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Jordan's Inter-Arab Relations: The Political Economy of Alliance Making
New York Chichester, West Sussex
1994
8 Budget Security and its Broader Applicability
Throughout the preceding chapters the concept "budget security" has been used to refer to a state or leadership's drive to ensure the financial flows necessary for its survival. The case for adopting the notion of budget security can be made quite clearly and succinctly. Territorial sovereignty cannot be defended against an external threat if there are insufficient funds to pay the troops or buy spare parts. In the same vein, a leadership may be unable to survive a domestic challenge that results from economic disarray or mismanagement.
An understanding of the structure of the domestic economy and, in particular, the sources of state revenue are the clear starting points for determining the potential bases of budget (in)security. Such an approach permits examination, not just of aid or trade, but of all revenue sources together. Trade or external assistance figures may tell very little about dependence or vulnerabilities if not examined in conjunction with other sources of state revenue, so that their relative importance can be determined and the points of sensitivity ascertained.
Jordan, the focus of this study, has been characterized by a heavy reliance on grants and loans from abroad and upon income, such as expatriate remittances, that has little relation to domestic productive forces. Hence, Jordan's drive for budget security has focused first and foremost on securing and diversifying suppliers of assistance, and only secondarily on the protection and expansion of markets. Given the importance of external aid suppliers to Jordan over the years, it should not be surprising that significant developments in its foreign policy, particularly alignment shifts, have in fact had domestic budgetary goals. Demonstrating that link between domestic economic structure and foreign policy has been the primary task of this study.
The case studies have pointed to several important examples of shifts in alignment attributable primarily to the state's or the leadership's desire to protect its revenue sources. It is useful at this point to reexamine the major alignment shifts that have been discussed to review the explanatory power of budget security versus the traditional balancing and bandwagoning approach.
Syria-Jordan, 1975-76
To the extent that this rapprochement is discussed in the literature, it is generally attributed to a number of traditional political motives. One argument holds that Syria was seeking regional reinforcement at a time when Egypt appeared to be moving toward a separate deal with Israel. However, such a conclusion is more easily reached with hindsight: although U.S. Secretary of State Henry Kissinger was clearly working toward further disengagement agreements and was focusing on Egypt, it was not clear at this time that Sadat would move toward a separate peace. (Moreover, the second disengagement agreement was not signed until September 1975.) Indeed, the only opprobrium Sadat encountered at this stage was from Syria, not from the chorus of Arab states that assailed him following Camp David. Another traditional political explanation is that, given the then recent (November 1974) Arab League recognition of the PLO as the sole, legitimate representative of the Palestinians, King Husayn was seeking to counter what had been a blow to his prestige by reviving ties with Syria. Moving out of relative regional isolation (which had resulted from the conflict with the Palestinian resistance in 1970-71) through an alliance with Syria certainly promised to enhance Jordan's regional position, although at the time the Syrians were still openly supportive of the PLO.
But if Jordan was simply seeking to move out of regional isolation or to strengthen its hand regionally, why choose Syria as opposed to another country, such as Egypt, which had to that point been a central force in Arab politics? It is possible that the history of the disastrous 1967 military alliance with Egypt and the resultant loss of the West Bank was still fresh in decisionmakers' minds, making them wary of Egypt. It may also be that the Syrians showed greater receptivity, feeling that they had been betrayed by the Egyptians in the 1973 war. However, none of these political explanations can account for the content or form of the rapprochement, which, in the earliest of the bilateral meetings and agreements, put economic concerns at the top of the agenda.
As the case study demonstrated, Jordanian policymakers insisted that the move toward a closer alignment with Syria was driven by their desire to present a united front to the Arab Gulf states in appealing for assistance: begging in unison made more sense that begging alone. Hence, economic interests were primary. But Jordan's need for reinforcement in facing the Gulf states does not explain its choice of Syria over Egypt, for Cairo was also interested in pressing the Gulf states to pay their Rabat commitments. The other element that was salient from the point of view of Jordanian policymakers was that because of the importance of transit trade (through Syria) to Jordan, a receptivity on the part of the Syrians to Jordan's overtures to improve relations offered Amman the opportunity to develop ties in such a way as to secure an open border and hence the critical trade route. Jordan had no such relationship with Egypt. And, since improving ties with both at the time was impossible because of Egyptian-Syrian tensions, Jordan opted for Syria, which was more crucial to its budget security.
Jordan-Arab States, 1979
Jordan's refusal to join in the Camp David process has received little study, since it has been taken for granted as part of a unified Arab position. Ostensibly for ideological reasons, but certainly also for practical ones, Jordan has always stressed the need for Arab unity and been loathe to act outside the "Arab consensus." In one instance of such a departure, its reestablishment of diplomatic relations with Egypt in September 1984, the king must have been certain of largely rhetorical retribution from other Arab states. However, in the wake of the August 1990 Iraqi invasion of Kuwait (on which, more below), there was another, far more important, "consensus" to which Jordan did not adhere. Therefore, it is worth reexamining Jordan's position on the 1979 boycott and U.S. and Egyptian attempts to enlist Jordan in the Camp David process.
Leaving aside ideological explanations based on Arab solidarity, was Jordan balancing the power and threat of Israel and the United States (and perhaps Egypt) by joining with the other Arab states? That would seem a plausible explanation from the point of view of international relations theory. Or, to offer an alternative explanation, was Jordan bandwagoning because of the threat of Arab sanctions or possible sabotage (both internal and external) had Amman failed to adhere to the sanctions or, worse, joined with Sadat? Since such an explanation also makes sense, it highlights the difficulty involved in trying to make balancing or bandwagoning determinations: the conclusion is determined by one's assessment of the source of the greatest threat and such an assessment may not coincide with that of the relevant policymakers. Rather than asking whence the greater threat, the better question may be, whence the greater incentive?
