U.S.-Jordan Partnership: Realizing Jordan’s Economic Potential

Alice G. Wells, The Ambassador of the United States to the Hashemite Kingdom of Jordan

June 9, 2015
Talal Abu-Ghazaleh Knowledge Forum

Remarks as prepared

Your Excellency Dr. Talal Abu-Ghazaleh,

Your Esteemed Ministers, members of the diplomatic corps, business leaders, and other distinguished guests.

It is a great honor for me to address the Talal Abu-Ghazaleh Knowledge Forum.

Over my last ten months in your beautiful country I have learned what everyone in this room knows – Jordan’s economic potential resides within the ingenuity and creativity of its people.

So it is fitting that when speaking about Jordan’s economy, I sit next to one of Jordan’s sharpest economic minds – Dr. Abu-Ghazaleh. I know his passion is for the greatest of causes, developing human capital in Jordan.

Since my arrival, I witnessed the breadth of the economic partnership between our two countries, the deepest friendship in this critical region. Two weeks ago, I was proud to build upon that partnership, overseeing with His Excellency the Prime Minister the signing of a $1.5 billion agreement to guarantee Jordan’s access to international capital markets. This agreement, and our previous two loan guarantees, will save Jordan over $500 million in interest payments over the life of the bonds.

Trade between the United States and Jordan has never been stronger. Starting with the Qualifying Industrial Zones and now the Free Trade Agreement, total bilateral trade reached $3.4 billion in 2014. As a result of the FTA, which in 2000 was the very first signed in the Arab world, you can find Petra Engineering’s air conditioning solutions, Hikma’s pharmaceutical products, as well as Jordanian cosmetics, jewelry, and camping gear in U.S. markets.

Through the Overseas Private Investment Corporation, the United States has funded projects big and small, as large-scale as the 202-mile Disi water pipeline and as individual as a chocolate company expanding and creating new jobs.

The United States is also committed to developing Jordan’s young workforce. The clean technology, healthcare, and Information Communications Technology sectors are receiving help from the USAID Jordan Competitiveness Program in research, financing, business operations, and many of the other critical back-office solutions that turn great ideas into great businesses.

And, of course, the United States signed a three-year memorandum of understanding that pledges $1 billion in assistance each year through 2017. At the end of this fiscal year, the United States will have provided $15 billion in economic assistance to Jordan since its founding. Our latest pledge will help ensure that Jordan can continue to provide critical services to its citizens, as well as to alleviate the financial burden caused by the 630,000 registered Syrian refugees in Jordan.

As I have seen in my travels around the country, Jordanians benefit from U.S. assistance in myriad ways, touching every aspect of their lives. Over 75 percent of babies in Jordan are born in maternity wards renovated by USAID. With half a billion dollars dedicated to Jordanian education since 2005, U.S. government programs have reached thirty thousand teachers and more than a million students, two-thirds of Jordan’s student population. A third of Jordan’s population receives fresh, drinkable water via treatment plants and supply networks built with U.S. funds.

These are all tangible examples of the United States commitment to Jordan’s stability. And, frankly, we are proud that these stand as symbols of what is obviously a unique and special relationship. At the same time, assistance must have a grander goal: to help Jordan develop the capability to become independent of aid. And so, like true friends, our help has an objective that we both believe in: to make Jordan strong, more economically self-sufficient, and to use its wealth of human resources to extend its influence in the region and the world.

Let me be clear; we believe in providing assistance, particularly in situations of extremity. But international assistance, while sorely needed and a priority of the United States, does not address the root causes of economic difficulty, and unless it supports efforts at structural reform, it simply buys time in the hope that necessary changes will be made on their own. And as we’ve seen during the Syria crisis, it is much easier for some donor countries to make promises of assistance than actual deposits.

Jordan’s underlying challenges, as His Majesty King Abdullah wisely noted in the Jordan 2025 plan, are not rooted in refugees, regional instability, or ISIL. They are the same challenges faced by every developing nation: how to create a sustainable and inclusive economy that supports and is propelled by the aspirations of its people.

But the effort to make sustainable progress begins with a basic assumption – that all honest work is dignified and of worth to society. Let me illustrate with a simple question. Would you rather be an unemployed engineer, or a forklift operator with a job? That might be a hard question, and it might be harder to answer if we were talking about our sons or daughters. So let me make it easier. Would you rather that Jordan have 100,000 unemployed engineers, or 100,000 employed forklift operators?

This isn’t hypothetical. A business contact recently told me that there are 118,000 registered engineers in Jordan, but only about 8,000 are actually practicing.

