'No miracle cure' for Jordan economic woes despite aid

‘Unprecedented’ events in Jordan will need more than $2.5 pledged by Gulf allies in aid amid concerns that unrest could spread in region.

Jordan's Gulf allies have pledged $2.5 billion in aid to help Amman ease an economic crisis that sparked angry protests, but analysts warned there is no "miracle cure" for its woes.

The lifeline announced Sunday at the end of a Saudi-hosted summit reflects fears in the Gulf that the protests that shook Jordan could spread to their doorsteps, experts said.

The largely peaceful demonstrations, which led to a change of prime ministers, erupted over rising prices and proposed legislation to increase income tax in line with IMF-driven austerity measures.

"What happened in Jordan was unprecedented and brought to mind the Arab Spring, which is a cause of concern for Gulf countries," said analyst Oraib Al Rintawi, who runs the Al-Quds Centre for Political Studies.

The 2011 uprisings saw pent-up public anger spill onto the streets of many Arab capitals, leading to the ouster of several veteran leaders. But Jordan, a key US and Gulf ally, was largely spared.

At the start of this month however thousands of Jordanians fed up with the rising cost of living and their deteriorating purchasing power took to the streets of Amman and other cities.

They demanded the resignation of then-prime minister Hani Mulki, pledging to keep up their nightime demonstrations until the tax legislation was revoked and price hikes reviewed.

"Jordan's stability is very important for the security of the Gulf region and particularly Saudi Arabia which is afraid that the protests would spread to its doorstep," Rintawi said.

Sunday's hastily arranged summit, hosted by Saudi Arabia and attended by Jordan, Kuwait and the United Arab Emirates, saw the energy-rich Gulf countries pledge an economic aid package for Amman totalling $2.5 billion.

- 'Undesirable options' -

Rintawi said Saudi "concerns" that Jordan could look outside the Gulf and its traditional allies for help were evident in the speed with which the summit was organised.

"Saudi Arabia feared Jordan could seek undesirable options," he said.

In May, Jordan's King Abdullah II was seen shaking hands with Saudi Arabia's arch-rival, Iranian President Hassan Rouhani, during a summit of the Organisation of the Islamic Cooperation in Istanbul.

There have also been recent signs of a warming of ties between Jordan and Qatar, the target of a boycott by a Saudi-led bloc that broke ties a year ago over claims Doha supports terrorism and Iran.

Amman also has vocally opposed the decision by US President Donald Trump to recognise Jerusalem as the capital of Israel and the transfer of the American embassy to the disputed city from Tel Aviv.

Jordan, which administered east Jerusalem until Israel took control of it in the 1967 Six-Day war and later annexed it, backs the position of the Palestinians who see the area as the capital of their future state.

Rintawi said Washington gave its Gulf allies a "greenlight" to help Jordan because it considers the tiny desert kingdom which shares borders with Syria and Iraq to be a "strategic partner".

- 'Rock and a hard place' -

"As often is the case Jordan is stuck between a rock and a hard place," said Karim Bitar, director of research at the Paris-based Institute of International and Strategic Affairs.

Jordan blames its economic woes on instability rocking the region and the burden of hosting hundreds of thousands of refugees from war-torn Syria, in addition to providing haven to Iraqi and Palestinian refugees.

The Gulf funds were announced a day after the European Union said it would provide Jordan with 20 million euros ($23.5 million) to help ease its economic woes.

Rintawi said there is no "miracle cure" for Jordan and stressed that the country needs "a new social contract".

"The economy cannot remain hostage to international aid... the Jordanians must learn to rely on themselves, and set up new economic measures to combat corruption and reduce public spending," he said.

Cash-strapped Jordan relies heavily on donors and is struggling to curb its debt after securing a $723-million loan from the International Monetary Fund in 2016.

The World Bank says Jordan has "weak growth prospects" this year, while 18.5 percent of the working age population is unemployed.

"Jordan's economy is structurally weak," and it is not clear if new prime minister Omar al-Razzaz, a Harvard-trained economist, will be able to tackle the challenges facing him, said Bitar.

"If the situation does not deteriorate further and if regional tensions do not increase, we could speculate that the country will emerge from the crisis as it always has by performing a balancing act."