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Jordan's Inter-Arab Relations: The Political Economy of Alliance Making
New York Chichester, West Sussex
1994
7 Jordanian-Egyptian Relations
Rivalry for regional influence was the key characteristic of relations between these two British client states until the early 1950s. However, following Egypt's 1952 revolution and Gamal 'Abd al-Nasir's "victory" in the 1956 Suez Crisis, the regional balance shifted markedly in Egypt's favor. Subsequent Egyptian policy toward its Arab neighbors, including Jordan, involved instruments that ranged from propaganda to more activist subversion to influence domestic and regional policies. Jordan's King Husayn was a particularly common target because of his geographic proximity and his continuing pro-Western orientation in the face of the Arab nationalist states' preference for nonalignment or the Soviet bloc.
The two leaders did not manage to repair relations until war appeared on the horizon in late spring 1967, just in time to lose huge pieces of their respective territories--the Sinai Peninsula, Gaza Strip, and the West Bank--to Israeli occupation as a result of the June war. Thereafter the gap between the two narrowed further. In September 1970, Nasir succeeded in brokering a cease-fire between the Palestinian resistance and Jordan's Husayn, only to die the following day. Hence, it was not really until Anwar al-Sadat's presidency that Jordanian-Egyptian relations begin to show signs of marked expansion and improvement.
By the beginning of the period under study, Egypt had severed most of its ties with its former Soviet sponsor and had begun to cooperate with the U.S. in a regional peace process so that, on this level, the barriers to greater cooperation between Egypt and Jordan had disappeared. (Although, on a regional level, Jordan's warming relations with Syria prevented a fuller development of ties owing to Syrian-Egyptian tensions.) But the countries shared another characteristic critical to this analysis: both were developing an aid dependence on the Gulf states. In this light, and in terms of the budget security argument, Egypt's value in Jordanian foreign policy considerations derived, not from an ability to offer direct financial assistance, but rather from the more indirect contribution relations could make to Jordanian economic (and other) security through increasing the kingdom's access to the huge Egyptian domestic market. On the one hand, expanded trading and industrial ties with Cairo offered Amman the opportunity to overcome some of the diseconomies of scale that had hindered Jordanian attempts at domestic commercial and industrial expansion. On the other, as was the case in Jordan's relations with Syria, Amman sought to deepen economic ties with Cairo as part of a broader strategy of building economic and political security through developing closer ties with its neighbors. The more extensive the economic links, Jordanian policymakers reasoned, the less likely Egypt might be to sever them at some future date.
The period under study witnessed two major shifts in Jordanian-Egyptian relations, and in both cases this chapter will demonstrate that economic factors played at least a key role, and perhaps the determining one. In 1979, Jordan followed the Arab consensus and broke relations with Egypt. The decision would perhaps seem to have been a foregone conclusion, given the aid promised by the confrontation states and given the negative reception Sadat's peace with Israel had encountered on a popular level throughout the Arab world but especially among Palestinians, many of whom were Jordanian citizens. Nonetheless, whether because the Americans were exerting opposing pressure or because the king simply wanted to temporize a bit in order to make sure that the Baghdad aid did not meet the same fate as had the Rabat aid promised five years earlier, concerns about whether Jordan would go the way of Sadat continued to be expressed through 1980. Ultimately, of course, the consensus held.
Or at least it held for a while. By 1983 the Iraqi market for Jordanian exports appeared to be shrinking, and the restoration of relations with Egypt offered the possibility of some economic relief for the Jordanian private sector. In addition, of course, Egypt had developed into an important source of manpower and war materiel for the Iraqis, using Jordan as overland conduit. Amman was certainly in a position and willing to support the Iraqi war effort, with the clear goal of seeing the war brought to an end. Hence, despite the absence of an official Arab League resolution permitting the restoration of relations with Egypt, Jordan moved ahead in 1984 and formally restored ties with Cairo, the second major shift during this period. The only significant economic and political fallout from this move was a temporary freezing of a then ongoing rapprochement with Syria, a matter that was overcome a few months later. Hence, while the role of political factors should not be ignored, the oft-neglected economic factors can be demonstrated to have had just as significant, if not more significant, a role in decisions regarding alliances shifts.
From Disengagement to Camp David: 1975-1979
Political Developments
The 1973 War, viewed as a victory in the Arab world, gave Egypt's President Sadat a credibility both domestically and regionally he had not previously known. His subsequent move toward disengagement agreements with Israel in January 1974 and September 1975 and his concomitant opening up of Egypt's heavily state-sector oriented economy beginning in 1974 further distanced him from the political and economic legacy of his predecessor, the charismatic 'Abd al-Nasir. What has been termed a "politics of pragmatism" emerged in the region with the 1973 war; however, what was increasingly in question was whether Sadat intended to be a team player or preferred to move ahead on his own. 1
On January 3-4 1975, the foreign ministers of Egypt, Syria, Jordan, and the PLO met in an attempt to coordinate policies, but reportedly achieved little. 2 Syria, already feeling betrayed by Sadat's 1973 war performance, was concerned at this point that Egypt's path toward a second stage of disengagement from Israeli forces in the Sinai portended a break with the Arab consensus. As Jordanian-Syrian relations warmed, Sadat visited Jordan in late May, the first Egyptian president ever to visit the kingdom. Crown Prince Hasan returned the visit in July and Prime Minister Zayd al-Rifa'i met with the Egyptian president on October 19 to discuss the Arab-Israeli conflict. Nonetheless, the state of Syrian-Egyptian relations against the background of growing Syrian-Jordanian ties prevented any real improvement in Egyptian-Jordanian ties at this stage, although Jordan did not join Syria in condemning the second Sinai disengagement agreement between Egypt and Israel, in September 1975.
Beginning in mid-1975, regional attention was focused on the unfolding civil war in Lebanon. Both Egypt and Syria sought to prevent an escalation of the conflict that might invite Israeli intervention or lead to the installation of a new government run by the coalition of Palestine Liberation Organization-Lebanese National Movement forces. However, the two former 1973 war allies differed over the issue of Syrian hegemony in Lebanon, which Egypt naturally opposed. A reconciliation between Syria and Egypt finally came at a mini-summit in Riyadh in October 1976, and then opened the way for an improvement in Egyptian-Jordanian ties.
In November 1976 the two sides agreed to upgrade diplomatic relations from chargé d'affaires to ambassador, but the first major step toward strengthening political ties began with official talks between Sadat and Husayn from January 13-15, 1977. The year was billed as a decisive one, since it had been planned that Middle East peace talks would be convened in Geneva at some point near the end of the year. Commenting on the talks between the two leaders on January 17, Egypt's Foreign Minister Isma'il Fahmi announced that there were no differences in views between the two on an Arab strategy or on the need to establish a Palestinian state. Moreover, in Egypt's view, the relationship to be established between Jordan and the Palestinians (a relationship that was still quite rocky at the time and an issue of some contention) was a matter to be left to the Jordanians and Palestinians to determine. 3
Consultations on issues related to Geneva continued throughout the spring. Discussions focused on developing a joint strategy, although the two sides differed on the proper role for the Palestinians and on the nature of a Jordanian link with the PLO, with whom the king was still feuding. The lack of agreement on key issues was indicated by the fact that no joint statement was issued following the meetings. 4
Shortly before Sadat's surprise visit to Jerusalem, his vice-president, Husni Mubarak, made a trip to Amman, and both 'Arafat and Husayn were in Cairo for several hours of talks with Sadat on November 6. When on November 11 Sadat announced his willingness to visit the holy city, Jordan responded cautiously. As was typical of Jordanian policy, Amman's focus was on the potentially divisive impact the move would have on Arab ranks. Husayn offered an official position on the Jerusalem visit on November 28 in an address to the nation:
Our position was and still is that solidarity among the Arab frontline countries and unified positions are the only means to achieve any sound and just settlement. . . . Although we have our reservations about the substance and form of the Egyptian initiative, we still understand what prompted Sadat to make this decision--a decision that required extreme courage and a break with several traditions, norms, and psychological barriers on which we had built our stance toward Israel and our way of handling the Palestinian cause." 5
Shortly thereafter, Husayn, accompanied by Prime Minister Mudar Badran and Chief of the Royal Court 'Abd al-Hamid Sharaf, went to Cairo. The king expressed his admiration for Sadat's courageous initiative aimed at establishing a just peace in the area, but he again stressed the need for Arab unity and solidarity. 6 This was clearly a response to concerns on the regional level. Jordan's Gulf state financial patrons were among those most likely to support a wait-and-see approach. Had Husayn been reacting to the Jordanian street, he likely would have behaved quite differently, for on a popular level, particularly among Palestinians, there was outrage at Sadat's move. Perhaps in deference to "the street" Husayn declined Sadat's invitation to visit Cairo shortly after the Jerusalem trip, saying that while he always welcomed the opportunity to visit Egypt, nothing new had transpired in Egyptian-Israeli contacts, and hence a meeting was not really necessary. 7 In hopes of selling the initiative, Mubarak visited Amman on January 31 as part of a tour of Arab capitals. However, by late February the Egyptian-Israeli talks were stalled and Husayn began to express pessimism about Sadat's initiative.
