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'Economic strength and self-sufficiency is Jordan's best defence amid regional chaos’

AMMAN — Profits and job growth can speak louder than politics, a US embassy press statement quoted US Ambassador to Jordan Alice G. Wells as telling ministers,diplomats, business leaders and other guests this week. 

According to the press release, Wells said at  the Talal Abu-Ghazaleh Knowledge Forum that economic strength and self-sufficiency is Jordan's best defence amid all the chaos in the region.

"Security is unlikely to improve until economic development and opportunities for citizens improve.  Jordan must be creative in its approach to opening and strengthening new markets," she added.
Stressing the importance of keeping the private sector engaged in regional initiatives, the ambassador mentioned that the US Chamber of Commerce convened in 2014 a successful meeting of the Middle East Commercial Centre (MECC) in Jordan that brought together private sector businesspeople, from Oman, Turkey, Saudi Arabia, Israel, and Jordan, who see the potential for peace and prosperity that regional trade presents.  

"Last month, another MECC workshop brought together business leaders in the region to feature the Port of Aqaba as a destination for goods," she added.

Wells indicated in the press statement that as war and terrorism reduced trade with Jordan’s traditional partners, there is an opportunity to open up more trade corridors throughout the region.  

"When I arrived, I was shocked to learn that the West Bank does $4 billion worth of trade with Israel each year, but only $100 million with Jordan," the ambassador said.  "Although many Jordanian trucks meet Israeli standards, they cannot cross the border, and businessmen have difficulty getting Israeli visas."

She added that in the other direction, containers from the Port of Haifa have to be unloaded into pallets before shipment into Jordan, rather than trucked directly across the border.  

"The more freely that Jordanian businesses can establish, grow and develop regional partnerships, the faster they will drive prosperity," she emphasised.

Noting that workers and businesses can only thrive in environments where the rules of the road are clear and predictable, Wells urged innovative Jordanian businesses not to be stifled by artificial barriers, like tariffs. 

Like tariffs, subsidies also stifle free markets, the ambassador remarked.

"They distort economic choices, hide inefficiencies, and consume resources that could otherwise be used to directly help the poor," she said.

"I may not be a farmer, but I know that goats aren’t supposed to eat bread.  But they do in Jordan, because it goes stale before it can be eaten and bread is cheaper than grazing fields," Wells added.

Targeted food discounts for poor Jordanians would cut Jordan’s 225 million dinar bill for food subsidies in half, she indicated, describing the steps taken by the Kingdom to implement subsidy reforms as brave and applauding Prime Minister Abdullah Nsour government’s efforts to continue along this path to a free and unbiased economic platform.

Wells said international assistance does not address the root causes of economic difficulty, and unless it supports efforts at structural reform, it simply buys time in the hope that necessary changes will be made on their own.  

"And as we’ve seen during the Syria crisis, it is much easier for some donor countries to make promises of assistance than actual deposits," the US envoy told the forum.

Associating sustainable progress with the basic assumption that all honest work is dignified and of worth to society, she asked whether it is preferable for one to be an unemployed engineer, or a forklift operator with a job?  

"Would you rather that Jordan have 100,000 unemployed engineers, or 100,000 employed forklift operators?," she asked. 

According to the press release, a business contact recently told her that there are 118,000 registered engineers in Jordan, but only about 8,000 are actually practicing. 

The ambassador indicated that this region has the highest youth unemployment rate in the world; and almost a third of Jordan’s young people do not have immediate prospects after graduation.

"Every year, 100,000 new graduates look for work or continued study; there are not enough spots for all of them in their chosen fields," she said, noting that Jordan’s workforce is young, and getting younger.  

"Is it always better to have a degree, when a marketable technical skill means jobs?," she asked,  when universities produce hundreds of thousands of young Jordanians with degrees like engineering and accounting, but there are not enough jobs to absorb them.  She pointed out that only a tenth as many are in vocational schools to become electricians and carpenters, and that snatch up jobs immediately.  

The pyramid is inverted; as one Jordanian entrepreneur recently said: “Everyone wants to be an engineer, but no one wants to be a technician.”

Mentioning another inverted pyramid that begs attention, Wells pointed to access to capital and the utilisation of financial liquidity because job creation depends on that.

"We understand that in the last few years, it has been more profitable for banks to lend to the government than to an entrepreneur.  But as the government balances its budget and reduces its need to borrow, small- and medium-sized businesses should be an investment priority," she said. 

"While small- and medium-sized enterprises represent 95 per cent of registered businesses in Jordan, they only receive 10 per cent of loans, and most banks have not yet considered how their lending practices could be restructured to facilitate access to financing for this crucial sector," the envoy added.

Wells underlined the importance of entrepreneurs creating a business around a concept because it is not enough just to have a great idea.

"Jordan has a wealth of smart people with great ideas, and can make it easier for them to establish and fund businesses," she said. "Jordan’s economic potential resides within the ingenuity and creativity of its people."

