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The Structural Logic of Repression in the Hashemite Kingdom of Jordan

Needs for cash and foreign currency force the hands of Jordanian policymakers when it comes to austerity

Colin Powers
Colin Powers

On September 8th of 2019, days after security forces used tear gas to clear their members from the streets, the Jordanian Teachers' Syndicate—representing the country's public school educators—responded with an escalation of its own. Yet to receive a 50% pay increase promised in 2014 (during the tenure of Prime Minister Abdullah Ensour), the Syndicate, hardly known for its radicalism, commenced a nation-wide, open-ended labor strike. Led by Deputy Head Nasser al-Nawasrah, 86,000 teachers would henceforth report to school each day for regular working hours though refuse to enter a classroom. Just like that, the Jordanian public education system ceased operating in any meaningful sense.

The initial counter from the Jordanian state—directed by Prime Minister Omar Razzaz in close consultation with the Royal Court (al-Diwan in Arabic)—was, predictably, an attempt at delegitimizing the strike. Evoking tropes and narratives bearing a stark resemblance to those heard in Chicago and West Virginia in recent times, regime PR-men pushed the plight of Jordan's children, rendered unwitting victims of union greed, to an all-consuming foreground. This cynical framing of events, of course, doubled as a means for obscuring the fact that it was the government’s refusal to honor a work contract agreed to five years prior which had prompted the teachers' action in the first place.

After messaging campaigns failed to move students, teachers, or the general public—and after an administrative court’s ruling that the strike was illegal proved irrelevant to events on the ground—negotiations between the government and Syndicate began in earnest.

Razzaz et al set out a performance-based bonus system as their opening position. Reasonable as all neoliberal policies appear at first glance, if implemented, this bonus system would have proven a major coup for austerity. Allowing the regime to pin both the poverty of Jordan’s educators and the country’s declining scholastic performance1 on worker incompetence alone, the proposal was designed to mystify the primary causality behind both outcomes: disinvestment.2 Dehistoricizing how the country’s public schools had come to be profoundly overcrowded, understaffed, and under-resourced, this was a cynical gambit, even by Hashemite standards.

Photo taken outside an elementary school in Karak

Auguring spending cuts and more privatization as the bonus scheme did, it was unsurprisingly rejected by the Syndicate, who insisted that deliberations be returned to the framework established during 2014. Government representatives reluctantly acquiesced. With the terms of bargaining thereby recentered upon universal and unconditional salary increases, an agreement eventually came to be reached on October 6th. Starting with fiscal year 2020, Jordan’s public school teachers were to receive pay increases ranging from 35% to 75% as determined by years of service. The teachers returned to the nation’s classrooms the following day.

For Jordan’s educators, a near majority of whom work in and around Amman—the most expensive city in the Middle East as of 2018—the prospective wage bump represented less a cause for celebration than a moment of reprieve. Over the past ten to twenty years, after all, their vocation had come to require something of a vow of poverty. At the time of the October agreement, the average monthly income for a public school teacher was a mere $565. For those just setting out on a career in education, meanwhile, the starting salary was set at $500, with annual pay raises pegged between $5-13 per year based on one’s qualifications, and with maximum compensation fixed at $635.

To set these figures in context, for a family of five, bureaucrats at the Department of Statistics placed Jordan’s 2020 absolute poverty line at $479.3 As the vast majority of Jordanian households have but a single bread-winner4—including, of course, teacher-led ones—a simple subtraction operation suffices to reveal the perilously thin margins keeping a young educator and their dependents out of official destitution under the previous wage structure.

In view of the spurious methods that go into determining poverty line calculations in the first place, moreover, the meaningfulness of such margins ought not be overstated. Indeed, if one were to appropriately account for inflationary dynamics affecting the costs of goods and services essential to the meeting of basic needs in Jordan—whether due to 60-100% price hikes on essentials like bread, rice, and cooking oil (brought on by the lifting of subsidies and tax exemptions in January of 2018); post-2011 rent increases of nearly 300% in towns and urban areas absorbing the greatest influx of Syrian refugees; or extreme spikes in the out-of-pocket cost of health services5—a majority of Jordan’s educators would most certainly wind up counted amongst the ranks of the poor.

That they and their syndicate opted to strike in September 2019 can therefore be seen as an involuntary response of the desperate as much as anything else.

By March of 2020, the clear and present danger posed by COVID-19 was apparent to all who cared to see it. Amongst those who acted accordingly were the people administering the Jordanian government’s response to the pandemic.

Asserting his sovereign prerogative, King Abullah II first issued a royal decree on March 17th in order to activate 1992’s Defense Law no.13. This move brought the country under what amounts to martial law, suspending many parts of the Jordanian constitution and empowering the royally appointed Prime Minister, Omar Razzaz, with extensive discretionary powers. Pledging restraint and circumspection, Razzaz, a Kennedy School trained former World Banker, then proceeded to directing the regime’s emergency operations.

