Global donors pledge $1.8bn as Jordan goes through economic transition

Britain's Queen Elizabeth II poses for a photograph with Crown Prince Hussein of Jordan (L), Queen Rania of Jordan (2nd L) and King Abdullah II of Jordan (2nd R) and Britain's Princess Anne, Princess Royal (R), during a private audience at Buckingham Palace in central London, on February 28, 2019. (AFP)
Updated 09 March 2019
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Global donors pledge $1.8bn as Jordan goes through economic transition

  • Jordan is at a transition point and it’s economy has been growing steadily for the past couple of years
  • But now there is a huge growth potential, according to the UN

LONDON: Jordan will introduce a slew of economic reforms to help its subsidy-supported economy escape the crippling burden of taking in more than a million refugees.
But planners must ensure that well-meaning policies do not punish the people they aim to protect, warn analysts. 
International donors last week pledged over $1.8 billion as part of the London Initiative at the Jordan: Growth and Opportunity conference, hosted by the UK government. Britain also announced it was underwriting a $250 million World Bank loan to make it easier for Jordan to borrow at lower interest rates. 
“We at the UN would like to be part of this journey and partner with the private sector to generate even more investments for the Jordanian economy,” said Nikolaj Gilbert, director of Partnerships Practice Group at the UN Office for Project Services (UNOPS).
“Jordan is at a transition point and it’s economy has been growing steadily for the past couple of years but now there is a huge growth potential,” Gilbert said.
Gilbert said that the UN and UNOPS will help bring in investments into Jordan by introducing de-risking projects and help convince institutional investors that Jordan is the place to go because the workforce is extremely capable and qualified.

“We are here to support education and equip schools with technology and teaching materials so that the Jordanian and the Syrian population and the refugees in Jordan can attend schools and have quality education.

Young Syrian refugees carry their chairs into a classroom at a UNICEF-run school in the al-Zaatari refugee camp in the Jordanian city of Mafraq. (AFP)

“Beyond that we are also doing ICT projects and empowering women through training programs for start-ups, where the women in Jordan can also help to create a positive change in the Jordanian economy,” he said.
UNOPS helps Jordan’s government and its international partners to respond to the impact of the Syrian crisis.
“Beyond that we are also doing ICT projects and empowering women through training programs for start-ups, where the women in Jordan can also help to create a positive change in the Jordanian economy,” he said.
Jordan’s economy has been battered by the fallout from conflicts in neighboring Syria and Iraq. The country has taken in hundreds of thousands of Syrian refugees and has the second-highest share of refugees compared to population in the world.
At the same time, tax hikes introduced to meet International Monetary Fund (IMF) targets to reduce Jordan’s debt burden have triggered widespread protests.

Jordanian police face off demonstrators during a protest near the prime minister’s office in Amman, Jordan, on June 6, 2018. (AFP)

Now the country is picking up the pace of reform, according to information minister Jumana Ghuneimat.
“We have a program with the World Bank for the next five years to implement many reforms and steps to remove the challenges that are facing investment in Jordan and provide a friendly investment environment to have growth in the future and to build a real opportunity for Jordan,” she said.
Over the past decade, Jordan has pursued a number of sometimes painful structural reforms in education and health, as well as privatization and liberalization. The kingdom has also introduced social protection systems and reformed subsidies, creating the conditions for public-private partnerships in infrastructure and making tax reforms. 
However, further progress is needed so that such reforms lead to concrete outcomes.
The Jordan-World Bank program aims to raise economic participation for women, reduce the cost of fuel and make the Jordanian economy more competitive in the region. 
“We want to tell the international community that Jordan has the capacity and skills to work in the civil sectors and especially in the services sector,” the information minister said.
The World Bank is optimistic about Jordan’s economic future and is committed to the five-year IMF-backed economic consolidation program that includes implementing tough reforms.
“Our engagement with Jordan is a far-reaching, long-haul type of commitment. It aims to frame a new set of reforms that would create jobs,” said Ferid BelHajj, vice president of the Middle East and North Africa at the World Bank.

