December 3, 2013
Jordan has felt the shockwaves of the Syrian crisis as acutely as any other state in the region. The United Nations High Commissioner for Refugees currently estimates that Jordan, a country of some 7 million with few natural resources, has taken in upwards of 560,000 Syrians since the start of Syria’s uprising in March 2011.
While international attention tends to focus on the Zaatari refugee camp, which has become iconic of the Syrian refugee crisis, most refugees have been absorbed into Jordanian communities. These Syrians are widely regarded as a strain on Jordan’s fragile economy, as they drive up housing prices, benefit from government subsidies, and seek work, though they are not legally allowed to do so as refugees, in a labor market with an unemployment rate of 14 percent. Yet there are those who dispute the conventional wisdom that the Syrian crisis is undermining the Jordanian economy, arguing that Syrian refugees have brought businesses with them to Jordan, creating jobs and investment.
Tayseer Smadi is a Jordanian senator and the CEO of al-Shamal Consulting, and previously served as Minister of Planning, Public Sector Reform, and Agriculture in the Jordanian government. He holds a Ph.D. in economics from Utah State University. He spoke with Syria Direct’s Alex Simon to discuss why he believes the Syrian crisis has had an overwhelmingly negative impact on the Hashemite Kingdom’s economy.
Q: What can you tell me about the overall impact of the Syrian crisis on the Jordanian economy?
I think if we talk about the impact of the latest wave of refugees, we have to talk about the direct and indirect impacts. Directly, there’s huge pressure on Jordan’s material and social infrastructure. In the labor market, we have a high rate of unemployment—the Department of Labor estimated it at 14 percent, I think it’s much higher than that. The problem is that the Syrians are entering the labor market very quickly, very easily, simply because some of them have been in the market before, they have very good qualifications, and they accept conditions that maybe Jordanians wouldn’t accept, working for long hours, accepting low salaries. And some of them maybe perform better than the Jordanians in some areas, especially in construction.
Q: Increasingly, analysts are arguing that the influx of Syrian refugees has brought new businesses and investment to the Jordanian economy. How would you evaluate this point of view?
When the Iraqis came in the 90s, there was a boom in the economy, especially in construction and to some extent in manufacturing. I don’t see the same with the influx of the refugees from Syria. I think the rich Syrians and businessmen have mostly gone to other areas, they did not come to Jordan. There are some factories, which are mainly tailored to serve the Syrians—you find the Syrian employment ratio approaching 100%, which means that the Jordanians did not benefit from these small investments.
Additionally, Iraqi factories were mainly oriented to serve the Iraqi market. For them, the Iraqi market was open—there was no problem with exporting to Iraq. The problem here is different, because even if you have some factories, you have to go through indirect ways to export to the Syrian market, it’s not easy, the borders are not open.
The other problem that we are facing is that Syria was the hub from which land transportation from the Gulf and from Jordan went to Turkey, and from there to Europe, and this is now closed. This had a negative impact on Jordan’s transportation sector, as well as some sectors that were mainly dependant on the Syrian market, whether to import or export. The agricultural sector, for instance, can’t send crops to Syria, and can’t send them across Syria to Europe—they have to use the sea or air travel, which is more costly.
Q: The Jordanian Investment Board registered JD114 million ($161 million) of Syrian investment in 2012, up from JD3 million ($4 million) the year before. Doesn’t this indicate a positive contribution from the Syrian presence?
You are talking about a GDP of about JD20 billion ($28 billion), compared to JD115 million ($162 million)—it’s nothing. And you have to take another point. Being on the border with Syria has also impacted the inflow of foreign investment, because some people look at Jordan as a high-risk country. So this affected the flow of investment from other countries, whether from the Gulf or other areas.
Q: Does the international community need to be doing more to help Jordan?
Yes, and money by itself is not enough. Other countries have to open their borders to minimize the impact of the refugee crisis on Jordan. Opening their borders will help the Syrians to go there to be in their labor markets, and it will help the Jordanians as well. It will reduce the number of households, reduce the people looking for jobs in a market which already has problems with high rates of unemployment among the Jordanians. Turkey, Saudi Arabia, the United States, all these states should open their borders as they have done with the Iraqis before.
Q: What do you see as the long-term implications for Jordan’s economy?
For me, the outlook is gloomy—I’m not optimistic. I think the main loser here, after Syria, is Jordan, and the Jordanian economy. Some people from the government have rough estimates of the costs—they are talking about maybe 1.5 billion, but I think this does not take into account the indirect impacts, the impacts on households, on the security issue, education, health, some areas like this.
I was hoping that some governments which are playing a vital role in supporting the militants, or the revolution—and I should say, I do think there is a cause for this revolution—would play another role, that they would open their borders or their markets for the Syrians to minimize the impact on the Jordanian economy. But unfortunately they did not do that, they want Jordan to pay most of the cost for a problem that Jordan is not responsible for.
Photo courtesy of the Utah State University.
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