In the meantime, in typical consensus-seeking style, Jordan called for the convening of an Arab summit to discuss the new situation created by Sadat's initiative. In practice this meant trying to restore solidarity in the face of inter-Arab divisions over Egypt's discussions with the Israelis. Consultations continued through the summer, although not at the highest level. By then, however, Sadat had made his decision to go to Camp David for discussions with Israeli Prime Minister Menachem Begin, under U.S. auspices. He reportedly called Husayn on September 11 regarding what was transpiring in the talks and had hoped to meet with him afterward in Morocco for briefings on the process. Exercising caution, the king reportedly declined to meet with Sadat until he had learned exactly what had been agreed to at Camp David. 8
What he eventually did learn did not please him, and the king set out on several rounds of diplomacy in October to win support for the Iraqi call for an Arab summit to address the ramifications of Sadat's move. At the Baghdad summit conference on November 2-5, agreement was reached (despite strong Saudi pressures to the contrary) to expel Egypt from the Arab League and impose a boycott if Cairo did sign a separate peace agreement with Israel. At Baghdad II, the meeting of Arab foreign and economic ministers on March 27-31 immediately following the signing of the peace treaty, the Arab states voted to implement the expulsion and boycott decisions.
In keeping with the resolutions of the meeting, Jordan subsequently announced the withdrawal of its ambassador from Cairo and its support for the economic and political boycott of Egypt. The Arab demand was that all economic, financial, and technical aid to Egypt be stopped; that all official and private deposits be withdrawn from Egyptian banks; that all agreements be frozen; and that the Arab League headquarters be moved. This included freezing or terminating Egypt's membership in a wide range of other inter-Arab organizations, companies, and regional funds. In many cases, however, deals already arranged or projects already funded were excluded from the boycott. This was the most serious inter-Arab use of economic statecraft since the imposition of the boycott on Israel in the 1950s.
TRADE
Trade between the two countries remained fairly steady during the early 1970s. Jordanian exports to Egypt hovered around the $1.5 million level and imports fluctuated between $7.5 and $10.5 million. The first sizable jump occurred between 1973 and 1974 as exports jumped to $3.75 million and imports soared to $21.3 million. 9 A trade protocol signed in November 1975 raised the trade share for 1976 from 4.5 million sterling pounds (to which the Jordanian dinar was pegged--$7.7 million) each to £6 million each ($10.2 million), with £400,000 ($680,000) for each country's trade center. 10 The next discussions came more than a year later in February 1977 and a trade protocol was signed increasing bilateral trade by 25 percent over the previous year. 11 At this point, Jordan was one of the few countries with which Egypt continued to have barter relations.
A new trade protocol, concluded in March 1978, was ratified on September 25, in the midst of the Camp David negotiations. The new instrument provided for an increase in the volume of trade between the two to $50 million per year (the currency in which the amounts were expressed had officially been changed to dollars since the last protocol), $25 million for each side. According to the protocol, commodities exchanged between the two were to be exempt from customs duties, fees, and other taxes. Hard currency was also to be used in the exchange. 12 Bilateral trade in 1977 had totaled $35 million. In 1978 it dropped slightly, although Jordanian exports to Egypt increased by 50 percent. However, as a result of the boycott, in 1979 Jordan's exports dropped to just under $668,000, only 12 percent of their 1978 level, while imports dropped by 50 percent. 13
In the 1975 protocol, both countries had agreed in principle to the establishment of a joint Egyptian-Jordanian Maritime shipping company with the goal of increasing trade between the then recently opened Suez Canal and Aqaba. 14 Syrian-Jordanian relations also had an emphasis on joint ventures during this same period, no doubt reflecting similar concerns: access to a larger market, greater economic security through integration with regional partners, and greater national political security through extended economic ties that would presumably make the cutting of ties so painful as to discourage such a move. However, probably for reasons related to excessive Egyptian bureaucracy or to inadequate capital, it appears no real progress was made on this company before the imposition of the boycott in March 1979.
Summary
The tensions in the Egyptian-Syrian relationship triggered by the 1973 war and Egypt's subsequent behavior made a full resumption of Egyptian-Jordanian relations impossible in the early to mid-1970s. The Jordanians were interested, but they had clearly given priority to the Syrian relationship, at least initially because of their desire to rebuild ties in order to prevent a repetition of the costly border closure of 1970. However, the Egyptian-Syrian rapprochement of October 1976 and the subsequent discussions of a 1977 Geneva Conference made a warming of Egyptian-Jordanian ties both possible and necessary. Economic relations during this period were gradually growing, particularly in the sector of bilateral trade. This was a natural development given Jordan's desire to expand economic ties for both economic and political security reasons.
Unfortunately, Geneva was preempted by Sadat's unilateral courting of Israel, to which Jordan initially reacted cautiously. It was not until the general Arab opposition to Sadat's separate peace included the wealthy oil states (who had at first been hesitant) that Jordan's opposition also solidified. The financial incentives from these states (and Iraq) served as a reward of sorts for breaking ties with Egypt. As a result Jordan remained a confrontation state, and the joint economic projects that had been proposed were tabled as Jordan adhered to the Arab League-imposed economic sanctions.
Adherence to Sanctions: 1979-1984
Political Developments
Although the U.S. pressed hard to convince Jordan to join the Camp David process in 1980, Husayn was not convinced. The king repeated numerous times that Camp David contradicted true peace for the region and that there was no future for the treaty. Jordan even forbade Egyptian novelist Nagib Mahfuz and writer Anis Mansur entry into the country because of their support for Camp David. 15 Nevertheless, Jordanian policymakers insist that because of Egypt's economic and political weight in the region, the king never completely closed the door on Cairo. Contacts continued in the hopes of eventually finding a formula to reintegrate Egypt into Arab ranks. 16
The first part of the formula in fact came with Sadat's assassination in Cairo on October 6, 1981. Although his successor, Husni Mubarak, was committed to the peace treaty with Israel, he was not among its authors or signatories. Hence, dealing with him had a much different symbolic connotation than did dealing with Sadat. In early January 1982 it was reported that Husayn had sent a message to Mubarak indicating that he was interested in improving relations. Jordanian officials reportedly conveyed that they had no objection to direct contacts between the two countries and that Jordan understood the Egyptian position and the limitations on it. 17 In mid-January there was even praise in the Jordanian press for Egypt's steadfastness in the face of Israeli demands for compromise on the issue of Palestinian autonomy, the second part of the peace treaty and the part on which no progress had been made. 18 On April 24, 1982 Egyptian newspapers and magazines reappeared in Jordan after a three-year absence. A few days later, in a speech before the National Consultative Council (NCC) as the Israelis were completing their withdrawal from Sinai, Husayn called for the return of Egypt to the Arab fold. 19 However, soon thereafter, Arab attention turned to Lebanon, which Israel invaded on June 6.
