LAND DEALS GENERATE A DEBATE ABOUT TRANSPARENCY

C O N F I D E N T I A L SECTION 01 OF 05 AMMAN 001455

SIPDIS

E.O. 12958: DECL: 04/22/2018
TAGS: PGOV ECON KCOR AE JO
SUBJECT: LAND DEALS GENERATE A DEBATE ABOUT TRANSPARENCY

REF: A. AMMAN 4575

B. AMMAN 1385

C. AMMAN 1392

D. AMMAN 1030

AMMAN 00001455 001.2 OF 005


Classified By: Ambassador David Hale
for reasons 1.4 (b) and (d).


1. (C) Summary: Three recent land deals by the state to
foreign investors have raised questions among the public
about transparency in Jordan. The alleged sale of the King
Hussein Medical Center (and an adjoining military complex),
the cancellation of a deal to construct a casino on the Dead
Sea, and the sale of Aqaba's commercial port were all
conducted behind closed doors. Details of these deals are
slowly leaking into the public sphere, and as they do they
are raising the hackles of the press and members of
parliament, who have called for public inquiries into the
substance of the transactions. While there is no evidence to
suggest corruption or criminal wrongdoing, the government's
statements have been contradictory and occasionally
misleading, fueling speculation. The Islamic Action Front
(IAF) has used the deals to cast aspersions on the
government's integrity, while the Anti-Corruption Commission
has remained silent. The issue has become a general proxy
for discontent with the economic situation, and the
government will have to come up with a clear public relations
strategy quickly. End Summary.

The King Hussein Medical Center and Armed Forces HQ
-------------- --------------


2. (SBU) On April 15, Agence France Press reported that the
King Hussein Medical Center (KHMC),a large complex in West
Amman, was slated to be sold to investors from the UAE for
two billion dollars. Perhaps more significantly, the story
reported that the sale included an adjacent parcel on which
the new armed forces headquarters, a massive complex, is
nearing completion after two and a half years of construction
work. The AFP report noted that after the "gradual" sale of
the land, the medical center and planned military
headquarters would be relocated, existing structures would be
razed, and office buildings would be constructed on the site.



3. (SBU) The district in which the KHMC and armed forces
headquarters are located is undergoing a construction boom,
and has gone from an area characterized by quiet country
homes into a bustling commercial artery in the space of just
a few years. Large infrastructure projects have made the
area more accessible, and as a result local real estate
prices have skyrocketed.


4. (C) Days before the story broke in the media, Prince
Feisal (Special Advisor to Jordan's Chief of Defense)
broached the subject with the DATT during a routine meeting,
indicating that the price of the land had appreciated to the
point that it made financial sense for the government to sell
the complex at a huge profit and re-build a new HQ elsewhere.
He asserted that moving the complex to Eastern Amman would
help to provide stimulus to local real estate prices and
provide jobs in a poorer area of town. Note: Although USG
assistance money was slated to help the Jordanian military
build command and control bunkers in the new headquarters
building, that portion of the project has not yet begun. No
USG assistance has been expended on the land that is being
sold. End Note.


5. (U) In the government's initial response to the AFP
piece, on April 17, State Minister for Media and
Communications Nasser Judeh categorically denied that the
KHMC was being sold, calling the reports "rumors." Judeh
instead focused on a new company, linked to Jordan's Social
Security Corporation, which would be established "to attract
investments in the real estate sector." He added that any
property deals would be announced "in a transparent manner."
Yet radio reports which appeared on April 27 declared that
the King Hussein Medical Center would be "moved" to a new
location on the road to Amman's airport, suggesting that a
deal had in fact been reached.


6. (U) In response to the media stories, PM Dahabi organized
a closed-door meeting with MPs on May 8 to discuss the issue
of government land sales. Press reports indicate that the
meeting was tumultuous, with accusations thrown at Dahabi
from a number of prominent, nominally opposition MPs such as
Abdulkarim Al-Dughmi and former PM Abdulrauf Al-Rawabdeh.
Al-Jazeera later reported that some MPs demanded the
resignation of the government. A statement released by
Dahabi after that meeting announced that the government had
received offers on the land, but that no decision to sell had
yet been made.

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The Ready-Made Villain: Bassem Awadallah
--------------


7. (C) Chief of the Royal Court Bassem Awadallah has long
been a lightning rod for complaints about Jordan's economic
reform program, with East Banker Jordanian elites frequently
questioning the sources and methods for Awadallah's sudden
wealth (in fact gained during a lucrative stint out of public
office in 2005),often adding loyalty questions due to his
Palestinian origins. Perhaps predictably, Awadallah is being
linked to the KHMC deal, even though there is no evidence to
suggest a connection. MP Mahmoud Kharabsheh, a former GID
colonel whose position on parliament's legal committee would
likely put him on any investigatory panel, pointed the finger
directly at Awadallah. "This case shows that if you want to
buy anything in Jordan, all you have to do is go to
BassemCo," he said. Kharabsheh believes that as in previous
(unspecified) land deals involving high-level officials, any
culprits (read: Awadallah) will face zero scrutiny from
prosecutors or government anti-corruption watchdogs. "The
government only interferes in political issues, not with
economic corruption," he said. The problem is
self-censorship - Kharabsheh argues that prosecutors will not
go out on a limb and target such a high-level official
because he is "under the King's protection."