Syrian refugees attend a sewing class as part of a UN project at the Azraq camp for Syrian refugees in northern Jordan. (AFP)

However, economic analyst Mostafa Al-Bazerghan said Jordan’s economy suffers from many problems and faces challenges associated with the conditions set by the IMF.
“There is the problem of government subsidies for basic goods and fuel, there are also proposals for support from the IMF or loans, but the social situation cannot tolerate the implementation of the IMF’s conditions,” said Al-Bazerghan.
Jordan has youth unemployment of almost 40 percent, possesses few natural resources and is burdened with 1.3 million Syrian refugees on top of the longstanding Palestinian influx.
The World Bank’s BelHajj said that the Jordanian government, under the leadership of Prime Minister Omar Al-Razzaz, had been courageous in pushing reforms that are not popular, but will transform the Jordanian economy.
“This reform must be carried out because Jordan is an important part of the Middle East economy. It is necessary to reduce the economy’s dependence on government subsidies,” Al-Bazerghan said.
The analyst cited three main priorities — reduction of subsidies, supporting those who are vulnerable to the loss of subsidies and encouraging the private sector to invest.

However, he also said that Jordan has a great responsibility that developed with the Syrian and Iraqi crises.

“There is regional support today. Iraq started supplying Jordan with crude oil at reduced prices.”

The Jordanian government revealed preferential tariffs offered by Iraq for supplying oil to Jordan as part of economic partnerships signed by the two countries.


EU launches in-depth probe on Amazon over data use

Updated 1 min 22 sec ago
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EU launches in-depth probe on Amazon over data use

  • Formal investigation opens a new chapter in the EU’s campaign to address the dominance of US tech firms
  • At the heart of the case is Amazon’s service to third party merchants
BRUSSELS: The EU’s powerful antitrust authority launched an in-depth investigation into Amazon on Wednesday, amid suspicions the US-based online behemoth misuses merchant data hosted on its website.
The formal investigation opens a new chapter in the European Union’s campaign to address the dominance of US tech firms with Google, Facebook and Apple also regular targets of regulators in Brussels.
With its probe, the EU competition watchdog is seeking to expand its oversight powers to data, the most prized asset for Silicon Valley giants that now dominate web-use worldwide.
“I have ... decided to take a very close look at Amazon’s business practices and its dual role as marketplace and retailer (and) to assess its compliance with EU competition rules,” the EU’s anti-trust commissioner Margrethe Vestager said in a statement.
At the heart of the case is Amazon’s service to third party merchants who use the world’s biggest online retailer to access customers and broaden their reach.
In providing this service, Amazon “continuously collects data about the activity on its platform,” the commission said.
Preliminary findings, according to the statement, indicate that Amazon “appears to use competitively sensitive information — about marketplace sellers, their products and transactions on the marketplace.”
The opening of a formal investigation procedure does not prejudge its outcome, but if fault is found the sanctions by the EU can reach up to 10 percent of sales.
“The stakes for the digital economy are high, because any action by the Commission can have an impact on the business model of web giants, which is based on data accumulation,” said Andrea Collart, of the consulting firm Avisa in Brussels.
The investigation, which has no deadline, is likely to be the final offensive by Vestager against big tech before the end of her current mandate on October 31.
In an email to AFP, Amazon said: “We will cooperate fully with the European Commission and continue working hard to support businesses of all sizes and help them grow.”
The probe adds to Vestager’s long list of cases against US Big Tech.
During her five-year term, Brussels has slapped Google with a combined $9.5 billion in antitrust fines and scrutinized Apple and Facebook for breaches of competition, tax and data rules.
Amazon in 2017 was ordered to pay back taxes of about €250 million to Luxembourg because of illegal tax breaks.
The company also settled with Brussels over its distribution deals with e-book publishers in Europe.