealing with the problem. Yet, after the war, its own financial distress put it in no position to help reverse the damage done to the Jordanian economy by the resultant drawing down of Jordan's foreign exchange reserves. By the late summer of 1988, Jordan was again in need of an external financial bailout.
Given the pending economic crisis, why did Jordan not turn to its familiar pattern of alliance shifting to address the problem? To a certain extent it did, as we shall see, by working to establish a more formal alliance with its Iraqi and Egyptian (as well as Yemeni) partners: the Arab Cooperation Council, which was to help address Jordan's growing economic problems through creating a larger market for both labor and goods, greater cooperation and integration. But part of the answer lies in the options Jordan had. Amman was not in the position it had been in 1978, when it was being actively courted by another Arab state with wealth and power. In 1988 there was no alternative alliance partner who could or was willing to offer a better deal. Jordan could only hope to build on the economic basis it had laid in the early and mid-1980s, no doubt assuming that Iraq's extrication of itself from the war with Iran would eventually enable it to return to its pre-war position of prominence and economic power in the region. Unfortunately for the Jordanian regime, the problems were too serious and time was running out.
From the ACC to the Gulf Crisis: 1989 -1990
Political Developments
Shortly after the ceasefire had been officially announced on August 20, it was reported that Jordan was preparing a draft plan on unity to be proposed to Egypt, Syria, Iraq, Lebanon and the Palestinians. Its first stage was intended to develop a system of economic cooperation which would lead to economic integration. 151 Even as early as the disengagement speech (July 31, 1988), the king had alluded to the EC as an example Arabs should follow. The emphasis was on economic integration--an indication of what kind of problems the king knew had to be addressed to maintain the kingdom's economic health and security at the time.
Saddam and the king held two rounds of talks in Baghdad in the fall of 1988, on October 2 and again on November 24. Moreover, during this period Egyptian-Jordanian-Iraqi interaction increased markedly: in early fall, Mubarak made two trips to Iraq in less than 45 days. Husayn undertook numerous trips as well, some of which were part of his mediation between Syria and Egypt but others of which were clearly aimed at creating a regional grouping working toward greater integration. While some commentaries stressed that this grouping was to revive the military concept of an Eastern Front against Israel, the king's and his ministers' statements all focused on the economic benefits that such a grouping would bring. 152 Again, given the increasingly serious economic straits in which the kingdom found itself (by January the IMF had had to be called in to arrange a rescheduling agreement for Jordan's external debts) the economic rationale given for the grouping makes sense.
Husayn returned to Baghdad on February 4, 1989 for a two-day working visit dealing with Arab issues, bilateral ties, and the negotiations between Iraq and Iran. However, the most important development in bilateral and regional relations came in mid-February at a quadripartite summit in Baghdad among Saddam, Husayn, Mubarak, and 'Ali 'Abdallah Salih of North Yemen at which the new regional grouping the king had spearheaded, the Arab Cooperation Council (ACC), was established. The founding of this organization formalized the Egyptian-Iraqi-Jordanian "axis" that had been evolving during the 1980s. From the outset Jordan stressed the economic potential of the ACC: the four states had a combined population of 80 million, total GNP of more than $100 billion, total exports of $15 billion and imports of $30 billion. In its efforts toward greater economic integration, the ACC (in Jordan's calculations) could expand the markets for Jordan's products, increase job opportunities for its skilled unemployed, and open up business opportunities for its private sector. 153
It is also possible that the ACC strategy was akin to the "joint begging" strategy used by Jordan and Syria in the mid-1970s. As we have already seen, the Gulf states are very sensitive about Arab integration or cooperation schemes of which they are not a part, and the Saudis were reportedly extremely unhappy with the founding of the ACC. Perhaps the attempt was also in part intended to coerce the Gulf states into paying to prevent the organization from becoming a vibrant reality. This argument becomes more compelling if one keeps in mind that, in the short term at least (the term in which most decisionmakers think) the members of the ACC were more partners in debt than in anything else, each saddled with staggering obligations to external creditors. 154 If Husayn genuinely thought the ACC could offer short-term economic relief he was either misinformed, desperate, or both.