In the wake of the Israeli invasion and the announcement by U.S. President Reagan of his peace plan on September 1, Egypt's Minister of State for Foreign Affairs Butrus Butrus-Ghali argued that the Reagan Plan superseded former agreements, including Camp David, and that Egypt would not participate in tripartite talks with the U.S. and Israel unless they were held within a new framework. This statement followed that by Egyptian Minister of Defense, Field Marshall Abu Ghazalah, which called on the Arabs to comply with a unified strategy to confront the Israeli threat. The Jordanian understanding of the statement was that the Egyptians viewed Camp David as outdated and that Cairo still considered Israel to be the main threat to all the Arabs, including Egypt. 20 Both countries were clearly interested in restoring ties, although each had different priorities: Jordan, the economy (see below); Egypt, expanding the peace process, and returning to the Arab fold.
Shortly thereafter, Butrus-Ghali arrived in Jordan on a short visit as part of Egyptian-Jordanian consultations on a common vision of the future of the occupied territories before King Husayn's visit to Washington on December 2. Mubarak's adviser Usama al-Baz and Butrus-Ghali visited Amman in February 1983 for consultations and on March 7 Mubarak and Husayn met in New Delhi at the nonaligned summit. In mid-October there was a call in the Jordanian press for Egypt's return to the Arab fold. 21 Shortly thereafter, Egypt's Middle East News Agency (MENA) announced that it had decided to open an office in Amman as of November 1, 1983. 22
Nonetheless, Jordan did not appear willing to break with the Arab consensus and officially reestablish political ties with Egypt. In November, in response to a question on Egypt's possible return to the Arab fold, Minister of Foreign Affairs Marwan al-Qasim indicated that any position reached collectively by the Arab League could be changed only by a similar Arab decision at the same level. 23 The fact that PLO Chairman Yasir 'Arafat stopped in Egypt on December 22, 1983 after his evacuation from Tripoli, Lebanon may well have made expanding ties a bit easier by giving Mubarak a certain legitimacy in (some) Palestinian eyes. On January 2, 1984, Husayn again received Usama al-Baz, who delivered a message from Mubarak on efforts to reinvigorate the peace process and on the results of talks the Egyptian president had had with 'Arafat during his then recent visit to Cairo. Later in the month Minister of the Royal Court 'Adnan Abu 'Awdah visited Egypt for discussions with Mubarak. About this time it was reported that Egypt had played a critical role in developing an approach in which Jordan and the PLO, with Arab and Islamic support, would try to persuade Western Europe to act as an intermediary and call for an international conference in which all parties to the conflict, including the U.S., Israel, the USSR, and the PLO, would participate. 24
Jordan's position had been to adhere to the Arab consensus regarding Egypt, but not to close all doors. Given its manpower, as well as its military, economic, and cultural importance, Cairo could not be ignored forever, and Jordan wanted a clear, unified Arab policy for its future return. Even before Sadat's assassination Egypt had been serving as a supplier of war materiel to Iraq, and Jordan clearly saw both Egypt's role and strengthening these growing ties as critical to overcoming the weaknesses in Arab ranks caused by the war. Although the warming of Jordanian-Egyptian relations helped the Iraqis, the Iraqis themselves were unwilling to take formal steps to improve ties at that point. Saudi policy at the time was less clear, but as always was opposed to further exacerbating Arab divisions, this time by possibly upsetting the Syrians. Therefore, Jordan had to balance its desire for expanding ties with Egypt with concerns regarding how negative the Syrian response would be. 25
A flurry of diplomatic activity between the two served as a prelude to the September 25, 1984 Jordanian restoration of ties with Egypt. The official announcement stated that Jordan, "out of its appreciation for the cohesion of Arab Egypt--leadership and people--with the struggle of the Arab people of Palestine, Iraq, and Lebanon and so that the transient alienation will not turn into a permanent fact to be exploited solely by our enemy, has decided to restore political and diplomatic relations with the Arab Republic of Egypt. . . . " 26 Although Jordan had clearly been moving in this direction, testimony indicates that apparently the king made a unilateral decision which took his advisers by surprise. Most members of the Jordanian government had supported the reestablishment of political relations with Egypt, but had felt the issue needed more study. 27
Jordan was quick to stress that the restoration of ties did not mean that the country's position on the Egyptian-Israeli peace treaty had changed. Nonetheless, Amman still had some explaining to do to justify its position to other Arab states. A Jordan Times article argued that the resumption of diplomatic relations with Egypt lays to rest to some extent the fiction of the Arab boycott of Egypt. If the boycott has shown anything, it has been that the Arabs need Egypt, more than Egypt needs the Arabs. It is noteworthy that the break in diplomatic relations meant very little in practical terms, as bilateral trade, labor, education, tourism, and military relations were maintained between Egypt and most of the other Arab states. 28
This was confirmed by Jordanian policymakers. Trade ties had never been completely severed and Husayn felt more harm than good would have been done by keeping Egypt completely out of the Arab picture. The assessment was certainly self-serving, as the economic discussion below makes clear, but it also contained a certain degree of truth. While states such as Saudi Arabia voiced their displeasure at the reestablishment of ties, the displeasure was largely superficial and again resulted from the Saudis' unhappiness with any step that caused open friction in Arab ranks. Other Arab states had been reestablishing ties tacitly, which is more the Saudi style. The Jordanians were simply the first to do so officially. 29
Economic Developments
Although some private-sector money continued to flow into Cairo, 30 from 1979 through 1981 Jordanian-Egyptian economic interaction markedly declined. Jordan's central bank instructed commercial banks and moneychangers that they were to observe a "complete ban" on trade with Egypt. 31 The only exemptions from this ruling were for imports from Egypt already in transit or for which letters of credit or import licenses had already been issued, or for personal effects and gifts with no commercial value. 32 In 1980 Jordan exported a mere $8,182 worth of goods and imported only $14.7 million, 50 percent of the 1979 level. 33
Despite Jordan's official adherence to the economic sanctions, in early April 1979 it was announced that EgyptAir would resume services to Amman, with ten flights a week. The flights had been suspended on March 27 when Jordan withdrew its ambassador from Cairo. Moreover, Jordan continued to grant work permits to Egyptians: in September 1979 the Ministry of Labor announced that it had issued 15,000 work permits to Egyptians, 34 who tended to fill agricultural, construction and domestic service jobs that Jordanians refused. In January 1982 it was reported that, in response to an Egyptian move allowing Jordanian citizens to enter the country without prior visas, Jordan had decided to exempt Egyptian labor in Jordan from residence laws. 35 At the end of 1982 the Minister of Labor issued a decision calling for exempting Egyptian workers from obtaining work permits for Jordan. 36
Egyptian willingness to cooperate during this period is easily understood, as any exception to the general boycott must have been seen as a source of legitimacy and as a potential building block for the future reestablishment of full ties. For Jordan's part, the role of Egyptian labor in its (and the Iraqi) labor markets was already too important to take measures against it. Boycotting Egyptian labor would have badly hurt the Jordanian agricultural sector, and forced price increases in such industries as bread baking, which have food security implications. The dismissal of Egyptian labor would also have increased prices in the construction industry, for example, and led more families to bring domestic labor from South Asia. Hence, the importance of Egyptian labor to both Jordan and Iraq continued to grow, even during the early years of the boycott.
REVIVAL OF TRADE
On April 9, 1983 a Jordanian delegation from the Ministry of Trade and Industry arrived in Cairo for talks. This was viewed as a Jordanian-Egyptian attempt to resume trade exchange. 37 At this point, the Jordanian government determined that the Arab League boycott applied only to the public sector, thereby freeing the private sector to trade with Cairo. Only those Egyptian companies violating the anti-Israel boycott remained off-limits to the Jordanian private sector. 38 On April 15, trade relations were reestablished between the two countries through the conclusion of an agreement that reactivated the March 1978 protocol. At these meetings Jordan extended an invitation to an Egyptian economic delegation to visit Amman in the near future to discuss means of boosting bilateral trade ties. The two sides agreed that a joint committee would meet in the autumn to review economic ties and introduce the necessary amendments to the 1978 trade protocol.
