Jordan's Model of Peace in the Middle East: Supporting Sustainable Development

Jordan's Model of Peace in the Middle East:
Supporting Sustainable Development

December 1997

The Middle East has undergone dramatic changes since 1991, when the Madrid peace process was successfully launched. Despite the many challenges posed to the process, significant positive developments have been achieved including the Oslo agreements, the Jordan-Israel Treaty of Peace, the establishment of a Palestinian National Authority in Gaza and Jericho, the redeployment of Israel from parts of the West Bank, the election of a Palestinian Council, the Palestinian decision to renounce those provisions of the Palestinian National Charter that call for the destruction of Israel, and more recently the Hebron agreement. The breaking down of many psychological barriers that have prevented Arabs and Israelis from living together for decades is equally important.

Yet, despite these achievements, serious challenges remain ahead. The Palestinians-Israeli track is in serious crisis and soon will enter its most crucial stage when negotiations start on the final status of the West Bank and the Gaza strip. The Syrian- and Lebanese-Israeli tracks are yet to witness any tangible progress. Full normalization of political and economic relationships between Israel and all other Arab countries depends on further progress in the peace process.

Success or failure in dealing individually and collectively with these challenges will certainly shape not only the future of our region, but also the Middle East's relations with the world community. There are many potential outcomes, but only one has the potential of enhancing the security and well-being of all parties concerned: A Middle East characterized by stability and peaceful coexistence which strengthens the forces required, not only to sustain it, but also to develop it and enforce it over time. This outcome would broker peace agreements among adversaries but would also create a vested interest in building and sustaining the resulting peace.

This is the scenario which Jordan supports. Every party has a role to play. The following represents Jordan's efforts to bring about this regional vision and to achieve its aspirations for a better life for its people and the region.

Jordan's ultimate domestic objective is straightforward: to assure our people full and productive lives, to enhance their quality of life and their interaction with and contribution to the world community in the economic, social, political and cultural spheres.

The economic growth that Jordan seeks is one which leads to more employment, a more equitable distribution of income, one that promotes democratic freedoms and enriches cultural heritage, one that is sustainable and that protects and enriches the environment.

Jordan's objective is not purely economic. Economic tools alone would be too limited and deficient to achieve Jordan's objective--a more holistic approach as we developed and articulated a comprehensive model for development, encompassing three distinct yet interlinked components.

The first component is a political reform program which enhances public participation in decision-making at all levels and one that consolidates democratic practices. The second component aims at developing an external environment which is more conducive to domestic development, replacing belligerence with coexistence, and apathy with cooperation. The third is an economic reform program which aims at liberalizing and modernizing the economy, making it more competitive at the regional and international levels and integrating it within the world economy.

Jordan launched a daring and bold political reform program which is unprecedented in the Arab world. We pursued a policy of inclusion which enables all political forces in the country to operate legally. They do so as part of a national consensus that advocates pluralism at all times and the pursuit of political objectives through peaceful means. This program has resulted in major achievements including the legalization of political parties, an independent parliament, one of the freest press in the Arab world and a human rights record which is unparalleled in the area. Jordan also succeeded in containing and refocusing the sometimes potentially devastating energies of extremism and fanaticism towards compliance within the framework of constructive nation building. There is no perfect model of democracy. Jordan's process of democratization has been successful in broadening popular participation in the decision-making process in a meaningful way at the political, economic and social levels. Jordan believes no meaningful human development can take place without such participation in the decision-making process.

When Jordan opted for peace, it did so based on a strategic decision to rid the region of the policies of conflict, and develop a new external environment of cooperation and interdependence with Israel and all the parties in the region as the only model that would ensure sustainable development. Jordan has sought a warm peace with Israel, going beyond the mere signing of agreements between governments to normal interaction among peoples of neighboring countries. Jordan has not only been committed to full implementation of the peace treaty, but to a proactive approach in seeking future areas of cooperation. The framework is a peace treaty full with references to cooperation and mutuality, 15 subagreements covering all areas of cooperation, and a strong commitment to develop the Jordan Rift Valley in a new outlook that sees borders--not as separating edges--but as common interfaces. This qualitative peace provides tremendous opportunities for development for each of the countries involved and for the region as a whole despite the very real risks.