Whatever the calculations, economic conditions in Jordan only worsened, triggering economic riots in April 1989. Following the riots, Husayn was back in Baghdad on May 11 and 12 to discuss coordination among ACC members. The visit was of particular importance because it preceded both the ACC and the Arab League summits. However, despite pleading for Gulf state support to counter the threat posed by the Likud-headed government of Israel and the growing influx of Soviet Jews into Israel, the king was ultimately disappointed by the summit's failure to extend or renew the support for confrontation states that had been decided more than a decade earlier in Baghdad. The king used the same campaign tactic with Saddam, following the summit, but was promised only that Iraq would give full military support to Jordan if it was attacked. 155
In January 1990, Saddam made a surprise visit to Amman, where his talks with Husayn resulted in the formulation of a joint Jordanian-Iraqi position on the Middle East peace process and on the Palestinian question. The two also reportedly discussed the Egyptian-Syrian rapprochement (ties had been officially restored on December 27, 1989), and Egypt's planned mediation between Syria and the PLO, who had been feuding, sometimes bloodily, since 1983. 156
A few days thereafter, Iraq and Jordan announced that they had decided to form joint military battalions to serve as emergency forces to confront any foreign challenge or threat to either country. The new military organization was based on the formation of special combat units from both the Jordanian and Iraqi armies. 157 A similar report was carried by Radio Monte Carlo in February, regarding a joint air squadron, which was to enable Jordanian pilots to avoid reducing the number of their training hours, a problem triggered by the country's economic crisis. 158 A Jordanian commentary in the semi-official al-Dustur indicated that this was the first step toward establishing a unified Arab military force, in keeping with the calls for a revival of the Eastern Front to confront Israel. 159
Husayn returned to Iraq on February 8 for a working visit, and was back again on March 3 and May 5 for talks. The second round of talks was certainly in part to prepare for the upcoming summit in Baghdad, of which the king had been an avid proponent, again hoping to drum up interest in providing Jordan financial support. However, it was also in the spring that the Iraqi decision to execute the Iranian journalist Bazoft, the alleged Iraqi attempt to smuggle nuclear triggering devices, and Saddam's speech on April 2 regarding burning half of Israel, created an anti-Iraq hysteria in some parts of the West. Analysts' and policymakers' concerns focused on what they saw as the increasing likelihood of an Israeli-Iraqi confrontation.
Of course, ultimately the confrontation that developed was inter-Arab, not Arab-Israeli. As the crisis between Iraq and Kuwait unfolded in July 1990, King Husayn, in his traditional role of mediator, took a very active part in trying to find an Arab solution before tensions escalated further. While clearly sincere and extensive, Jordanian mediation efforts were to no avail. And if Jordan thought it had paid the economic price for a close relationship with Iraq during the Iran-Iraq war, it had seen nothing yet.
Economic Developments
AID
Following the emergency Arab summit in Baghdad, May 28-30, 1990, Iraq was the only Arab state to make a formal commitment in response to King Husayn's plea for aid. Iraq was also reportedly planning to speed up repayment of its debt to Jordan, which at the end of 1989 stood at about $600 million. 160 On June 1, 1990 it was reported that Iraq had decided to give $50 million in financial aid to Jordan for 1990, and would consider additional support in 1991, in response to the May Baghdad summit and its resolutions. 161 Based on these commitments, the king may well have thought he had good reason to bank on Iraqi help in restoring Jordan's economic health, although at this point Jordan had already been involved for more than a year in implementing austerity measures dictated by IMF conditionality to address Jordan's external debt and chronic budget deficits.
Developments in this sector were largely related to the economic crisis in which Jordan found itself and to the existing debt owed Jordan by Iraq from the export credits scandal. On December 17, 1988 the joint committee agreed to raise the level of trade exchange to $900 million during 1989, to diversify the commodities exchanged, and to increase the number of trade centers in each country, allowing the centers to sell directly to the citizens. 162 However, when the committee met a year later, it decided to reduce the level of commercial exchange by $100 million to $800 in 1990. (Iraq was facing a huge foreign debt and Jordan's agreement with the IMF required a reduction of imports.) The agreement also envisaged Amman's importing about $350 million worth of Iraqi crude in exchange for goods and services, up from $300 million in 1989. No mention was made of changing the system of repayment of Iraq's debts to Jordan, but repayment was proceeding at a rate of about $15 million a month. 163
OIL
The year 1988 ended with bad news in this sector, as Iraq announced on December 24 its intention to stop exporting crude oil through Aqaba when the agreement expired on April 30, 1989. By the first of the new year, Iraq had stopped exporting 65,000 barrels of crude oil a day across Jordan and 25,000 across Turkey. The decision was forced by Iraq's commitment to the production quota approved by OPEC, which amounted to 2.64 million barrels a day. 164 However, in mid-January the Iraqis indicated that priority would be given to exporting other Iraqi oil products through Aqaba. 165
In April Jordan reached agreement in principle with Iraq and Saudi Arabia to receive Iraqi oil through linking an Iraqi pipeline running through Saudi Arabia with another pipeline which was then pumping Saudi oil to Jordan. It was estimated that the project would save Jordan $40-50 million a year in transportation costs. At that point, Jordan was receiving about 80 percent of its oil needs (18 million barrels per year) from Iraq. Jordanian estimates placed the cost of the project at about $2 million, although the Saudi estimate was reportedly $6 million. The exact specifications of the project were not released. 166 Further discussions about this oil connection were held in July 1990, but were interrupted by the Iraqi-Kuwaiti crisis.