One major change in the original protocol, which also exempted goods from customs duty, was the suspension of the payments agreement. In the 1970s, Egypt had used this facility effectively to gain large chunks of free credit from Jordan. The new arrangement meant that Egypt would be obliged to settle its bills immediately in hard currency, a clear advantage for the Jordanians. The few quota restrictions on consumer goods that existed in 1978 were also lifted, again to Jordan's benefit, since these were to be its main exports to the Egyptian market. 39
Economically, the restoration of ties was quite significant for both sides. For Jordan, the contraction of the Iraqi market after the initial boom raised the specter of economic decline, particularly for the private sector. The reopening to the private sector of the Egyptian market, the largest in the Arab world, offered the prospects of badly needed relief. For Egypt, the boycott had closed off traditional Arab markets for fresh vegetables and processed foods. To compensate, it had been forced to find other outlets, primarily in the EC. However, the recession and the inclusion of Greece, Portugal and Spain into the EC had made that grouping less likely to take Egyptian products. 40 Hence the reopening of Jordan was a first step for Cairo toward reentering its traditional Arab markets.
Trade protocol talks, scheduled to begin in November 1983, in fact began on December 21, with both sides expressing eagerness to develop ties. The delay was widely believed to have been caused by a dispute about customs tariffs: the previous April, the two had agreed to abolish regular tariffs, yet Cairo continued to exact customs duties on imported Jordanian goods. 41 The protocol signed at the meetings stated that the national products, including foodstuffs, exchanged between the two countries would be exempted from customs and other taxes. 42 In addition to trade, the discussions covered financial affairs, the banking sector in both countries, the conditions of Egyptian workers and investments, and strengthening bilateral communications, especially transportation through the cities of Suez, Nuwaybi' and 'Aqaba. Talks focused on setting up joint projects between Egyptian and Jordanian businessmen, and on establishing a joint transport company to link Egypt with the countries of the Arab East. 43
Despite the hopes of many Jordanian financiers and politicians that moving in the direction of Egypt would trigger a rebound in exports following the virtual closure of the Iraqi market, in the event, Egypt was slow to respond. By August 1984 only two significant letters of credit worth $10 million had been opened for Jordan in Egypt. 44 Of course, at this point, diplomatic relations had yet to be restored. Jordanian exports for 1984, while up to $800,000 from the meager $41,400 the previous year, were still well below the levels of the late 1970s. Imports, on the other hand, rose by more than 30 percent to $17 million. 45
On September 24, a day before political relations were restored, an Egyptian delegation arrived in Amman to discuss the development of trade between the two, to contact Jordanian industrialists about potential deals, and to sign contracts concerning the remaining part of the trade protocol signed by the two countries in December 1983, valued at $10 million. 46 It was later reported that one of the topics discussed by the two sides was the question of building a dock on the Egyptian side of the Gulf of Aqaba to be linked to the Jordanian port. 47 Two weeks later it was decided to establish a Jordanian-Egyptian bank for development to be equally shared by Jordan and Egypt and to have branches in both Cairo and Amman. 48
Summary
Although diplomatic relations were broken in 1979, King Husayn reportedly never completely closed the door on ties with Cairo. The revival of relations, even before the official reestablishment of ties, was possible in part because of the role Egypt played in supporting the Iraqi war effort, in part because of the shrinking of the Iraqi market for Jordanian exports and its impact on the Jordanian private sector, and in no small part by the 1981 assassination of Anwar Sadat. Jordan felt the Arab world needed Egypt, particularly as it was facing a threat from the east, and with Sadat, the author of the peace treaty, gone, it was easier politically to work with his successor. The restoration of political ties in September 1984 was strongly criticized by Syria, and at least rhetorically by the Gulf states, but aside from Syrian subversion against Jordan, no state moved to reprimand or punish Husayn.
On the economic front, Jordan adhered to the letter but not the spirit of the anti-Egypt boycott. It quickly restored flights between the two capitals and Egyptian labor, which served a number of key sectors and played a significant role in several others, continued to be recruited into Jordan. By mid-April 1983, Jordan took what should have appeared to be a bold step in restoring private sector trade relations with Egypt at the same time that it attempted a similar initiative with the Syrians. While the Syrians balked, the success of the new policy toward Egypt went almost unnoticed, a lucky development for the Jordanian private sector, which was in desperate need of alternatives to the war-plagued Iraqi market. Indeed, the security and prosperity of the Jordanian private sector appears to have been a major concern in both of these rapprochement initiatives.
A New Era: 1985 to the Gulf Crisis
Political Developments
The official restoration of ties between Egypt and Jordan was followed on October 9-11 by an official visit to Jordan by Mubarak, accompanied by a delegation including the ministers of foreign affairs, agriculture, information, planning, and the economy. Shortly thereafter, a joint higher committee was formed to draft the Jordanian-Egyptian action strategy and implement the program of bilateral cooperation. 49 Political consultations also continued throughout the fall, including discussions by phone of the controversial 17th Palestine National Council meetings held in Amman in November.
On January 21 Egyptian Foreign Minister 'Ismat 'Abd al-Majid made a one-day trip to Jordan to deliver a message to Husayn and on January 30 al-Majallah reported that Jordan and Egypt had signed a "strategic cooperation agreement" whereby each would provide military assistance to the other in case of a threat. 50 Exchanges of visits by military delegations followed. In an interview, Egyptian Defense Minister Abu Ghazalah stated that the following weeks would witness joint maneuvers of Jordanian and Egyptian special forces, and that Jordanian officers had observed the Egyptian Army's maneuvers between April 7 and 11. 51 The unprecedented joint maneuvers actually took place at the end of June in Egypt's Western desert.
On May 20 Mubarak received Husayn in Cairo on a one-day visit to discuss recent developments, including U.S. Secretary of State Shultz's recent visit to the area. By the fall, however, PLO-Jordanian coordination on the peace process was running into trouble. Egypt continued to stress the importance of Palestinian-Jordanian solidarity, just as it announced its support for the Syrian-Jordanian rapprochement. 52 Jordanian-Egyptian coordination continued at the highest levels, but Egypt did not side openly with Jordan in its feuding with the PLO. 53 Egypt did, however, engage in numerous attempts to reconcile King Husayn and 'Arafat.
Regular contacts and consultations between the two leaders and other high-level officials continued in 1987 on the Iran-Iraq war, Lebanon, bilateral relations, and the proposed but elusive international peace conference. Although Mubarak did not attend the summit held in Amman on November 7, 1987, he nonetheless visited Amman shortly thereafter to discuss the outcome, one important element of which was the decision to allow Arab League states to determine when they would restore relations with Egypt. In early 1988, there were consultations regarding the Palestinian intifada and the Egyptian president outlined a controversial peace initiative to solve the Palestinian problem.
Consultations continued over the latest developments in the Gulf war and over the visit of U.S. Secretary of State Shultz to the region as part of an attempt to deal with the Palestinian uprising. During the summer, Mubarak was reportedly again mediating between 'Arafat and Husayn, and the Egyptian press hailed the July 31 Jordanian disengagement from the West Bank, saying that it would pave the way for the establishment of an independent Palestinian state. 54 By the end of October, the PLO-Jordanian reconciliation had reached the point that the three leaders--Husayn, Mubarak, and 'Arafat--gathered for a summit in Aqaba to discuss the peace process and the options open to the Palestinians.
In early 1989 the bilateral relationship was overshadowed to a certain extent by the establishment of the Arab Cooperation Council (ACC) on February 16 and its subsequent quadrilateral arrangements. Husayn had been working tirelessly since the Gulf war cease-fire for the establishment of a sub-regional grouping that would work to promote greater integration, particularly economic integration, along the lines of the EC. During the previous fall he had shuttled back and forth among a number of states trying to sell the plan. In the end, the Arab Cooperation Council joined Iraq, Egypt, Jordan and North Yemen, states in which Jordan saw the opportunity to expand markets both for its products and its labor. 55
Nonetheless, only two months later, Jordan experienced economic riots and much of the king's attention was by necessity drawn to domestic affairs. The rest of his regionally directed energies during this period concentrated on campaigning for greater Arab attention to the increasing numbers of Jews who were emigrating from the Soviet Union to Israel. Egypt and Jordan continued coordination in the framework of further developing the ACC, but progress there was very slow, with little of substance to show by February 1990, a year and four summits later. Indeed, problems were already beginning to develop. Saddam Husayn was flexing his rhetorical muscle and in effect making a bid for leadership of the Arab world. This constituted a direct challenge to Egypt, which had assumed for itself the leadership mantle after its return to the Arab League in May 1989. Jordan had to attempt to maintain good relations with both, but it was clear from Amman's statements and actions that the tilt was in the Iraqi, not the Egyptian, direction. Jordan's economic ties with Egypt continued to pale in comparison with Jordanian-Iraqi economic relations. Hence, with the war over and with the Iraqi market again open for business, Jordan focused on those potentially far more lucrative ties.