Razzaz began by issuing a series of Defense Orders starting on March 19th. Nine such orders were made in total. Many amongst them addressed the public health crisis—delineating, for instance, the terms of Jordan’s lockdown (which ultimately extended until April 30th), its travel policy (borders were closed and international flights were grounded), and the penalties (financial and criminal) that were to be levied upon those found in violation of the new legal regime. Others attempted to address some of the economic fallout that was certain to follow as a result of the government’s aggressive approach to controlling the spread of the virus. Within this group of orders was one freezing all scheduled public sector pay increases, effective immediately. This included those pledged to the teachers in 2019 (as well as those pledged to the doctors and engineers’ unions, each of whom had supported the Syndicate's strike).

With the country under lockdown and paralyzed by uncertainty, it was not immediately clear whether Razzaz’s unilateral retraction of the October 2019 agreement with the Teachers’ Syndicate might induce a reaction from the teachers themselves. For a few months, it did not. Alas, once a degree of normalcy returned to Jordan in early summer, it became clear that the union was unwilling to take this development lying down, and preparations for a new strike began in early-mid July. Around the same time, the aforementioned Nasser al-Nawasrah (Deputy Head of the Syndicate), already in the crosshairs of many at the Ministry of Interior due to his affiliation with the Muslim Brotherhood, also began broadening his critiques of the government. Linking the pay freeze to Jordan’s generalized retreat from democracy in a number of speeches posted on social media, knowingly or unknowingly, al-Nawasarah bumped up against some of the third rails of the Hashemite regime.

It was no great shock, then, when the counter-move from the government this time around proved uncompromising. Led by Interior Minister Salameh Hammad and Amman’s Prosecutor General Hassan Abdallat, the state first went after the Syndicate’s leadership. On July 25th, each member of the executive council was arrested on charges of incitement or in connection to vague allegations of financial improprieties. That same day, union offices across the country were raided, and the Syndicate itself, representing 140,000 employees in total, was ordered to suspend operations for two years. With the union’s elected leadership in the custody of the state, the Prosecutor General then proceeded to dissolve the executive council6, at which point the Ministry of Education appointed a caretaker formation charged with managing union business for the duration of the Syndicate’s suspension.

The state’s preemptive crackdown provoked wildcat actions from the teachers. As they and their allies began assembling in Irbid, Karak, Jerash, and Mafraq, however, the Prime Minister evoked the emergency powers afforded by the Defense Act to place a ban on public gatherings. With the shackles thereby taken off the police, protests were quickly nipped in the bud. As this was all happening, a gag order was also imposed on the local media’s coverage of events. Coming only months after the owner of a private television channel and his news director had been detained and charged under anti-terrorism laws for having the audacity to release a video segment examining the struggles of day laborers in the post-COVID-19 world, the gag order was largely respected. Information regarding what was one of the most important labor events in recent Jordanian history—including the hunger strike undertaken by the executive council during their month long detention in prison—was thereby kept off the local airwaves.

At the time of writing, the coercive tactics adopted by Prime Minister Razzaz—recently resigned, as is customary in the period immediately preceding new parliamentary elections—seem to have worked. Preventing the teachers from catalyzing and/or leading a wider anti-state movement, the government’s harsh actions have, at the very least, allowed many people in the Royal Court to breathe easier.

Children playing football in southern Jordan, a traditional stronghold of the Hashemites, though a region facing increasing hardship under Abdullah II

To understand why Razzaz and his government opted for such force—kinetic and juridical—in dealing with the country’s public school educators, one could, of course, turn to the simplest and most direct explanation: Jordan’s is an authoritarian political system, and they did what they did in order to snuff out a spark which may have threatened that system’s autocrat (Abdullah II), however improbably.

If that answer is not without merit, its obviousness does belie an underlying superficiality. While true in a very basic sense, after all, such an explanation still enlightens little about the particular causal processes that drove a government headed by Omar Razzaz—an undeniable progressive within the Jordanian context—to choose violence and repression in the face of a group of public servants seeking only that the government honor what it had already pledged to them. Why didn’t he just pay up?

It is my position that the causalities most relevant to the government’s curious behavior this summer can only be accessed by unwinding two structural properties of the Jordanian political economy:

(i) The Jordanian government’s endemic shortage of public revenues, and the existential dependence that binds the state to its creditors and its suppliers of bilateral aid as a result;

(ii) The Jordanian economy’s profound external imbalances, largely powered by the country’s import bills, and the constant strain they place on the foreign currency reserve stock.

In the context of crises brought on by COVID-19, I will attempt to demonstrate that it was these structural properties which made a confrontation with the teachers somewhat inevitable.

Revenue Shortages

Since Abdullah ibn Hussein (King Abdullah I) arrived in Ma’an in 1920 to presumptuously stake his claim on the lands that were to become the British Mandate of Transjordan, the character of Hashemite rule has been shaped, and decisively so, by the ways with which public moneys have been raised and spent. Setting the course for the state building process, molding the class structure, investing the relationship between sovereign and citizen, and positioning the country to interact with its region and the world outside it in a very particular way, choices impacting both sides of the fiscal ledger have, in many ways, constituted modern Jordan.