Jordan eagerly supported Iraq's calls for an Arab summit to address the results of Camp David and, not surprisingly, embraced the Iraqi proposal for increased support for the confrontation states. Whether the king would actually have joined what was begun at Camp David or not remains an open question; however, as the case studies showed, other Arab states did have questions regarding the king's intentions and, in response, forwarded additional aid and loans, presumably to ensure his steadfastness. Ultimately, of course, the king rejected the U.S. approach and lost U.S. financial assistance; however, "in exchange" he had gained a commitment of a decade of far greater support than the U.S. had been offering. In so doing, he also avoided triggering what would certainly have been substantial discontent among both his East and West Bank constituencies.
In the final analysis, Jordan's adherence to the sanctions and avoidance of the Camp David process may have been overdetermined. Nonetheless, an explanation that considers budgetary threats and incentives goes much farther toward explaining the essence of the Jordanian decision than do explanations based on calculations of external threat.
This rapprochement poses perhaps the greatest challenge to balancing and bandwagoning for, examined closely, Jordanian behavior simply cannot be characterized as either. By 1976-77, Iraq was clearly demonstrating its power and its desire to play an active role in inter-Arab politics. However, it was not in any sense threatening Jordan, and hence Jordanian behavior cannot be characterized as bandwagoning. Nor, despite the cooling of relations with Syria, was Damascus threatening Jordan until well after Amman threw in its lot with Iraq. Therefore, neither can Jordanian behavior be accurately described as balancing Syrian power (which was clearly on the wane because of domestic instability) by moving toward Iraq.
Indeed, rather than seeking what one may call negative explanations--explanations based on fear and threat--this, again, appears to be a case of positive incentives that fit nicely into Jordan's heavy reliance on external aid. Iraq simply had more to offer Jordan than did Syria. Syria was also aid-reliant and was increasingly mired in a domestic battle with its Islamists. Iraq's inter-Arab efforts as well as its own willingness to provide support (buttressed by a strong economy and substantial oil wealth) provided powerful incentives to move the kingdom away from Syria and in the direction of Iraq.
Jordan-Syria, 1983-85
Unlike the three cases discussed above, this period witnessed a rapprochement, but not a move toward a more formal alliance as had been concluded in the 1970s. However, again, neither balancing nor bandwagoning captures what was at work here. By early 1983, Iraqi austerity measures began to have an impact on Jordan. The Jordanian private sector had become quickly and intensively involved in the Iraqi market, and the slowdown threatened to hurt Jordanian business severely. In the spring of 1983 Amman extended initial feelers to Damascus, reportedly in connection with a Jordanian desire to convince the Syrians to reopen their part of the oil pipeline that had carried Iraqi crude to the Mediterranean, presumably to ease some of the economic pressure on Baghdad. Recall that this attempt met with little Syrian enthusiasm. Attempts were made again in 1984, during a period when Syria was suffering from a cutback in Iranian oil deliveries, and there was greater responsiveness, although the Syrians drew back after Jordan reestablished ties with Egypt. The final rapprochement did not finally come until late 1985. Again, timing is important: the traditional explanation that Jordan wanted to try to improve relations with Syria because of attacks on its diplomats and to counter the weight of the PLO does not apply to the early period, when the Jordanians first sought the improvement. Only economic factors explain the timing both of Jordan's attempts at rapprochement and Syrian receptivity to them.
Jordan-Egypt, 1983-84
Jordan's reestablishment of ties with Egypt also does not fit balancing or bandwagoning. It is true that Jordan sought the reintegration of Egypt into the Arab world as a way of countering the Iranian threat to the area. But to say that Jordan reestablished ties with Egypt to balance Iran again misses the mark. Jordan was the first Arab state to reestablish official ties with Egypt, and in so doing angered the Gulf states (more because of lack of consultation and for the move's potential for creating further divisions in the Arab world than because of their opposition to Egypt's return to the fold) and Syria. Moreover, the resumption of economic ties preceded the reestablishment of diplomatic ties by about eighteen months. Again, as in the case of Syria, by late 1982-early 1983 the Jordanians were scrambling to make up for losses in their Iraqi export market. Egypt, from which Jordan had been largely cut off since the imposition of the Arab League sanctions in late March 1979, offered a huge potential market that had been of considerable economic significance prior to Camp David. Its size and proximity made it a natural target for expansion.
It is true that King Husayn, recognizing Egypt's importance to Arab politics, tried to maintain some ties with Cairo even after the March 1979 peace treaty. It is also true that Egypt had begun to supply Iraq with war materiel even before Sadat's October 1981 assassination. Again, however, timing and content are important, and the initiation of an economic rapprochement in the spring of 1983 strongly suggests that it was concern for reinvigorating bilateral exchange to make up for the apparent loss of the Iraqi market that underlay the decision.
The ACC, 1989
To a large extent, the announcement of the ACC served merely to formalize the trilateral relationship among Egypt, Iraq, and Jordan (with North Yemen for good measure) that had been evolving since the early part of the decade. Military, political, and economic cooperation were already quite extensive, as the case studies have documented. Can one detect balancing or bandwagoning here? Certainly not as a group, although individual state motivations differ. North Yemen may have been balancing Saudi Arabia, but that appears to be the extent of balancing and bandwagoning. Iraq and Egypt both seem to have intended to use the organization for increased regional power projection. Jordan, on the other hand, may have had some concerns about Israel in mind, but this project was proposed immediately following the Iran-Iraq war, which suggests another set of considerations.