8. (C) Awadallah's name also surfaced in PM Dahabi's meeting
with MPs. After that meeting, parliament speaker Abdulhadi
Al-Majali denounced the remarks of MP Nariman Rousan (Irbid -
elected through the quota for women),who allegedly fingered
Awadallah in the land deals. According to an Al-Jazeera
report, Rousan implied that Awadallah was an Israeli agent.
"I do not think that Rousan's role in monitoring the
performance of other estates allows her to make any such
libelous statement. This is a wrong and unacceptable
practice that requires evidence," Majali said. Note: To
Awadallah's private annoyance, the Prime Minister issued only
a mild defense of him. End Note.


9. (U) Awadallah does have his defenders in the press. The
May 10 edition of daily Al-Ghad included an indictment of
"conservative politicians" by commentator Mohammed Abu
Rumman, who pointed out that Awadallah's detractors have no
alternative vision for Jordan. Rather than descend into the
politics of personal destruction, Abu Rumman suggests that
MPs should instead be thinking about how to bring Jordan out
of the economic doldrums.

The Dead Sea Casino Deal
--------------


10. (U) A separate real estate deal under public scrutiny
involves land on the Dead Sea. Back on September 10, 2007,
the government of Ma'arouf Al-Bakhit signed a deal with the
Oasis real estate company to construct a casino and other
developments on the shores of the Dead Sea. Oasis won the
tender after competing with two other firms, Astria and
Empire. Note: Nothing has come out in the press about the
ownership of any of these companies. End Note. The Oasis
bid promised two million dinars (2.8 million dollars) in
licensing fees, to be paid in two tranches to the Jordanian
treasury, plus one million dinars (1.4 million dollars) in
licensing fees every year afterward for the life of the
contract. In addition, Jordan would receive a percentage of
the casino's profits on a sliding scale, ranging from fifteen
percent to thirty-five percent. The Astria and Empire bids
included no lump sum payments, and much smaller percentages
of casino profits - a minimum of ten percent and a maximum of
twenty-five.


11. (U) According to press reports, the Minister of Tourism
at the time, Osama Dabbas, secured unanimous approval for the
deal from the Jordan Tourism Board (which includes the
Secretaries General of the Ministries of Tourism and
Planning),despite the fact that gambling is illegal in
Jordan. Only two months after the deal was finalized,
however, the government began to look at ways to annul the
deal. Bakhit (by this time a lame duck Prime Minister),
issued an order to Dabbas to halt any movement on the project
until further notice. According to media reports, the
government's backpedaling resulted from unspecified
accusations against an unnamed Palestinian businessman
allegedly linked to the project. Purportedly, when the
government was informed about other unfulfilled contracts
linked to the same businessman, questions were raised about
the viability of the entire enterprise.


12. (U) According to the contract, the government would have
to pay USD 1.4 billion to cancel the deal outright. Faced
with this enormous penalty, according to media reports, the
new Dahabi government has apparently offered alternative

AMMAN 00001455 003.2 OF 005


compensation in the form of a plan that would give the casino
investors the ability to develop the project minus the
casino, land elsewhere in Jordan to compensate for the lack
of a casino, and the rights to develop a casino at the Dead
Sea should the gambling ban be lifted in the future. Yet
there is still some question as to whether the deal has
conclusively been quashed or merely frozen as part of the
government's attempt to avoid a financial hit. Neither
Bakhit nor Dabbas have made statements to the media on the
issue.


13. (SBU) Furious at the hastiness of the deal and the fact
that it left the government open to a substantial financial
penalty, MPs in parliament's legal committee threatened to
open a formal investigation. The public airing of the
scandal prompted PM Dahabi to call a closed-door meeting with
members of the legal committee and Speaker of Parliament
Abdulhadi Al-Majali on April 14. Adbulkarim Al-Dughmi, the
head of the legal committee, appeared before the press after
the meeting and said that "the government assured us that it
does not suspect any legal misconduct," but did not rule out
the possibility of an ad hoc parliamentary commission to
investigate the matter further. Ahmed Safadi, head of the
parliament's tourism committee, also promised to investigate.

