VISIT OF HOWARD DEAN AND NATIONAL JEWISH

C O N F I D E N T I A L SECTION 01 OF 03 AMMAN 007522

SIPDIS

E.O. 12958: DECL: 09/20/2015
TAGS: PGOV PREL KDEM KISL KPAL KMPI EAID ECON PINR IS IZ JO
SUBJECT: VISIT OF HOWARD DEAN AND NATIONAL JEWISH
DEMOCRATIC COUNCIL TO JORDAN

REF: A. AMMAN 7498

B. AMMAN 7283

C. AMMAN 7273

D. AMMAN 7112

E. AMMAN 5456

Classified By: CDA Daniel Rubinstein for Reasons 1.4 (b),(d)

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SUMMARY
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1. (C) A delegation from the U.S. National Jewish Democratic
Council (NJDC),led by Democratic National Committee Chairman
Howard Dean and accompanied by three state Democratic party
leaders, met separately September 17 with Prince Ali bin al
Hussein (acting as Regent in the absence of King Abdullah,
his half-brother) and Deputy Prime Minister Marwan Muasher.
Discussions focused on the Israeli-Palestinian conflict,
Iraq, Jordan's economic situation, and reform. End Summary.

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ROYAL COURT MEETING
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2. (C) During the group's meeting at the Royal Court (also
attended by Minister of Tourism Alia Bouran),Prince Ali
expressed satisfaction with the recent Israeli withdrawal
from Gaza, but said that continued U.S. engagement with both
Israel and the Palestinian Authority was "crucial." He said
there was an urgent need to clarify the "next step" after the
pullout, as well as to support the missions of General Ward
and Quartet Special Envoy James Wolfensohn to ensure
stability and security in the Gaza Strip. Asked what was
needed to move the peace process forward, Ali replied
"courageous leadership" from both parties that reflected the
will of the majority of Israelis and Palestinians. Ali urged
American Jews to lobby Israel to reject the agendas of
"fringe or extreme groups," while noting that Arab support
for the Palestinians had moved into a new phase with the
demise of the "old" (i.e., Arafat-led) Palestinian Authority.



3. (C) On Iraq, Ali reiterated Jordan's continuing strong
support for the Iraqi Transitional Government, as evidenced
most recently by Prime Minister Badran's trip to Baghdad (ref
C) - the first by an Arab head of government. He warned of
"interference" by Iraq's "neighboring states" (i.e., Iran),
which could compromise the country's independence, and said
the insurgency could not be defeated through force alone, but
required dialogue with Sunni groups, though not with Zarqawi
and "terrorists". He further claimed that some sectarian and
ethnic militia groups joining the Iraqi security forces "were
just putting on the uniform" without laying aside their
partisan objectives. A premature pullout of Iraq by U.S.
forces, Ali stated, would be a major mistake.


4. (C) Noting the threat posed by religious extremism, Ali
stressed Jordan's efforts to promote the moderate, peaceful
nature of "true Islam." He highlighted the international
conference of Islamic scholars held in Amman on July 4-6 that
embraced the "Amman Message" and rejected the issuance of
fatwas promoting violence (ref E). According to Ali, Jordan
is currently busy publicizing this message in Asia, and hopes
to take it to Islamic leaders in the U.S. soon. He added
that Jordan was trying to organize a conference that would
bring together leaders of different Iraqi factions to jointly
denounce the killing of Muslims by other Muslims.


5. (C) Regarding reform and Jordan's economic situation,
Minister Bouran described the government's current endeavor
to create a National Agenda for comprehensive reform (ref A)
using a "holistic approach" that incorporates specific
benchmarks and milestones. She thanked the U.S. for the
positive economic impact of the U.S.-Jordan Free Trade
Agreement and the establishment of the Qualifying Industrial
Zones (QIZs). Ali remarked that record-high world oil prices
had been very damaging to Jordan's fiscal health, and
necessitated a further lifting of government subsidies on
fuel prices in the coming days (ref B). Ali also made a
pitch for a proposed pipeline from the Red Sea to the Dead
Sea which, he stated, would provide electricity and
desalinated sea water to Jordan, Israel and the Palestinian
territories while saving the Dead Sea from extinction (ref
D).

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MEETING WITH DEPUTY PM
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6. (C) Asked by Dean to describe Jordan's economic
challenges, Deputy PM Muasher noted that Jordan had good
macroeconomic indicators with GDP growth of over 7% in 2004
and 2005. Exports to the U.S. had surpassed USD 1 billion,
and economic reform measures were succeeding in attracting
foreign investment. (NOTE: Both Muasher and Prince Ali
skillfully and forcefully described the real benefits to
Jordan of the U.S.-Jordan FTA and of Jordan's increasing
commitment to IPR in response to leading statement-questions
from Dean and delegation contesting the value of free trade
and IPR protection to Jordan and other developing countries.
END NOTE.) He continued, however, that the government was
now "bankrupt" due to high oil prices. Approximately 25% of
the GOJ's budget, Muasher stated, was spent on fuel
subsidies. This financial drain, combined with an
inefficient tax system and the high cost of debt servicing,
had sent the budget deficit soaring. Consequently, the GOJ
had no choice but to further lift fuel subsidies (ref B)
which, Muasher predicted, would make the government "even
more unpopular" and could generate inflationary pressures.


