Hussein Feels Pressure of Intifada, Israel, Weak Economy : Uneasy Rests the Crown on Jordan King’s Head

At least Jordanians haven’t lost their sense of humor.

On the face of it, there’s little to laugh about these days in the tiny but tidy kingdom that, both geographically and politically, sits somewhat uneasily at the center of things in the Middle East, surrounded by the area’s five largest regional powers--Israel, Egypt, Iraq, Syria and Saudi Arabia.

Over the past year, King Hussein and his advisers have watched with growing alarm the effects of the intifada, the 11-month-old Palestinian uprising against Israeli rule in the occupied territories. The uprising has radicalized the political atmosphere both on Jordan’s doorstep and in the region at large, awakening passions that threatened to spill over into the kingdom itself where, depending on whose figures are cited, between 35% and 60% of the population is of Palestinian origin.

During that time, the king has also seen the last of his hopes for momentum in the Mideast peace process frustrated by what, in the Jordanian view, has been a combination of Palestinian indecision, Israeli intransigence and American folly and timidity.

King Lost Patience

Explaining one of the motives behind Jordan’s decision to sever its legal and administrative links to the Israeli-occupied West Bank on July 31, a senior government official said Hussein lost patience with “the catastrophic situation in which we had come to find ourselves, with an unreliable partner in the PLO, an undependable ally in the United States and an unreasonable, vicious adversary in Israel.”

What remained of Jordan’s slim hopes for the peace process had been pinned on the possibility that Israeli Labor Party leader Shimon Peres would win Israel’s parliamentary elections last week. But although the results were close, it now seems likely that Labor’s right-wing rival, the Likud Party led by Prime Minister Yitzhak Shamir, will head the next Israeli government--an outcome that Hussein, just before the election, warned would be “an absolute disaster” for the peace process.

On top of all this, Jordan itself is in the midst of a major economic crisis brought on by years of deficit spending, a precipitous drop in revenues and a 35% decline in the value of the dinar, the Jordanian currency, since the beginning of the year.

Under the circumstances, it may seem surprising that Amman these days is rife with jokes about its predicament. One of few printable ones holds that Jordanians won’t have to worry about the locusts moving up from Africa because their country has already been stripped clean. Another has the governor of the Central Bank being nominated for the Nobel Prize in chemistry--for having turned the dinar into . . . well, let’s just say dirt.

Subtle Shift in Mood

Such black humor, however, fails to mask the fact that Jordan, once described by a Western diplomat as “a dictatorship with a smile,” is starting to lose some of its grin.

This is apparent in the stringent import restrictions and other austerity measures that the government, after years of dithering, finally decided to impose this month in an effort to cut its trade deficit by $200 million next year. It is apparent in the new limits placed on the press, whose narrow margin for free expression has recently been compressed even further by the dismissal or forced resignation of a number of senior editors and reporters who apparently could not agree with Information Minister Hani Khasawneh’s dictum that “journalism should be firmly in the service of the state.”

And less tangibly but perhaps most importantly, this new, grimmer mood is apparent in the bitter criticism of the government that a number of well-to-do Jordanians--businessmen, bankers and economists among them--increasingly are voicing in private.

So far, most of the criticism is directed against the government of Prime Minister Zaid Rafai for the heavy borrowing and lavish spending that have characterized Jordanian fiscal policy for the last several years despite large fall-offs in Arab aid and expatriate remittances, the two most important props in Jordan’s largely externally financed and therefore highly vulnerable economy.

The criticism still takes a cautiously circuitous route around the king, who by all accounts remains popular; but among both native East Bankers and Jordanians of Palestinian origin, concern is growing that the monarch’s advisers are not serving him well.

“The king is a very nice man,” says a prominent Palestinian intellectual, “but the people around him have isolated him too much from his people.”

As a case in point, the critics cite the disengagement decision, which many believe was badly handled. While the king’s supporters insist that the decision was, in the words of one senior official, “both necessary and long overdue,” the sudden and seemingly impulsive way in which it was implemented further undermined the economy by triggering the third run on the dinar this year.

Currency Reserves Fall

Palestinian professionals living abroad reacted by withholding some of the remittances they send back to Jordan, while investors in the country rushed to convert their dinars to dollars. The rush was so sudden that the foreign currency reserves held by the Central Bank fell to zero last month.

Scrambling to cope with the crisis, Jordanian officials made all private banks in the country deposit 35% of their foreign currency holdings with the Central Bank to raise its cash reserves to $380 million, banking sources said. The Central Bank was also forced to initiate a limited float of the dinar, which most economic analysts believed was unrealistically high to begin with. It is now hovering at about $2, compared to $3.30 a year ago.

Most bankers now say that these jitters have largely subsided, that the inflow of remittances is returning to normal and that the crisis was not as bad as it first appeared.

Contrary to rumors that have even made their way into the foreign press, for instance, the Palestine Liberation Organization, which spends about $10 million a month in Jordan on salaries and family support payments, has not moved substantial amounts of money out of the country.