On June 18, 1989 a joint technical committee dealing with transport issues approved a project to construct a 1,130-kilometer railway between al-Haditha in Iraq and Aqaba at a total cost of $1.887 billion. It was expected that it would transport 2.5 million travelers and 10 million tons of goods a year. In Jordan the project was viewed as a major step toward economic integration among the ACC countries. 167 In August, Iraq, Jordan, and Egypt signed an agreement to establish a closed land transport line for passengers between Baghdad and Cairo, using one coach with an average of one trip daily, through Aqaba and Nuwaybi'. The line was to be operated by the Arab Bridge Company for Maritime Navigation, jointly owned by the three countries. 168
It was also reported in August that 90 percent of the platforms and port resources at Aqaba were still being used for transporting various commodities to and from Iraq, just as they had been during the war. Imports via Aqaba had dropped 8 percent in 1989; however, the Jordanians were still hoping that Iraq would reconsider its decision to stop exporting oil byproducts via Aqaba, given that a special platform costing $55 million had been built to export these products. 169 At this stage, of course, no one could have foreseen that trade and transit through the Aqaba port would be one of the major casualties of the coming Iraqi invasion of Kuwait and the imposition of UN sanctions on Baghdad.
Summary
Even before the end of the Iran-Iraq war, King Husayn had evidently been contemplating the need for a subregional grouping that would promote economic cooperation and integration. With the end of the war, he set out to sell his ideas abroad. Not surprisingly, Iraq and Egypt, Jordan's erstwhile political partners, were key states the king courted: both because of their large market size, but Iraq in particular because of the standing relationship between the two countries, and the hopes (encouraged by Iraq during the war) that those who had stood by Baghdad would benefit from postwar reconstruction contracts. The result, of course, was the ACC. Military cooperation between the two countries was strengthened in its wake, and Iraq did offer financial assistance to Jordan in May 1990, after the 1989 Arab summit had failed to renew Baghdad summit commitments. However, with a war-ravaged economy Iraq was in no financial position to provide the support it had offered in 1979. While Iraq did continue to pay off (in oil) the debt accumulated in the export credits scandal, it nevertheless announced that it planned to cut back on its use of Aqaba facilities, thus threatening to wound further the ailing Jordanian economy.
Given the damage to its own economy caused by the Gulf war Iraq was simply not in a position to provide the economic support the king had hoped for, nor could the ACC, at least in the short term (and, of course, ultimately, there was no long term). Moreover, if a major purpose behind the formation of the ACC was to frighten the Gulf states into providing aid, this strategy also failed. And, despite the king's apparently close relationship with Saddam, he was as surprised as outsiders were by Saddam's next destructive adventure, this time into Kuwait.
Conclusions
Economic Relations
In its attempt to counter Syrian influence in the region by gradually courting Jordan, Iraq's primary economic instruments were grants and loans. It made its first major attempt at winning influence with Jordan (and others in the Arab world) by campaigning for the convening of an Arab summit in the wake of the signing of the Camp David Accords, and by proposing annual oil state support for the confrontation states. Iraq even went a step further by promising to pay the shares of any state that might renege on its commitment. Iraq then proceeded to shower Jordan with smaller grants (some governmental, others officially nongovernmental) and development loans.
Perhaps just as important, and an element that distinguishes the Jordanian-Iraqi relationship, is what may be called the focus on infrastructure development as foreign policy, both economic and political. Both Jordan and Iraq had an interest in the further development and expansion of the Aqaba port and the Jordanian highway system. Since imperial quills had left Iraq with only minimal access to the Persian Gulf, most trade had to enter the country over land from Turkey, Syria, or Jordan. Given Baghdad's standing feud with Damascus, the transit lanes through both Syria and Turkey were subject to closure. Hence, Aqaba and overland routes from Iraq to it, took on greater and greater significance. For its part, Jordan was eager to enhance any infrastructure that raised income, in this case in the form of locational rent, transit, and storage fees, not to mention the increase in employment through the growth of the trucking and hauling sector.
