JORDAN SCENESETTER FOR SENATOR JOHN KERRY

UNCLAS AMMAN 000454

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL ECON EAID JO
SUBJECT: JORDAN SCENESETTER FOR SENATOR JOHN KERRY


1. (SBU) SUMMARY: Embassy Amman warmly welcomes the visit of
Senator John Kerry. We have confirmed meetings with King Abdullah
and Palestinian Authority President Mahmoud Abbas.


2. (SBU) SUMMARY CONTINUED: The end of 2009 was marked with a
flurry of political changes in Jordan, with the King dissolving the
parliament in November. Separately, he dismissed the cabinet and
named a new Prime Minister, who formed a new cabinet, in December.
The new cabinet, in accordance with the constitution, has begun
issuing "temporary" laws in the absence of parliament, as a way to
move its agenda forward until parliamentary elections, scheduled to
take place during the fourth quarter of 2010, occur. Regional
tensions continue to capture the attention of the Jordanian
leadership, particularly the stalled peace negotiations between the
Palestinians and Israelis and the situation regarding Iran's nuclear
program, two issues seen as linked by Jordanian interlocutors. In
addition to domestic and regional security concerns, Jordan's
leadership is preoccupied with managing a tight budgetary situation.
The 2010 Jordanian budget includes $7.7 billion in expenditures, a
$1.43 billion deficit before grants, and 20% cuts in capital
expenditures. As a result, GOJ agencies are curtailing spending,
reducing or eliminating some price subsidies, increasing some taxes
and fees on residents, and seeking additional financial and
technical assistance from the USG and others. END SUMMARY.

Domestic Political Changes
--------------


3. (SBU) The King constitutionally dissolved the Parliament in late
November 2009. The parliament was widely perceived as ineffective.
Cooperation between the then-cabinet and parliament had deteriorated
to such an extent that only a minimal amount of legislation was
offered for parliamentary consideration, most of which was stymied
or, if approved, mangled in the process, according to parliamentary
observers.


4. (SBU) Following the King's dissolution of the parliament, he
exercised a constitutional clause which allowed him to extend the
normal constitutionally required four-month window for new
elections. He also established a ministerial-level committee to
consider electoral law reforms; the existing election law has been
criticized for privileging rural, East Bank communities over urban
communities with large Palestinian-origin populations during the
2007 election. The King announced that parliamentary elections will
be held in the last quarter of 2010.


5. (SBU) In early December, the King accepted the resignation of
then-Prime Minister Nader Dahabi and appointed to replace him
entrepreneur Samir al-Rifa'i, who is a former official and advisor
to the King in the Royal Court, Foreign Minister Judeh's cousin, and
the son of former Prime Minister and Upper House Speaker Zayd
al-Rifa'i. In his designation letter to Rifa'i, the King
emphasized, among various reform efforts, the need to fight
corruption.


6. (SBU) Along with the new Prime Minister, a new 29-member cabinet
was named and officially sworn in on December 14. Local
commentators note a lack of new faces in the cabinet, with 13
returning ministers and seven who served in previous governments.
In the absence of a sitting parliament, the new government has begun
to pass so-called "temporary laws" or legislation enacted without
parliamentary approval, which will theoretically be subject to
parliamentary re-evaluation once new members are elected and seated.
Some commentators see this as a way for the government to pass
legislation which otherwise would not have made it through a sitting
parliament. For example, much needed tax reform laws, which the
previous parliament opposed, were recently enacted as well as a law
on renewable energy.


7. (SBU) On February 17 the government announced a National Action
Plan that is the product of extensive late January meetings by nine
ministerial committees and includes over 250 programs designed to
increase government accountability, promote investment, expand civil
and political participation, and improve public services.
Commentary was mixed, with supporters praising its performance based
approach and critics saying that it failed to address elections laws
or lay out concrete recovery steps.

Middle East Peace
--------------


8. (SBU) King Abdullah has said publicly that the lack of progress
is the greatest threat to stability in the region and hurts U.S.
credibility. King Abdullah further asserts that the lack of
meaningful progress hurts the ability of the United States to
advance its interests on multiple issues in the region, including on
Iran. Jordan considers settlement activities, home demolitions, and
evictions in Jerusalem to be particularly destabilizing and
unhelpful in restarting negotiations. The King has a keen interest
in preserving Jordan's role in administering the Haram
al-Sharif/Temple Mount complex in Jerusalem and in overseeing other
Islamic and Christian holy sites in Jerusalem.