An intaj programme to connect Jordanians to Silicon Valley accelerator “Plug and Play” has offered young entrepreneurs the opportunity to incubate their businesses in the United States, raising close to a million dollars in financing to date, the envoy indicated.   

"I recently visited the Zain Innovation Campus at King Hussein Business Park, a perfect example of Jordanian companies helping entrepreneurs turn their dreams into reality," she said.

The press release quoted the ambassador as saying that the gender employment gap is three times bigger in this region than in most developing economies.  

Wells added that each Jordanian woman who is not given a chance to work represents an opportunity lost, and profit lost, for Jordan.  

According to one estimate, if the gender gap was narrowed just by one-third, the gross domestic product (GDP) in the region would grow by $1 trillion per year, or 6 per cent.  If Jordanian women participated in the country’s economy as much as their Arab women neighbours, Jordan’s GDP would increase 5 to 10 per cent.

She indicated that through the USAID Jordan Loan Guarantee Facility, the United States is providing $250 million to participating Jordanian banks to fund small businesses; and over 10 per cent of the guarantees have benefitted women-owned businesses.  

Wells mentioned Innovative Packaging which provides locally-produced packaging for Jordanian products like Dead Sea minerals and olive oil as one good example.

The ambassador spoke also about energy and water telling her audience that while the loss of cheap Egyptian gas caused a JD4.7 billion debt at the state-owned National Electric Power Company and  a fiscal crisis, it has also led to opportunity in the form of diversification and new investment.

She indicated that two major American renewable energy companies have made plans to invest in Jordan, a 20 megawatt solar plant in Ma’an and a 45 megawatt wind farm in Irbid.  

"These two examples of Public-Private Partnerships demonstrate how the private sector can help the government invest in critical infrastructure.  Like us, these US companies believe in Jordan’s future," Wells said.

The ambassador added that the recent arrival of a liquefied natural gas processing ship in Aqaba will allow Jordan to import large quantities of affordable fuel that will provide 30 per cent of the country’s power needs at a third less than the cost of diesel.  

"The next hurdle is to secure a long-term supply of natural gas from the Leviathan field, with the potential to solve Jordan’s energy crisis entirely," she added.

Wells indicated that the US contributed over $1 billion to the water sector over the last 10 years and mentioned that last October, "Water Minister Hazem Nasser and I cut the ribbon on the Al Karak Dam, which was financed through the proceeds of the sale of wheat donated by the United States".

"In Zarqa, the US is completing a $275 million water programme through the Millennium Challenge Corporation [MCC]," she stated.  "When completed in December 2016, the MCC investment is expected to benefit over 3 million residents in the Amman and Zarqa governorates."

The envoy reiterated support for phase one of the Red-Dead desalination project which will bring much-needed new sources of water to Aqaba and northern Jordan, and will be an important first step in efforts to stabilise the Dead Sea. 

According to the ambassador, Jordanians benefit from US assistance in myriad ways, touching every aspect of their lives.

"Over 75 per cent of babies in Jordan are born in maternity wards renovated by USAID," she said.  

"With half a billion dollars dedicated to Jordanian education since 2005, US government programmes have reached 30,000 teachers and more than a million students, two-thirds of Jordan’s student population," the envoy added. "A third of Jordan’s population receives fresh, drinkable water via treatment plants and supply networks built with US funds."

Wells mentioned that through the Overseas Private Investment Corporation, the United States has funded projects big and small, as large-scale as the 325-kilometre Disi water pipeline and as individual as a chocolate company expanding and creating new jobs.

The ambassador also indicated that clean technology, healthcare and information and communications technology sectors are receiving help from the USAID Jordan Competitiveness Programme in research, financing, business operations and many of the other critical back-office solutions.

Wells detailed many areas where the US is backing the Kingdom, pointing particularly to the signing of a $1.5 billion agreement to guarantee Jordan’s access to international capital markets.  

"This agreement, and our previous two loan guarantees, will save Jordan over $500 million in interest payments over the life of the bonds," the envoy said, pointing out that the United States signed a three-year memorandum of understanding that pledges $1 billion in assistance each year through 2017.  

"At the end of this fiscal year, the United States will have provided $15 billion in economic assistance to Jordan since its founding," the ambassador added.  "Our latest pledge will help ensure that Jordan can continue to provide critical services to its citizens, as well as to alleviate the financial burden caused by the 630,000 registered Syrian refugees in Jordan."

Noting that total bilateral trade reached $3.4 billion in 2014 as a result of the free trade agreement signed between the two countries, Wells pointed to Petra Engineering’s air-conditioning solutions, Hikma’s pharmaceutical products, as well as Jordanian cosmetics, jewellery, and camping gear in US markets.

 

She concluded that assistance must have a grander goal: to help Jordan develop the capability to become independent of aid.  "Our help has an objective that we both believe in: to make Jordan strong, more economically self-sufficient, and to use its wealth of human resources to extend its influence in the region and the world."

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