Austerity creeps upwards

Pushed to the wall by its failed developmental strategies, the Jordanian government introduced a new tax law with seemingly zero consultation of the public. It did so despite expanding the burdened population from earners of about $1,500 a month to those at $1,000.

This only hits the upper segments of wage earners, given that more than 70 percent earn less than $600 a month. But it still took place in a society in which family monthly poverty line is estimated at about 500 dollars. Most Jordanians are poor or hovering above poverty. College graduates and professionals who narrowly escaped unemployment or underemployment and are buried in debt are now looking at new deductions and possible price hikes that brings them closer to poverty.

At the same time, the proposed law encroached on business interests, increasing the tax rate for financial institutions from 24 percent and 35 percent to 40 percent. For manufacturers, it aimed to increase it from 14 percent to 20 percent, it removed a tax break for exporters, and introduced a new tax on dividend payments for companies registered at the local stock exchange.

Responses varied only in the intensity of rejection. The banks, despite presiding over a wide interest rate spread caused by heavy governmental borrowing, announced that this law will trigger deflation that would quickly raise governmental borrowing to unsustainable levels. Top-tier industrialists, who basked in robust corporate welfare for decades, signaled their unease with not being consulted. Merchants who struggle with extremely low purchasing power started signing letters to the king and the premier.

Finally, middle and lower segments of manufacturers pushed the main chamber of industry to announce opposition. For many of them, this could be a final blow that throws them out of business.

The power of cross-class coalitions

Fortunately there are professional unions in Jordan that survived the martial law era between 1957 and 1989 and maintained a membership base of tens of thousands of doctors, nurses, pharmacists, lawyers, and engineers. In fact, typical of third-world societies, slow developmental processes put such associations at the center of civic life, instead of clearer class-based organizations that flourish with rapid development.

Legitimacy and popularity of these organizations stem from fervent Arab nationalism, Baathist ideals, and active opposition to the occupation of Palestine and Iraq. Importantly, these are not trade unions. They do include, for instance, waged professionals at governmental facilities for a few hundred dollars a month, on the one hand, and private hospitals owners, architects, and corporate lawyers on the other.

Class-mixed as it is, this was a moment of cross-class action. These associations declared a partial strike on May 30 demanding that government withdraw the draft and sits down for negotiations.

The day was a success. Many shops closed their doors; companies pardoned their employees, doctors and nurses protested while still offering service, and a huge crowd converged on the premises of these professional unions. Even dormant democracy activists emerged from their forced slumber since 2012 and encouraged participation in any form possible.

However, the prime minister, rushing to implement his cuts, announced a new price hike in fuels and electricity just one day after the strike. Activists skillfully seized the opportunity and called for a late evening protest on the thirty-first — since it was Ramadan, in which Muslims fast during daylight — near the prime ministry. Thousands responded.

Alarmingly for the government, these were the middle and upper-middle classes of Amman, the capital city, who are new to street action. They came every night afterwards and mixed police routines of beating protestors one day and offering them water the next didn’t confuse them.

Meanwhile, business elites went silent or outright denied that they even encouraged the first strike. Working- and middle-class protestors started to mobilize in Amman itself, and in Zarqa and Irbid, the second and third largest cities after the capital. Even smaller rural towns that made the substance of protest about the governing structure and the king in 2011, sprung to action. These small towns, historically bastions of regime loyalty, were also this time around the most radical.

While chants in Amman focused on tax reform, chants in these small towns all focused on opposing the king. In a single week the government had more layers of protestors than it had in 2011, and the attempts by the business community to peddle back against the mobilization were unsuccessful. A promise by the prime minister to reconsider, controlled police suppression, and eventually shuffling the government did not help.

Numbers increased every night, more people converged on Amman, and the substance of the protests quickly expanded to include the way the country is governed. Demanding democratic reforms started to appear at these evening protests. The council of the professional unions that kept its word on organizing a second partial strike a week after, demanded that protestors give the new prime minister, who haven’t offered anything yet, a chance.