The Egyptian-Jordanian bilateral contacts that took place in the time remaining before the Iraqi invasion of Kuwait were aimed at trying to mediate the Iraqi-Kuwaiti dispute before it deteriorated further. As a result, there was a great deal of ultimately unproductive shuttling back and forth during the final weeks of July 1990. The third major alliance shift in the relationship then came as Egypt lined up with the international coalition, and Jordan opted for neutrality (with a pro-Iraqi tilt) during the Gulf crisis and war.
Economic Developments
TRADE
Only a week after Mubarak's October 1984 visit to Jordan, Crown Prince Hasan arrived in Cairo for a visit which included participation in a seminar on Egyptian-Jordanian cooperation in agriculture and in the exchange of technical expertise. The prince later indicated that the first meetings on the scope of cooperation between Egypt and Jordan had in fact been held about six months earlier, in the absence of official political ties. 56 Subsequently, the joint higher committee began its deliberations on the prospects for cooperation in the economic, trade, tourism, maritime transport, and air transport fields. The meetings discussed means of exchanging technical expertise in extracting and processing potassium, in operating a ferry line between Nuwaybi' and Aqaba, and in the auto and clothing industries. 57
Egypt's desire to reenter Arab markets and Jordan's need to expand its own markets to offset setbacks in its relationship with Iraq were clear in the October 1984 meetings. The agreements reached exempted national products from customs and other taxes and fees normally imposed on imports and exports, and set trade targets at $75 million each, with the goal of eventually reaching an ambitious $500 million. This represented a major, quantitative shift in the history of bilateral economic and trade relations between the two countries, for in 1978, before relations were severed, trade had totaled only about $30 million. 58 The accord also included a shipping agreement to regulate the size of commercial exchange 59 and a call for free commercial exchange in hard currency for both the public and private sectors (according to the laws of each country). The lowest proposed amount was set at $50 million for each side, of which the private sector's share was to be at least $10 million. 60 Despite this apparent encouragement of the private sector by both governments, the fact remained that it was primarily state-sponsored contracts that composed bilateral trade. Private sector-initiated and -directed interaction represented only a small fraction of the exchange.
In early December an agreement on the first consignment of goods to be sold to Egypt as part of the trade protocol was signed: Cairo was to buy $10 million worth of textiles, home appliances, and clothing. However, not much success could be reported on a pending cement deal, as talks broke down over a price dispute characteristic of problems inherent in this and other bilateral trade deals. Egypt's Cement Supply Bureau, which was purchasing from Jordan's Southern Cement Company (SCC), was insisting that Egyptian trucks be used to transport the cement to Aqaba. 61 By April, however, a deal had been struck, as a $110 million barter agreement was signed which included a one million ton purchase from the SCC, to be exported in June 1985. Jordanian prices were reportedly 10 percent higher than international prices, but the quality was reportedly sufficient to make up for the difference. 62
The April 1985 meetings also revised upward the trade targets from 1985's already ambitious $150 million to $250 million for 1986. (The final trade statistics for 1985 in fact showed Jordanian exports of only $7.7 million, which was itself a tenfold increase over the previous year; imports, on the other hand dropped to their 1983 level of $12 million.) 63 The decisions also included a provision allowing the Egyptian private sector to import from Jordan, with the free transfer of money, beyond the share determined in 1984. In addition to contracts with the SCC noted above, and the Jordan Fertilizer Industries Company, the two sides agreed upon the following: putting Jordanian contractors bidding for work in Egypt on an equal footing with their local counterparts; exchanging $5.4 million worth of agricultural goods in the next two months; and encouraging joint ventures. 64 In May 1988 a new agreement was signed raising trade exchange to $350 million 65 , more than twice the 1987 level. It had a $110 million barter component and a $110 million private sector trade target. 66
On January 28, 1989 the joint committee agreed that the size of trade between the two countries would be $350 million annually. 67 However, in the meantime, Jordan was rocked by economic riots, and IMF austerity measures required a cutback in imports. Hence, when the committee next met, on July 15, 1990, the new protocol called for only $250 million of exchange, out of which $80 million was allocated for barter deals. A unique aspect of the 1990 protocol was that it laid down the principle of free trade between the two outside the framework of the protocol: that is, both sides could increase the trade volume between them, although this meant the payment of customs duties on commodities exchanged outside the protocol's framework. 68 The actual trade figures showed a great deal of fluctuation: Jordanian exports to Egypt were $11.4 million in 1986; $40 million in 1987; and $21.4 million in 1988. The level of imports was much more stable: $26.5 million in 1986, $28.7 million in 1987, and $28.8 million in 1988. 69
INDUSTRY AND JOINT PROJECTS
Shortly after the restoration of ties in September 1984, discussions began on a range of joint projects. On February 24, 1985, talks were held regarding the establishment of a joint bank with Egypt by Central Bank of Jordan Governor Muhammad Sa'id al-Nabulsi and a visiting Egyptian team. Agreement was reached and the bank was to be capitalized at $10 million. 70 Two months later, the joint higher committee agreed in principle to establish a holding company, with capital (equally shared) of $50 million. The company was to specialize in establishing joint agricultural, trade, and tourism projects. 71
The next meetings of the joint higher committee dealt with some of the joint ventures in greater detail. On November 26, 1985, it was agreed (again) to establish an Egyptian-Jordanian holding company with $50 million in capital. In January 1986 the two countries formally laid the groundwork for the company, which was to undertake joint investment projects, issue bonds to be marketed in Egypt and Jordan, and market its products in both countries. The new company was slated first to set up a $10 million fishing company, based in Alexandria, Egypt, to help both countries attain self-sufficiency in salt water fish. 72 The following April, meetings of the joint higher committee led to an agreement to establish a joint fodder and meat company and, two months later, the establishment of the joint Egyptian-Jordanian meat production company, with capital of $30 million, was announced. 73 Talks were held in the fall regarding a joint contracting company, using capital from the joint holding company, to win some of the contracts that were then going to foreign contractors. However, the Joint Holding Company was itself just getting started, and its first meeting was not held until the end of August 1987. 74
Clearly, the apparent flurry of joint company discussions did not mean that all was proceeding smoothly. According to July 1988 decisions of the Higher Committee, Jordan had yet to pay its share of the capital of the Egyptian-Jordanian Company for Investment and Development. A year later, a meeting of the Egyptian-Jordanian Holding Company, discussed the (evidently few) steps taken to date to set up a company producing red meat and fodder in Egypt. 75 According to testimony and the written record, most of the joint ventures discussed above had little or no life beyond the founding resolutions. While Jordanians argued that the Egyptian bureaucracy obstructed a great deal, it is also clear that capitalizing these projects was a problem for both sides.
One important exception was in the realm of maritime transport. The Egypt-Jordan link had become important in the early days of the Iran-Iraq war, when Egypt began supplying Iraq with labor and war materiel. As the war dragged on and as Jordanian-Egyptian ties grew, the significance of the transport connection between the two countries increased. In January 1985 the Jordanian and Egyptian ministers of transportation had held talks to discuss how to organize sea transportation between the two. Included in the talks was discussion of a proposed shipping line to link the Aqaba port with Nuwaybi' in the Sinai. The line was to reduce costs for haulers and halve the travel time from Aqaba to Cairo to only nine hours. The line was slated to be operated by a joint venture between the Jordan National Shipping Lines and the state-owned Egyptian Shipping Company. The link was also intended to minimize border procedures and increase tourism and hajj traffic. 76 The final agreement on the line was signed on March 28. On April 25 a trilateral meeting among Husayn, Mubarak and Oman's Sultan Qabus served to inaugurate the new ferry line.