Jordan’s workforce is young, and getting younger. Every year, 100,000 new graduates look for work or continued study; there are not enough spots for all of them in their chosen fields. This region has the highest youth unemployment rate in the world; and almost a third of Jordan’s young people do not have immediate prospects after graduation.

Is it always better to have a degree, when a marketable technical skill means jobs? Universities produce hundreds of thousands of young Jordanians with degrees like engineering and accounting, but there are not enough jobs to absorb them. Meanwhile, only a tenth as many are in vocational schools to become electricians and carpenters, and that snatch up jobs immediately. The pyramid is inverted; as one Jordanian entrepreneur said recently, “Everyone wants to be an engineer, but no one wants to be a technician.”

At the same time, workers and businesses can only thrive in environments where the rules of the road are clear and predictable. Innovative Jordanian businesses shouldn’t be stifled by artificial barriers, like tariffs. As war and terrorism have reduced trade with Jordan’s traditional partners, there is an opportunity to open up more trade corridors throughout the region. When I arrived, I was shocked to learn that the West Bank does $4 billion worth of trade with Israel each year, but only $100 million with Jordan. Although many Jordanian trucks meet Israeli standards, they cannot cross the border, and businessmen have difficulty getting Israeli visas. In the other direction, containers from the Port of Haifa have to be unloaded into pallets before shipment into Jordan, rather than trucked directly across the border. The more freely that Jordanian businesses can establish, grow, and develop regional partnerships, the faster they will drive prosperity.

Like tariffs, subsidies also stifle free markets. They distort economic choices, hide inefficiencies, and consume resources that could otherwise be used to directly help the poor. I may not be a farmer, but I know that goats aren’t supposed to eat bread. But they do in Jordan, because it goes stale before it can be eaten and bread is cheaper than grazing fields. Targeted food discounts for poor Jordanians would cut Jordan’s 225 million dinar bill for food subsidies in half. Jordan has taken brave steps to implement subsidy reforms, and I applaud Prime Minister Nsour’s government’s efforts to continue along this path to a free and unbiased economic platform.

Job creation depends on access to capital and the utilization of the financial liquidity that we know exists in Jordan. We understand that in the last few years, it has been more profitable for banks to lend to the government than to an entrepreneur. But as the government balances its budget and reduces its need to borrow, small and medium-sized businesses should be an investment priority. While SMEs represent 95 percent of registered businesses in Jordan, they only receive 10 percent of loans, and most banks have not yet considered how their lending practices could be restructured to facilitate access to financing for this crucial sector. This is another inverted pyramid that begs attention.

Just as we have committed to support Jordan with assistance, the U.S. is and will continue to be partners with Jordan to overcome its economic challenges, including some of its most pressing needs, such as energy and water.

Not only is affordable energy needed to drive the Jordanian economy, but its scarcity has already caused a 4.7 billion dinar debt at the state-owned National Electric Power Company.

While the loss of cheap Egyptian gas caused a fiscal crisis, it has also led to opportunity in the form of diversification and new investment. Two major American renewable energy companies have made plans to invest in Jordan, a 20 megawatt solar plant in Ma’an and a 45 megawatt wind farm in Irbid. These two examples of Public-Private Partnerships demonstrate how the private sector can help the government invest in critical infrastructure. Like us, these U.S. companies believe in Jordan’s future.

The recent arrival of a liquified natural gas processing ship in Aqaba will allow Jordan to import large quantities of affordable fuel that will provide 30 percent of the country’s power needs at a third less than the cost of diesel. The next hurdle is to secure a long-term supply of natural gas from the Leviathan field, with the potential to solve Jordan’s energy crisis entirely.

Unlike energy, water is a resource that has no alternatives. That’s why we are helping Jordan develop new and innovative water solutions, with the U.S. contributing over one billion dollars to the water sector over the last ten years. Last October, Water Minister Hazem Nasser and I cut the ribbon on the Al-Karak Dam, which was financed through the proceeds of the sale of wheat donated by the United States.

In Zarqa, the U.S. is completing a $275 million water program through the Millennium Challenge Corporation. When completed in December 2016, the MCC investment is expected to benefit over three million residents in the Amman and Zarqa governorates.

Likewise, we are supportive of the Phase One Red-Dead desalination project. It will bring much-needed new sources of water to Aqaba and northern Jordan, and will be an important first step in efforts to stabilize the Dead Sea. And, it exemplifies Jordan’s long-time leadership in pragmatic peace-building efforts. The region could benefit from more such innovative and cooperative solutions to resource-scarcity and economic challenges.

