On Wednesday, May 30th, Jordanian workers staged a strike in the capital city of Amman against the government’s latest income tax proposal. The proposal was set to increase government revenue by raising the individual tax rate to up to 25% of their reported income and anywhere between 30% and 40% for most businesses. The plan was also set to eliminate exemptions and tax pensions and inheritance for the first time.
The reforms come just months after an earlier tax hike as part of an agreement with the International Money Fund (IMF) to reduce Jordan’s $40 billion public debt. The IMF conditioned its aid package on Jordan enacting austerity measures, such as an increase in government revenue or unpopular spending reductions.
The strike was set to last from 9am to 3pm with a demonstration to follow, but demonstrations continued peacefully into the night. Unique about this protest is the fact that it was organized by professional workers’ unions rather than political parties.
The unions cover a diverse set of trades, including teachers, doctors, shop workers, and bankers. Historically, many Jordanian unions have been dominated by the Muslim Brotherhood’s Islamic Action Front, but the group has fared poorly in recent union elections. In current protests, with a less influential Muslim Brotherhood, participants have been adamant about not allowing the Muslim Brotherhood or any other external group to use the protests for ideological gains. Instead, protesters insist they have learned from the past and are attempting to stay focused on “singular goals.”
Much of the protests are led by young men and women who are motivated by the failures of the Arab Spring protests in 2011, which led to “half-hearted” reforms among Jordan’s government that had minimal results.
Although initially concerned with the tax reform law, protests morphed into demonstrations against the government’s corruption and poor economic policies. On Wednesday, June 6th, the 7th day of demonstrations, protests turned violent when a security guard was non-fatally stabbed by a protester who was then arrested. No acts of violence have been reported since.
To appease the protesters, Prime Minister Hani al-Mulki resigned on Monday, June 4, and was replaced by Omar Razzaz, a former World Bank official. In another victory for the protesters, Razzaz announced his intent to withdraw the tax reform as soon as he was sworn into office by King Abdullah. Additionally, Jordan has asked the IMF to slow its reforms.
These steps by the government convinced union leaders to suspend protests to allow the government to make further changes. This was poorly received by protesters, however, who pressured union leaders to continue lobbying efforts with members of Jordan’s parliament.
What’s At Stake?
Jordan has been an ally to United States’ efforts for peace and security in the Middle East, but economic troubles could restrain the Jordanian government’s ability to assist the U.S. in some of its key regional security goals. Jordan is one of two countries in the Middle East to sign a peace treaty with staunch U.S. ally Israel, which it did in 1994.
Jordan maintains a vested interest in Jerusalem, where it administers the Temple Mount, a major religious site for Jews and the site of Al Aqsa mosque, which is highly regarded by Muslims. Tensions increased between Jordan and Israel over the decision to relocate the U.S. Embassy to Jerusalem, and in January of 2018, Jordan’s King Abdullah affirmed his support for the Palestinian cause. This relationship is an important factor to peace in the region.
Although seemingly friendly, Jordan and Palestinians have historically had a complex relationship. After the 1948 Arab-Israeli War, Jordan annexed the West Bank and granted citizenship to the Palestinian population. With the creation of the Palestinian Liberation Organization (PLO), the situation devolved into conflict after the 1967 Six-Day War.
Human Rights Watch reported that more than half of Jordan’s population is of Palestinian origin, but more than 2,700 of them were stripped of Jordanian citizenship beginning in 1988, the height of the first Palestinian uprising against Israel in the West Bank and Gaza Strip. The possibility of a Palestinian majority poses a threat to the political power of the Hashemite ruling family of Jordan. Therefore, Jordan has supported the right of return for Palestinians and a two-state solution between Israel and Palestinian territories to prevent Israel from controlling the West Bank and prevent Palestinians from threatening Jordan’s rulers.
If a severe economic crisis develops in Jordan, it would result in Jordan’s inability to be a significant ally in the Israeli-Palestinian dispute. The U.S. or Israeli governments might have to take a more proactive role in finding a long-term peaceful solution, an already difficult task made more complex by recent, ongoing protests and the U.S Embassy relocation to Jerusalem, which further angered Palestinian supporters. Although Hamas has been linked to sponsoring the protests to pressure Israel, reporting has often portrayed the Israeli military as unnecessarily aggressive, further straining relations.
Jordan has also been a major partner in the Syrian refugee crisis, taking in the second highest total of Syrians and offering them protection, health and education services, employment opportunities, and access to resources. Expenditures for the Syrian refugees totals over $2.5 billion per year, a quarter of government revenue and 6 percent of Jordan’s gross domestic product. In other words, the refugee crisis has been a significant financial burden on Jordan, and its economic crisis could send more Syrians on the move. That scenario could result in Syrians attempting to seek refuge in the U.S. or European countries, which would pose potential security threats.
Jordan’s economy is dependent on foreign aid with no oil or other natural resources, so its foreign policy is dependent on its largest donor. Since the U.S. is Jordan’s largest donor, Jordan has historically adopted a pro-West stance. It is notable then, that after agreeing to a $1.2 billion financial aid package with the United States, Jordan’s King Abdullah met with Iran’s President Hassan Rouhani. In their meeting, the two leaders expressed their displeasure in the U.S. decision to relocate its embassy to Jerusalem and affirmed their support for the Palestinian cause. Rouhani later stressed a desire to improve relations with Jordan, and the tensions between the U.S. and Jordan could provide an opening for both leaders to cultivate the relationship. Because of Iranian tendency to undermine stability in the region by supporting insurgencies or other divergent tactics, the relationship between these two is worth watching. However, the Jordanian monarchy still maintains close economic and military ties with the U.S., the E.U., and Saudi Arabia.
After repeated failed promises to reform Jordan’s government, King Abdullah’s appointment of Omar Razzaz seems to ignore the demands of the protestors. The IMF-backed reforms have strained middle and lower class Jordanians, and a former World Bank official as Prime Minister is indicative of Jordan’s intent to continue pursuing IMF reform proposals. Jordan’s Military Veterans Association also expressed disappointment in Razzaz, calling him “unfit” to lead the country through this crisis. Although popular now, Abdullah must carefully weigh the necessary austerity measures with the economic realities of Jordan’s lower class citizens, who began their protests because of such measures.
For the time being, the demonstrations remain as mostly peaceful protests against increased costs of living, higher taxes, and limited job opportunities. The protests are advocating for governmental reform rather than regime change. But if the King is unable to promote meaningful reform, Jordanian citizens could reach a breaking point.
Considering that some of Jordan’s veterans groups have been critical of the monarchy in the past, this event should not be written off as a simple protest. Jordan’s economic woes have continued for years, and its government does not appear to be close to a solution.
The U.S. government must closely monitor the situation while also remaining wary of Iran’s attempts to increase its influence in the Kingdom. If Jordan is unable to overcome this economic crisis, the United States risks losing a key ally in improving the security of the Middle East.