Despite its seemingly auspicious beginnings, the joint venture got off to a rocky start. The company lost $6,500 a day on the line during its first month. Prices were too high and passengers complained about the requirement that they change the equivalent of $150 into local currency upon their arrival in Egypt. 77 In an effort to attract commercial customers and cut losses, the Jordan National Shipping Lines subsequently reduced charges for trucks and refrigerator vans on the ferry by up to 75 percent. Egypt then also agreed to further reductions in charges. 78 Nonetheless, performance was still judged suboptimal. Therefore, in the May 1987 meetings of the higher committee it was recommended that representatives from Egypt, Jordan, and Iraq meet to look into the steps necessary to establish a company run by all three countries to take over the ferry line. The formal establishment of the new company, the Arab Bridge Company, headquartered in Amman and with capital of $6 million shared equally by the three governments, came on December 1, 1987. 79 The new company reported a profit of $1 million in its first six months of operation, and a $2.1 million profit for 1988, with passenger travel up 38.7 percent from 1987. 80
LABOR
On January 30, 1985 Egypt and Jordan signed an agreement for cooperation in the field of labor and manpower. The agreement provided for equal rights and responsibilities for workers from both countries, as well as exchange of information and expertise in the fields of occupational training, social insurance, industrial security, manpower planning, and social development. 81 However, the labor market in Jordan was quite different from what it had been in the late 1970s. A high birth rate, increased educational facilities, and reduced demand for Jordanian labor in the Gulf had gradually led to increasing unemployment in the kingdom. On January 1, 1987 a new ruling came into force according to which Egyptian workers could no longer be employed in Jordan without prior approval from the Egyptian and Jordanian ministries of labor. At the time, Egyptians, numbering about 250,000, constituted the largest expatriate labor force in the country. 82 While the majority of Egyptians in Jordan worked in jobs Jordanians refused to take--as domestic servants or as unskilled laborers in agriculture or construction--this did not seem to figure into what were largely political calculations.
In an apparent about-face, in early summer 1989, the Jordanian Ministry of Labor recommended the abolition of labor permits for nationals of the ACC. But this was more political rhetoric than a serious initiative. Whatever the ministry might say, large numbers of foreign workers remained a politically sensitive topic, particularly as unemployment among Jordanians continued to rise. Moreover, given the economic crisis through which the kingdom was passing and the need to raise revenue wherever possible, the state was unlikely to implement a major revenue reduction policy, which exempting such laborers from permits would have constituted. At the time such permits cost Arab workers $53 per year if they worked in agriculture and $175 for other sectors. Other foreign nationals were paying $530 for such permits. 83
Summary
Political relations during this period expanded to include coordination on the Iran-Iraq war, PLO-Jordanian relations, and the peace process. Egypt's involvement in the war effort eventually led to a crystallization of a trilateral, Jordanian-Egyptian-Iraqi axis, despite Iraq's failure to restore official ties with Cairo at this time. The axis was, however, formalized in February 1989, in the ACC, the organization Husayn hoped (in vain) would further Arab economic integration and alleviate some of Jordan's domestic economic ills.
Bilateral economic ties also developed during this period, and indeed, had preceded the official reestablishment of formal diplomatic relations. Developments in the field of bilateral trade were of particular importance as projections for trade levels were raised dramatically and a new, if still minor role was given to the two countries' respective private sectors. Joint ventures were another matter, however, as the numerous proposals and the semblance of movement really masked minimal progress. Lack of political will and economic crisis certainly played a major role. Only the most economically and politically critical of the ventures, the sea-land transport company, managed, after initial difficulties, to remain active and realize a profit.
Economic Relations
With the largest population in the Arab world (about 45 million in 1977) and increasing at a rate of 1 million every nine to ten months, Egypt constituted the largest market in the region. For Jordanian business, in bad times captive to and in good times constrained by its small domestic market, Egypt offered significant possibilities. Cairo's proximity was an additional, key advantage. In addition, of course, the state and nature of the Egyptian economy meant that while Cairo could serve as a partner in trade and joint ventures, it would never serve as an aid provider. As a result of all these factors, the Jordanians used several types of economic statecraft with Egypt, primarily trade and joint ventures, with the goal of expanding and diversifying Jordan's markets.
The development and expansion of economic links was probably also desirable as insurance against economic or political attacks from a future regime that might be less sympathetic. The imperative here seems to have been somewhat less than in the case of Syria, although that may have been simply because the Jordanians had not previously had the opportunity to develop extensive economic ties with Egypt. Under Nasir, ties had generally been strained, as King Husayn had been a prime target of Egyptian propaganda. Sadat's arrival on the scene and his abandonment of much of his predecessor's program made improved ties possible.
Not surprisingly, then, trade was the first area on which the joint committee focused. Both sides had an interest in principle in expanding trade and to do so required little in the way of additional work or infrastructure. Yet interest and enthusiasm alone were not sufficient to overcome several substantial problems. One was the issue of payment, a result of each country's perennial hard currency shortages. The trade agreement addressed this issue in the following way. An Egyptian who imported goods from Jordan was to deposit payment for the goods into an account in an Egyptian bank; likewise, a Jordanian who imported from Egypt paid into an account in a Jordanian bank. Then, a Jordanian who exported to Egypt was paid from the Jordanian account, just as his or her Egyptian counterpart would be paid by an Egyptian bank. This was one reason why setting and adhering to the quota established by the protocol was so important: if one exceeded the target one was not likely to be paid because no currency was being exchanged between countries. 84
One of the most serious problems plaguing Egyptian-Jordanian trade relations (as well as other inter-Arab trade relations) has been that of the competitive, rather than complementary nature of domestic products. For example, one of the items Jordan was to export to Egypt as part of the $10 million protocol was stoves. By unfortunate coincidence, the Egyptian Ministry of War Production was manufacturing a similar stove, but (according to the Jordanians) of poorer quality. When it became clear that Egyptians preferred to buy the higher quality Jordanian stoves an angry Minister of War Field Marshall Abu Ghazalah reportedly torpedoed the entire protocol. 85
The second economic instrument by which Jordan attempted to promote greater economic integration between the two countries was joint ventures. Here the experience was a bit different than that with Syria. In the case of Egypt, a joint holding company, not several joint government companies, was established. Muhammad Saqqaf, who had been in charge of joint companies, said this was because by the time Jordan began to restore ties with Egypt, the ideological tide had shifted from support for the public to a concentration on the private sector. In addition, waning state financial capabilities in the mid-1980s meant that some projects were threatened from the beginning because of insufficient capital. This was the case with the red meat and fisheries projects. The projects were never launched because neither country was willing or able to pay its share of the start-up capital. 86
The Aqaba-Nuwaybi' line was the one big success story, although not until it was reorganized and run by the Egyptian-Jordanian-Iraqi Arab Maritime Bridge Company. Again, as is clear in the cases of Syria and Iraq, transport companies seem to have a better chance of success than many other ventures. The company required little if any additional infrastructure and served a standing (and, broadly construed, security) need: the transport of passengers and supplies among the three countries.
One element that appears to have been key to the success or failure of economic statecraft in this bilateral relationship was the role of the bureaucracies in both countries. According to participants, if negotiators have been instructed to make things work, they will; if not, they will find myriad problems to block progress. This situation was noted with greatest frequency in discussions of Jordanian deals with Egyptian government officials. One classic example of Egyptian stonewalling concerned the joint husbandry project. The two sides had agreed that a feasibility study was to be undertaken. However, in subsequent discussions of the project, an Egyptian representative contended that the text of the original agreement stated that not the project itself, but the feasibility of studying the project was to be studied first. Although the Jordanians countered that this did not make sense, the Egyptians said that that was the way the requirement read. 87 This and similar incidents transpired during a period when political relations were quite good: high-level bilateral political relations had nothing to do with the problem.
Jordanian sources also noted that the Egyptians often went to negotiations poorly prepared, frequently unaware, for example, of what commodities were already on customs lists. The Jordanians also argued that when a Jordanian team would go to negotiate with the Egyptians, they would be four or five, whereas the Egyptians would arrive with a team of 20 or more, each of whom had his or her own ideas and could veto something, but none of whom had the authority to approve anything. These factors led some Jordanians to wonder how seriously the Egyptian representatives in economic talks or their superiors took such matters. 88 On the other hand, there was plenty of testimony regarding bureaucratic obstruction of implementation or of general lack of concern for follow up on the Jordanian side as well.