Regional interdependence is hard when the security situation is poor and conflict is at your doorstep. But the two are intertwined: security is unlikely to improve until economic development and opportunities for citizens improve. Jordan must be creative in its approach to opening and strengthening new markets.

Business people can lead the way even when government-to-government dialogue stalls. The U.S. Chamber of Commerce convened in 2014 a successful meeting of the Middle East Commercial Center in Jordan that brought together private sector business people, from Oman, Turkey, Saudi Arabia, Israel, and Jordan, who see the potential for peace and prosperity that regional trade presents. Last month, another MECC workshop brought together business leaders in the region to feature the Port of Aqaba as a destination for goods. We need the private sector to stay engaged in regional initiatives like the MECC; profits and job growth can speak louder than politics.

It isn’t enough for an entrepreneur to have a great idea; they have to create a business around it. Jordan has a wealth of smart people with great ideas, and can make it easier for them to establish and fund businesses. An Intaj program to connect Jordanians to Silicon Valley accelerator “Plug and Play” has offered young entrepreneurs the opportunity to incubate their businesses in the United States, raising close to a million dollars in financing to date. I recently visited the Zain Innovation Campus at King Hussein Business Park, a perfect example of Jordanian companies helping entrepreneurs turn their dreams into reality.

No society can reach its full potential unless it harnesses the skills and capabilities of one hundred percent of its population. Global stability, peace, and prosperity depend on protecting and advancing the rights of women and girls around the world.

The gender employment gap is three times bigger in this region than in most developing economies. Rather than entering into a debate about rights, we need to think about this as a monetary issue. Each Jordanian woman who isn’t given a chance to work represents an opportunity lost – and profit lost – for Jordan. According to one estimate, if the gender gap was narrowed just by one third, the GDP in the region would grow by $1 trillion per year, or six percent. If Jordanian women participated in the country’s economy as much as their Arab women neighbors, Jordan’s GDP would increase five to ten percent.

During this year’s World Economic Forum, which I was privileged to attend last month, we heard from Ronald Bruder, a U.S. real estate developer who founded Education for Employment, which offers short-term training in technical skills. His organization takes young, unemployed women and men, and trains them in high-demand jobs like cashiers and data-entry workers. They practice job interview skills and work with employers to find placements. Out of the 5,000 people Bruder’s organization has trained in Jordan, 85 percent now have jobs. This is a win for everyone.

Through the USAID Jordan Loan Guarantee Facility, the United States is providing $250 million to participating Jordanian banks to fund small businesses; and over 10 percent of the guarantees have benefitted women-owned businesses. I would like to acknowledge and thank our partner banks: Jordan Ahli Bank, Cairo-Amman Bank, Capital Bank, and Bank Al Etihad.

These banks are providing loans to men and women with great ideas, like Ms. Rana Abweh. Her company, Innovative Packaging, provides locally-produced packaging for Jordanian products like Dead Sea minerals and olive oil. She attended a U.S. government financing workshop for women entrepreneurs to learn how to approach banks for funding. With only a 50,000 dinar loan from Jordan Ahli Bank, she bought new equipment and started her production line. That 50,000 dinars turned into 11 new jobs, five filled by women. By my math, that’s an investment of a little over 4,500 dinars to create one job. That’s a great deal. With 70 percent of loans under this program guaranteed by the United States, I hope that our partner banks continue to review collateral requirements to provide affordable loans and enable entrepreneurs like Rana to create new jobs and revenue.

The government’s recently-released Jordan 2025 plan takes up many of the issues I’ve addressed today, and we are supportive of His Majesty King Abdullah’s efforts to again carve a new path for Jordan. As a steadfast partner of this proud nation, we hope that these ambitious government reforms will open the way for the private sector to turn goals into outcomes. Neither side can do it alone.

With all the chaos in the region, Jordan’s best defense is economic strength and self-sufficiency. Both the United States and Jordan have worked together to fight the terrorist group Da’esh on the battlefield. But as President Obama has said, this is a war that will take years, not days or months. The only way to truly defeat Da’esh is to discredit its poisonous ideology; to show that modern, moderate states provide a better path for our youth. There are 350 million young people in the Middle East, looking for jobs and looking to start their lives. In a poll published last week, less than 50 percent of Jordanians expressed optimism about the future of Jordan’s economy. This makes our partnership, and focusing intently on Jordan’s long-term economic independence, absolutely crucial. Time is not on our side.

Jordan’s young people need to have hope in the future, which depends on a strategy and plan that produces jobs and prosperity for young Jordanian men and women alike. When all is said and done, if we can succeed in this effort, our partnership will have accomplished its highest objective. We are proud to stand with you in that journey.

Thank you.