The Trouble With Jordan

The past few weeks have seen increased unrest in Jordan. But the biggest challenge for King Abdullah II might not come from the streets, but from his country’s dependence on foreign oil.

In recent weeks Jordan has seen its most dramatic protests since the start of the Arab Spring. Indeed, protests have flared in regions outside the capital, traditionally known for their loyalty to the regime. Some protesters have directly called for the removal of King Abdullah II and the Hashemite dynasty which has ruled the country since independence in 1946.

The recent lowering of subsides on fuel prices and food prices have certainly shocked the nation of six million. Yet despite their broad base, the current rounds of protests are unlikely to topple the regime. Rioters believe with enough pressure the government will restore the subsidy. History is on their side. For years Jordan received subsidized oil from the government of Saddam Hussein. In 2008 the government decided to remove the subsidy a deeply unpopular measure. This resulted in packed passenger buses on the streets of Amman and taxi drivers who passed on the charges to customers. Thus, the government response to the initial Arab Spring style last year was simply to re-instate subsidies.

The most likely solution is that the Jordanian government will once again temporarily re-instate the subsidy to ride out the crisis. Bahrain, a kingdom which has seen even more serious “Arab Spring” protests than Jordan, completed a similar abolition of fuel subsidies in 2012. The Gulf nations (GCC) have made clear that the fall of even one Arab monarchy would be seen as a grave risk to all of the Arab royal houses. As such Jordan has already received 1.4 billion dollars and a new aid package is already being planned. Thus, while the present crisis will continue to simmer it is far too soon to add Jordan’s name to the list of transitional states like Yemen, Egypt, and Tunisia.

But there’s a more strategic challenge, too: increased energy security is crucial to the future of Jordan. In recent years the country met 80 percent of its energy needs from Egypt via natural gas pipelines across the Sinai Peninsula. But fifteen attacks on those pipelines in the last two years have called their security into question. As a result Jordan has had to spend a large portion of its budget buying fuel at market prices. Jordan has explored a variety of policy solutions to this crisis from pressing ahead with nuclear power to flirting with the idea of importing Liquefied Natural Gas (LNG).

More promising are efforts to exploit Jordan’s previously untapped unconventional hydrocarbon reserves. Earlier this year, oil-major BP began exploratory drilling in the Risha gas field near Jordan’s border with Iraq. Korea Global Petroleum Corporation has also agreed to explore along the Jordanian portion of the Dead Sea.

Additionally, Jordan has the world’s 8th largest reserves of oil shales in the world and which are spread across some 60 percent of the country’s sub-surface. During World War I, the German Army helped the Ottomans extract oil shales which were used as a ready fuel source for the Hejaz railway. Following the war however, further development was largely abandoned, in part due to the fact of the economics of extraction. With rising oil prices, Global Shale Oil Holding signed an agreement to begin exploration work on shale oil in September. Significant new sources of energy could also make desalination more affordable. Were Jordan to see new commercial finds, these could help ameliorate energy price woes in the long run and the primary concern of many government critics.

Read more in this debate: Ragnar Weilandt, Abdullah Al-Arian, Joseph Hammond.

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