July 20, 1994
1. 'JORDAN FEARS ECONOMIC COMPETITION.' - Interview with Prof. Eliahu
Kanovsky, ("Ha'aretz", July 20, 1994)
Q: In your most recent research report, you expressed reservations
regarding economic stimulus by the Arab states to the Israeli economy from
the peace talks. Were you also referring to Jordan?
A: Yes. We are not starting from zero on this point. The Jordanian economy
has gone through a number of dramatic changes. From the 1970s through the
early 1980s a boom period existed due to the rise in oil prices and
monetary aid from the richer Arab nations like Kuwait and Saudi Arabia.
However, the oil price crisis of 1982 changed the direction of Jordan's
economy. Afterwards, came the Gulf War, precipitating another crisis. With
King Hussein's support of Iraq and Saddam Hussein, aid from other Arab
nations was cut drastically, and 300,000 to 400,000 Palestinian refugees
fled Kuwait to Jordan, forcing the country to look after their welfare,
following the conquering of Kuwait by the UN forces. Yet, within a short
time, the Jordanian economy adjusted, fueled by the newcomers and came out
of its crisis in fair condition.
Q: King Hussein has promised his nation that a peace agreement with Israel
will bring economic benefits. Is there a basis for this?
A: The economic success or failure of any national economy is dependent
upon a its economic policies. Jordan can come out of its crisis if it can
succeed in encouraging private investment from abroad. The fact remains
that Jordan has not succeeded at this despite its more than 20 years of de
facto peace with Israel. It turns out that internal economic conditions,
like the size of the economy and bureaucratic limitations, have prevented
success, and this has no connection whatsoever with peace, or with us.
Q: Can joint projects with Israel assist the Jordanian economy?
A: Certainly there are specific projects worthwhile for both of us. For
instance, land and aviation infrastructure projects are joint projects
capable of bringing savings to both countries. I am not convinced that the
solution to these problems, including the difficult water issues, will
bring a dramatic change for Jordan's economy, or even for ours.
Q: What about trade between the two countries?
A: What do we have to buy from them? A very low level of compatibility
exists between us and between the Arab nations, and even more so with
Jordan. We can sell Jordan quite a lot of things, however they want
reciprocity, and the problem is that they have nothing to sell to us. The
Jordanians produce phosphates, vegetables, fruits, potash, and
fertilizers. There is no demand for their products in Israel. The
Jordanians also are very fearful of Israel's dominant economy. They fear
competition and say this publicly. In reality, they are not interested in
trade and they will raise obstacles so that their businessmen are not
harmed by our trade.
Q: In your opinion, how will the economy of the Autonomous region connect
those of Israel and Jordan?
A: In January of this year, a free trade treaty was signed between Jordan
and the PLO. In May, [ED. signed 29 April] the PLO signed a treaty with us
cancelling a large part of their treaty with Jordan. The PLO has fears not
only from us but also from Jordan. The Palestinians still do not have
something which can be called an economy. Up until now, 90 percent of the
imports to the West Bank and Gaza came via Israel. Now, in the sense that
the Palestinians have self-rule and economic freedom, it is clear they
will attempt to decrease their dependence upon us and Jordan.