From his first suggestion of what eventually became the ACC, the king called for the establishment of an EC-like model, and argued that regional subgroups should be the first step. He placed primary emphasis on economic integration, and with good reason. In the first place, Saddam Husayn had promised to reward those who had stood by Iraq during the war. Since Amman had been one of Baghdad's staunchest supporters, the Jordanian leadership had every reason to believe that Jordan would be among the first in line for a substantial share of reconstruction contracts. Thus, through the ACC Amman no doubt wanted to ensure and increase Jordanian access to the Iraqi market, not only for the kingdom's goods, which had flooded the republic during the war, but also for its labor, which found fewer and fewer openings in the Gulf states during the 1980s. While closer integration with Cairo did not offer the prospect of employment for Jordanians, nonetheless, Egypt did constitute the largest market in the Arab world; increased efforts toward lowering trade barriers and increasing exchange as the ACC promised could only work to Jordan's advantage. These considerations must all then be placed against the backdrop of increasing unemployment in Jordan and, in the period of the king's campaign for the organization, the precipitous drop in the value of the Jordanian dinar and the rescheduling of the kingdom's external debt with the IMF in January 1989. The ACC's ultimate failure to meet the king's economic expectations in no way vitiates the initial role of these factors in Husayn's calculations.
The Gulf Crisis: The Hard Case?
Any reader familiar with the 1990-91 Gulf crisis and war must have wondered by now how an argument based on budget security can be applied to Jordan's alliance behavior during this period. Indeed, the reader may well be tempted to conclude that Jordanian decisionmaking during this crisis completely undermines the argument. Before explaining why the budget security argument made in chapter 1 is not weakened by Jordan's Gulf crisis foreign policy, a brief description of the crisis and its impact on the kingdom is in order.
The Gulf crisis marked perhaps the greatest challenge for Jordanian leaders in the kingdom's history. On only two prior occasions had decisionmakers faced somewhat comparable situations. The first was in 1956, when the kingdom initially indicated its interest in joining the Baghdad Pact, then being promoted by the United States and Great Britain. At that point, both domestic forces and powerful regional forces (Egypt, Saudi Arabia, and Syria) combined to convince the king not to join. The second came in September 1970, when the decision was made to crush the Palestinian resistance movement. In this case, however, the Jordanian population was badly divided, as was the Arab world. While Jordan incurred widespread opprobrium--Syria closed its borders, while Libya and Kuwait cut their Khartoum-promised support--Saudi Arabia did not end its critical aid. In the case of the 1990-91 Gulf crisis, however, the Jordanian population was united on one end of the political spectrum, while the wealthy and powerful Arab states were all on the other.
Thus, each of these cases embodied a different combination of forces. In 1956, internal and Arab regional pressures united against the king's expected decision to join the Pact to produce the opposite decision. In 1970 Husayn had support among key sectors of his subjects, criticism from a divided Arab world, but strong U.S. and tacit Israeli support in the background. In the case of the Gulf war, however, Husayn had only the vociferous support of his people, since the other noncoalition Arab states had very little weight in regional politics. Jordan's position incurred the wrath of its powerful and wealthy Arab neighbors as well as virtually the entire international community, most notably, Jordan's long-time supporter, the United States.
It is important to stress here that while the Jordanian people were clearly and unabashedly pro-Iraqi in their demonstrations and discourse, the official government line was not so until after the air war began in mid-January 1991. Jordan refused to recognize Iraq's annexation of Kuwait as its nineteenth province, repeatedly stating that it continued to view the Sabah monarchy as the legitimate government of Kuwait. At the same time, however, while proclaiming its adherence to the principle of the inadmissibility of the acquisition of territory by force, neither Husayn nor any of his advisers condemned Iraq by name for its aggression against Kuwait. The king was clearly trying to withstand countervailing pressures from within and without. He insisted, more or less convincingly depending upon one's point of view, that condemnation or recognition of Saddam's moves would have compromised the possibility of a diplomatic solution. In this respect he was simply following a traditional Jordanian policy of seeking to settle inter-Arab disputes in an inter-Arab framework, and to that end made numerous attempts to avoid the internationalization and escalation of the conflict. What was different about this conflict, however, was that the international community had defined away neutrality: any state that was not with the coalition, as constructed by the United States, was depicted as being pro-Iraqi. Unlike past conflicts, in this case there was no middle ground.
What about the influence of economic factors on Jordan's position? There were clearly strong economic considerations at work that militated against Jordan's cutting ties with Iraq through adhering to the UN-imposed sanctions, regardless of other political considerations. Chapter 6 has already detailed the gradual development and expansion of the Jordanian-Iraqi economic and political relationship. During the first three quarters of 1989, Jordan relied on Iraq for 82.5 percent of its petroleum, importing a total of 2.1 million tons of Iraqi crude oil and other oil products. 1 Jordanian farmers had standing contracts with Iraq for a reported $200 million. 2 And, as Tables 7 and 8 show (chapter 2), Iraq was also Jordan's number one trading partner. Thus, implementing sanctions threatened not just future Iraqi good will, but also a very real and important market for Jordan's exports.
However, the equation is not quite so simple, for, as we have seen in the discussions of Kuwait and Saudi Arabia, Jordan's reliance on these countries for aid and markets was also substantial. During the first three quarters of 1989, Jordan had imported 133,626 tons of Saudi Arabian crude, and 307,609 tons of Kuwaiti crude. 3 The issue of Kuwait for the short term was somewhat moot, since the occupation of the country meant that, at least temporarily, it was lost as a market to Jordan no matter what position the kingdom took on the larger issues. Jordan also faced a disruption in the flow of remittances from its large expatriate community in Kuwait, a factor that might have argued for a more circumspect, long-term-oriented policy in order to ensure the economic and employment future of this community.
In terms of financial support, while Gulf state largess had clearly been on the wane during the 1980s, nonetheless, Saudi Arabia and Kuwait remained the most likely potential Arab sources of aid and concessionary loans. And both states in the wake of the Iraqi invasion indicated their willingness to reward support for the anti-Iraq coalition. For example, Saudi Arabia agreed to provide half Jordan's crude oil needs in order to encourage Jordan to line up with the coalition. 4 Conversely, when that policy of "encouragement" did not work, on September 20 Saudi Arabia announced that it was ending its oil shipments to Jordan; it closed its border to Jordanian traffic and expelled Jordanian diplomats.
