JORDAN - The Challenge Of Globalisation - Part 7.

Few countries in the Arab World have faced the challenges that Jordan has experienced in the past five decades. It has become embroiled in virtually every war that has hit the region, most of the time simply because of its geographical location. Guided by the late King Hussein, the small kingdom has survived every challenge and somehow managed to emerge unscathed. The challenge of globalisation is no different, and Jordan has been facing it head on in a way intended to turn this challenge into an opportunity.

Under the young and dynamic King Abdullah, who succeeded his father in a last minute surprise, Jordan is now projecting itself as a forward looking state. Integrating with the globalised economy and benefiting from it is seen as a crucial aspect of such a state.

In his public comments, speeches and interviews after taking office, King Abdullah has repeatedly stressed his belief that reforming the economy is of crucial importance to the future of Jordan. He is well attuned to the latest developments in globalisation trends and the rapid changes in technology. He has set in motion an information and communication technology policy that should put the kingdom at the forefront of Arab states to benefit from the "new economy" based on the Internet.

The king also knows that the main economic problems being faced by the country include slow growth, a high external public debt, poverty linked to unemployment, a chronic trade balance deficit as well as other structural distortions. He is moving ahead with structural adjustment reforms introduced since the late 1980s, by his father, at a time when the cold war was coming to an end and it was becoming clear that the old aid-dependent approach would no longer apply.

As in the past, the biggest problem for the Jordanian economy would continue be that is that it is highly vulnerable to external influences - be that a downtrend in the Middle East peace process, or the possibility of a confrontation between Iraq and the US.

This was clearly demonstrated during the Gulf crisis. But this vulnerability, a function largely of Jordan's geography, is not likely to end in the foreseeable future. Indeed, it may increase; as Jordan plugs into the global economy, it is likely to be more affected by global economic trends (positive or negative) that it is at present.

However, Jordanian technocrats and decision makers are aware that such vulnerabilities can be significantly reduced by making the economy highly "shock-absorbent" - i.e. by turning it into a more efficient, market oriented and globalised system. Many officials believe that, in fact, there is no other option if Jordan is to thrive. They believe that the alternative, a reversal to a more centrally controlled and regulated system, would only make things worse.

Moreover, officials note that membership of the World Trade Organisation (WTO), to which Jordan acceded in December 1999, also means that the kingdom has certain obligations in terms of its economic policies.

(Jordan formally joined the WTO as its 136th member on April 11, 2000. Its entry came just over six years after the Kingdom began negotiations to join the organisation's predecessor, the GATT. Jordan's accession was originally set to be approved by existing member countries in Seattle, but was finally agreed at a meeting of the WTO's ruling General Council on Dec. 17. It went into effect after final formalities, including ratification of the entry agreement by Parliament in Amman, had been completed).

Under King Abdullah's oversight, the government has been implementing a new economic adjustment programme for the years 1999-2001. It is aimed at stabilizing the economy and setting the stage for sustained recovery and resumption of structural reform. As part of this programme, the Jordanian economy has been subjected to some painful processes of structural reform. Reforms have concentrated on the areas of privatisation, taxation and introduction of value-added tax (VAT), deregulation of trade, etc.