February 20, 2014
Many Jordanians blame Syrian refugees for their country’s economic woes, but analysts maintain that the reality is much more complex. In the second of a two-part series, Alex Simon and Abdulrahman al-Masri explore the competing narratives of how the Syrian presence has impacted the Hashemite Kingdom’s economy. Part 1 is available here.
AMMAN: When American President Barack Obama pledged $1 billion in new loan guarantees for Jordan last week, he affirmed what many here in the Kingdom have long felt—Jordanians have generously taken in nearly 600,000 Syrians fleeing their country’s civil war, but need greater support to continue hosting them as the conflict grinds on.
While Jordanian politicians and economists sometimes disagree about the Syrian crisis’s overall impact on their country, President Obama’s statements—and his promise of increased financial support—underscore the fact that the Jordanian government and its Western backers are still struggling to establish a long-term plan addressing the social and economic tensions of a refugee crisis with no end in sight.
“We have dealt with the receiving of refugees,” explains a high-ranking official in Jordan’s Foreign Ministry who asked to remain anonymous, “but now we have to deal with the hosting, as these people adjust to their extended stay in Jordan.”
With time, the official says, Syrians will become more reliant on Jordanian health care, education and infrastructure, all while consuming subsidized commodities. All of this, he says, “is a burden on the Jordanian economy.”
Syrian refugees cross the border into Jordan. Photo courtesy of @Refugees.
This view of Syrian refugees as an unsustainable economic burden is common in Jordan, particularly among government officials. Current Planning Minister Ibrahim Saif has said that the crisis is costing the Kingdom $1.7 billion annually.
“I think the main loser here, after Syria, is Jordan—and the Jordanian economy,” says Tayseer Smadi, a Jordanian senator and former Minister of Planning.
Smadi believes that the real costs of the Syrian war are even greater than the estimate of $1.7 billion estimate. This figure, he says, “does not take into account the indirect impacts” of the crisis, including the loss of Syria as a major market and overland shipping route for Jordanian exports.
A report last month by international aid organization Oxfam bolstered this narrative, finding that Jordan—more than any other country—is shouldering a disproportionate share of the financial burden stemming from the Syrian refugee crisis.
The report, which measured donor states’ contributions against their overall wealth, concluded that Jordan was doing 12,720 percent of its “fair share” to support Syrian refugees; Lebanon was a distant second at 5,617 percent, while the United States came in at 88 percent, despite its status as the world’s single largest donor to Syrian refugees.
Syrian investment: A silver lining?
Despite these numbers, some analysts maintain that the Syrians have in fact been an unheralded boon to Jordan’s economy, as they have triggered a dramatic increase in Syrian investment.
Refugees from the current crisis have brought with them over 500 new companies, and the accompanying jobs. The Jordanian Investment Board reported more than $200 million of Syrian investment in 2012 and the first half of 2013, compared to just $3 million in 2011.
“I actually think the government has benefited from having the refugees,” says Yusuf Mansour, a Jordanian economist.
In addition to the uptick in investment, Mansour argues that the sheer increase in population size has increased government funds. “One third of government revenues come from the [16 percent] sales tax,” he points out. “So when the population increases by, say, 10 percent, the government makes more money.”
Critics like Mansour argue that the Jordanian government has exaggerated the strains created by the refugee crisis in order to attract Western aid dollars and deflect attention from the monarchy’s track record of economic mismanagement.
“Every time we have refugees, Jordan tries to make the best out of it,” says Mansour. “We did that with the Iraqis before and we’re doing it with the Syrians.”
Mansour acknowledges that the heavy concentration of refugees has created difficulties in northern Jordan, but insists that the Jordanian government is to blame for having neglected these areas since long before 2011.
“It’s the fault of the Jordanian government, which is not providing proper services,” he says.
“This is a government whose faults have been exposed by the refugee presence.”
For their part, Jordanian officials dismiss as unrealistic the notion that Syrian investment could even begin to offset cost of hosting the refugees, insisting that the new revenue is a drop in the bucket.
“You are talking about a GDP of about JD20 billion ($28 billion), compared to [$200 million in new investment],” says Smadi, the Jordanian senator. “It’s nothing.”
Smadi maintains that any discussion of Syrian businesses as a force for job creation is misplaced, arguing that these businesses are generally small or medium in size, and “are mainly tailored to serve the Syrians. You find the Syrian employment ratio approaching 100%, which means that Jordanians did not benefit from these small investments.”
The Foreign Ministry official echoes Smadi’s points, adding that Syrian investment does little to alleviate the strains on Jordan’s underdeveloped infrastructure.
“How does this compensate for the pressures in the northern region when it comes to space in schools, overcrowding?” he asked. “How many classrooms does that add to the Jordanian infrastructure, how many clinics does that create?”
Agreeing to disagree
Despite these fundamental disagreements, one point on which commentators seem to converge is that the Syrian presence has given rise to very real tensions—particularly in northern Jordan—and that these tensions will continue to increase until the Jordanian government and its international backers can establish a formula to stabilize the situation.
Some experts suggest that the key lies in ensuring that aid is effectively funneled into northern cities such as Irbid and Mafraq that have been most affected by the refugee flows.
“Given that the government in Jordan has an overstretched budget and no money to spend in these areas,” says Mansour, “aid should go into these specific areas to ensure that there is no friction among the host communities and the refugees.”
Others, however, insist that resettlement must be part of any long-term solution, as no amount of financial assistance will enable Jordan to absorb a refugee population that currently represents nearly 10 percent of the Kingdom’s total.
“Money by itself is not enough,” says Smadi.
For more from Syria Direct, like us on Facebook or follow us on Twitter.