Jordan's Economy Struggles Amid Regional Conflict While Aqaba Port Thrives
In recent nights, Iran has launched missiles toward American bases in Jordan, worsening the country's economic challenges amid ongoing regional conflicts. Despite recovering from political turmoil, Jordan's economy remains fragile, heavily reliant on limited exports such as phosphates, potash, and tourism, which has been hit hard by the broader regional instability, including the war in Gaza and tensions with Iran.
Economic analyst Doron Paskin explains that Jordan's economy lacks strong macroeconomic problems but suffers from low growth under 3%, high public debt at about 85% of GDP, and severe water scarcity. Jordan ranks among the poorest globally in water supply per capita, consuming only about 60 cubic meters annually, far below the global poverty line of 500 cubic meters. While peace agreements with Israel provide some water supply, 50 million cubic meters annually, with talks to extend this, Jordan has yet to significantly increase its water resources.
A landmark 2021 "water-for-electricity" deal, funded by the UAE, aimed to supply Jordan with 200 million cubic meters of water annually in exchange for 600 megawatts of green electricity to Israel. However, this project was shelved following the outbreak of the Gaza war amid rising anti-Israel sentiment in Jordan. Paskin notes that despite occasional tensions and jihadist elements near the border, the Jordanian government maintains relative calm along the Israeli border.
Jordan also faces challenges with Syria, including increased smuggling of weapons and drugs. The Jordanian air force has recently targeted drug labs in Syria, reflecting Jordan's interest in Syria's stabilization. Meanwhile, Jordan has benefited economically from the closure of Israel's Eilat port, redirecting maritime traffic to its port of Aqaba. Aqaba is undergoing rapid development, with significant UAE investments aiming to establish it as a strategic maritime corridor bypassing the Strait of Hormuz. This growth could potentially compete with Israel's Eilat port, prompting calls for Israeli policymakers to consider investments or cooperation with Aqaba and the UAE to maintain regional economic balance.