What about the most "spectacular" economic statecraft initiative during this period, the Arab boycott of Egypt? The boycott, as well as a decade of substantial financial support for the confrontation states, was first discussed at the Arab League summit in Baghdad in November 1978. However, the sanctions were not immediately implemented, primarily because of pressure from Saudi Arabia. In their concern not to trigger unrest in Egypt, the Saudis convinced the Arab states, led by Iraq, to postpone imposing a boycott unless or until a peace treaty was finally signed, an outcome which was not completely certain at that point. While King Husayn had given Sadat the benefit of the doubt when he first made his trip to Jerusalem, after the signing of the Camp David accords and after the call by the Iraqis for a summit to discuss this issue as well as the issue of increased financial support to the confrontation states, the Jordanians moved closer to the hard-line rather than the Saudi position on this issue. Once the treaty was signed, there was little question about implementing the resolutions of the 1978 summit calling for a boycott: it was a position that stood to win Jordan substantial financial support and it was very popular in the Jordanian street. This issue is further discussed below.
That Jordan was the first state officially to reestablish ties with Egypt is less a reflection of the failure of the boycott than an indication of a general Arab wearying of the Iran-Iraq war and of Jordan's desperation: on the economic front, the Iraqi option had not realized its full potential because of the war; on the political front from a Jordanian perspective, the absence of Egypt from active involvement in Arab politics rendered the Arab world weaker in its battle with revolutionary Iran. Although the Jordanian press claimed that economic ties and political channels had remained open during the early years of the boycott, the boycott actually had hurt both countries. It did not force Egypt to abrogate its treaty with Israel, but, as Baldwin has argued, there are various ways of measuring the success of 89 The boycott did force Egypt to find alternative markets and, just as important, it deprived Egypt of a voice in the politics of the region during a critical decade.
Before concluding this section, a word on labor is in order. Over the years, Jordan developed not only as a major exporter of largely skilled labor to the Gulf; it also became a major importer of unskilled labor, largely from Egypt (and to a lesser extent from Sri Lanka and the Philippines). Jordan's importation of Egyptian labor is an economic policy, but is not really a tool of economic statecraft (although periodic statements from various ministries regarding changing the conditions or cost of obtaining or renewing employment permits may be). Jordan's treatment of its Egyptian guestworkers was of more symbolic than substantive economic import in the bilateral relationship. In some ways, the presence of this labor is more important in Jordanian domestic politics: on the one hand, it is a constant reminder to unemployed Jordanians that large numbers of foreigners work in the country, even if they hold jobs that Jordanians value less than unemployment; on the other hand, the role of this labor in such key sectors as agriculture helps keep domestic food prices low. Employers do not want to be deprived of their cheap labor and Jordanian citizens would not look kindly upon having to pay more for certain basic products if these people were replaced by Jordanians earning Jordanian-level wages.
Economics and Alliances
This survey of fifteen years has covered a warming of relations between Egypt and Jordan in 1976-77; a deterioration leading to the breaking of relations and economic boycott in 1979; a reestablishment of ties in 1983-84, and the formation of a regional grouping, the ACC.
In the case of the developments in 1976-77, the major obstacle to an earlier improvement of relations was the strength of Jordanian-Syrian ties in the context of strained Egyptian-Syrian relations. Why Jordan gave priority to developing relations with Syria rather than Egypt at this particular time has been discussed at greater length in chapter 5. Here, suffice it to say that the economic impact of Syria's 1970 border and air-space closure was still quite fresh in Jordanian policymakers' minds and had done sufficient damage as to make the avoidance of a possible repetition a central focus of policy. In any case, the close ties with the Syrians constrained Jordan only for a while: both testimony and secondary evidence indicate that the Syrians, Jordanians, and Egyptians had made common cause by late 1976 in lobbying the Gulf states for payment of the 1974 Rabat commitments. Thereafter Jordan was freer to expand its own ties with Egypt without jeopardizing its relations with Syria.
As for the deterioration in relations in 1978-79 and the ultimate imposition of the boycott, Jordan has always stressed the importance of Arab consensus, of maintaining unity of ranks. Therefore, aside from considerations of domestic Palestinian discontent or of regional retribution, which may have influenced Jordanian considerations, Egypt's unilateral peace with Israel violated one of the basic principles of Jordan's regional interaction: the need for unity. Of course, one of the primary reasons for such a policy, beyond the king and his advisers' Arab nationalist (of a conservative bent) inclinations is precisely the kingdom's economic and political vulnerability, and the consequent presumption that Jordan's best hopes for survival lie in avoiding what the king calls the "politics of axes" and in building broad coalitions: the safety in numbers theory.
In the case of the boycott, there was not only safety, but also booty, in numbers. Supporting the boycott, and remaining aloof from the Camp David process not only pleased key domestic constituencies for political reasons, it also brought the kingdom the largest promise of Arab aid in its history: at least $1.2 billion a year for ten years. It also was a key element in cementing the still nascent political and economic relationship with Iraq, which had been a prime mover behind the Baghdad summit's call for such support for the confrontation states. The question then arises, would Jordan, in the absence of the promise of such Arab aid, have gone the way of Sadat? Was the promise of aid sufficient to keep the king from contemplating his own separate deal? These questions have been addressed in detail in the chapters on Kuwait and Saudi Arabia, where the outpouring of aid offers in the wake of the treaty and as the Americans tried to pressure Jordan to join the peace process, was discussed. The short answer is that the aid was probably necessary, but not sufficient. To have refused to break ties would have meant forfeiting the promised Arab budgetary support and angering much of the population. To have gone a step further and joined Camp David, as the Americans and the Egyptians wanted, would likely have meant increased American financial support (although one can only speculate whether it would have matched the levels promised by the Arab states), but would also probably have led to an extension of the Arab political and economic boycott to Jordan, which, given the nature of Jordan's inter-Arab economic ties, could well have brought financial ruin. It is unlikely any amount of American aid could have offset the havoc that a comprehensive Arab economic boycott of Jordan would have wreaked. Hence the economic security rationale for remaining outside Camp David in and of itself is quite compelling. Add to that the more commonly noted political rationale for Jordanian policy--the fact that most of the Jordanian population, both Palestinians and East Bankers, would have objected vehemently to going the way of Sadat--and the outcome is in fact overdetermined. Nonetheless, the centrality of the economic factors should not be ignored or downplayed.
What of the restoration of relations, which began with the resumption of trade in early 1983? While it is clear that neither economic nor political ties were completely severed, the timing of the real warming of relations indicates that economic factors played a major role. The primary trigger was Iraq's failure to fulfill its potential as market and aid supplier to Jordan. Not only did the costs of the war turn Iraq from an aid provider into an aid recipient, they also forced Baghdad to implement unforeseen austerity measures. As a result, instead of witnessing a boom in its trade and contracts with Iraq, Jordan and its business sector bore part of the brunt of the shrinkage in Iraqi markets. Jordan then had to scramble for additional markets. The most likely targets were close to home: Syria and Egypt. While the economic results of the move were disappointing, this does not undermine the economic argument regarding why and when the restoration of ties was sought.
Certain political factors did intervene to render the reestablishment of relations more palatable regionally and domestically. First, Sadat had passed from the scene, which meant that the author of the treason was gone. Moreover, Mubarak had been one of the few Arab leaders to provide support to PLO chief Yasir 'Arafat and his people as they fought Syrian and Palestinian opponents in Tripoli, Lebanon in November 1983, which made the Egyptian leader more acceptable to some, both domestically and regionally. 'Arafat's surprise stop in Egypt after his evacuation from Tripoli only reinforced the growing positive impression of Mubarak. Perhaps most important regionally, however, was the increasing support that Egypt had been providing Iraq in its war effort against Iran. This made a reintegration of Egypt more critical and more acceptable to the wealthy Gulf states, who saw in Egypt's contributions to Iraq indirect contributions to their own security.
Hence the political ground was set for Jordan to make such a move if it so chose. Other Arab states were gradually restoring economic and other ties. The timing of the reinvigoration strongly argues for an economic impetus, although the formal reestablishment of political ties a year and a half later, a move Jordanian policymakers felt needed more careful study, was evidently taken by the king unilaterally, and without forewarning.