Most salient to our present concerns is the Jordanian state’s long-standing inability and/or unwillingness to levy a meaningful tax on either the income of domestic subjects or the profits of domestic firms.

Amongst the most enduring features of the country’s political economy, the provenance of this policy failure can be traced to the interwar period. During this critical juncture in the country’s history, Sabri al Taba’a and his peers at the Amman Chamber of Commerce managed to persuade the then-Emir (the aforementioned Abdullah I) to forego the imposition of an income tax by promising to extend him moneys and lines of credit sufficient to cover financial needs on a more discretionary basis instead. More thoroughly institutionalized once the flow of oil rents allowed the Emir’s grandson, King Hussein, to consolidate his authoritarian bargain with the Jordanian people7, the absence of income tax revenues—and the state’s consequent reliance upon non-tax forms of income—calcified over many years into a path dependent tenet of Hashemite governance.

It should be said that the terms of King Hussein’s authoritarian bargain—a relic of post-colonial times and sensibilities—did not ultimately survive the royal succession. Upon Hussein's demise in 1999 and the ascension of King Abdullah II, much of the non-tax financed welfarism that had once been provided in exchange for political quiescence was, in fact, quietly though scrupulously done away with.

Transform Jordan as its first neoliberal King (Abdullah II) did—most immediately through his privatization of state-owned enterprises, his lifting of universal subsidies, and his partial retreat from public sector hiring—there was one element of the old ways that did not meaningfully change with the coming of new management in Jordan: the income tax system.

Not withstanding reforms instituted at the start of 2019, taxes levied on individual and corporate income have never once produced a yield in excess of 3.3% GDP during Abdullah’s tenure, and never once contributed more than $1.44 billion (in 2019) to the state coffers. To place these figures in context, while 2019 produced the largest return from the income tax ever recorded (and by some distance), these moneys still amounted to a mere 13.3% of the state’s total annual revenues. Dwarfed many times over by the percentage attributed to explicitly regressive measures like the value-added tax, the relevance of the income tax vis-a-vis the fiscal health of the state remains undeniably marginal.

The social, political, and economic consequence of Jordan’s public revenues—be it their composition or their magnitude—are profound and multifaceted. For our purposes, it is most important to draw attention to how the dearth of income taxes regularly contributes to the emergence of budget gaps (i.e. a situation where revenues are unable to cover planned spending allocations). Throughout Abdullah II’s reign, these gaps have consistently run into the billions; in 2019, they hit $2.18 billion.

Regardless of place, the most immediate effect of a budget gap is to force policymakers into either (i) cutting spending or (ii) raising money through alternative, non-tax mechanisms. As recent reductions to social expenditures combine with contemporary political realities to make the first option unviable in Jordan, when caught in these budget binds, officials typically seek to bridge existing gaps through seeking additional financing.

Like fellow travelers in the global south, their means for doing so are fairly limited. They can ask for more aid—in cash or in kind—from their patrons in the Gulf, Europe, and the US. They can seek a line of credit from the Arab Monetary Fund or from one of the International Monetary Fund’s lending facilities. They can issue treasury securities domestically or internationally. They can arrange alternative lending agreements with the national pension fund and local financial institutions. If unable to gather enough capital, finally, they can also accumulate arrears, which will almost certainly be owed to local producers and service providers, until a day should come when they can more readily pay off outstanding bills.

However they choose to skin the cat, though, the ultimate outcome is to render the government more dependent on the benevolence of creditors, be they near or afar. Indeed, even in the very best of times, the Jordanian government would swiftly be made insolvent were grants, loan guarantees, and cash deposits  to cease flowing; were concessionary loans from the international financial institutions (principally, the IMF, World Bank, and Arab Monetary Fund) to cease being made available; or were demand for government treasuries to dry up.

Of course, these are not the very best of times. By dint of the shutdown brought on by COVID-19, public revenues have fallen precipitously in Jordan: the damage done to the income side of the government’s balance sheet in quarters one and two alone are sufficient to devastate the budget. Compounded, in turn, by the emergency expenditures that had to be summoned in order to address both the public health situation and, to a lesser extent, the socioeconomic crises that followed, the World Bank estimates that 2020’s fiscal deficit will push Jordan’s debt-GDP ratio from 96.8% at year’s start to 110% as of year’s end.

The fiscal pictures for 2021 and 2022 are no rosier. In all likelihood, Jordan’s economic recovery will be slow and weak due to stunted domestic demand and a semi-permanent decline in business activity. As recessionary conditions consolidate, options for recouping the public revenues lost in 2020 (without deepening social and developmental pain) will therefore be few and far between. Be that as it may, debts will still come due and expenditures will still need to be made, whether state income is available to pay for them or not. In this context, the government’s capacity to secure affordable forms of non-tax financing is about to become even more critical to its struggles against against both insolvency and economic depression.