Thus, as the crisis unfolded, Jordan had several options, all unappealing. To join the coalition would have meant the loss of Iraqi markets and oil, although after the sanctions were imposed Iraqi markets were largely closed (despite the leakage) no matter what position the kingdom took. The sanctions also meant that Kuwait was temporarily lost as a market: the future of its relations with Jordan would be determined by the outcome of the crisis. Here there were two possible positive and two possible negative outcomes. If Jordan joined the coalition and it was victorious or if Jordan sided with Iraq and it was able to hold out then Jordan stood to win. If, on the other hand, Jordan chose to side with the future loser (whether Iraq or the coalition), at very least access to Kuwait would have been lost, which is of course, what happened.
Joining the coalition would have offered Jordan the possibility of increased Arab and Western aid to offset losses incurred during the crisis, whereas failure to join the coalition both ruled out any such assistance and offered no other options. Acquiescing in coalition policy would also likely have meant swift and more substantial financial assistance for Jordan to address the (largely South Asian) refugee problem Jordan faced as those fleeing Kuwait poured across its borders. In the event, as the crisis unfolded, and Amman remained outside the coalition, the international community was quite slow to assist Jordan in its efforts to provide relief to the incoming refugees.
Any attempt at precise accounting of these trade-offs would be foolhardy since statistics and projections are at best imprecise. Nonetheless, from the standpoint of short-term budget security, the pro-coalition option would appear, at least on the surface, to have been the wiser strategy. Why then did the king act otherwise?
It may be argued, with some plausibility, that the king's sense of Arabism, which by all accounts is quite strong, motivated him to seek an inter-Arab solution and ultimately refuse to abandon Iraq. However, then one would have to be able to argue why such a sense of Arabism did not prevent him from undertaking the assault against the Palestinians in 1970, or even more important, why his Arabism led him to stand more firmly by Arab Iraq than by Arab Kuwait. One could also argue that the king simply miscalculated, although his survival for some four decades as monarch of a small and vulnerable country in the Middle East certainly suggests that it would be the uncommon exception. More plausible is that the traditional bases or factors used to assess options had changed, and the king was reacting to the new environment.
One of the key components of the new environment was popular opinion, the "Jordanian street." However, the argument has long been made that Husayn must take into account his domestic constituency. The reference is to the Palestinian component of the population, with the implication being that the king could not take certain steps if they were likely to upset the kingdom's Palestinians. There are two problems with this contention. The first is not directly relevant to our discussion, but will be mentioned in any case: whatever differences may have existed between Jordan's Palestinian and Transjordanian communities, at least in the past, the issue of conciliation with Israel was not a point of contention, as both sides opposed such a move. The second and more important consideration is that, while the Palestinian community in Jordan is large, its size and importance have not stopped the regime from taking a number of steps over the years to which the community was opposed, most notably, but by no means exclusively, the military assaults against the Palestinian resistance in 1970-71. Hence, if one wants to argue that the king has always been sensitive to "the street," one must also be able to explain the many occasions on which he was apparently able to ignore it. It would seem prudent to reexamine those past crises in which popular opinion has been deemed to have played an influential role to determine if in fact its role was as central as it has been described. In any case, it remains to make the case for why the pressures from below had special significance in the Gulf crisis, and for how they relate to the concept of budget security.
The basis of the argument made here is that developments in the 1980s, in particular the evolution of a serious economic crisis, gradually undermined the traditional bases of budget and regime support. When the crisis finally exploded in economic riots following the announcement of IMF-requested austerity measures, the regime reacted by launching a process of political liberalization, a survival strategy that aimed at defusing discontent while setting the stage for significant changes in the political and economic system. As a result of the relaxation of political repression that accompanied the liberalization, by the time of the Gulf crisis, Jordanians were better positioned to express publicly and vocally their position on the Iraqi invasion of Kuwait. 5
A close examination of the background to these developments reveals the following. On the political front, the Jordanian parliament had been suspended in 1974, and replaced in 1977 by what was called a National Consultative Council (NCC), whose members were appointed by the king. The parliament had hardly been a lively or contentious body, but the NCC had even less clout, much less popular legitimacy. Hence the recalling of parliament in early 1984 seemed to bode well for institutionalized political development in the country. However, by early 1985 internal political repression was on the rise again. A new election law was drafted in 1986 and new general parliamentary elections were promised, but were subsequently postponed.
In the meantime, the political atmosphere in the kingdom grew increasingly tense, particularly when, in early 1986, political coordination between the PLO and Jordan broke down, and the kingdom closed all the offices of Fateh, the largest constituent faction of the PLO. But PLO-Jordanian difficulties were only a part of the problem, and the regime was simply not disposed at the time to allow for the expression of criticism. In June 1987, the Jordanian Writers' Association, one of the last remaining fora for political and cultural expression, was closed. Tensions continued to mount after the beginning of the Palestinian uprising in December 1987 led the Jordanian government to take increased security measures against Palestinians on the East Bank. The king's decision to disengage from the West Bank on July 31, 1988 simply underscored the friction in Palestinian-Jordanian relations.
However, the political difficulties and the regime's security response might have been less severe had Jordan not at the same time begun to experience economic problems as well. As we saw in the case study chapters, after a number of years of continuous (if not consistent) Arab aid, by 1983, the Iran-Iraq war had begun to take its toll on oil-state financial contributions. Government policy at the time of the declining aid aimed at compensating for the shortfall, not through serious measures intended to cut expenditures or invigorate the domestic economy, but rather through borrowing from abroad. In this way, the government avoided adjustments that would have undermined part of its governing formula: underwriting employment (primarily for the Transjordanian core) and a variety of other subsidies from which a majority of the population benefited.