7. (C) Other challenges cited by Muasher included a bloated
public sector employing 35% of the Jordanian workforce, high
pension costs, and a young population - half of all
Jordanians are under 15 years of age - that in the coming
years could push unemployment well above 20%. To tackle
these issues, Muasher said the royal commission creating the
National Agenda (ref A) had reached consensus on
recommendations to reform the tax and pension systems,
provide easier credit terms to small and medium size private
businesses, and channel more investment to "labor intensive"
growth areas. These recommendations, if implemented, could
sustain GDP growth above 7% over the next ten years and
double the per capita income in the same time frame.


8. (C) Muasher stated that the GOJ was trying to increase
the use of natural gas (in lieu of oil) supplied by a
pipeline from Egypt. Plans to convert all electrical power
generation to natural gas in the immediate future could
reduce the GOJ's oil bill by 30%. Although Jordan has
abundant oil shale, Muasher said this resource was only a
long-term option as oil extraction from shale is not
commercially feasible at present and poses environmental
problems. Asked about textiles, he responded that expansion
of QIZs was a "short term" economic remedy. Though the QIZs
had created 40,000 jobs, this was "not sustainable." Muasher
continued that Jordan needed to focus on promoting other
industries such as pharmaceuticals, potash, phosphates, and
information technology (IT). Tourism was another bright
spot, as evidenced by a construction boom of new vacation
apartments and resorts in Aqaba, though he added that tourism
growth was limited by continuing conflict in the region.


9. (C) Despite an official unemployment rate of 12.5%,
Muasher said there was a shortage of skilled labor in Jordan
and a glut of graduates in "unneeded" fields from Jordan's 31
public and private universities. While some of these
graduates in the past had found employment in the Persian
Gulf, the inhabitants of Gulf states were becoming
increasingly better educated and less in need of the services
of Jordanians. (Muasher estimated that there are currently
300,000 Jordanians in the Gulf sending remittances of around
USD 2 billion.) Jordan is working to reform the education
system - including the introduction of computers and the
internet in every public school - to help better prepare
students for the job market, while it also pursues judicial
reform that will computerize the court system, train judges
on relatively new issues such as intellectual property rights
(IPR),and introduce laws to increased the judiciary's
independence. Since Jordan changed its IPR laws to join the
World Trade Organization, it has developed a promising
software export industry which, Muasher noted, had succeeded
in selling e-learning programs to the U.S. Though piracy
still exists, he claimed that IPR awareness was expanding
among the general public with more people buying non-pirated
products.


10. (C) Turning to regional violence and terrorism, Muasher
pointed out that Jordan "has been fighting al-Qaeda since
1991." He emphasized that Jordan maintains close security
and intelligence cooperation with the U.S., as well as with
states such as Saudi Arabia and Iraq. Jordan was also trying
to combat extremist ideology by its promotion of the Amman
Message. Muasher said that King Abdullah was making
interfaith dialogue and the denunciation of violence in the
name of Islam a central theme both in Jordan and abroad. In
response to a question about Lebanon, Muasher expressed hope
that Amman and Beirut, which shared free market principles
and other interests, could enjoy fuller cooperation and
economic ties now that Syrian control of Lebanon had been
broken.


11. (C) On the Israeli-Palestinian conflict, Muasher said
that the basic parameters of a final settlement were well
known: an independent and viable Palestinian state on "most"
of the West Bank and Gaza; Palestinian sovereignty over "Arab
East Jerusalem" in a way that would "keep it open to all
faiths;" the offer of residence in the future Palestinian
state, resettlement, or some type of compensation to refugees
- Muasher claimed that not even 5% of the roughly 5 million
Palestinian refugees would choose to return to present-day
Israel; and the guarantee of Israel's security by every Arab
country. The problem, according to Muasher, is that trust
between the parties was at "an all time low," and the roadmap
was stuck in "phase one or pre-phase one." While Israel's
pullout from Gaza was a "great first step," many are afraid
that it will become "a final step" with Israel expanding its
control over the West Bank.


12. (C) Muasher recognized that it would be very difficult
for Israeli PM Sharon to move forward on the peace process
due to domestic politics, but stated the international
community must not allow the peace process to "fall
backwards" through the continuation of Israeli settlement
activity. Muasher warned that proposed settlement
construction linking Jerusalem to E-1 would effectively cut
the West Bank into two parts and prevent the creation of a
viable Palestinian state. Abu Mazen was making the necessary
tough choices, he added, and needed full Israeli and
international support if Hamas was not to gain more power and
popularity among Palestinians. Muasher was gratified that
the two parties, along with Jordan, had agreed to cooperate
on saving the Dead Sea, which he said would disappear by 2050
if present trends continue. The World Bank had approved a
2-year feasibility study to assess the construction of the
proposed pipeline between the Red Sea and Dead Sea (ref D),
but so far only the French had committed to paying "their
share" of the project's costs.


13. (U) BIO NOTE: The day prior to the meeting with Dean
and delegation, Prince Ali's wife (Princess Rym) gave birth
to the couple's first child, Princess Jalila.
RUBINSTEIN