Jordan is moving quickly to capitalize on the agreements it reached with Israel in August,promoting itself as the transport and trade hub of the Levant.
These agreements, which normalize political relations, transportation systems and commu- nications, encourage trade and investment. Coupled with debt relief being provided by the United States and Britain, they have given the Jordanian economy a major boost. The economic stimulus should have an immediate effect in two key sectors: transport and tourism.The debt relief, announced after the Jordanian-Israeli joint declaration in July, is expected to reduce Jordan's $6.7 billion debt by as much as 15 percent. But there are already calls for much more substantial reductions to reward Jordan for its role in the Middle East peace process. The World Bank is proposing debt relief of $2.5 billion, which would reduce Jordan's debt to 75 percent of GDP, down from the present 120 percent. This is expected to make the Jordanian economy more attractive to foreign investors and to allow an increase in domestic savings.
While Jordan does not represent a large market for U.S. goods, it is a major entrepot for land shipments to Saudi Arabia, Syria, Iraq and other parts of the region, including the West Bank. Indeed, one analyst at Lehman Brothers recently defined Jordan as an "entrepot economy." More than 70 percent of the labor force is engaged in trade and services.
Last year, U.S. companies exported $205 million worth of goods to Jordan, chiefly agricultural products, non-electrical machinery, and transportation equipment. The United States imported only $3.2 million in goods, primarily gold jewelry, diamonds, apparel and palm oil.
The U.S. Commerce Department believes that, in the new economic and political environment, Jordan presents a good market for foodstuffs, computer hardware and software, medical products and equipment, and telecommunications equipment.
Anticipating increased trade with Europe and the United States, as well a greater flow of goods from North Africa and Egypt to the Arabian peninsula, the Jordanian government is considering a major expansion of berth facilities at the Port of Aqaba, to 12 or 13 from eight. This would be the first major transport-improvement project undertaken in Jordan in over six years.
Several Jordanian trading companies are negotiating with Israeli ports to provide alternative, more economical, shipping points for goods moving between Jordan and the Mediterranean.
In addition to trade- and transport-related developments, there are several other sectors of the Jordanian economy that are expected to enjoy direct benefits from the improved relations with Israel. Jordan is seeking to broaden its economic base by developing specialty agricultural products and by fostering light manufacturing.
The government's Jordanian Export Development and Commercial Centres Corp. (Jedco) has been courting foreign partners for local manufacturers, and recently produced a detailed and informative series of export directories, organized on a sectoral basis. "We concentrate in developing sectors which depend on raw materials and human resources here in Jordan," said Farouk Hadidi, deputy general manager of Jedco. "Jordan has the highest number of engineers per capita in the region. It gives us a good base from which to build an electronics industry."
Samsung, Goldstar and Hitachi all have manufacturing facilities in the kingdom.
Jordan is also expanding production of its traditional raw-materials exports - Dead Sea salts (chloride and magnesium), phosphates and potash. Jedco is seeking foreign companies that can help develop those exports. "We want to expand and diversify potash- and phosphate-related industries," said Mr. Hadidi.
Foreign investors can participate in the Jordanian economy either through direct investment or through purchasing shares on the Amman financial market.