To its credit the Jordanian leadership also sought to revive economic ties with Egypt and Syria, in addition to its policy of extending export credits to Iraq. In each of these cases the policy was clearly aimed at promoting the health of the domestic export sector, both public and private. However, by mid-1988, the Iraqi export credits fiasco combined with burgeoning external debt began to drive down the value of the dinar. By January 1989, Jordan was unable to meet its debt service payment and was forced to negotiate with the IMF to reschedule its external debt. This was a clear signal that the economic structure that had underpinned the governing formula of the past was crumbling. Jordan could no longer count on massive infusions of external aid to support its "beyond its means" distributional lifestyle. While the Arab states made offers of support in the wake of the April 1989 economic riots, they also made clear in the 1989 Arab summit that their Baghdad commitments would not be renewed. Jordan was simply going to have to cut its budget and raise revenues domestically. Both of these targets were in keeping with IMF requirements. As we saw above, while budget cutting threatened one part of the governing formula--the support of the Transjordanian bureaucracy and army--revenue raising threatened the other--the state's demand for political acquiescence from the important and largely Palestinian bourgeoisie in exchange for few extractive (taxation) demands.
In sum, the economic crisis of the late 1980s meant that the government's distributional capabilities severely declined. With no new financial savior available, the state was no longer capable of fully providing its traditional part of the economic and political bargain to either the largely Transjordanian public sector or the largely Palestinian bourgeoisie. The budget could no longer bear the regime's part of the political acquiescence bargain. Therefore, as the kingdom continued along the path of debt rescheduling and budget reduction, the king initiated a process of political liberalization in the summer of 1989, which led to Jordan's first free elections in thirty-five years.
The key point is that even before the Gulf crisis two trends were clear: the financial capabilities of the Jordanian state were contracting, leading to a decrease in its distributional capabilities; and, the extractive role of the state was increasing, with a growing contribution to state coffers of taxes and fees of various sorts. These two trends then pointed to a third: with the bases of regime economic support shifting (and with the political liberalization well under way and very popular), the state would have been very hard-pressed financially (even with a massive infusion of Kuwaiti or Saudi assistance) to call up and sustain the repression needed to silence its pro-Iraqi population into acceptance of a pro-coalition stance. Moreover, given that the traditional institutions of coercion, the army and the intelligence apparatus, are overwhelmingly staffed with Transjordanians, who were just as enamored of Saddam as were the Palestinians, the cost to the regime both in material and legitimacy terms would have been tremendous. It seems highly unlikely that it would ever have crossed the king's mind to "fight" his population in the way he likely would have had to had he chosen a clear pro-coalition position. Moreover, short of a massive transfer of assistance directed specifically at the army and internal intelligence, it probably would have been extremely difficult to prevent massive defections.
Hence the economic decline and its impact on the traditional bases of regime support, combined with the Jordanian popular position on the Gulf crisis, left the king with few options. (Indeed, the fact that he was able to sustain his version of neutrality was a testament to his skill in reading and understanding his subjects.) By 1990, budget security for Jordan had a much more important domestic component than it had had at any other time during the period under consideration in this study. With the revenues and aid from the oil states dwindling and unlikely to be restored on a long-term basis, the economic crisis of 1988-89 further increased the importance of domestic extraction. Add to this the unparalleled and unified Jordanian popular mobilization that accompanied the invasion of Kuwait and the resources (both material and moral) that would have been needed to check or repress this outpouring of emotion and one has the most important components in explaining Jordanian policy toward the coalition and Iraq.
Indeed, the king's official stance was a masterful modification of an extremely pro-Iraq, anti-U.S. and anti-Gulf state position. Some might argue therefore that the king really did have complete control of the policy agenda and that, contrary to the argument being made here, the "Jordanian street" was not a serious consideration. However, that the king felt the need to be sensitive to public pressures was borne out, for example, in his handling of the issue of adherence to the sanctions: the decision to comply was announced through a secret memorandum sent to government offices and was downplayed in the country. Moreover, throughout the period the king and the crown prince stressed that Jordan was being made to suffer economically for its political stance. 6 Such statements shored up morale both to help soften the economic blow and to increase the chances that Jordanians would view their monarch's stand as a principled one, for which they were being punished by the less principled.
The argument here is not just that pressures from below have a greater potential impact on Jordanian foreign policy in the wake of the liberalization than they did before. There is a budget security aspect to the argument as well. As we saw in chapter 1, a state can deal with an economic crisis in two major ways: it can seek a short-term fix, which involves securing additional revenues rather quickly and avoiding painful domestic economic restructuring; or it may attempt to address the crisis through a series of policies that amount to restructuring. The second strategy, while perhaps sounder for the national economy in the long run, is, nonetheless, potentially subversive in the short run, both because it probably cannot address the crisis quickly enough and because diversifying may require upsetting existing sociopolitical coalitions.
There are numerous examples of Jordanian policymakers' crafting policies intended to protect the economic status quo rather than attempting to diversify or restructure. One early example was the Jordanian government's policy beginning in 1979 to allow Jordanian labor freer mobility to go to the Gulf for work. This was in effect the path of least resistance, for the other alternatives--preventing such workers from taking their talent outside the kingdom in search of better-paying jobs elsewhere, providing incentives to the domestic labor market to offer more opportunities to such skilled labor, or attempting to channel Jordanians into jobs that they traditionally had avoided--would likely have met with substantial resistance from various quarters. Instead, the state allowed Jordanians to work abroad and then encouraged the importation of expatriate Arab and Asian labor willing to work for less in the jobs that Jordanians eschewed. In other words, rather than seeking substantially to expand white collar employment or in effect to force those trained for white collar work into jobs they did not want, the policy allowed the surplus to leave. In this way, not only was the balance maintained, but remittances from abroad were thereby increased. Moreover, by additionally forbidding foreign labor to join unions, the state also severely undercut the potential for the development of a labor movement of any consequence.
