Jordan’s Long War Economy

At dawn on 17 September 1970 two divisions of the Jordanian Armed Forces (JAF), plus newly formed internal security units from the Government Intelligence Directorate (GID), attacked the capital Amman. Over the previous year, sporadic violence flared between JAF units and the Palestinian fida’iyyun as multiple efforts at negotiation and resolution faltered. The fighting lasted longer than the Jordanian command expected, encompassing many parts of the country and not ending until July 1971 in the city of Ajlun. This was Jordan’s longest war, and for a country involved in nearly every major Middle Eastern war, a turning point like no other.

Neat conceptualization of war economies can be tricky. Social scientists and historians have long investigated how war and states relate but variation in political violence and state origins vex clear relationships. Additionally, markets and violence intersect in historically contingent ways limiting the reach of generalizing claims. I am interested in war economies as types of political economies in which organized violence and state preparation for conflict are constitutive of national and regional economies. War can act as an external stimulus impacting a country’s politics, but it can also be endogenous to societies and regimes.[1] Temporally a war economy can align with the start and end of formal political violence but in most cases understanding war economies should not be isolated from socio-political antecedents not necessarily defined by violence.

In the case of the Hashemite Kingdom of Jordan, my research investigates a dynamic war economy which I argue has become the monarchy’s ruling strategy but has also adversely shaped pathways of state building and socio-economic development. There is clearly a transnational, neo-colonial component to this war economy. British assistance was crucial to its institutional origins while deeper American patronage since the 1950s ensured institutional endurance. There is also a path dependence to Jordan’s war economy. The first historical phase stretches from its emergence in the early twentieth century until the civil war in 1970. This early war economy involved a massive fiscal commitment to maintaining a large land force beside a minimalist state. There were other factors at play but the 1970 civil war proved crucial in compelling changes in these arrangements. In the years after, the Jordanian state expanded its administrative roles, provision of public goods, and regulatory interventions. Jordan’s role in war also changed from direct participation in interstate wars to indirect linkages with Iraq’s multiple conflicts starting in 1980. A clear result of this war economy is that by the late twentieth and early twenty-first century the Jordanian state has been gripped by chronic fiscal crisis. Conversely, the JAF and the GID have gradually built institutional capacities taking on the characteristics of the type of military-political actors best exemplified in Egypt and Pakistan. Jordanian society has responded, in increasing frequency since the late 1980s, with unrest and revolt.   

Scholars of Jordanian history recognize that “war built the Jordanian state” or as early Israeli observers noted, “in Jordan an army owns a state.”[2] Less appreciated is the broader war economy which emerged. There were three ingredients. One part of the institutional adhesive was the British command and finance of the Arab Legion, the forerunner of the JAF. A second component was TransJordan’s relatively equal land tenure system and the absence of the kind of repressive rural labor conditions which plagued neighboring Iraq and Syria. This situation combined with rural deprivation during WWI facilitated British recruitment of tribal and village populations at precisely the same time as the Hashemite monarchy came into being.[3] The Legion acted as a proto-state distributing resources and meager public goods to tribal networks in the southern parts of the country while military bases farther north, Zarqa and Mafraq for example, boosted local economies. The third ingredient to this arrangement was fiscal. Though tribal elites and urban merchants acquiesced to Hashemite rule, they refused to pay for it. Foreign rents would cover much of the military budget but domestic extraction would remain limited. Often the role of external rents is explained in ecological terms, i.e. TransJordan as a territory with sparse rainfall and little from which to extract. Or it is argued that British financial largess reduced the need for domestic fiscal centralization, thus Jordan’s status as “a semi-rentier state.” But these claims miss the political origins of Jordan’s particular war rentierism. From the mandate period through the 1960s, there were attempts at and opportunities for fiscal strengthening (before and after war), even reductions in military spending. All failed because the principle rural and urban supporters of the monarchy were never on board.

In the 1948 War, the Hashemite monarchy, it can be argued, emerged a winner with control of the more developed cities and better educated populations of the West Bank.[4] However, the Hashemite state did little to incorporate or build on these advantages. Historical explanations emphasize East vs. West Bank calculations which cannot be discounted but the Hashemite state did little on the East Bank as well. Throughout the 1950s and 1960s, what was left to spend on the villages and cities of Jordan was minimal, particularly in contrast to the more robust security budgets. Instead, the United Nations Relief and Works Agency for Palestinian Refugees and the US Agency for International Development built and managed “parallel institutions” to provide initial investments in education, infrastructure, and vocational training.[5] The 1967 War is often singled out because of the loss of the West Bank, but more importantly, it set the stage for the fighting in 1970.  