Rejected, booed, and literally pushed to a meeting room, they reconsidered and announced continuation of protest only one hour later. Nothing diffused the evening crowds other than declaring the withdrawal of the proposed tax law the next day on June 7. Activists quickly grasped the general mood and stopped the agitation for evening protests.

Make No Mistake

The new prime minister Omar Razzaz, a Harvard graduate who grew an audience formulating what he called a new social contract against corruption, rentier economics, and inefficiency, is not that different from his predecessors despite his appeal among the protesting middle classes. He is a true neoliberal through and through.

Under his management of the social security corporation, a separate institution was established to manage the national retirement fund in 2010, a layering institutional strategy that hides more and more decision making out of public reach into technocratic confinement. Afterwards, as chief planner of a national employment strategy, his main recommendation was to train nationals to occupy foreign-dominated low-pay jobs.

As minister of education just earlier this year, he introduced efficiency standards that place most of the educational outcome upon the shoulders of teachers. If his record is any indication, he will negotiate with business and reach an agreement. The now-jubilant middle classes, despite what they achieved, will be left out of that settlement.

They have nowhere to look other than the working class for alliances. This is a hard task anywhere. In Jordan, it has proved to be among the hardest.

Structural Preemption of Working-Class Power

A series of regional shocks throughout the twentieth century sculptured a peculiar class structure in Jordan in which migrants and refugees are embedded in the most important sectors for the state. But they are isolated socially, legally, and spatially. Perhaps random at first, but this isolation proved to have an economic value for elites that were unsuccessful at developmental designs.

Like other countries in the region, the Jordanian government has been in a constant state of managing economic instability. The IMF entered the Jordanian economy in late 1980s in order to instill macroeconomic stability. This occurred in the same decade that brought many import substitution industrialization (ISI) state-led projects around the globe crashing down. The poor record of accelerating private investments and growth-led development inherent to ISI models is compounded in Jordan.

First, it is a miniscule market compared to more successful ISI cases, such as India and Brazil, or even regionally, as Egypt and Syria. The ceiling of this model is quite low in Jordan. Second, chances for capital were abundant in the region, with neighboring economies flush with oil wealth. Many businessmen preferred logistical services catering to regional cycles. Third, a flood of gulf aid and remittances repeatedly washed any inclination to self-correct and address these economic limitations away as a whole third of the Jordanian workforce migrated there by the 1980s.

Accordingly, the global slowdown at the time meant both a structural impossibility to keep the economy afloat as lending became scarcer, and a disruption in the Gulf’s own oil flows severed the remedies and fixes it bestowed on Jordan. The crash of 1988 was so intense that foreign currencies reserves barely covered weeks’ value of imports, and the local currency was devalued to half its price.

Given the strain, an uprising erupted in April 1989 that forced the government to lift martial laws that were imposed since 1957 to counter a vibrant civil society that did put significant pressures on the monarchy. The liberalization of 1989 softened the authoritarian grip, which has become necessary for a state that had no capacities beyond implementing a neoliberal shift for economic sustainment and no allies. The gulf monarchies became vengeful when King Hussein sided with Iraq over Saddam’s Kuwait escapade, which was decimated in its turn by a war that an American-led coalition visited upon it.

Regional circumstances changed for the worse for the Jordanian state elites. Their earlier quest for private investments had after 1990 deeper and more damning imperatives since economic support was decreased. In fact, by 2001 the World Bank praised the stealth speed with which Jordan privatized its public sector during the 1990s. They were bent on doing anything there is to be done to attract internal and international investments to jumpstart their economy and run “healthy” budgets.

But weaving a developmental strategy is different than keeping current accounts flush with cash. Those are in fact cause and effect. The Jordanian state didn’t erect a bureaucracy that is rational in its conduct, coherent in its functions, and pointed towards a mission. It held no popular mandate.

