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Jordan Economic Austerity, 1981-
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
(see Jordan - Structure and Dynamics of the Economy
, ch. 3).
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
(see Jordan - Political Dissent and Political Repression
, ch. 4). 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.
Data as of December 1989
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