The Palestinian-owned Arab Bank, the largest private financial institution in the Arab world, also has not been transferring assets abroad, as had been reported, and rumors of an “economic war between Jordan and the PLO are absolute and utter nonsense,” one senior banking official said.

Still, the dinar, as a barometer of the economy’s weakness, remains uncommonly sensitive to such rumors. And there is concern that the unprecedented new austerity measures imposed by the government, including a new range of taxes and a ban on the importation of most luxury goods, could fuel social unrest as their impact begins to be felt.

More disturbing and harder to gauge, however, is the impact that the disengagement is having on the two sides of Jordan’s dual identity.

Ever since Palestinian commandos and the Jordanian army fought a bitter battle for the control of Jordan in 1970, a struggle that cost thousands of lives and ended with the expulsion of the PLO in September of that year, King Hussein has tried to create stability by fostering a common sense of Jordanian identity between the Palestinians living here and those who consider themselves “Transjordanians”--that is, the native inhabitants of the East Bank.

Breech Widens

But the king’s decision in July to disengage from the West Bank--to suggest, as he has done, that commitment to the Palestinian cause is incompatible with loyalties expected of a Jordanian citizen--has reopened old wounds and widened the breach that Hussein himself has spent the better part of two decades seeking to bridge.

New tremors are running down the length of this societal fault line, and many Palestinians, who have done at least as much as their Transjordanian counterparts to make the country what it is today, confess in private that they are deeply concerned about their future position in Jordanian society.

“Many of them feel they are being asked to make an impossible choice, to choose between renouncing their Palestinian identity and their commitment to the Palestinian cause or to be forced into the position of being second-class citizens or even foreigners here, in a country they’ve spent most of their lives to support,” a Western diplomat said.

“I grew up here. My friends, my family and my future are here,” one Palestinian, expressing a widely shared sentiment, said shortly after the disengagement was announced. “When Palestine becomes independent, I will be a Jordanian. But until that day, I have to be a Palestinian.”

In some circles, there is also concern that the king’s decision will diminish Jordan’s pivotal role in the region by moving it from the center to the periphery of the peace process.

However, a number of diplomats and other officials say that in this, the king appears to have weighed his calculations more carefully.

The intifada’s silver lining, from the Arab point of view, lay in its shock value for the moribund peace process. It shook up the status quo that the Israeli right wing and the Arab left wing had, for different reasons, a common interest in preserving. In renouncing his claim to the West Bank, King Hussein added his own prod to that process in the hope that it would force the PLO, Israel and the United States to become more realistic about negotiating with one another.

The impact of the disengagement in this sense is already apparent. It has provoked an intense debate within the PLO over whether or not finally to recognize Israel, a debate that is expected to come to a head when the Palestine National Council, the PLO’s supreme decision-making body, convenes in Algiers today.

In view of the still-inconclusive Israeli election results, Jordanian officials are extremely doubtful that the PLO will do this. However, in abruptly abdicating all of his responsibilities for the West Bank to the PLO, in its capacity as “the sole legitimate representative of the Palestinian people,” Hussein has put pressure on the organization “to wake up to realities and recognize its own limitations,” one Arab diplomat said.

One sign of this is the fact that the PLO is now talking warmly about the internationally more acceptable idea of a confederated Jordanian-Palestinian state when and if independence in the West Bank and Gaza Strip is ever achieved.

“This is a real turnaround,” a Western diplomat noted. “It used to be the Jordanians who were pressing confederation upon the PLO, but now it’s the other way around.”

Playing It Coy

Given the PLO’s continued indecisiveness, the possibility of a right-wing government in Israel and the fact that it will probably take the George Bush Administration some time to turn its attention to the peace process, the king is playing it coy for the moment.

When PLO Chairman Yasser Arafat went to Jordan for an ice-breaking summit with Hussein earlier this month, the king told him “in no uncertain terms” that future Jordanian-PLO cooperation rests upon the PLO’s ability “to come up with a clear-cut political program that is saleable to the Americans, the Europeans and to that segment within the Israeli body politic that wants a negotiated peace settlement,” a senior Jordanian participant at the meeting said.

Outlook Bleak

Did this official really think that the PLO, whose own divisions mirror those in Israel, will be able to do this in the near future? No, the official indicated, shaking his head ruefully and confirming that the outlook from the gentle hills rising above Amman is decidedly bleak.

In this official’s estimation, the intifada will continue and probably get a lot worse, especially if a Likud-led government tries to crush it with even more force than has been used up until now. That in turn is liable to drive the PLO even further away from moderation and perhaps lead to a new wave of terrorism in the Middle East, this and other Jordanian officials fear.

This suggests another reason for the disengagement.

“The king is moving to protect his kingdom, even at the risk of some discontent at home,” one diplomat said. “His gambit is a bold one, and if it fails, then being on the periphery is probably a better place to be at the moment than in the center, at the eye of the storm.”