Jordan - Domestic policy

Jordan has a small, underdeveloped economy and few natural resources. Nearly one-third of its people live in poverty, and official estimates place the unemployment rate at around 15%, although other sources cite the unemployment rate to be as high as 25%–30%. Declining oil prices in the 1980s led to a drastic cut in hard currency inflows and contributed to the country's rising foreign debts, which are now approximately US $8 billion. In the late 1980s, difficulties with debt servicing sparked a currency crisis, forcing adoption of an International Monetary Fund (IMF) structural adjustment program. The government introduced reforms to reduce the role of government in the economy, including privatization of public enterprises. These reforms resulted in tax increases, reduced public spending, and higher prices on staple products. Economic distress was compounded by fallout from the Iraqi invasion of Kuwait. The subsequent Gulf War and United Nations (UN) sanctions against Iraq deprived Jordan of a principal trading partner and oil supplier. Moreover, the country had to cope with an influx of refugees from Iraq and Jordanians of Palestinian origin who were expelled from Kuwait. The potential for social upheaval caused by economic strains is given as one justification for the government's clampdown on political dissent in the early 1990s. However, widespread unrest did not materialize, partly due to the generosity of Western aid donors who provided stopgap financing to alleviate the country's fiscal crisis.

After about six months in office, in August of 1999, Abdullah recalled the parliament from its summer recess for the purpose of acting on legislation. By September, amendments to existing laws were passed to list restrictions on some forms of freedom of the press.

Abdullah considers the continuity of reform essential to solve Jordan's economic problems. Consequently, he has appointed seasoned pro-reform figures to key economic policy posts. He has also introduced limited economic reform in the form of privatization of state-owned enterprises. In January 2000, Jordan entered the World Trade Organization and in October 2000, Abdullah signed the Jordan-United States Free Trade Agreement, providing Jordanian products unimpeded access to the United States. Observers are keenly watching how Abdullah will respond to the IMF calls for continued progress on privatization and to domestic pressures for tax relief and against further cuts in subsidies. Abdullah received the president of the World Bank in March 2003, who was impressed with Abdullah's emphasis on education and in developing Jordan's human resources. Abdullah continues to focus on job creation through private investment and public sector reform, more efficient natural resource management, particularly for water, and improving social conditions. Small and medium businesses are receiving attention in Jordan as way of creating jobs, including those for women and low-income groups.

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