Another example is from the mid-1970s, when many were touting the possibility of Jordan's taking Lebanon's place as the banking and service center of the Arab world. One high-ranking Jordanian official admitted off the record that he was present at meetings at which opposition to this notion was expressed at the highest levels. It was not that Jordan was incapable of taking on the role; rather, there was real concern about what Jordan's becoming a service-oriented economy would mean for domestic politics. Top policymakers were certainly interested in foreign investment, at least on a theoretical level; however, they did not want to open up the country to large numbers of foreigners, and put a strain on the housing market and on services. They also felt that opening up a conservative country like Jordan might eventually lead to the same instability that Lebanon was encountering. 7 As a result, Jordan in effect passed up the opportunity to assume Lebanon's regional role.
A third example of avoidance of structural change came during Zayd al-Rifa'i's second prime ministership. Although he was given a mandate for energizing the private sector by the crown, economic liberalization in fact made only marginal headway under his leadership. One may lay the blame at the feet of the bureaucracy, but one must also find an explanation for why greater emphasis was not placed on pushing for reform if it was indeed so critical to the government's program. Here again, the desire not to undertake changes that might have caused a restructuring of domestic economic or social relations (particularly, in this case, affecting the crucial East Bank bureaucracy), must have played a significant role.
In each of these cases, the preferred response was to seek external solutions, and avoid remedies that might trigger internal dissent or instability, even though in the long run the domestic changes might well have resulted in a more diversified and self-sufficient economy. The difference between each of these cases and the economic crisis faced by the kingdom in 1989 was that none was as severe, and in each case short-term safety-valve solutions were available. By 1989, Jordan had exhausted the financial good will of its traditional donors and no other quick-fix solutions remained. As a result, it had no option short of, first, IMF stabilization measures, and then, more thoroughgoing policies aimed at restructuring. It was left to the political liberalization process to defuse whatever politically subversive effect the economic measures would have. Only in such a context is Jordan's Gulf crisis behavior fully comprehensible.
Traditional balance of power theory as modified by Walt to include balance of threat would not have been able to predict Jordan's behavior in the Gulf crisis. In the first place, identification of provenance of greatest threat would have been problematic. It seems likely that traditional security studies scholars would have characterized Jordan's behavior as bandwagoning, indicating that Iraq was the threatening power. But that was not the way Jordanian decisionmakers understood the conflict. To the contrary, they saw the U.S. and the broader coalition of forces as the primary threat, because of the potential their intervention had to trigger a wider conflagration into which Jordan might have been drawn against its will. Should one then conclude that Jordan was "balancing" against the international coalition? Such an assessment makes little sense either. In fact, Husayn appears to have tried to steer a course of neutrality, for which there is no provision in a balancing and bandwagoning framework.
If balancing considerations did figure into the king's analysis they most likely concerned the requisites for internal economic and political stability versus external political demands and economic threats and incentives. Indeed, a convincing explanation of the king's position requires that the changing nature of the country's political system (from authoritarianism to free elections and freer speech) and economic structure (away from the distributive and toward the extractive state) be factored into the analysis. While it would be an oversimplification to state that budgetary concerns tell the whole tale, an explanation that treats domestic revenue sources as a key to understanding state behavior does provide the part of the analysis that transforms the explanation from one based on irrationality, miscalculation or cowardice, to one based on a rational weighing of a range of security considerations.
Budget Security and Arab-Israeli Peace
With the destruction of Iraq and the curtailment of its regional power during the second Gulf war, there was little question that Jordan would make its way to the U.S.-Russian sponsored Middle East peace talks that began in Madrid in October 1991. Again, there were simply no other options. However, little progress was made until the so-called Oslo agreement of August 1993 was announced (during the final stages of completing this work), thereby reenergizing the Arab-Israeli negotiations. An examination of the Jordanian response to the unfolding of events since the signing of the Palestinian-Israeli accord further reinforces the salience of the budget security argument.
In the first place, it is clear that old habits die hard. The promises by various members of the international community to provide development aid and other assistance to help support and institutionalize the peace have struck a resonant cord with Jordanian decisionmakers. Several years of austerity have not erased the sweet memories of the kingdom's former aid addiction. New infusions of money in the quick-fix tradition could well help ease the country's current struggle with austerity, which has left increasing numbers of Jordanian below the poverty line and has seen a concomitant increase in the appeal of Islamist trends in the country.
Selling the peace process in Jordan raises numerous sensitive and potentially stability-threatening issues, many of which could be calmed or soothed (or so decisionmakers appear to believe) if new aid commitments are made. The first issue simply concerns easing the country's way through the continuing period of austerity. A population that feels itself to be less under siege economically, and understands that the peace process is responsible for bringing the relief, is less likely to take an openly oppositional stance. While the king has, to date, skillfully handled the major channel of organized opposition to the peace process, the Islamists, the receipt of additional aid could certainly strengthen his hand.
As the peace process unfolded, King Husayn's trip to Washington, D.C., in July 1994 for a meeting with Israeli Prime Minister Yitzhak Rabin produced another clear example of the impact of the drive for economic assistance and solvency on the kingdom's foreign policy. At this stage, the critical question was whether Jordan would end the state of war, or simply the state of belligerency, with Israel. The Jordanians were concerned both with securing a deal for up to $1 billion in debt relief and with obtaining new weaponry for the armed forces. According to a July 27 Jordan Times article, "When it became apparent to His Majesty that the difference between the two states [belligerency and war] paled in comparison to the political and economic advantages of doing the latter [ending the state of war] he did not hesitate to declare the end of the state of war with Israel."