External Imbalances

Complicating the state’s generalized need for cash is its need to maintain a huge stock of foreign currency reserves. This second need stems from the enormous trade deficits Jordan runs up each year—deficits which have averaged out at 34.8% Jordan’s GDP for the period stretching between 2011 and 2019.

Jordan’s trade deficits are primarily driven by the country’s insatiable demand for imports.8 Relative to the size of its economy, Jordan is routinely amongst the biggest importers in the world. To give some sense of the magnitudes we are dealing with, in nominal terms, the aggregate value of Jordanian imports amounted to $19.5 billion in 2019, down from a total of $22.3 billion the year prior. These figures are equivalent to 52.8% and 44.5%, respectively, the national GDP for the years in question.

Because of decades of failed industrial and trade policies—policies that have resulted in foundering export performance and an inability to satisfy foreign currency needs through international trade alone—Jordan has long needed to lean upon remittance inflows and travel receipts in order to reduce the imbalances in its current account.

According to data provided by the Central Bank of Jordan, the mean inflow of workers’ remittances between 2015 and 2019 was $3.351 billion. After trending downward for a number of years, meanwhile, a 12% jump in 2019 increased the country’s surplus in net travel receipts back up into the area of $4.3 billion. Together reducing the current account deficit by as much as 40%, these two sources have played an indispensable role in preserving Jordan’s foreign currency reserve stock.

Note that the international tourism receipts in this graph are not a net figure (i.e. they have not subtracted out the moneys Jordanians spend abroad). They are therefore considerably larger than the figure that goes into the calculation of the current account balance. 

Even when buoyed by healthy flows of remittances and tourism dollars, of course, the deficits in Jordan’s current account remain substantial. To balance them out, macroeconomic accounting logic dictates that Jordan maintain an equivalent surplus in its capital account, lest critical consumer goods pile up at the borders or shortfalls in critical energy inputs—oil and natural gas, principally—bring domestic production and services to a standstill.

Pedestrian as levels of foreign direct investment have been across Abdullah II’s tenure, the maintenance of capital account surpluses has only been achieved through significant state action. Adopting a quietly interventionist posture, officials at the Central Bank of Jordan (CBJ) have proven essential to these efforts. Along with setting up currency reserve swaps with other central banks, the CBJ’s auctioning of Eurobonds on external markets has generally managed to satisfy the currency and liquidity needs of the government and wider economy alike. In conjunction with securing injections of cash and low interest loans from Gulf allies and the International Monetary Fund (denominated in foreign currencies of course), as of June, such treasury sales have helped keep the foreign currency reserve stock at a level sufficient to foot the bill for roughly eight months of imports.

While the CBJ’s challenges in incessantly resolving the economy’s external imbalances have always been trying, due to a number of shocks introduced by the spread of COVID-19, their tasks have grown even more onerous. This is because policymakers must now handle the weighty complexities born of Jordan’s import dependence without being able to lean on the two bulwarks—remittances and travel receipts—which had traditionally helped shoulder the burden.

Specific to remittances, they had already contracted by 5.4% as of quarter one, and that was despite the months in question largely preceding the crises precipitated by COVID-19. A more accurate reflection of contemporary realities can be gleaned from figures recently reported for the first half of fiscal year 2020, which corresponds to the period stretching from April to September. As compares to the same period last year, Jordanian remittances were down by approximately 10%. For the calendar year, economists at the World Bank have projected inflows of remittances to decline by 15%.

Devastating as a hit of the magnitude projected by the World Bank would be, it may actually represent a best case scenario for Jordan. Per the visuals above, some 560,000-700,000 Jordanians work in the Gulf, more than 85% of them split between Saudi Arabia and the UAE. While expatriates in the west also send money home, these Gulf-based workers constitute the main engine of Jordan’s remittance flows.

This information is relevant because all of the Gulf's petromonarchies are currently dealing not only with the fallout brought on by COVID-19, but with the collapse of energy markets, looming private debt crises, tightening fiscal balance sheets, and popular frustration over the peace agreements recently signed with Israel.

In navigating their own recessions—the economies of Kuwait, the UAE and Saudi Arabia are expected to contract by 12.1%, 6.6%, and 5.4%, respectively, according to the latest projections of the IMF—the Gulf’s existing wealth will certainly allow its policymakers to spend at a much higher rate than their counterparts in Jordan. In view of the parochial nationalisms now being promoted by most of the Khaliji monarchs, however, those policymakers are likely to allocate stimulus spending in such a manner as to appease relevant domestic constituencies first and foremost. This being the case, it is an open question whether big government interventions in places like Saudi Arabia will wind up filtering down to the migrant worker pool, high-skilled Jordanians included. If it does not—as anecdotal evidence suggests—a short circuiting of remittance flows well beyond the 15% posited in the Bank’s prognostications may very much be in the offing.9

Things are even worse for Jordan when it comes to travel receipts. Seeking to control the spread of the virus, international commercial flights were suspended from the middle of March through the middle of September, with no new arrivals coming into Jordan during the intervening period apart from a small number of repatriated expats. By consequence, where Jordan received more than 8.474 million international tourists (inclusive of returning Jordanians) in 2019, this year, it has received only a handful more than 1.5 million. To date, this 80%+ decline has translated to near commensurate declines in terms of foreign currency flows and in terms of the tourism sector’s value-add to the economy. Factored into an annual calculation, the World Bank has projected a 40% decline in travel receipts for 2020.

