Economic Austerity, 1981

Jordan Table of Contents

Since the creation of Transjordan in 1921, the nation had depended on external economic aid. This dependence rendered it economically vulnerable. For many years the economy was underwritten by Britain. By the early 1950s, after Jordan had officially annexed the West Bank, foreign aid accounted for 60 percent of government revenues. The crucial event for the Jordanian economy, as it was for the Arab world as a whole, was the quadrupling of world oil prices that followed the October 1973 War. Possessing little oil of its own, Jordan nonetheless became inexorably linked to the volatile world oil market. Between 1973 and 1981, direct Arab budget support rose more than sixteen-fold, from US$71.8 million to US$1.179 billion. In the same period, the value of Jordanian exports jumped almost thirteen-fold, from US$57.6 million to US$734.9 million. In addition, Jordan sent to the Persian Gulf states an estimated 350,000 doctors, engineers, teachers, and construction workers who by 1981 had sent back home more than US$1 billion. Even after deducting the outward flow of dinars from the 125,000 foreign workers inside Jordan holding agricultural and unskilled jobs, net worker remittances rose from US$15 million in 1970 to US$900 million in 1981.

The accelerated pace of economic growth fueled by the oil price increases of the 1970s also caused inflation and growing import bills. Most important for Jordan, the economic boom years of the 1970s raised popular expectations of continued economic prosperity. As a result, when world oil prices began spiraling downward in the early 1980s, the government halted many large-scale construction projects, slashed food and other subsidies, and significantly reduced public employment. These actions stirred public dissatisfaction.

Hussein's response to the rise in public discontent was to ease restrictions on the political process. First, in 1981 he increased membership of the National Consultative Council (NCC) from sixty to seventy-five. The NCC had been created in April 1978 to fulfill the legislative functions of the dissolved House of Representatives. The NCC, however, was empowered only to debate and discuss bills and had no authority to make laws. As a result, the enlargement of the NCC's membership did not appease the opposition seeking democratic reforms. In addition, in March 1982 a new weekly publication, Al Ufuq (Horizons), campaigned for greater democratic freedom and for the reestablishment of political parties banned since 1957. Two political parties were formed: the Arab Constitutional Alignment and the Arab National Party. Both parties called for greater public participation in the affairs of state.

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Source: U.S. Library of Congress