9. (SBU) The King remains a resolute advocate of a two-state
solution and has responded positively to his engagements with SEMEP
Mitchell. Jordanian officials consistently express concern that
Jordan will be asked to assume some form of responsibility for the
West Bank, a proposition that King Abdullah consistently rejects, as
does an overwhelming percentage of the Jordanian public. Many
Jordanians currently believe that Israel is unwilling to move
forward on peace negotiations.

Iran
--------------


10. (SBU) Jordan has expressed concerns regarding Iran's nuclear
program. Some Jordanians link Iran to regional instability and
terrorist organizations Hamas and Hizbollah and argue that regional
consensus on Iran depends on meaningful movement on
Palestinian-Israeli peace negotiations.

Iraq and Afghanistan
--------------


11. (SBU) Jordan plays a positive role in regional security efforts,
including in Iraq and Afghanistan. Jordan supports a conditional
U.S. withdrawal from Iraq that prevents chaos in Iraq, which would
impact Jordan, and which limits the Iranian influence there.
Despite local press reporting on Jordan's role in Afghanistan,
Jordan will continue its security cooperation in Afghanistan.
During your audience, the issue of Jordan providing further support
in Afghanistan in exchange for additional economic assistance
through an anticipated Afghanistan supplemental appropriation may
come up.


12. (SBU) Jordan hosts numerous Iraqis who have fled the conflict
and its after-effects and has provided them with access to some
social services. The GOJ emphasizes that hosting the Iraqis has
been a burden on the budget, and Jordan has received international
aid to ease their already tight fiscal situation. Jordanian
officials have previously placed the number of Iraqi refugees
between 450,000 and 500,000, but most international organizations
and NGOs working with the refugees estimate numbers are
significantly lower, in the 100,000 to 200,000 range. Displaced
Iraqis in Jordan are integrated and live within Jordanian
communities, not in refugee camps.

Budget Challenges
--------------


13. (SBU) Your visit also comes as Jordan faces a difficult budget
environment. The 2010 budget includes $6.74 billion in projected
revenues and $7.71 billion in expenditures and has a $1.4 billion
deficit before grants, which is 5.8% of Jordan's GDP (estimated at
$24.7 billion for 2010). The 2010 budget features 20% cuts to
capital expenditures and 1.4% cuts to current expenditures and will
impact GOJ agencies by curtailing their ability to hire new
employees and forcing additional cuts in overtime, official travel,
and purchases of vehicles and furniture. Existing reform and
development projects requiring new staff and/or construction will
also face financial constraints. Weak growth in 2009 will translate
to lower income and sales tax revenues this year (taxes on 2009
income will be paid in 2010). This along with a downward trend for
the collection of land sales and other fees by the GOJ in 2010
portends an even more precarious budget situation during the second
half of 2010. This budget environment has already resulted in
additional requests from the GOJ for financial and technical
assistance.

Assistance MOU
--------------


14. (SBU) On September 22, 2008, Jordan and the U.S. signed a
memorandum of understanding (MOU) related to development, economic,
and military assistance. The agreement laid out a five-year
non-binding annual commitment of economic support funds (ESF) ($360
million) and foreign military funds (FMF) ($300 million). The FY
2011 OMB budget submission includes $360 million in ESF and $300
million in FMF for Jordan. In 2009, Jordan secured $150 million in
supplemental appropriations legislation, to be forward financed from
the 2010 expected commitment of $300 million.


15. (SBU) A side letter to the assistance MOU spelled out the joint
intent to expand cooperation in the political and economic arenas.
The side letter draws on the 2006 Jordanian "National Agenda" reform
plan and identifies areas of mutual cooperation to be discussed in
separate economic and political bilateral dialogues. A bilateral
political dialogue meeting focused on equality for women under the
law, media freedom, religious tolerance and freedom, prison
conditions and inmate treatment, good governance, and a strong civil
society was held in Amman in January 2010. The delegation was led
by NEA Principal Deputy Assistant Secretary Schlicher with
participation from Assistant Secretary Posner from the Bureau of
Democracy, Human Rights, and Labor, and Director of Policy Planning
Slaughter. GOJ officials have proposed the bilateral economic
dialogue take place in April in Washington.


Beecroft