Jerash, like the rest of Jordan's tourist draws has received precious few visitors in 2020.

These figures strike as unduly optimistic as well. In view of the marginal gains generated after the partial lifting of flight restrictions last month—and accounting for the fact that more restrictions may be necessary once infection rates spike this fall and winter—it would not surprise were travel receipts to contract at a rate double to what the Bank has forecast.

Corroborating the case for pessimism, the Chairman of the Jordan Inbound Tourism Operators Association Awni Kawar expects travel demand to be compressed until the first quarter of 2021 at the very earliest, and the workforce that caters to it to shed between 35,000 and 40,000 jobs. Evincing the same sentiments, a survey of enterprises conducted by the ILO and UNDP this past summer showed 94% of firms operating in the tourism and hospitality sector facing existential challenges, with a full 68% of them not expecting to survive.

Unable, then, to bring dollars et al in through the normal channels, the task of replenishing Jordan’s foreign currency reserves has become a truly daunting one.

Practically speaking, the most immediate consequence of these shocks is to increase the attentiveness policymakers must pay to the state’s external financiers. Without their provisions of aid, without their driving demand for Jordan’s Eurobonds, and without their agreeing to currency swaps, after all, the entire house of cards could come falling down. Seen in conjunction with the growing importance that lenders of all stripes have acquired due to the revenue shortfalls experienced in 2020, the result is to bring Jordan’s moneymen to the very forefront of the country’s politics.

Once one breaks down who these moneymen are and what it is they want in exchange for their cash, the causae ultimae behind the government's repression of the Teachers' Syndicate this summer can finally be seen in full light.

Jordan’s Financiers and July’s Crackdown on the Teachers’ Syndicate

Saudi Arabia and the United Arab Emirates

Saudi Arabia ceased providing Jordan direct budget support in 2014, while the UAE has also pulled back in terms of the grants it annually provides. Nevertheless, both Gulf states continue to play a critical role in securing the Central Bank of Jordan (CBJ) and in steadying the government's finances. Complementing the aid flows dispatched each year by the United States ($1.275 billion annually), European Union, and Japan, Saudi Arabia/UAE's provisions of loan guarantees and emergency cash deposits when crises threaten to spiral out of hand have frequently proved a lifesaver for the regime.

For the better part of ten years now, Saudi Arabia and the United Arab Emirates have been conducting a region-wide scorched earth campaign against the Muslim Brotherhood (or Ikhwan). This is relevant because, as the reader may recall, the Jordanian Teachers’ Syndicate just so happened to be led by Nasser al-Nawasrah, a member of the Muslim Brotherhood, at the time of this summer’s confrontation. As the reader may also be keen to learn, as of July, 27% of those sitting on the Syndicate’s executive council were themselves members of the Muslim Brotherhood as well, according to Jamel Jeet.

Now, before one connects the dots so to claim that Saudi Arabia and/or the UAE, seeking a win against the Ikhwan, decided to leverage their financial muscle to compel Prime Minister Razzaz into breaking the teachers, it is important to first recognize that anti-Brotherhood agendas are not foreign to Jordan. Local partisans of anti-Ikhwan politics have, in fact, been ascendant since Abdullah II’s coronation in 1999.

Where Abdullah’s father had personally managed the Ikhwan portfolio with great dexterity—Hussein actually enlisted the Brothers as a key ally in his struggles against the Jordanian left and long allowed them to preside over the Ministry of Education—upon becoming King, Abdullah II immediately empowered his Ministry of Interior to handle the Islamist question. Given the Manichean view of politics favored at those offices, this decision led to the Brotherhood being treated as a security threat and a security threat only—a framing that rendered the Ikhwan inherently illegitimate. Twenty years of hot and cold conflict have followed.

By virtue of this recent history, there are a large number of genuine anti-Brotherhood zealots—true believers in the notion of an existential conflict pitting what they call secularism against what they call Islamism—populating Jordan’s Royal Court, its Ministry of Interior, and its Ministry of Justice.

This being the case, one can understand that there would have been little arm twisting needed on the part of the Saudis and Emiratis in order to convince powerful factions within the Jordanian state to go after the teacher’s union as a way of settling their own scores with the Ikhwan. To present this summer’s events as a proxy conflict carried out by Gulf surrogates, then, would clearly be an act of considerable analytical oversimplification.