As people make the transition from war to peace, they move progressively along a spectrum that takes them from belligerence to a peaceful coexistence which is initially characterized by skepticism and, subsequently, by apathy; and, then, from peaceful coexistence to cautious cooperation. As trust develops, they finally move towards proactive cooperation.

Jordan, in its peace treaty with Israel, opted for rapidly consolidating a level of cooperation that could form a nucleus for a more comprehensive regional development. Jordan actively participated in the multilateral track of the peace process and also signed a number of bilateral agreements with Israel which covered almost every aspect of cooperation, be that economic, social or cultural.

In parallel to its political liberalization process and its bold policy towards peace, Jordan has been implementing a very successful economic restructuring program, aimed at achieving sustainable development based on the country’s own capabilities within a framework of positive interaction with the world community.

The Gulf crisis and the domestic difficulties that followed led to a rethinking of the country’s economic strategy. After seeing the dangers that can result from a highly protected economy, dependent to a large degree on a small number of regional markets for its products, manpower and foreign exchange earnings, Jordan decided in 1992 to open up the economy, liberalize the country’s systems and diversify its economic relationships as quickly and efficiently as possible. The new economic program is not only based on macroeconomic reform of reducing the budget deficit and the current account deficit, but also emphasizes complete rehabilitation of the economy and strengthening the base upon which development could be sustained. The trade system was liberalized, tariffs reduced and tariff schedules rationalized along with removal of all non-tariff barriers to trade. Trade laws and regulation have been simplified in line with international practice which allowed Jordan to apply to and start negotiating for membership in the World Trade Organization.

Sustainable development requires the ability to continuously create new jobs and to effect a transfer of modern technology. The economic program also focuses on enhancing the economy's ability to attract and retain foreign investments. A concerted effort was initiated to create an investment environment which is more conducive to business, enacting new laws which are transparent and investor-friendly. These laws included legislation on income tax, encouragement of investments, free zones and a new companies law. In addition, bureaucratic procedures were streamlined and an all encompassing program was implemented to enhance the efficiency of public services. By 1994, the Jordanian economy was one of the most liberalized and open economies of the region--as reported in a recent publication of the Heritage Foundation.

The reform of the business and legal environment continued in 1995, 1996, and 1997, with the addition of a new component: privatization. In this domain, Jordan started a process of selling government shares in public shareholding companies and in commercializing and privatizing public enterprises which are concentrated in the infrastructure sector, namely transport, electricity, water and telecommunication. The country has made huge strides in the telecommunications and energy areas by converting these public enterprises into companies and enacting new laws that enable private sector delivery of services and allowing for enhanced competition. In the domain of transport and water, the government has taken steps to enter into management contracts with private sector operators.

According to traditional economic yardsticks, the program was remarkably successful. The economy has sustained an average real growth rate of about 6 percent annually since 1992. Unemployment, though still high at 15 percent, dropped ten percentage points from 25 percent in 1990. The budget deficit was reduced from 19 percent to 4 percent and the current account deficit to 4.6% in 1996. Inflation was contained at less than 4 percent over the past three years. The external debt to GDP ratio dropped from 200% in 1990 to 90% in 1997. The U.S. decision to write off Jordan's debts contributed significantly to this drop and is much appreciated. This performance was described by international financing institutions as exemplary. Jordan is determined to stay the course of reform to achieve its target of reducing the fiscal and current account deficit to just 2% of its GDP by the turn of the century.

When Jordan opted for this 3-pronged model, it was aware that it can be negatively affected by a number of variables beyond its sphere of control or influence. Specifically, Jordan realized early on that three elements needed to be in place if the causal relationship between development in the country and regional cooperation is to materialize: First, the peace process on other tracks will not be impeded, but will, on the contrary, be expedited to reach an early comprehensive settlement to the conflict; second, the international community will realize the importance of supporting a model for regional cooperation; and third, Israel will see the benefits of this approach and will make every effort to make it bear fruit.