Aqaba's significance grew exponentially following the outbreak of war in the Persian Gulf. Overland transit trade through Jordan became not just a matter of greater convenience: after the war started, Iraqi ports were too close to the frontlines with Iran to be used at all. Aqaba, distant and safe, became Baghdad's main port, and further developing its capacity directly affected Iraqi economic and political security. Again, the Jordanians were only too happy to have such external financial support for facilities which further strengthened their internal economic infrastructure, provided increased revenues and employment, and solidified economic ties with an Arab neighbor.
Two other major infrastructural projects were proposed during this period: an oil and a water pipeline. The proposed water pipeline was intended both to demonstrate and increase Iraqi influence in the area. Clearly an Iraqi initiative, this project appears not to have been seriously considered by Jordanian policymakers, who contended that the kingdom would have been foolish to allow itself to be put in such a dependent position for a commodity as vital as water. The oil pipeline was a somewhat different story, as it appears to have been a project in which both sides were keenly interested. It promised not only to cut Jordan's oil costs, but also to raise further revenues in the form of transit royalties. For the Iraqis, of course, the primary concern was to have an additional, safer facility and exit point through which to export oil. In the case of this project, while both countries wanted Western security guarantees against Israeli attack, it seems the Iraqis, with clear memories of the 1981 bombing of the Osirak nuclear reactor, were by far the more concerned with a possible security threat. Ultimately, in the absence of sufficient assurances, the Iraqis instead struck a deal with the Saudis for a pipeline farther from the Arab-Israeli front.
The war and the significance (and convenience) of Aqaba also opened further opportunities for Jordan to increase its exports to Iraq. While Jordanian businessmen were initially anxious about the negative effect the war might have on commerce, they wasted little time in taking advantage of the besieged Iraqi market. Trade boomed, thanks in large part as well to the supportive policies of the respective governments. Jordan had a desire to expand its markets, both to increase revenues and to further the process of Arab integration it had long pushed, while Iraq, particularly after the outbreak of the war and the closing of its ports, had need of virtually everything. This mutual need and enthusiasm, combined with the continuation of the war and increasing Iraqi financial woes, ultimately, however, did serious damage to the Jordanian economy.
When the Iraqi austerity measures were first announced in 1982, Jordanian exports were hard hit. As a result, Amman instituted a program of extending export credits to Baghdad. This program should be understood as a political or economic tool used with the domestic Jordanian audience in mind: there was little chance of Iraq's abandoning its relationship with Jordan, or even of relations souring, had Jordan cut back on its exports. (Although it is possible that providing continuing access to exports was viewed by policymakers as a way of helping to ensure the steadfastness of the Iraqi populace in the face of war and to ensure a place for Jordanian products in the country after the peace.) More important, the export credits were intended as a form of support for Jordanian businessmen, to help them continue making money by enabling their Iraqi purchasers to continue buying. Since one of Jordan's most important state revenues has been from customs tariffs of various sorts, the state may also have been looking for a temporary way of supporting its own long-term trade (and revenue) relationship with Iraq.
Even before the export credits issue became a scandal, Iraq was forced to begin concluding deals on the basis of bartering, the most important deal being the provision of Iraqi oil in exchange for Jordanian goods and services. It was an exchange that, while clumsy, served both countries' interests. Unfortunately, the war dragged on, and the ceiling on export credits was violated by an import-hungry Iraq and an export-greedy Jordanian private sector. Eventually, Jordan's foreign currency reserves were drained to so low a level that the stage was set for the precipitous decline in the value of the dinar in the fall of 1988. Hence, the economic statecraft, faultily pursued in an effort to shore up Iraq's ability to purchase Jordanian products, ultimately jeopardized Jordan's economic security.
Another tool of economic statecraft was the establishment of joint ventures. Here, as in attempts at trade expansion, Jordan was pursuing its longstanding policy of increasing its own economic security through closer ties and greater economic integration with its neighbors. On an ideological level this was based on implementing the principles of Arab nationalism. On a more practical level, the reasoning was that the development of economic ties would make much less likely the complete severing of ties in the event bilateral relations grew strained. As we shall also see in the case of Egypt, the joint ventures that were most successful were the transport-related ones: the IJLTC and the Arab Maritime Bridge Company. In both cases, the companies served not only an economic need, but, certainly from Iraq's standpoint, a security need as well, since the companies further facilitated the transport of goods and people to and from Baghdad during the war. The other joint ventures appear to have been far less successful. 170
In the case of some of these projects, the Iraqis may well have believed that by binding the Jordanians closer and closer to themselves, they were making less and less likely any meaningful political alliance between Jordan and Syria in the future. However, certainly after the beginning of Iran-Iraq war, it seems most likely that the primary Iraqi concern was to implement policies that directly or indirectly supported the war effort.