The Sale of Aqaba Port
--------------


14. (U) On April 20, the government announced the sale of
the land on which Aqaba's commercial port sits to the
Emirates-based Al-Ma'abar firm for five hundred million
dollars. The port, which is located on prime beachfront
property near the center of Aqaba, has long been slated to be
moved to a new industrial area south of town, opening up a
new space for development in the heart of the city.


15. (SBU) In 2005, the Aqaba Development Corporation (ADC)
sent out a tender for moving the entire port and
re-development of the land for tourism and residential use.
No bids were received, and the ADC in turn considered
splitting up the tender to make it more manageable. American
consulting firm Bearing Point estimated the value of the port
in 2005 to be between 240 and 280 million dollars.


16. (C) Imad Fakhouri, the head of the ADC, implied in a
recent meeting with USAID officers that the King and Prime
Minister Dahabi (himself the former head of the Aqaba Special
Economic Zone Authority) negotiated a deal in principle
directly with Al-Ma'abar. The money was to be paid up front,
and at a rate double the estimated value of the land. The
proceeds of the sale, according to Fakhouri, were then used
to pay down Jordan's debt to the Paris Club - a point
confirmed to the Ambassador by Royal Court Chief Awadallah.


17. (C) One remaining hitch is the relocation of the
existing port, which was not part of the deal. The UAE
investors now own the land, but have to wait for the ADC to
float a new tender to relocate the port facilities before
they can re-develop it as a tourist area. According to the
contract, this move must happen within five years. USAID
contacts within ADC estimate that the cost of moving the port
will easily top one billion dollars.


18. (C) Another hitherto undisclosed, and potentially
problematic, part of the deal involves the portside slum of
Shalalah. Rumor has it that either part or all of this
neighborhood has been sold as part of the port and will
eventually be razed for touristic development. ASEZA has
long had plans to move the residents of Shalalah to a low
income area north of town. Yet those plans may be thwarted
by the fact that many in the area are undocumented laborers
and Palestinian refugees originally from Gaza who cannot
legally own property. If Shalalah is part of the deal, the
issue of providing alternative housing for its residents is
likely to become a political football.


19. (C) While the sale and relocation of the port were long
anticipated, the suddenness and scale of the deal has caught
many policymakers and even ADC officials by surprise. Even
Fakhouri was unaware of the King and PM's actions until they
were essentially complete. The lack of a renewed public
tender for the land caused no small amount of grumbling
behind the scenes, and even some limited public commentary,
despite the fact of the original 2005 tender. Senator and
former PM Taher Al-Masri criticized the deal in an April 15
interview, saying, "the problem is the lack of transparency.
The government must explain the circumstances of these
investments, which happen in the dark."

Clear As Mud
--------------


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20. (SBU) Government statements and media reports of these
blockbuster land deals are often at odds. Even after deals
have reportedly been finalized, different voices within the
government simultaneously deny that land is being sold and
feed rumors that deals are on the table or already concluded.
On April 28, London-based newspaper Al-Hayat featured an
interview with PM Nader Dahabi in which he indicated that the
Jordanian government has received "tempting offers" from
foreign investors for KHMC, Aqaba port, land on the Dead Sea,
and even the large Sports City compound in central Amman.
Dahabi told the reporter that "if a facility is sold, a
better, larger, and more modern one will be built in its
place." Yet the next day, Minister for Communications Nasser
Judeh appeared on Al-Jazeera and said that all of the deals
were just "rumors".


21. (SBU) Those "rumors" have spread like wildfire in the
absence of a coherent public relations strategy to explain
the land deals to the Jordanian public. The PM's meetings
with key members of parliament may have allayed some fears
among the ruling elite, but they are fanning speculation in
the media. Talking to Al-Jazeera, MP Bassem Hadadin wondered
why the government simply failed to announce the details of
the deals "before the rumors reached their height." Hadadin
added that "the PM is not extending assistance to the
deputies to help them play their role" in calming public
furor over the deals.

A Hook for the IAF
--------------


22. (SBU) The Islamic Action Front (IAF) has used the recent
slate of real estate deals to bolster its claim to represent
average Jordanians through an increasingly caustic set of
public statements pillorying the government for selling
national assets. "These projects are not designed to benefit
the poor, but only wealthy and influential Jordanians," said
IAF Secretary-General Zaki Beni-Irshaid in an April 30
interview with Al-Jazeera. "People's patience has limits,
and I think that in the coming days there will be an
explosion, a very big explosion, and nobody can predict its
repercussions and results." Beni-Irshaid also accused the
government of hiding the sale of land by using front
companies set up specifically to unload high-profile public
properties. In a May 8 press statement, the IAF further
alleged that the Social Security Corporation was used as a
"tool of deception and corruption" and a "means to deceive
the Jordanian people" to sell the land at a discount price to
foreigners.