Despite the risks, Jordan pursued this new regional vision while vigorously attempting, at the same time, to ensure that conditions for its success remain in place. Nonetheless, the events that unfolded throughout 1996 and 1997 proved that our best efforts alone are not enough and that this process will remain fragile as long as it is exposed to regional risks such as:

As a small country, Jordan is necessarily affected by regional developments which have an impact on economic performance and on the domestic national consensus which is essential to sustain its vision and help it endure the test of time. Lack of progress on other tracks, the terrorist attacks on Israeli targets, military strikes against South Lebanon, opening of the tunnel in Jerusalem and events that ensued, renewed settlement activities, and most importantly, the erosion of confidence in the peace process that resulted from all this, took a heavy toll on the Jordanian economy. Foreign investments--known to shy away from unstable regions--failed to materialize as expected or planned. The growth in tourism which stood at over 25% in 1995 dropped to around 3% in 1996.

It is a fact that the majority of Jordanians supported the peace treaty with Israel. It was seen as the treaty that returned "our land and water" and promised prosperity and a better life for all through regional cooperation, expanded trade opportunities, and through giving Jordan the opportunity of a fresh and healthy start by relieving it of its debt burden. But, the benefits of peace were slow to materialize and some actually never did. An agreement with Israel to identify sources of additional waters to be provided to Jordan a year after signing the treaty (by October 1995) is yet to be reached. Israeli barriers to trade triggered by security concerns or protectionist tendencies have substantially impeded exports to Israel and to the Palestinian territories. The job creation and economic activity that were expected to accrue from such agreements have therefore not materialized, and no trickle down effects have been felt. In addition, no major creditor other than the U.S. did actually write off Jordan's debt, though countries like Japan and Germany did actually step up their assistance to Jordan.

People's expectations--particularly after the signing of the peace treaty with Israel--were indeed elevated by statements of strong support by world leaders. Those statements were understood as promising much more than what actually materialized. In that context, and despite the good macroeconomic performance, the fact remains that 15 percent of Jordanians are unemployed and 20 percent of the population lives below the poverty line. Moreover, per capita consumption declined by more than ten percent over the past three years, and external debt still stands at around 100% of GDP. As part of the restructuring program, increases in the price of energy and water, in addition to an extremely unpopular increase in the price of bread, took place in 1996. In short, the tolerance level among Jordanians today is much lower than was their tolerance for poor economic conditions after the Gulf war. An economic setback could spell disaster not just for Jordan, but also for its model of peace and development.

Perhaps it is a matter of debate whether it is more beneficial for a country to embark upon three reform programs simultaneously--such as Jordan did--or whether regional cooperation should only be pursued once real progress is achieved on other political fronts such as the Syrian-Israeli track and the Palestinian-Israeli track. Jordan opted for the first course to maximize the catalytic role which its own actions can have in serving the interest of comprehensive regional peace.

The simultaneous implementation of the programs in Jordan opens the way for a possible convergence of different interest groups, each of which opposes for ideological and other reasons one of these reforms for their own reasons. In the case of Jordan, different interest groups opposing the three processes of political and economic reform and regional cooperation can converge in a manner which if unchecked could create a critical mass, postponing one or more of the three elements cited above.

Disparities in development between Jordan and Israel are quite pronounced. This is reflected not only in the size of the economy (a 90 billion dollar versus a 7 billion dollar economy) but also in the standard of living as represented by the per capita income ($17,000 vs. $1,500), the technological base, the support services for investments and general conditions of the infrastructural network. Theoretically, this could result in an expedited growth for the smaller economy, but it could also result in polarization of development in the larger one at the expense of marginalization of the smaller economy. A first outcome would be the erosion of the very basis of the Jordanian model calling for development in peace. The challenge is to support an outcome through positive and market-friendly interventions by Jordan and the international donor community towards a peace-supporting and sustaining scenario.