That said, it would also be folly to diminish the effect that Saudi and the UAE pressure have had in pushing the Jordanian state to intensify its conflict with the Brothers, or to discount how these pressures would have inevitably filtered their way into the arithmetic of Razzaz and those around him a few months back. With the government’s finances in as desperate a state as at any point since 1989—and with a return migration of workers from the Gulf threatening to destroy the Jordanian labor market once and for all—the persuasive power of the Khaliji’s carrots and sticks are, after all, as potent as at any time in recent memory. For evidence of this, one need only observe Jordan’s muted response to the UAE’s historic betrayal of the Palestinians in August.

That the need to please these irreplaceable creditors at a moment of genuine peril functioned as a contributing variable to the crackdown on the Syndicate in July therefore seems irrefutable.

The International Monetary Fund

Exposure to DC’s international financial institutions—the International Monetary Fund in particular—also structured the decision matrix of Omar Razzaz this summer.

Since 1989, Jordan has become something of a chronic debtor cum client of the IMF. Prior to the ruptures introduced by COVID-19, in fact, the Fund and the Jordanian government had actually just agreed to terms on a new $1.3 billion Extended Fund Facility (EFF). This loan package followed almost immediately after a previous EFF, agreed to in August of 2016, expired, an EFF that was itself preceded by a $1.364 Standby Arrangement Jordan established back in August of 2012. To assist the Jordanian government in navigating the acute and novel crises brought on by COVID-19, meanwhile, the Fund’s Executive Board agreed to extend it another loan in the form of a $396 million Rapid Financing Instrument, a line of credit representing 85% of Jordan’s available quota.

Like all of Jordan’s previous arrangements with the IMF, the ones agreed to in 2020 granted the government concessionary borrowing terms, with the interest rates attached to each of the loans discussed above set at levels far, far below what the country might ever secure from private creditors. In line with most contemporary lending packages extended by the Fund, however, Jordan’s arrangements were also structured around conditionality provisions.

Broadly speaking, these provisions serve as the mechanism through which the Fund disciplines borrowers, both for the purposes of ensuring loan moneys are spent appropriately and for making certain that debtors honor the policy reforms that they pledged in exchange for access to financing. Operationally, this mechanism works by first dividing the aggregate sum of the loan into a specified number of installments (or tranches) scheduled to be released across a specified period of time. With the disbursal of each individual tranche contingent upon the borrower’s fulfillment of conditionality provisions (as determined by an IMF performance review), the scheme grants the Fund the power and flexibility needed to cut off the borrower at any time. Thereby able to maintain pressure throughout the duration of a loan, the terms of IMF’s modern lending have proven highly effective in keeping borrowers on the straight and narrow.

In Jordan’s case, the Extended Fund Facility agreed to this winter was divided into nine installments spread over four years. Notably, the conditionality provisions written into the terms of lending were not as radically neoliberal as those imposed in the recent past. That said, they did mandate that the state stick to a program based on fiscal consolidation. In so doing, this arrangement placed very real limits on the kinds of spending Jordanian officials could enact, and on the kinds of deficits they could run up.

The ties between Jordan’s borrowing from the Fund and this summer’s confrontation with the teachers are, then, rather direct. Legally or otherwise, the terms of Jordan’s loan from the IMF meant that the government was likely to suffer genuine consequences were it to go forward with a major spending increase bound to drive the fiscal deficit well beyond designated thresholds. Certainly, Jordan’s policymakers could have gone ahead with the salary hike anyway, betting that the Fund wouldn’t be so bold as to cut the country off in the middle of a pandemic. The current King’s father pulled this trick on a number of occasions in the 1990s, confident that the strategic utility of Jordan was such that the White House would always take care of things with the IMF in the final instance.

Staring down desperate short, medium and long-term financial outlooks, however, and answering to a King far more sympathetic to the Fund’s austerity project, Razzaz et al would have felt they had little choice but to exhibit docility before the IMF, an institution that is, after all, Jordan’s creditor of last resort. With performance reviews coming down the pike, in this case, such an exhibition consisted of the government reneging on millions of dinar pledged to the country’s teachers, regardless of the consequences.

Private Creditors and International Bond Markets

Last but not least, the precarity of Jordan’s post-Covid-19 position not only increased the state’s financial dependence on friendly states and institutional lenders but on private financiers as well. Flipside of the same coin, this precarity also heightened the influence private financiers could exercise over those leading the Jordanian government.

Bond markets represent the primary mechanism through which local and international bankers and investors express their influence over Jordanian policymakers. For the locals, dinar-denominated government securities are auctioned with considerable frequency, all the more so since COVID-19 jolted the state’s books. In May of 2020 alone, for instance, the Central Bank of Jordan issued four different dinar-denominated treasury bills of two year, ten year, and fifteen year maturities, collectively selling more than JD 550 million ($775 million) in sovereign debt. By calibrating their bidding, Jordan’s commercial banks—the only actors allowed to participate in these auctions—determined the cost of these debts, which resulted in coupon percentages (i.e. annual interest rates) of 3.044%, 4.6%, and 5.5% being attached to the two, ten, and fifteen year bonds, respectively.