The final alliance move discussed here, the formation of the ACC should be seen in the context of Jordanian-Egyptian ties as an expression of the kingdom's desire to exploit more fully the potential of the Egyptian market to absorb Jordanian exports. Given Egypt's peace with Israel, Jordan could not have been looking to it for potential military support in the event of armed confrontation with the Jewish state; nor, given Egypt's overwhelming poverty and indebtedness, could the kingdom have been looking to Mubarak for any kind of economic support in the form of aid. Thus, what Egypt had to offer was potentially important for Jordanian producers, but in terms of economic security, it was not as easily parleyed into direct support for the state or the regime as grants and loans were. As a result, as Saddam and Mubarak gradually drifted apart politically in 1990, Jordan continued to stay the Iraqi course.
In conclusion, Egypt has been viewed as and continues to be a large, still underexploited market. Substantial potential for expansion remains, despite the problems with currency regulations and state bureaucratic inertia. Although Jordan was clearly constrained by domestic and regional political forces, there was a strong economic motive in several important Jordanian foreign policy moves toward Cairo. However, in the case of Egypt, the policy has generally been based on the weakness, rather than the strength, of bilateral economic ties. This is similar to the role of economics discussed in the case study of Jordanian-Syrian relations. The low level of economic exchange between the two, combined with the fact that Egypt was not an aid provider meant that Amman's relations with Egypt were influenced first and foremost by its relations with states possessing superior economic resources, resources that could make a more substantial difference to Jordan's budget security. Again, however, this is a quite different conclusion from the standard refrain that economics plays little or no role in inter-Arab politics. The evidence here has again shown economics to be key and often decisive in determining or triggering critical alliance shifts.
Note 1: See Alan Taylor, The Arab Balance of Power (Syracuse: Syracuse University Press, 1982), chapter 5. Back.
Note 2: QER: Egypt, no. 1, 1975, p. 5. Back.
Note 3: FBIS, January 17, 1977. Back.
Note 4: MECS, 1976-77, p. 158. Back.
Note 5: FBIS, November 29, 1977. Back.
Note 6: FBIS, December 9, 1977. Back.
Note 7: FBIS, January 9, 1978. Back.
Note 8: FBIS, September 20, 1978. Back.
Note 9: Statistical Yearbook, 1979. Back.
Note 10: "Protocol number 4, November 21, 1975," pp. 337-38 and "Protocol number 3, October 31, 1974, pp. 325-26, in Ministry of Trade and Industry, Hashemite Kingdom of Jordan, Majmu'at, 1. Back.
Note 11: FBIS, February 17, 1977. Back.
Note 12: FBIS, September 26, 1978. Back.
Note 13: Statistical Yearbook, 1983. Back.
Note 14: "Protocol number 4, November 21, 1975," p. 352, in Majmu'at. Back.
Note 15: 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, 1990), p.36. Back.
Note 16: Interview with former Chief of Jordanian Intelligence and former Prime Minister Mudar Badran, July 19, 1992; interview with former Chief of Jordanian Intelligence and former Prime Minister Ahmad 'Ubaydat, July 14, 1992. Back.
Note 17: FBIS, January 7, 1982. Back.
Note 18: FBIS, January 19, 1982. Back.
Note 19: Royal Scientific Society, Al-'Alaqat al-Urdunniyyah, p.32. Back.
Note 20: FBIS, November 2, 1982. Back.
Note 21: FBIS, October 12, 1983. Back.
Note 22: FBIS, October 21, 1983. Back.
Note 23: FBIS, November 23, 1983. Back.
Note 24: Middle East International, January 27, 1984. Back.
Note 25: 'Ubaydat interview. Back.
Note 26: FBIS, September 26, 1984. Back.
Note 27: 'Ubaydat interview. Back.
Note 28: FBIS, September 28, 1984. Back.
Note 29: Interview with former Foreign Minister and former Prime Minister Tahir al-Masri, July 14, 1992. Back.
Note 30: MEED, August 17, 1979. Back.
Note 31: MEED, May 25, 1979. Back.
Note 32: MEED, May 25, 1979. Back.
Note 33: Statistical Yearbook, 1983. Back.
Note 34: Royal Scientific Society, Al-Alaqat al-Urdunniyyah, p. 27. Back.
Note 35: FBIS, January 7, 1982. Back.
Note 36: Royal Scientific Society, Al-'Alaqat al-Urdunniyyah, p. 27. Back.
Note 37: FBIS, April 9, 1983. Back.
Note 38: MEED, March 11, 1983. Back.
Note 39: QER: Egypt, no. 2, 1983, p. 21. Back.
Note 40: MEED, April 15, 1983. Back.
Note 41: MEED, December 2, 1983. Back.
Note 42: "Letter Number 2, December 25, 1983" and "Letter Number 3, December 25, 1983," in Majmu'at, 1: 403 and 405. Back.
Note 43: FBIS, December 23, 1983. Back.
Note 44: FBIS, August 3, 1984. Back.
Note 45: Statistical Yearbook, 1990. Back.
Note 46: FBIS, September 25, 1984. Back.
Note 47: FBIS, October 15, 1984. Back.
Note 48: FBIS, October 26, 1984. Back.
Note 49: FBIS, October 16, 1984. Back.
Note 50: "Chronology," Middle East Journal, January 30, 1985. Back.
Note 51: FBIS, May 6, 1985. Back.
Note 52: FBIS, November 25, 1985. Back.
Note 53: MECS, 1986, p. 457. Back.
Note 54: Royal Scientific Society, Al-'Alaqat al-Urdunniyyah, p. 40. Back.
Note 55: See Chapter on Iraq. Back.
Note 56: FBIS, October 30, 1984. Back.
Note 57: FBIS, October 22, 1984. Back.
Note 58: Statistical Yearbook, selected years. Jordan exported $4.5 million of goods to Egypt, while Egypt sold $25.5 million to Jordan. Back.
Note 59: "Minutes of the Meeting of October 22-25, 1984," in Majmu'at, 1: 407-409. Back.
Note 60: FBIS, October 30, 1984. Back.
Note 61: MEED, December 14, 1984. Back.
Note 62: FBIS, April 4, 1985. Back.
Note 63: Statistical Yerabook, 1990. Back.
Note 64: MEED, April 26, 1985. Back.
Note 65: "Qararat al-Lajnah al-'Uliya al-Misriyyah al-Urdunniyyah al-Mushtarikah fi-Dawratiha al-Thaminah, Amman, 29-July 31, 1988" [Decisions of the Egyptian-Jordanian Higher Joint Committee]." Unpublished paper from the Jordanian Ministry of Industry and Trade. Back.
Note 66: MEED, August 12, 1988. Back.
Note 67: FBIS, January 30, 1989. Back.
Note 68: FBIS, July 15, 1990. Back.
Note 69: Statistical Yearbook, 1990. Back.
Note 70: MEED, March 8, 1985. Back.
Note 71: FBIS, April 22, 1985. Back.
Note 72: FBIS, January 31, 1985. Back.
Note 73: MEED, April 12, and July 26, 1986. Back.
Note 74: MEED, September 5, 1987. Back.
Note 75: FBIS, July 26, 1989. Back.
Note 76: MEED, March 22, 1985. Back.
Note 77: MEED, June 15, 1985. Back.
Note 78: MEED, July 13, 1985. Back.
Note 79: FBIS, November 23, 1987. Back.
Note 80: MEED, September 23, 1987 and June 23, 1989. Back.
Note 81: FBIS, February 1, 1985. Back.
Note 82: MEED, January 17, 1987. Back.
Note 83: MEED, July 7, 1989. Back.
Note 84: Interview with Michel Marto, Deputy-governor of the Central Bank of Jordan, October 30, 1991. Back.
Note 85: Interview with Raja'i al-Mu'ashshir, former Minister of Industry and Trade, October 14, 1991. Back.
Note 86: Interview with Mansur Abu Hammud, former commercial attache to the Jordanian Embassy in Cairo, October 16, 1991. Back.
Note 87: Mu'ashshir interview. Back.
Note 88: Abu Hammud interview. Back.
Note 89: See David Baldwin, Economic Statecraft, (Princeton: Princeton University Press, 1985), chapter 9. Back.
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