There is no denying that transitional periods such as the one Jordan is passing through are difficult and risky. They entail moving from a well-known status quo which is fully transparent to people--with all its opportunities and problems--to a new, but quite uncertain promise. The move itself will also most certainly cause a reshuffling of fortunes and opportunities among the various interest groups. The fragility of the transitional period emanates from the fact that it allows the merger of forces between the skeptics--though good-willed--and those defending interests which developed over years of distortions. The challenge is to shorten and soften the transitional period as much as possible in order to bring the fruits of reform closer and to prevent any formation of disruptive coalitions.

Moreover, the pace and intensity of reform represent a trade-off between the present and the future. Jordan has made a choice. Undoubtedly, support of the international community for our serious domestic effort is essential to a further deepening of the reform, making the transitional period shorter and more tolerable.

The recent decision by the U.S. Administration and Congress to increase aid to Jordan to the level of $225 million annually is thus good not only for the country, but the whole region as well. It comes at a time when, despite all our efforts, such assistance is needed in a transition period where political progress in the peace process has been lacking in the region. We are undoubtedly very appreciative for this support.

There is no doubt today that Jordan has serious differences with the present Israeli government. The sense of partnership between the two governments--necessary for breaking new grounds and abundantly in existence before--has lost much of its strength. The Misha'al affair is only among the most recent of actions by the Israeli government that has contributed to the present state of affairs. But peace should not be held hostage to ill-advised actions or short-term difficulties. Clearly, a majority on both sides, indeed in the world, want peace to prevail in the region.

All of us, thus, share responsibility in making sure this becomes a reality, so that no one party, on either side, can be allowed to have outdated ideologies stand in the process of peace-making and peace-building--a peace that all parties can feel comfortable with, and thus work to protect and preserve.

That is why it has been a constant policy of Jordan, since the peace treaty, to address not only the sitting government in Israel, but the Israeli public as well. The message is clear: that we seek, right from the beginning, a relation built on our intention to shed away the policies of the past and live in peace. We remain committed to achieving that through comprehensive, just and lasting agreements for all the parties. That commitment holds true, whether we are in agreement or not with the sitting Israeli government at the time.

Our message to the Israeli public has been consistent. In our quest for a long-term solution, our vision should not be clouded by present-term difficulties. We have learned that despite all the historical baggage, countries need to get rid of their fortress mentalities and take risks for peace.

The significance of Jordan's unique model of peace is vital to the entire Middle East. More specifically:

Such a model is also the only one which has been successful in addressing the average Israeli citizen's basic need--acceptance as a member of the neighborhood. It is no coincidence, therefore, that the peace treaty with Jordan has been euphorically endorsed by all sectors of Israeli society, both supporters of Labor and Likud, secular and religious, Jews and Arabs. It is also no coincidence that with a change of government in Israel, Jordan's strategic vision, and its good standing among Israeli citizens, has been least affected.

If this model of peace is to succeed and be emulated, it is imperative that we go beyond the framework and nurture and support such a model. If this model of peace and cooperation succeeds, it will bring benefits not to Jordan alone, but to the whole region, transforming the Middle East from a region of conflict to one of stability, prosperity and interdependence, from the old concept that security brings peace to a new one where peace provides security. If this model fails, the cost will not be limited to Jordan alone, and would deal a fatal blow to the only vision that would satisfy the aspirations of all peoples in the area. It could, moreover, jeopardize the extensive investment which the international community and the US in particular have made in the regional peace process to safeguard their own interests in the region at the minimum cost possible.

We applaud the administration's recent efforts to bring new energy to the peace process. These efforts--not to impose solutions which no party wants, but to play a more active role to help the parties that today are either unwilling or unable to help themselves--are direfully needed. Again, we feel that we all share a responsibility to support this effort until it bears fruit.

Despite these enormous challenges, and all the present-day difficulties, we remain confident in our belief that the model that we are trying to affect is the right one for the development of the region. It is a model that we are committed to realizing.