In all discussions of aid that may come into the region, Jordanian policymakers are very concerned that Jordan not be shortchanged or bypassed. Hence, the Jordanian demand, for example, that the kingdom be compensated for the years that it has hosted its large Palestinian refugee population. To be sure, the demand in part reflects a desire for recognition of Amman's contributions, but it also reaffirms that many of these refugees are eligible to return to a Palestinian entity, and hence, reduce to some extent the Palestinian population in the kingdom, an outcome many Transjordanians dream of. However, even if there is substantial Palestinian repatriation from Jordan, the larger issue that concerns some Transjordanians is the possibility that, because most of Jordan's wealth is held by Palestinians, without external assistance, their state will eventually either become a kind of economic colony of the Palestinian entity, or a wealthy and ascendant Palestinian bourgeoisie, whether it returns to Palestine or continues to reside in Jordan, will in fact come to control the country, thus further changing the sociopolitical coalition that underpins the regime.
Thus, for a number of reasons, Jordanian policymakers are as keen as ever to secure external development and budgetary assistance. Receipt of such funds could certainly help smooth the kingdom's passage through the rough waters of austerity. Some may even believe that it could postpone or obviate additional adjustment or austerity measures. However, the most central concern of the Transjordanian sector of the population, whether decisionmaker or average citizen, is that without such assistance, Jordan will eventually lose not only its economic, but also its cultural and political sovereignty to a Palestinian counterpart. It was this concern over possible loss of sovereignty that led Jordanian decisionmakers to take a special interest in who controls the bridges between Jordan and the new entity (lest instability on the Palestinian side lead to a new population exodus to Jordan) and it was this concern that led many in the fall of 1993 following the PLO-Israel accord to call for the postponement of Jordan's elections lest Palestinians who might soon be "going home" be allowed to vote in East Bank elections.
The shape of the future peace, therefore, is an extremely sensitive issue, one that goes to the "core values" of the Jordanian state, and one in which budget security is closely tied to the prospects for the continuation or loss of effective economic and political sovereignty.
Broader Applicability
This study began as an inductive project to attempt to determine the role of economics in inter-Arab relations. In the course of the research, I was surprised to find policymakers who would in one breath insist that politics always won out, and then proceed to relate accounts of policy decisions in which they themselves (not my interpretation of their words) demonstrated that economics had been if not the determining consideration, at very least an extremely important one. I find this significant and recount it here, because some will no doubt contend that Jordan was the fatal "easy case" and that to demonstrate the viability of my approach, a "hard case," one in which the importance of budgetary considerations would not automatically suggest themselves should have been selected. To such a critique, two responses are in order.
The first response is to remind the reader that this project was aimed at hypothesis generation, not at hypothesis testing. The notion of budget security and its importance were generated through the long process of research and interviewing. It suggested itself as a result of close work with a great deal of empirical material that was not originally screened to confirm or disconfirm a preselected hypothesis. Hence, the "easy case" contention by no means vitiates the importance or conclusions of the study.
The second response is that because the conclusions are so counterintuitive for most students and scholars of the Middle East, the study has made a contribution as it stands. Part of the problem in dealing with Arab politics is that everyone is sure s/he understands decisionmakers motivations because of the more obvious and often articulated political reasons behind policy choices. This project, while not discounting such explanations, nonetheless, has argued that other variables need to be examined, and that the real motivations behind "obviously" political decisions may not be strictly or even largely political after all. This should not be interpreted as constituting a crude form of economic determinism. The argument here is not that all foreign policy choices and moves are based solely or primarily on economic considerations: regional and domestic political forces, as well as the ideology and personality of decisionmakers certainly play a role in many decisions. However, the conclusions should lead analysts to reexamine the still unfortunately widely prevailing notions that high politics in the Middle East is based on the political whim of a few men.
Nonetheless, neither of these responses obviates the need to question the potential broader applicability of the concept of budget security. Here I would like briefly to discuss two other cases that appear to be potentially fruitful for further study and then offer some reasons for testing the broader applicability of the concept.
While the primary focus of this research was Jordan, in the course of gathering data, several cases of alignment shifts by other countries appeared to have been related to the same budget security considerations. They demand further, careful examination along the lines followed in the case studies in this work. I note them briefly here, not to "prove" my case, but rather to argue that Jordan should not be viewed as a hopelessly unique and, therefore, uninteresting case from a theoretical point of view.
The first is the case of Syria. Considerations of Syrian foreign policy demonstrate a marked tension between those who regard Asad and his foreign policy as pragmatic, and those who see nothing but a policy driven by Syrian Ba'thist ideology. For the record, with the possible exception of some of the developments in the Iraqi-Syrian relationship, Syrian foreign policy has generally seemed eminently pragmatic, not ideological, to me. In any case, in the course of the research three developments were particularly striking.
First, it seems clear that at least part of the reason for the Syrian-Jordanian rapprochement in 1975-76 was the joint "begging strategy" noted in the case study. While larger regional considerations may have been more important to the Syrians than budgetary ones, that needs to be demonstrated, not simply assumed. The second instance has to do with Syrian-Iraqi relations in the wake of the signing of the Camp David Accords. At this stage, relations between Baghdad and Damascus warmed considerably, a development usually attributed to the need to close Arab ranks in the shadow of the impending peace treaty between Egypt and Israel. However, there is also reason to believe that, like Jordan, Syria saw the wealth and potential of Iraq and, also heavily dependent upon external aid, sought to repair relations for its own economic advantage. 8 The final example concerns Syria's ultimate willingness to restore ties with Jordan in 1985. Recall that Jordan had been making overtures since 1983. Syria, however, did not respond until 1984, after it had problems receiving and paying for Iranian oil. Recall as well that it was reported well after the fact that Jordan had begun supplying Syria with Saudi oil during this period. Again, an explanation based on budgetary concerns appears a reasonable possibility.