The key periods for changing alliances in this relationship were the 1979-80 period and the conclusion of the ACC agreement in 1989.
As we saw in the case of Syrian-Jordanian relations, the Jordanian shift from its close, if by 1980 somewhat troubled, relationship with the Syrians, is best explained by the economic benefits the Iraqis had to offer. Iraq, with a large and relatively well-educated population (estimated at 14 million in 1982) 171 , substantial oil reserves, abundant water supplies, and extensive agricultural land, more than any other Arab state, was blessed with the combination of resources necessary for the development of a strong and diversified economy. Iraq was also clear and forthcoming in its promises of aid at a crucial time for Jordan, following a period in which Rabat-promised aid was not forwarded and the number of years' commitment involved in the Rabat pledges was in question. At this point, Saddam, anxious to play a more central role in Arab politics, pushed for the convening of the Arab summit in November 1978 to address the consequences of Sadat's trip to Jerusalem, and made financial support for the remaining confrontation states a major element in its proposals.
As Syria and Iraq repaired ties in the wake of the Sadat trip, Jordan was not forced to choose between the two. However, as that relationship gradually unraveled in late 1979, and as Syria increasingly faced violence and sabotage at home, Jordan could not remain neutral. With its own relations with Syria already suffering over charges that it was harboring anti-Syrian Muslim Brothers, Amman's desire to build stronger ties with Iraq was incompatible with preserving good relations with Damascus. Given the choice between a Syria that offered military depth, a reasonably large market, but that was plagued with domestic instability, and a clearly economically ascendant and militarily powerful Iraq with tremendous oil reserves, Jordan appears to have made a choice based largely on economics: Iraq over Syria. This is a quite different explanation than that offered by Walt: that a Jordanian-Saudi-Iraqi axis emerged in 1979 to balance Syria and the growing threat from Khomeini's Iran. 172
The relationship with Iraq then blossomed quickly. Grant and loan money flowed freely. The infrastructure relationship discussed above, which had begun well before the official political or economic rapprochement, served as a solid foundation for more sustained infrastructural growth and interdependence. The outbreak of war also contributed to the trend, boosting commercial relations and increasing Jordan's role as Iraq's sole, secure (re)supply route. The ties continued to develop, even in the face of the Iraqi austerity measures of 1982. Moreover, despite the financial woes that the 1988 export credits scandal brought Jordan, and the apparent inflexibility of the Iraqi government in dealing with the problem until the war had ended, relations did not sour. By that time, the commercial, infrastructural, and transit (not to mention military) links were so well developed that shifting economic orientation, had there been an alternative, would have involved major domestic economic dislocations.
Hence, following the war, Amman continued to bank on Iraq-in-reconstruction as a major market for Jordanian goods and services. The establishment of the ACC only further solidified ties, although in a largely symbolic way since even after its first year the grouping constituted little more than proposals for cooperation on paper. One of its major obstacles, beyond the traditional bureaucratic problems, was the growing distance between Iraq and Egypt, each of whom had intended to use the ACC as a vehicle to promote further its own regional influence. In the nascent and, in spring 1990, largely unspoken competition between the two, Jordan continued to lean toward Iraq: despite its considerable debts, Baghdad still had oil and was willing to offer financial support to Jordan at a time when the kingdom was suffering and the other oil states showed little interest. Egypt, of course, could offer no aid. And if security against Israel was truly high on the king's mind, Egypt's peace treaty with the Jewish state precluded its playing a role on that front as well.
By the time the Gulf crisis began, Jordan had been closely tied to Iraq for a decade. Trade relations, military cooperation, grants and loans on both a governmental and societal level made Iraq and its strong man Saddam enormously popular in Jordan. Iraq's role in the export credits scandal was not widely discussed, although Jordanians were well aware that the Gulf states had reneged on their financial obligations to the kingdom. Given such a background, it is not surprising that pro-Iraq sentiments were held and voiced strongly by broad sectors of the Jordanian population as the crisis unfolded. What was more surprising to many was that greater awareness of the tremendous threat to budget security that the failure to join the anti-Iraq coalition posed was apparently not manifested at the decisionmaker level. That episode is discussed in the final chapter.
