* Opposition to liberal economic policies post-Arab Spring
* MPs, unions, tribes attack privatisation
* New economic reforms put on hold
* Some foreign investment projects suspended
* Government may need fresh mandate to revive reforms
By Suleiman Al-Khalidi
AMMAN, April 11 At a meeting in the royal palace
last month, Jordan's King Abdullah did not disguise his
exasperation with his officials as he listened to a chorus of
complaints from foreign investors.
Among the frustrated investors was Abu Dhabi property
developer Al Maabar, whose plan to build a resort in the granite
mountains around the Red Sea port city of Aqaba has come under
attack from conservative politicians and tribal leaders.
Critics allege the $500 million acquisition of land for the
project involved corruption and represented a plunder of
national wealth at cut-rate prices.
Angry executives of the company, part-owned by Abu Dhabi's
ruling family, went as far as telling the monarch at a private
meeting in February that they were prepared to give up the
project, according to industry executives familiar with the
"The Marsa Zayed project is to set up an economic and
touristic landmark in Aqaba, and the rumours about corruption in
the agreement are affecting the company. The agreement with
Jordan is clear and transparent," managing director Yousef Al
Nowais told reporters in February.
The tense atmosphere in the royal palace was a far cry from
the optimism among businessmen which prevailed just a few years
ago. At the start of the last decade, Jordan began introducing a
string of liberal economic policies which made the country a
showcase of International Monetary Fund-guided reforms.
Foreign investors were courted in order to create jobs and
obtain hard currency. Substantial stakes in state enterprises
were sold to investors including Brunei's sovereign wealth fund,
France Telecom, cement maker Lafarge and
Canada's Potash Corp of Saskatchewan.
But last year's "Arab Spring" uprisings elsewhere in the
Middle East emboldened opponents of the reforms, and their
opposition has developed into a broad backlash against economic
policies designed to aid the private sector.
Members of parliament, union activists and tribal leaders
have made demands ranging from the renegotiation of
privatisation deals, in order to recover billions of dollars in
royalties that were allegedly lost, to the repurchase of
majority stakes in some companies by the state.
The backlash has been particularly strong among Jordan's
East Bank tribes, whose members enjoyed preferential access to
jobs at state-owned firms before the privatisations, and cannot
count on this benefit with the companies under new management.
Some state bureaucrats have also opposed the reforms because
they remove a major source of the bureaucracy's influence.
"Our goal is to regain control of our national wealth.
Phosphates are Jordan's petroleum, and privatisation to a
certain party has given it a complete monopoly," said Ahmad
Shaqran, an MP from Jordan's impoverished south.
He headed a parliamentary committee that recommended the
abrogation of the sale of 37 percent of Jordan Phosphate Mines
to Brunei in 2006, and demanded that ministers
involved in the sale be referred to the prosecutor-general on
Jordan's economic reformers can point to successes of their
policies. Gross domestic product expanded by over 7 percent
annually in the five years through 2008, before the global
financial crisis hit; that was roughly 3 percentage points
faster than growth rates in the previous five years.
Former officials say the privatisation programme brought
over 1.7 billion dinars ($2.4 billion) to state coffers, easing
the country's external debt problem while putting some of the
privatised firms on a sounder financial footing.
But the government is finding it hard to make such
arguments. Jordanian administrations have traditionally shown
little appetite for confronting the country's tribes, which form
the backbone of public support for the government and provide
much of the manpower for the powerful security services.
Prime Minister Awn Khasawneh, who was appointed to the post
by King Abdullah last October in response to public protests
against corruption and pressure for democratic reforms, has
echoed some of the criticism of the privatisation programme.
"We will review deals with the possibility of buying back
some of the assets," Khasawneh told angry deputies at one of
several parliamentary sessions on privatisation since late last
The government, facing daily picketing by workers at state
enterprises and demands for pay hikes, has already put the
brakes on further privatisation deals that it thinks could
inflame the opposition.
Industry executives say a decade-old plan to sell off
state-owned Jordan Post, which had drawn bidding interest in the
region, has now been scrapped. The government has also retreated
from asking foreign firms to build and operate a new port.
Jordan's privatisation agency, which spearheaded some of the
country's largest sales, is nearly defunct, employees say. Its
website, which previously described plans to lease a range of
state assets to investors including utilities and grain silos,
now says there are "no new tenders at the present time".
Some economic liberalisation is still proceeding, including
deregulation of imports of petroleum products after the monopoly
of the country's sole refiner was abolished. But an official
list of six firms pre-qualified to handle the business has been
reduced to three.
Authorities have frozen plans to launch billions of dollars
of public-private partnerships, which would involve private
firms in building infrastructure and providing public services.
Popular protests have extended even to companies which have
no direct link to the privatisation programme. Local residents
have staged sit-ins in front of a plant operated by Saudi
Arabia's Arabian Cement Co in Jordan's southern town of
Qatraneh, demanding jobs as a social right.
Some members of parliament have called for higher taxes on
the telecommunications sector, dominated by foreign players such
as France Telecom, Kuwait's Zain and Bahrain
Telecommunications. It is unclear whether the proposal
will be adopted, but it has helped to chill business sentiment.
In some ways, Jordan remains attractive to private
investors. Its population of about 6 million is young and
fast-growing. It is an important base for doing business in
Iraq, where post-war reconstruction is gathering pace.
Nevertheless, the populist backlash against private business
has clearly begun to hurt investment. For example, Cairo-based
developer and resort operator Amer Group Holding, which had
intended to establish resorts in Jordan's Dead Sea area, has put
those plans on hold, according to investment officials.
The failure of the government to defend one of the country's
most prominent tycoons, Sabih Masri, who has interests in
tourism, banking and agriculture, has prompted him to halt new
projects in the southern region of Wadi Rum. After some of his
land holdings there appreciated in value, authorities sought to
renegotiate the leases, citing protests by community elders,
said executives working with Masri.
"None of the large privatisation deals concluded in the last
decade have any legal certainty now because of parliament's
ability to demand the invalidation of these deals, and this is
creating a lot of caution among new investors," said Lana
Alamat, a lawyer with International Business Legal Associates,
an Amman-based firm.
"This shadow of doubt is worsened by the cabinet's
unwillingness to approve new transactions or give incentives to
new investors, which is affecting prospective deals in the
A more aggressive government stance on defending the private
sector may depend on the results of the next parliamentary
elections, expected this year or next. As part of democratic
reforms, Jordan's cabinet drafted a new electoral law this week
which it says will improve political representation.
The danger, however, is that the elections could give
conservative tribes even more influence in the assembly, which
could increase the mood of economic nationalism.