Relatively steep as May’s auctions show the cost of local borrowing to be, Jordanian officials know that the aforementioned coupon percentages are liable to rise should local commercial banks perceive a misstep in fiscal policy.10 To the extent that a sovereign default represents the biggest concern for those investing in domestic treasuries, Jordanian policymakers in June and July of this year knew that any increase in public expenditures would likely be viewed as unduly risky by those it counts onto buy government securities at a reasonable price, especially in the context of an ongoing collapse of public revenues. In light of how exposed local commercial banks already are to Jordan’s sovereign debt, moreover, they would have also known that such actors wouldn’t have the stomach for this kind of risk at our present juncture.

Cognizant, then, that a spending increase would likely precipitate a compression in local demand for Jordan’s treasury bills—driving up the state’s borrowing costs to a non-negligible degree in the process—policymakers may have deemed that the danger of going forward with the salary hike promised to the teachers was greater than the danger of betraying them. The relation between the need to assuage the concerns of local bond market participants and the decision to repress the Syndicate, then, is fairly intimate as well.

The same arguments hold when it comes to the Eurobond market.

As was discussed earlier, the Jordanian import bill, in conjunction with the state’s external debts, requires that a sizable stock of foreign currency reserves be maintained at all times. As was also discussed earlier, this task has been complicated by a post-COVID-19 drawback in remittances and travel receipts. Faced with the shortfalls brought on by these twin shocks, keeping international demand relatively high for Jordanian government securities has become more essential than ever.

At the end of June, the Central Bank of Jordan issued a double tranche of Eurobonds worth $1.75 billion on the London Stock Exchange’s main market. Despite the government’s financial troubles, the bond was actually six times oversubscribed. This unexpectedly high level of demand drove down the coupon percentage attached to each tranche considerably.

For the five-year bond, Jordan’s government will need pay 4.95% annual interest. For the ten-year one, it will pay 5.85% annual interest. With $1.25 billion in externally-owed debt maturing in October, this injection of capital and foreign currency at a comparatively low cost proved a major boon.

These Eurobond successes in June certainly helped ease the tensions straining Jordan’s external account (at least in an immediate sense). They did not do so, however, to the degree that the vagaries of onlookers out in London and New York became a non-concern. Even when in a contented mood, after all, overseas investors had managed to extract a five-odd percent return on Jordanian debt.

Facing these realities—and the prospects of another round in the Eurobond market in the months ahead—the preservation of the Jordanian state’s credit rating and with it, its access to affordable dollars and Euros, would have become a priority of the highest degree for government officials as the calendar turned to July. With Moody’s having threatened to downgrade Jordan’s debt on a recent occasion when its policymakers were deemed to have wavered in their devotion to austerity—and with Fitch Ratings having already downgraded the state’s credit rating to BB- this past May—this priority, in turn, would have made them perceive a substantial increase in government spending as a dangerous provocation.

Already pressured by the Gulf and the IMF, then, the need to keep Wall Street and the Canary Wharf happy only further restricted policymakers' freedom of movement as tensions ratcheted up with the Syndicate. Hemmed in thusly, I believe the collective weight of these variables made a visible display of commitment to fiscal consolidation—one proving that the state wouldn’t cave, regardless of public pressure and regardless of the suffering inflicted—somewhat overdetermined. In the end, the betrayal of the teachers was merely the form this display adopted.


In a very basic way, the survival of the Hashemite state in Jordan has required the navigation of a two-fronted politics. Herein, the leadership must not only appease and/or satisfy significant portions of the citizenry, but keep its internal and external creditors contented as well. By consequence, irresolvable tensions and contradictions permeate the very heart of the political system at all times. And while these tensions and contradictions do not preclude the achievement of stability, they do render such a stability tenuous and impermanent in nature.

In triangulating and balancing the interests at play within the country’s two-fronted politics, Jordan’s strategic importance to the American empire does afford moments when its leaders are free to use policy so to favor non-financial constituencies. In those moments where the policy community finds itself with more space to move than is customary for a poor debtor in the global south, they have looked after the homefront through, amongst other things, temporarily reinstating consumer subsidies, boosting public sector hiring, and protecting certain sectors of the economy (and their parochial moguls) from foreign competition. Frustrate the government’s institutional sponsors and private financiers as these policies might, Jordan’s indispensability to America’s great game has, to date, ensured that her people rarely suffer the full wrath of bankers scorned.

And yet, exceptions do prove the rule. Generally speaking, material conditions are such as to dictate that Jordanian officials grant the interests of the state’s underwriters—those who can pay for the violence and the care with which citizenship-subjects can ultimately be kept at bay—an unambiguous pride of place in the policymaking process. Alone holding the power to steel the regime through the crises that are regularly born of past policy failures and bad luck alike, these sponsors and creditors exert something akin to a structural effect on the country’s politics.