Note 1: Amatzia Baram, "Baathi Iraq and Hashemite Jordan: From Hostility to Alignment," Middle East Journal 45 (1): 52. Peter and Marian Sluglett argue that Iraq's failure to support the PLO in 1970 was the foundation of the close relationship between Saddam Husayn and King Husayn. See their Iraq since 1958: From Reevolution to Dictatorship (New York: KPI, 1987), pp. 132-134. Back.
Note 2: QER: Iraq, no. 1 (1975): 5. Back.
Note 3: MEED, May 28, 1976. Back.
Note 4: MEED, November 5, 1976. Back.
Note 5: QER: Iraq, no. 4, 1976, p. 5. Back.
Note 6: QER: Iraq, no. 1, 1975, p. 6. Back.
Note 7: MECS, 1976-77, p. 487. Back.
Note 8: Even in the 1950s Jordan had looked to Iraq for financial support, and there had been discussions of unity between the two well before the 1958 Syrian-Egyptian union triggered the announcement of the Hashemite Union in February 1958.) Back.
Note 9: QER: Iraq, no. 4, 1977, p. 7. Back.
Note 10: FBIS, October 11, 1977. Back.
Note 11: MEED, December 15, 1978. Back.
Note 12: FBIS, October 2, 1978. Back.
Note 13: Interview with former Foreign Minister and Prime Minister Tahir al-Masri, July 14, 1992. Back.
Note 14: Interview with former head of Jordanian Intelligence and former Prime Minister Mudar Badran, July 19, 1992. Back.
Note 15: Badran interview. Back.
Note 16: MEED, July 4, 1975. Back.
Note 17: "Protocol Adjusting the Economic and Technical Agreement between the Republic of Iraq and the Hashemite Kingdom of Jordan, June 26, 1975," p. 68 in Hashemite Kingdom of Jordan, Ministry of Industry and Trade, Majmu'at, 2. Back.
Note 18: MEED, February 27, 1976. Back.
Note 19: MEES, March 24, 1976. Back.
Note 20: MEED, August 19, 1977. Back.
Note 21: QER: Iraq, no. 4, 1978, p. 11. Back.
Note 22: It is not always clear in documents or journalistic reports whether the dinar in question is Jordanian or Iraqi. At the time, the Jordanian dinar was worth about US $2.80 to $3.00 and the Iraqi dinar about US $3.30. Back.
Note 23: FBIS, December 26, 1978. Back.
Note 24: Department of General Statistics, Hashemite Kingdom of Jordan, Statistical Yearbook, 1980. Back.
Note 25: MEES, May 21, 1975. Back.
Note 26: "Minutes of the Meeting of the Joint Jordanian-Iraqi Committee, June 27, 1975," in Majmu'at, 2: 69-71. Back.
Note 27: Statistical Yearbook, 1980. Back.
Note 28: "Minutes of the Meeting of the Joint Jordanian-Iraqi Committee, March 21, 1976," in Majmu'at, 2: 72-75. Back.
Note 29: FBIS, April 21, 1978. Back.
Note 30: MEED, July 4, 1975. Back.
Note 32: "Minutes of the Meeting of the Joint Jordanian-Iraqi Committee, June 27, 1975," in Majmu'at, 2: 70. Back.
Note 33: "Minutes of the Meeting of the Joint Jordanian-Iraqi Committee, 7-May 12, 1977," in Majmu'at, 2: 84-88. Back.
Note 34: MEES, March 31, 1975. Back.
Note 35: MEED, June 13, 1975. Back.
Note 36: "Agreement on Economic and Technical Cooperation between the Republic of Iraq and the Hashemite Kingdom of Jordan, June 26, 1975," in Majmu'at, 2:65-67. Back.
Note 37: H-5 is a small town that developed around one of the pumping stations on the old Iraq Petroleum Company pipeline in eastern Jordan near the Iraqi border. Back.
Note 38: MEED, November 21, 1975. Back.
Note 39: MEED, August 19, 1977. Back.
Note 40: FBIS, February 16, 1978. Back.
Note 41: "Minutes of the Meeting of the Joint Jordanian-Iraqi Committee, April 1978," in Majmu'at, 2: 97-113. Back.
Note 42: MEED, February 29, 1980. Back.
Note 43: QER: Iraq, no. 3 (1980): 8. Back.