23. (SBU) Newly elected leader of the Muslim Brotherhood
Hamam Saeed took time in his first press interview on May 7
to address the casino deal in particular. Said called the
deal "suspicious" and said that the focus of the government
should be on helping the poor rather than "those whom they
call strategic investors". The Higher Coordination Committee
of the Opposition Parties, a group of small parties which
often acts as a proxy for the IAF, also issued a statement
condemning the Dead Sea casino deal and demanded an official
inquiry.


24. (SBU) The IAF may be testing the waters for expanded
action on the issue of land sales. On May 7, the IAF
announced the formation of a "front of political forces,
civil society organizations, and tribal forces" which would
work again future land deals, and sent a letter to the PM
stating that "selling public land is illegal, unacceptable,
and unjustified." An expanded statement posted on the IAF
website on May 8 declared that all recent land sales were
"null and void" and that the "property should be returned to
its previous status."

Possible Role for the ACC
--------------


25. (C) Jordan's Anti-Corruption Commission (ACC) is charged
with fostering more transparency in Jordan's political
culture and prosecuting wrongdoing. In meetings with Poloff,
ACC head Adel Shakhanbeh has repeatedly stressed that the
commission is charged with challenging the closed-door
mentality of Jordan's governments. Yet despite the eruption
of a public debate on transparency regarding these land
sales, the ACC is standing on the sidelines. It has issued
no public statements about the opening of an investigation,
nor commented on parliament's apparent intent to do so. In a
meeting with Poloff, ACC head Adel Shakhanbeh sidestepped any
responsibility for investigating recent deals or addressing
the public outcry surrounding them. "We respect public
opinion and its role," Shakhanbeh noted, but stopped short of
addressing the lack of transparency in the deals. He made it
clear that the ACC had no role to play in shaping the public
debate surrounding corruption in these high-profile cases.

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When asked about the public confusion surrounding the Dead
Sea Casino and KHMC cases, Shakhanbeh asserted that "the
government wouldn't deny anything without a reason."

Ripple Effects
--------------


26. (C) Members of Jordan's Executive Privatization
Commission, charged with the sale of state-owned enterprises,
are starting to wonder how the spate of land deals (which
they are not connected with) will ultimately impact their
work. Dina Dabbas, the commission's Secretary-General,
believes that the lack of transparency on the land deals will
ultimately give further grist to anti-privatization forces in
Jordan's government and parliament. "We were touched
negatively by these deals," Dabbas says. "Some people in
Jordan were talking about the problems of privatization from
the start." The fear is that the public and some in Jordan's
political elite will conflate privatization and direct land
sales, with the lack of transparency in the latter negatively
coloring the former. While she hoped that the public debate
over land sales would fuel price speculation and result in an
advantageous deal, Dabbas said that "once the sales are done,
they should be out in the public."

Comment
--------------


27. (C) Among Jordan's political class, perception is
reality, and a lack of real facts never gets in the way of
accusatory conclusions. So far, there is no indication that
anything criminal or even untoward occurred in the spate of
recent land deals. It is entirely possible (and in the case
of the Aqaba Port, even likely) that the amount of money the
government received in these deals was the highest price it
could reasonably expect. Yet the lack of transparency which
marked these transactions leaves the government in an awkward
position. Not accustomed to airing the details of
behind-the-scenes deals in public, the government has allowed
the terms of the debate to be set by others, and now faces
the challenge of explaining how it was acting in Jordan's
best interest to very skeptical average Jordanians and the
political opposition.


28. (C) Among the traditionally pastoral East Bankers who
constitute the Jordanian "establishment," land is not an
abstract asset, but a tangible and essential element of
Jordanian identity. It is precisely this establishment that
is most opposed to the government's economic reform program
in general, and to West Banker Bassem Awadallah in
particular. The IAF, for its part, facing its own political
struggles (Ref B),has latched onto this as a hot-button
issue and a proxy for widespread popular discontent with the
economic situation. In the absence of clarity and detail
about the process behind and benefits to Jordanians of these
deals, Jordan's political classes will continue to speculate
about who at the top was involved, with the clear implication
that the well-connected are reaping ill-gotten gains through
the sales of Jordan's land. While the Anti-Corruption
Commission sits on its hands, parliament looks set to act,
potentially dragging out and further politicizing the issue
in a way that cannot be dealt with behind closed doors. In
an environment in which inflation is hitting the lower and
middle classes hard (Ref C),while the benefits of economic
reform have yet to trickle down, Jordan's government is
vulnerable on this issue. So far the government has shown
remarkable success in maintaining its popularity despite
significant economic stress (Ref D),but its ability to
satisfy the public and parliament's demands for
accountability on the land deals will be a key test of its
skill in handling the political manifestations of this year's
economic upheavals.
HALE