Nowhere was this structural effect more apparent than in the case of Omar Razzaz and his handling of the Teachers’ Syndicate this summer.

As was briefly touched on, Razzaz is one of the most thoughtful and socially progressive figures to have ascended the ranks of power during Abdullah II’s tenure as King. Evidence of this, as Minister of Labor more than a decade ago, Razzaz took up the lonely task of contesting the neoliberal orthodoxy that has pervaded almost every aspect of Jordanian development planning across the last twenty-odd years, nobly if futilely pushing back against policies that had consistently pinned Jordan’s wage and unemployment crises on the shortcomings of the workforce. While it would be an exaggeration to say that Razzaz cut a leftist figure as Prime Minister, moreover, he did, better than most, manage to avoid being brought all the way to heel. Across his tenure, Razzaz at least advocated for bold industrial policies and helped return the bygone albeit sensible goals of the postcolonial era—productive self-sufficiency and mass employment in particular—to the fore. This summer, he even attempted to crack down on elite tax evasion, one of the most corrosive elements of Jordan’s neoliberal cronyism.

All of this is a long way of saying that it was a man of sympathetic character and progressive ambition, a man more resembling the first generation of aspirational Jordanian nationalists than he does the uninspired surrogates of capital who have generally dominated political life under Abdullah II, who carried out the betrayal and repression of the Jordanian teachers.

In view of this, the gravity that the structural imperatives discussed earlier exert within the country’s politcs cannot be overstated. Indeed, there is a certain inevitability by which these money-based imperatives shall bring any individual actor, regardless of ideology or anything else, into line.

These realities will not cease to exist whenever the King appoints Razzaz’s successor in the weeks to come. Indeed, whoever shall fill the Prime Minster’s office will, like Razzaz, need to govern while keeping at least one eye trained on the moneymen in Washington, DC, London, Riyadh, and Abu Dhabi. Should the occasion require it, moreover, he/she too may need to put on a performance of cruelty before these lenders in order to establish credit worthiness. This is what life is like for small debtors, as the municipal leadership of Detroit or the government of Puerto Rico can corroborate, and as local and national governments around the world, all of whom have lost so much in public revenues this year and many of whom are constrained in the deficits they can run, are about to learn.

Until the money side of the equation changes, those with power in the Hashemite Kingdom will continue to prostrate themselves before those who help pay their bills with the exception of those occasions—a labor strike of the men holding the weapons, for instance—when doing so will more immediately threaten obsolescence for the regime. And with the G20 again resisting any meaningful debt relief for the world’s poorest countries, it would be naive to think the money side might change any time soon.


1 For a more comprehensive explanation, see: Khaled Abu Tayeh, Mohammad Al-Rsa’i, and Mohammad al-Shugairat, “The reasons for the decline of the results of Jordanian students in ‘TIMSS’ 2015”, International Journal of Instruction (11:2), 2017, pp.325-338

2 Though this disinvestment is not apparent in nominal terms, when one accounts for the significant population growth witnessed in Jordan during the last twenty years, the public education system’s per-student investment can be seen to have quite clearly contracted.

3 The Jordanian poverty line, like most other national poverty lines, ultimately derives from a calorie count. Specifically, it is set in reference to the price of a particular basket of goods deemed sufficient to satisfy the basic nutritional needs of an individual.

4 Jordan’s dependency ratio, which measures the average number of people supported by an income earner, was 3.7 as of 2016. See Rami Galal and Mona Said, "The Evolution of Wage Formation and Inequality in Jordan 2010-2016", in eds. Caroline Krafft and Ragui Assad, The Jordanian Labor Market: Between Fragility and Resilience (Oxford University Press: 2019).

5 Average annual household expenditures on health services tripled between 2008 and 2017, tipping $700 by the end of that period according to household surveys administered by the Jordanian Department of Statistics.

6 Per Human Rights Watch, 2011’s Jordan Teachers’ Syndicate Law only allows for dissolution of the executive council by court order, which the Prosecutor General cannot issue, or by two-thirds vote of the central committee.

7 In broad strokes, the authoritarian bargain is generally meant to describe a relationship between autocrats and citizen-subjects where the latter accepts the former’s rule in exchange for the former providing a decent quality of life via non-tax financed welfarism.

8 In view of the state’s heavy dependence on customs-based revenues, one ought note that the government retains a somewhat perverse interest in the maintenance of this import demand.

9 This being the case, while the crisis of oil producers helps Jordan by reducing the price it pays for its energy imports, contractions in the moneys being sent home from the Gulf are bound to offset much of the current account savings thereby generated. If things get so bad that sizable percentages of Jordan’s Gulf-based workforce return home, the country’s manifold labor market crises will intensify to degrees never seen before as well.

10 If one compares the interest on Jordanian debt to the zero and/or negative interest percentages attached to the securities of western governments at the time of writing, this steepness becomes quite apparent indeed.

Colin Powers

Colin received his PhD from Johns Hopkins School of Advanced International Studies in 2020. He is a two-time Fulbright Fellow.