Note 44: Alan Taylor, The Arab Balance of Power, (Syracuse: Syracuse University Press, 1982), p. 87. Back.
Note 46: Royal Scientific Society, Al-'Alaqat al-Urdunniyyah li-Duwal Majlis al-Ta'awun al-'Arabi, 1974-1989 [Jordan's Relations with the States of the Arab Cooperation Council], (Amman: n.d.), p. 5. (Hereafter Al-'Alaqat al-Urdunniyyah. Back.
Note 47: MEED, February 29, 1980. Back.
Note 48: MEED, May 9, 1980. Back.
Note 49: Royal Scientific Society, Al-'Alaqat al-Urdunniyyah, p. 5. Back.
Note 50: QER: Iraq, no. 4 (1980): 12. Back.
Note 51: Royal Scientific Society, Al-'Alaqat al-Urdunniyah, p. 5. Back.
Note 52: Ibid., p. 5; MEED, September 19, 1980. Back.
Note 53: MEED, September 26, 1980. Back.
Note 54: MEED, March 30, 1979. Back.
Note 55: MEED, April 13, 1979. Back.
Note 56: MEED, May 2, 1980. Back.
Note 57: MEED, October 3, 1980. Back.
Note 58: "Minutes of the Meeting of the Joint Jordanian-Iraqi Committee, March 14, 1979," in Majmu'at, 2: 120. Back.
Note 59: MEED, November 21, 1980. Back.
Note 60: "Developments in the Meeting of the Joint Jordanian-Iraqi Industrial Committee, September 14, 1980," in Majmu'at, 2: 168-170. Back.
Note 61: MEED, February 1, 1980. Back.
Note 62: MEED, February 29, 1980. Back.
Note 63: MEED, April 25, 1980. Back.
Note 64: FBIS, February 20, 1980. Back.
Note 65: "Agreement on Economic and Technical Cooperation Between the Hashemite Kingdom of Jordan and the Republic of Iraq, May 2, 1980," in Majmu'at, 2: 155-161. Back.
Note 66: MEED, November 14, 1980. Back.
Note 67: MEED, August 29, 1980. Back.
Note 68: W. Andrew Terrill, "Saddam's Closet Ally: Jordan and the Gulf War," Journal of South Asian and Middle Eastern Studies 9 (2): 46-47. Back.
Note 70: FBIS, February 9, 1982. Back.
Note 71: MECS, 1982-83, p. 644. Back.
Note 72: QER: Iraq, no. 3, 1982, p. 13. Back.
Note 73: Ibid., no. 1, 1983, p. 11. Back.
Note 74: FBIS, November 25, 1983. Back.
Note 75: FBIS, March 22, 1984. Back.
Note 76: FBIS, October 9, 1984. Back.
Note 77: FBIS, October 8, 1984. Back.
Note 78: FBIS, January 6, 1981. Back.
Note 79: FBIS, February 23, 1981. Back.
Note 80: Royal Scientific Society, Al-'Alaqat al-Urdunniyyah, p. 6. Back.
Note 81: "Minutes of the Meeting of the Joint Jordanian-Iraqi Committee, October 24-26, 1981," in Majmu'at, 2: 197. Back.
Note 82: MEED, November 13, 1981. Back.
Note 83: MEED, September 11, 1981. Back.
Note 84: MEED, May 22, 1981. Back.
Note 85: MEED July 10, 1981. Back.
Note 86: MEED, September 24, 1982. Back.
Note 87: Statistical Yearbook, 1983. Back.
Note 88: Phoebe Marr, The Modern History of Iraq (Boulder: Westview, 1985), p. 301. Back.
Note 89: Statistical Yearbook, 1990. Back.
Note 90: MEED, September 9, 1983. The drop in Arab aid to Iraq resulted from the decline in liquidity experienced by the Gulf states as a result in the drop in oil prices during this period. Back.
Note 91: MEED, August 10, 1983. Back.
Note 92: MEED, September 30, 1983. Back.
Note 93: MEED, January 6, 1984. Back.
Note 94: MEED, February 3, 1984. Back.
Note 95: MEED, May 18, 1984. Back.
Note 96: "Minutes of the Meeting of the Joint Jordanian-Iraqi Committee, April 12, 1981," in Majmu'at, 2: 176-187. Back.
Note 97: MEED, October 1, 1982. Back.
Note 98: QER: Iraq, no. 1. 1981, p. 7. Back.
Note 99: MEED, January 2, 1981. Back.
Note 100: MEED, March 13, 1981. Back.