The civil war was never really a military contest. The JAF far outgunned and outmanned the factionalized Palestinian fighters. Rather the challenge was political. The Palestinian factions were hardly a foreign force holding sway over a resistant population as Royal Court loyalists would later argue. The Palestinian guerillas and their supporters were, in the terms of the day, a “state within a state.” The more radical Palestinian elements did prove unpopular and excessive to many civilians but the case was different for Yasir Arafat’s Fateh movement.[6] Fateh organizations had come to dominate popular elections to the country’s professional associations by 1970—to the point where a Fateh list of candidates ran in the leadership elections of the Amman Chamber of Commerce two days before the fighting in September. Fateh maintained a rival visa counter at Amman’s international airport, Palestinian organizations took over municipal services and taxes, and their police units controlled most of the major cities. Destroying the fida’iyyun laid bare the shallowness of the Jordanian state. Simply maintaining a massive land force astride a minimalist state would no longer suffice. The existential crisis of the civil war forced the monarchy to take account of the country’s growing, mostly urban, middle classes.

In the decade after the civil war, the Hashemite regime expanded the state in wholly different ways. The region’s oil-fed economic expansion flooded Jordan with external revenue allowing authorities to spend more but it was the spending choices which mattered. They significantly expanded the public sector reaching almost 50 percent of the labor force. They implemented basic consumer subsidies, extended the reach of public education, established a national social security fund, and undertook urban infrastructure expansion. Yet, the greater reach of public goods and regulation had important limits. First, the military/security commitment, as a percentage of the state’s budget, did not change. By 1990 according to World Bank data,[7] Jordan ranked second in the world in terms of military employment as a percentage of the labor force, behind Iraq but ahead of North Korea and Syria. This labor force ratio would eventually decline but overall spending would not as Jordanian leaders and US advisors shifted funding to weapons systems procurement, training (capacity building), and social welfare benefits for military personnel.[8] In the mid-1970s, Washington began training Jordanian officers under the new International Military Education and Training program, and since, Jordan has been among the top three countries sending officers to the US. The GID, which until the civil war, had been second to military intelligence, emerged as an independent and powerful domestic actor. Decades later, the former Director of the CIA George Tenet would tell the journalist Bob Woodward, with no hyperbole, “We built the GID.”

The second limit to the state’s expansion after the civil war was fiscal. While the state expanded, its domestic finances continued to wither. Once oil rents from the Gulf began to decline in the 1980s, Jordan’s fiscal crisis began to bite. In every decade since 1970, the Jordanian state has witnessed a steady decline in overall revenue (external and internal) as a percentage of GDP.[9] Gradual fiscal decline turned the gains of the 1970s into “fire and forget” policies. Build more schools, increase literacy. Hire more civil servants, boost incomes. Expand infrastructure, feed domestic real estate consumption (and similar footloose investment). Leveraging state capacities to build upon these gains in developmentally nutritious ways would prove allusive and forever be at the mercy of military spending and fiscal decline.

A decade after the Jordanian civil war, Iraq’s invasion of Iran helped forge a new regional war economy. This war economy no longer involved direct Jordanian combat but it would bind the country’s future to the battlefields of Iraq. Baghdad quickly became reliant on imports from Jordan to replace the loss of its access to the Gulf. Shipments of Iraqi oil not only financed Jordanian exports but Baghdad funded infrastructure upgrades in the Kingdom to facilitate the trade. According to declassified CIA reports, Iraqi money even found its way to directly financing the JAF in the 1980s.[10] Amman’s support for Ba‘thist Iraq also opened the door for the GID to expand its role outside the Kingdom. The Regan Administration’s determination that Iraq could not be defeated by Iran positioned Jordan as the conduit for all of the Iraqi Army’s munition needs and for the supply of American battlefield intelligence to Iraqi commanders.

