Beyond Boom and Bust: External Rents, Durable Authoritarianism, and Institutional Adaptation in the Hashemite Kingdom of Jordan

Transjordan refers to the land east of the Jordan River (what is today modern Jordan) and is also called East Bank. Cisjordan, also called the West Bank, refers to the land that today, in combination with the Gaza Strip, constitutes the Palestinian Territories.

The authors would like to acknowledge Richard F. Doner for pointing out the underdeveloped demand aspects of rentier states.

A coalition refers to the arrangements by which ruling elites maintain the support of two or more social groups in exchange for their collective political support.

Our conception of the relationship among coalitions, side payments, and institutions owes much to the work of Waldner (1999). Yet while Waldner claims that it was elite conflict that broadened Turkish and Syrian regime coalitions to the extent that large side payments had to be made to subaltern classes, we find that in the Jordanian case, the requirements of state building required the Hashemites to ally themselves with two highly disparate coalition members, necessitating large side payments.

As Michael Ross (2001: 330) notes, these two dependent variables are often conflated.

While opposition mobilization, popular protests, and limited liberalization did take place in a number of countries (including Jordan) as rent-fuelled patronage decreased in the 1980s and early 1990s, democratization hardly followed. Furthermore, though it may still be argued that rents in the form of superpower security assistance and debt financing helped sustain regime security institutions despite fiscal austerity, there is no reason to believe that the downfall of an authoritarian regime would mean democracy (Skocpol 1982; Bellin 1994; Gause 1998).

For example, though Kuwait, Libya, and Saudi Arabia are all considered oil rentiers, levels of political participation and the composition and the strength of the political opposition vary significantly. Chaudhry’s detailed comparison of Yemen and Saudi Arabia introduced the still-underdeveloped argument that the type of rents available to a state (remittances and foreign aid versus oil) influences state-building strategies.

The subject of rent maximization and foreign policy is a fruitful research agenda that Brand (1995) has already carefully undertaken for Jordan, as well as Barnett (1993) for Egypt. We do not address foreign policy outcomes in this short paper, but acknowledge the importance of this exchange for Jordan.

These merchants, originally of Palestinian and Damascene origins, had acquired significant tracts of land through usury and established local commercial banks by the end of the Ottoman period (Moaddel 2002: 68; Moore 2004: 60). In 1923, the merchants established the Amman Chamber of Commerce (ACC) (El-Said 2002: 257; Moore 2004: 61).

The British established the MESC in 1941 as a means of reducing wartime shortages across the region.

Of the 39 merchants who dominated this so-called quota coterie, 24 either sat on the ACC board or were related to board members (Moore 2004: 65).

It is worth noting that while the mass base of pan-Arab and communist groups were Palestinian, the mobilizers of these groups were often educated Transjordanians from the settled areas or early Syrian/Palestinian immigrants (Anderson 1997: 23, 86).

The Prime Minister was Suleiman Al-Nabulsi, the Transjordanian leftist who had mobilized Palestinians, communists, and Baathists, as well as abrogating the Anglo-Jordanian Treaty without consulting with King Hussein, attempting to ally Jordan with Egypt and Syria, and dismissing Hashemite officials.

For a complete list of US infrastructure projects, see Peters (2009).

From 1955 to 1966, the average domestic revenue as a percentage of budget expenditure was 45%, down significantly from the 73% average of the 1924–1934 period (Aruri 1972: 61).

The American attitude toward parallel institutions differed substantially from that of the British. US aid officials consistently allied themselves with the “King’s Men”, old-guard tribal leaders who opposed institutional rationalization, greater taxation of the population, and the retirement of redundant and corrupt civil service officers. Aid officials ignored appeals from reformers such as three-time prime minister Wasfi Al Tell, who sought to minimize state patronage and exemplified an Transjordanian technocratic elite that aspired to develop Jordan’s industrial base. As a result, the Point Four/USAID bureaucracy grew in parallel to the Jordanian rentier state, performing essential state functions but never making an attempt to engage Jordanian institutions in meaningful reform (Kingston 1994, 2001).

This observation runs contrary to traditional rentier interpretations of Jordan, which see the rise of the rentier state in the 1970s and its demise (corresponding with aid reductions) in 1989 (Knowles 2005).

Army salaries were raised several times between 1978 and 1981, with two raises in 1980 alone. Special supermarkets were set up for government employees, offering up to a 50% discount on consumer goods. In 1980, a decree was issued that gave the children of public servants preference in university admissions (Satloff 1986: 9–19).

Overall, the Hashemites seem to have favored the tribal coalition partner over the economic elite as Jordan spiraled toward economic crisis. Business had generally opposed greater interference of the government in the economy (particularly when the Ministry of Supply was established), but it became even more opposed in the mid-1980s. Yet from 1973 to 1988, government officials had less than 20 formal meetings with the industrialists’ associational representative, the Amman Chamber of Industry, and the government of Zaid Al-Rifai (1985–1989), a businessman coming from a pre-1948 Palestinian family, left promises of reforms and deregulation unfulfilled (Brand 1995: 57–58).

The Jordanian government deposited dollar payments for the oil at the Jordan Central Bank, and Jordanian industries exporting to Iraq then withdrew this money in payment. Some industries, such as those in pharmaceuticals, household appliances, and assembly, were solely dependent on the Iraqi market, though trade with Iraq did not only benefit industrialists (Al Turk 2007, personal interview).

The USA has designated only five other states with this title: South Korea, Israel, Egypt, Australia, and Japan (Yom and Al-Momani 2008: 40).

Apart from King Hussein’s decision to side with Iraq during the First Gulf War (for which Jordan’s military and budgetary aid was reduced), the USA has purchased some stellar geopolitical services with its economic and military aid, which peaked at $1.15 billion and $681.5 million, respectively, in 2003. Before the Iraq invasion, Jordan supported coalition flyovers of Iraq. After September 11, Jordan provided both overt and covert political and security support to the USA, including the support of “extraordinary rendition” of terrorist suspects through the General Intelligence Directorate. After the invasion of Iraq, Abdullah allowed the stationing of US and British Special Forces in the Eastern Desert and consented to nonoffensive coalition flyovers to support the war effort during in the lead up to the war. During the war, Jordan permitted the training of Iraqi police in the Eastern Desert, the use of the Aqaba port and the Karameh borders for passage of goods, and the placement of peacekeeping forces in Iraq.

One such example is the Rifai family. As the CEO of Jordan Dubai Capital, Samir Rifai has overseen (with two foreign partners) the purchase of 51% of the Central Electricity Generating Company.

Jordan’s committed average tariff rate is 21.6 percent, and customs tariffs must be reduced to 20 percent by 2010. Jordan committed to removing 139 measures in services, excluding market access, and 79 measures granting national treatment. Procedures by which import licenses were granted were first changed in 1997, and in 2003 import licenses were no longer necessary except for limited categories of goods relating to public safety, environment, natural resources, national security, public order, and morality (FEMISE Coordinators 2005: 66, 75).

Opening an export zone and qualifying for duty-free export to the USA requires ministerial approval in Amman, as well as Tel Aviv and Washington, making connections with the Royal Court a necessity.