Note 101: "Minutes of the Meeting of the Joint Jordanian-Iraqi Committee, October 26, 1981," in Majmu'at, 2:191. Back.
Note 102: MEED, June 4, 1982. Back.
Note 103: MEED, August 13, 1982. Back.
Note 104: MEED, March 25, 1983. Back.
Note 105: MEED, November 28, 1980. Back.
Note 106: MEED, August 12, 1981. Back.
Note 108: FBIS February 23, 1983. Back.
Note 109: FBIS, May 21, 1984. Back.
Note 110: FBIS, August 13, 1984. Back.
Note 111: FBIS, May 24, 1984. Back.
Note 112: MEED, March 30, 1984. Back.
Note 113: FBIS, June 13, 1984. Back.
Note 114: MEED, June 15, 1984. Back.
Note 115: MEED, June 22, 1984. Back.
Note 116: FBIS, August 13, 1984. Back.
Note 117: FBIS, August 14, 1984. Back.
Note 118: FBIS, September 27, 1984. Back.
Note 119: "Minutes of the meeting of the Joint Jordanian-Iraqi Committee, October 24-26, 1981," in Majmu'at, 2: 196. Back.
Note 120: MEED, March 12, 1982. Back.
Note 121: MEED, October 12, 1984. Back.
Note 122: FBIS, March 19, 1985. Back.
Note 123: FBIS, December 22, 1985. Back.
Note 124: FBIS, December 23, 1985. Back.
Note 126: MEED, November 9, 1984. Back.
Note 127: The Middle East, October 1985, p. 46. Back.
Note 128: FBIS, January 24, 1985. Back.
Note 129: "Minutes of Meetings of the Fifth Round of the Joint Jordanian-Iraqi Ministerial Committee, January 21, 1985," in Majmu'at, 2: 226. Back.
Note 130: Statistical Yearbook, 1990. Back.
Note 131: FBIS, December 17, 1986. Back.
Note 132: FBIS, December 15, 1987. Back.
Note 133: Statistical Yearbook, 1990. Back.
Note 134: FBIS, May 12, 1988. Back.
Note 135: MEED, May 13, 1988. Back.
Note 136: MEED, May 13, 1988. Back.
Note 137: MEED, May 27, 1988. Back.
Note 138: MEED, June 17, 1988. Back.
Note 139: MEED, November 4, 1988. Back.
Note 140: FBIS, September 21, 1988. Back.
Note 141: MEED, August 23, 1986. Back.
Note 142: MEED, February 27, 1988. Back.
Note 143: MEED, January 18, 1985. Back.
Note 144: FBIS, April 3, 1986. Back.
Note 145: FBIS September 27, 1988. Back.
Note 146: FBIS, January 24, 1985. Back.
Note 147: MEED, August 17, 1985. Back.
Note 148: Interview with Sa'd al-Tall, Director-General of the Jordan Petroleum Refineries Company, July 13, 1992. Back.
Note 149: MEED, January 18, 1986. Back.
Note 150: MEED, May 10, 1986. Back.
Note 151: FBIS, August 31, 1988. Back.
Note 152: FBIS, 12 and December 15, 1988. Back.
Note 153: MECS, 1989, p. 470. Back.
Note 155: FBIS, January 16, 1990. Back.
Note 156: FBIS, January 24, 1990. Back.
Note 157: FBIS, January 29, 1990. Back.
Note 158: FBIS, February 20, 1990. Back.
Note 159: FBIS, February 20, 1990. Back.
Note 160: MEED, June 15, 1990. Back.
Note 161: FBIS, June 1, 1990. Back.
Note 162: FBIS, December 19, 1988. Back.
Note 163: MEED, January 12, 1990. Back.
Note 164: FBIS, January 4, 1989. Back.
Note 165: FBIS, January 24, 1989. Back.
Note 166: FBIS, April 25, 1990. Back.
Note 167: FBIS, June 25, 1989. Back.
Note 168: FBIS, August 18, 1989. Back.
Note 169: FBIS, August 11, 1989. Back.
Note 170: Interview with Bassam al-Sakit, former economic advisor to the Crown Prince and Director-General of the Jordan Cement Company, October 8, 1991. Back.
Note 171: Christine Moss Helms, Iraq: Eastern Flank of the Arab World (Washington, D.C.: Brookings, 1984), p. 12. Back.
Note 172: Stephen M. Walt, The Origins of Alliances (Ithaca: Cornell University Press, 1987), p. 145. Back.
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