With the end of the war, the fiscal strain generated its first national crisis. In 1989 a run on the Central Bank’s currency reserves brought Jordanian citizens to their knees. Protests and riots broke out for the first time since the 1950s, but ironically, these protests took place in parts of the country where many of the beneficiaries of the earlier war economy resided. The return of hundreds of thousands of workers (many with personal finances) from the Gulf after the liberation of Kuwait in 1991 provided short term fiscal relief. As this faded, US sanctions on Iraq cut into Jordanian exports reversing the growth of employment in small-scale export industries in cities like Zarqa. The important transport sector based in Ma’an also suffered with a decline in truck transport to Baghdad.[11] A peace treaty with Israel in 1994 rewarded the JAF with major non-NATO ally status and allowed for US patronage to expand. The financial crisis nevertheless deepened and the World Bank took notice. But instead of curtailing military outlays or redirecting foreign aid to other areas, conditionality policies pushed the monarchy toward limited fiscal reform. By the end of the 1990s, Jordan adopted a national sales tax, which did little to arrest the overall decline of public revenue but did succeed in spreading a regressive tax to all parts of Jordanian society.

Upon ascension to the throne, King Abdullah faced a clear paradox. Socio-economic stagnation and fiscal crisis were deeply intertwined. Cutting either military spending or directly taxing urban wealth to close the fiscal gap was too politically threatening. American diplomats at the time reportedly cautioned the new King against consideration of any reduction of the land forces. Instead, Abdullah championed an expansion of Jordan’s special forces and remained content to preside over an ever weakening public sector that invests less and less in its citizens. Public education in Jordan, once a regional leader as a result of the 1970 investments, has declined precipitously. Pressure on families to keep up by hiring private tutors increased the socio-economic strain at the same time numerous cheating scandals emerged. Pockets of urban wealth and exclusion in Amman contrast with vast tracts of crumbling roads and infrastructure in much of the rest of the capital.[12] Corruption linked to public-private real estate development and the looting of public assets has spread forcing state officials to occasionally investigate. Unemployment remains among the highest in the region and job market prospects for even university graduates bleak.[13] Despite popular portrayals of the country as “the stable patch” during the 2011 Arab uprisings, protest fueled by socio-economic grievance has mounted.[14]

The US invasion of Afghanistan in 2001 afforded the JAF’s special force units the chance to operate directly with the US military. These early “blood sharing missions” and eventual participation in US operations in Iraq (and now Syria) were transformative. Though there are few open sources, it is generally understood that CIA presence and funds in the country expanded rapidly. The GID, with its CIA patrons, is an authority all its own. Its budgets are classified, its recruiting is distinct from other Jordanian services,[15] and it operates beyond the law.[16] A joint CIA-GID center in the north of the country manages operations with Syrian rebels, largely in isolation from the US Army and the US Embassy in Amman.[17] With such weak oversight, it is no surprise that the GID has become embroiled in public corruption scandals and the black-market sale of American supplied weapons, some of which were used to kill US servicemen.[18] Not to be outdone, the US Army has become a principle financier of the war economy in the new century. After 2009, the US Central Command moved its annual training exercises, “Eager Lion,” from Egypt to Jordan. Though Jordan and the US do not have a basing treaty, significant US Army presence in the country has paid hundreds of millions (distinct from the billions in reported military and economic aid) in contingency and operations funds to the JAF. One US official interviewed for this project described the JAF’s billing for these services as “organized corruption.” The King Abdullah II Special Operations Training Center (KASOTC), built by the US Army Corps of Engineers and opened in 2009, also earns the JAF funds through rental agreements with foreign militaries. Typically, allied foreign militaries use their own US military aid to pay for time training at KASOTC giving new meaning to the recycling of US taxpayer monies. And following in the Egyptian military’s footsteps, the JAF created its own arms manufacturer, the King Abdullah II Design and Development Bureau.[19]

Today, commentators typically cite the addition of hundreds of thousands of Syrian refugees and the disruption of regional trade as reasons for Jordan’s socio-economic decline. But long before the Jordanian state struggled with these challenges, it had already failed its own people. In a region where declining state capacity has produced dramatic and tragic results, Jordan’s own decline has largely gone unnoticed by outside observers. In part that is because despite these costs, Jordan’s long war economy has served as a profitable ruling strategy for the monarchy and its allies.