The second case is that of Egypt. Egyptian political scientist Ali E. Dessouki has entitled a chapter on the foreign policy of Egypt "The Primacy of Economics." Although the primacy of economics is not really thoroughly developed in his presentation, he does make economic arguments about a number of Egypt most significant alignment changes. For example, he argues that in the mid-1970s, the Cairo-Riyadh alliance was predicated on expected economic gains from Saudi Arabia and other Gulf states. He also notes that Sadat's trip to Jerusalem in 1977 was largely motivated by the need to reduce defense expenditures, to encourage foreign private capital to enter the country, and to win more U.S. aid. All of this, of course, is placed against the background of Egypt's attempts to mobilize external resources to ease the growing deficit, what Dessouki calls the "population-resources gap." 9 In the case of Egypt, of course, the need to attract or mobilize external resources also required a move away from its close relationship with the Soviets and toward the West. In Dessouki's words, "When a ruling elite decides to pursue a development strategy based on foreign aid and capital, it follows that all necessary steps will be taken to attract and reassure its creditors." 10 Egypt's alliance shifts in the 1970s should then be seen as largely dictated by these requirements.
Hence we have two other states, both of which are and have been major regional players, and neither of which is remotely the "artificial" entity Jordan has often been described as, whose foreign policy or alignment decisions also suggest that budget security may well be high among decisionmakers' priorities. All three of these states are reliant (moderately to heavily, depending upon period and criteria) on external sources of income, particularly external aid, thus suggesting that the concept of budget security in explaining foreign policy behavior may be most significant in countries that are major recipients of external aid, a type of state that can be found beyond the Middle East. Again, however, only a very narrow understanding of budget security would limit its applicability to securing external aid.
It is for this reason that the idea of focusing on the structure or composition of state revenues was proposed at the outset. One can image a situation in which state A, heavily dependent upon the marketing of a particular product, finds itself, for whatever reason, unable to sell to its major market, state B. The potential threat to the economy and by extension, the state budget of A, may be so severe that A is forced to improve ties with state C, which may serve as an alternative market. In the same way, assume state A has long depended upon shipping its products overland through state B. Then, for reasons of domestic political turmoil, state A can no longer safely send its produce through B. As a result, in order to forestall economic disaster it is forced to improve relations with state C, which offers an alternative overland route. What state C may demand in return in either of these two cases will help shape the nature of the new relationship, whether it will involve an upgrading in relations, a warming in relations, or a stronger commitment. But in each case, budget security could be said to have been threatened, leading to a foreign policy initiative specifically designed to address or prevent a potential shortfall. These cases are intended only to be illustrative; one could certainly imagine others.
Moreover, although the focus in this study has been on its impact on a specific aspect of foreign or security policy--alignment shifts--budget security is useful as a general concept whether its impact is on foreign or domestic policy. It is certainly a relevant concept in examining the domestic instability and loss of relative economic sovereignty to external lending agencies caused by the debt crisis of the 1980s. In such cases, leaderships faced default or potential economic deterioration or collapse. Unable to mobilize sufficient resources, whether domestic or external, to address the shortfall under the preexisting conditions, they had little choice but to go to the IMF. Agreements with the IMF permit states some financial repayment breathing room and may make them eligible for additional external loans, both of which forestall collapse. However, the IMF agreements generally require that greater domestic resources be mobilized and/or that fewer state resources be spent on populist policies such as subsidized food and services. The implementation of such policies may well trigger unrest itself (e.g. Egypt 1977 and Jordan 1989), but without such agreements these states would have found it virtually impossible to find additional resources to enable them to address their debt crises. More recently, budget insecurity is perhaps nowhere more evident than in the numerous moves to liberalize political/and or economic systems across the developing world, as well as in Eastern Europe and the Soviet Union. Many of these moves derived largely, or at least in part, from imminent economic collapse.
What these theoretical and more specific examples indicate is that in the developing world, states that enjoy only limited resources, capital, and development are the norm. Their heavy reliance upon external aid, one or a few commodities, limited markets, a particular trade route, and the like, renders the concept of budget security extremely relevant. As David pointed out in his presentation of omnibalancing, regimes or leaderships may be expected to act, or at least attempt to act, in such a way as to ensure that they remain in power. While external threats do challenge some of these states, economic solvency and survival seem more real and pressing challenges to many others. In such conditions, states unwilling to upset existing socioeconomic or political coalitions, or unable (for whatever reason) to mobilize resources domestically to address their basic financial distress may be expected to turn outward to do so and, in their attempt, may seek to conclude new alliances.
Trying to explain such behavior in terms of balancing or bandwagoning state-level power or threats misses much of what most threatens developing countries. Threats to regime stability must be understood to be broader than the traditional domestic political or external military formulations. No state or leadership can long survive without income. Securing that income, whatever its present or potential sources, should therefore be viewed as just as integral to state security as defending borders against foreign military assault. For, when all is said and done, empty treasuries fund no soldiers.
Note 1: Middle East Economic Survey (Hereafter MEES) no. 33, 1989, p. 47. Back.
Note 2: Washington Post, January 9, 1990. Back.
Note 3: MEES, no. 33. 1989, p. 47. Back.
Note 4: MEED, August 31, 1990. Back.
Note 5: See Laurie A. Brand, "Liberalization and Changing Political Coalitions: The Bases of Jordan's 1990-91 Gulf Crisis Policy," Jerusalem Journal of International Relations, 13 (4): 1-46. Back.
Note 6: See D. Williams, "Arab Truck Drivers Stalled by UN Sanctions," Los Angeles Times, September 21, 1990; see also Prince Hasan's news conference on August 15, 1990, in FBIS, August 20, 1990, and Husayn's interview on October 2, in FBIS, October 3, 1990. Back.
Note 7: Interview with Jordanian official, fall 1991. Back.
Note 8: See, for example, Eberhard Kienle's Ba'th v. Ba'th: The Conflict between Syria and Iraq 1968-1989 (New York: I.B. Tauris, 1990), chapter 4. Back.
Note 9: Ali E. Dessouki, "The Primacy of Economics: The Foreign Policy of Egypt," in Korany and Dessouki eds., The Foreign Policy of Arab States (Boulder: Westview, 199l) second edition, p. 161. Back.
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