Identifier
Created
Classification
Origin
04AMMAN7394
2004-09-07 10:12:00
UNCLASSIFIED
Embassy Amman
Cable title:  

DAS DIBBLE VISIT: JORDANIAN ECONOMY

Tags:  ECON ETRD JO FINV 
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This record is a partial extract of the original cable. The full text of the original cable is not available.

071012Z Sep 04
UNCLAS AMMAN 007394 

SIPDIS

E.O. 12958: N/A
TAGS: ECON ETRD JO FINV
SUBJECT: DAS DIBBLE VISIT: JORDANIAN ECONOMY
GROWING, MORE REFORM MEASURES TO COME


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SUMMARY
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UNCLAS AMMAN 007394

SIPDIS

E.O. 12958: N/A
TAGS: ECON ETRD JO FINV
SUBJECT: DAS DIBBLE VISIT: JORDANIAN ECONOMY
GROWING, MORE REFORM MEASURES TO COME


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SUMMARY
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1. (SBU) Since the establishment of the Qualifying Industrial
Zones (QIZ) and conclusion of the Jordan-U.S. Free Trade
Agreement (FTA),Jordan's economy has flourished, despite the
considerable bumps during the Iraq War. Jordan's reform program
has achieved fiscal and monetary stability; inflation is under
control; and the economy is growing. More needs to be done to
reduce public debt and, over time, decrease dependency on foreign
aid. USG support and American investment remain key to Jordan's
strategy. End Summary.

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GOOD PROGRESS, BUT HARD WORK REMAINS
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2. (SBU) During a meeting with visiting NEA DAS Elizabeth
Dibble on August 25, Minister of Planning and International
Cooperation Bassem Awadallah provided an upbeat assessment of
Jordan's economy, coupled with a recognition that the GOJ needs
to do more work on fiscal issues and debt. With slow but steady
privatization reforms moving forward, total government debt is
being paid off. Public sector debt stands at 90% of GDP or JD6.9
billion (9.66USD billion). Each year the government is using all
of the annual USG cash transfers (the FY 2004 transfer amount was
$238 million, including $100 million supplemental) to pay down
both U.S. and multilateral debt. Awadallah told Dibble that on
his next visit to Washington in September he wants to continue
discussing assistance issues, the Red-Dead Canal and ways for
Jordan to do well by doing good toward Iraq.



3. (U) Awadallah's upbeat message was echoed by several
prominent Jordanian business leaders during a separate meeting
with Dibble and the Charge. They expressed concerns over the
expiration of the Multi-fibre Arrangement and the potential
threat from China's textile industry for Jordan's QIZs.
Jordanian textile producers have been looking for ways to combat
this threat by turning themselves into "total package providers"
and not just manufacturers; Jordanian businesses are seeking
larger niches within the U.S. market to establish themselves with
known US brand names.


4. (U) Contrasting with the significant economic
benefits of the QIZs, the business leaders say the
FTA is only just now starting to produce visible
benefits. They are having difficulty meeting U.S.
buyers' standards while enticing foreign investors
to back projects through the FTA. At the same
time, many Jordanian importers are unaware of the
advantages under the FTA of using U.S. inputs. The
Jordanian business community recognizes the need to
work creatively to turn the FTA into a success
story like the QIZs.

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CAPITALIZING ON OPPORTUNITIES IN IRAQ
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5. (U) Following the end of the Iraq War, the
Jordanian services sector saw an opportunity to
turn Jordan into a business hub for Iraq's
reconstruction and for the region. The GOJ
redoubled efforts to improve the business and
investment climate in Jordan. A number of foreign
firms (e.g. Bechtel, GE, KBR and Lucent) have
established a temporary (and potentially permanent)
presence in Jordan to support their work on Iraqi
reconstruction. The GOJ believes that Jordan's
proximity to Iraq, lower cost base (compared to
neighbors such as Israel),and easy immigration
formalities for Iraqis (compared, for example, to
Kuwait) will continue to attract corporations
looking for a regional base for their Iraq
operations.


6. (SBU) The GOJ views a stable new Iraq as an
important national interest, but believes Jordan
will have to rely on donor aid to fund most of
Jordanian government efforts to facilitate
reconstruction there. Jordan is selling itself as
the perfect platform to reach the region,
especially Iraq. However, the GOJ realizes it must
continue to market Jordan's advantages, and work
with the Iraqi Interim Government (IIG) to improve
the border crossing procedures and transportation
links such as the roadway between the port of Aqaba
and Iraq.

HALE