Layers upon layers of independent and isolated agencies and programs to lure business were introduced in place of a sophisticated and well-lubricated machine that is capable of tying, incentivizing, and most importantly, disciplining private capital into a sustained and an expanding growth-led industrialization instead of short-term tendencies. By 2010, the public budget under inconsistent development grew by eightfold folds since 1990, only to result in the growth – instead of the decline – of the trade deficit by more than five times for the same period.

GDP, capital formation, exports, and investments all grew phenomenally — none of which resembled the virtuous cycle a developing state would hope to accomplish. It was only a spillover from the new heights the gulf’s wealth was achieving, after gaining quick profits in real estate and banking. Newer incentives, such as tax reductions, tariff removals, or land transfers failed to get things going, and had no other chance of implementation without cuts in other spending items.

As a result, every year in between 1990 and 2010 witnessed a new austerity measure, whether the IMF recommended it or not. This was a pattern across the region, which started to give way to a new kind of opposition by lower layers of wage earners and the unemployed, for whom life conditions had severely deteriorated in a span of a single generation. Morocco had a surge in protest in 2005, Egypt in 2006, Tunisia in 2008; Jordan also started to show early signs of unrest in 2007.

Crucially for Jordan, the outflow of educated segments of the workforce since the 1970s created a shaft of social mobility within the country that vacated lower segments up to governmental and clerical jobs. Regional dynamics were doubly generous to Jordanian elites. It placed their workers at top lots in the Gulf to the extent of having remittances actually higher than exports in the late 1980s. It also furnished them with migrants and refugees from Palestine, Egypt, South Asia, Iraq, and now Syria, who were pushed by the state into informality or legally lower minimum wages. An estimated roughly one million foreign workers exist in what used to be a two-million worker labor market only years prior.

More pointedly, these workers dominate the strategic sectors for the state, such as food exports, textiles exports, and construction that spin the wheels of foreign flows in a country submerged in debt and deficit. That most of them are illegally present only adds to the problem that the majority of private sector workers — Jordanians included — are informal workers that lack basic guarantees. Understandably, it is much more difficult for these labor segments to mobilize for change. Unions and democracy activists are still not addressing their existence in the country. This composition haunted Jordan’s Arab Spring back in 2011 and 2012.

Jordan’s Arab Spring: Zero Accomplishments

Earth-shattering events that toppled both Tunisia’s Ben Ali and Egypt’s Mubarak within a month in early 2011 laid a path for many in the region. Fashioning themselves after the Egyptian activists who assigned a date, January 25, to launch protests against Mubarak, activists across the region announced similar plans. The Yemenis were set on February 2, Bahrainis the fourteenth, Libyans the seventeenth, Moroccans the twentieth, Syrians March 15, and finally Jordanians on the twenty-fourth.

In Jordan, protests were starting to take place even before the big day, but when it finally arrived, only a few hundred showed up to the square occupation. Promises of reform, a government wage increase, shuffling the cabinet — a normal tactic to absorb public anger in Jordan – help explain the low turnout. The lack of popular organizations (except for the Muslim Brothers, who are less confrontational than what democracy activists have wished them to be) and the lack of working class capacities are all reasons behind the popular disinterest.

Failing to pose anything resembling Cairo’s Tahrir Square mass occupation, riot police moved in quickly and cleared the square after only one night of encampment. Yet protests did not stop in 2011. In fact, a decentralized protest movement across the country emerged even in towns used to be considered bastions of regime loyalty.

Some four thousand protests took place in 2011, up from a few dozen in 2010. Demands were mostly related to anti-corruption and for some form of constitutional monarchy that limits the free hand the king enjoys. By the end of 2011, a National Front for Reform had emerged with a precise formulation of the desired constitutional monarchy that appealed to many followers among the loose networks of activists, and traditional opposition parties including the Muslim Brothers.

A new government reshuffle at the time brought another reformist, a judge at the International Court of Justice, to the premiership. However, the democracy movement that had established an organizational platform, a widely accepted leadership, a significant following or at least varying allies among the popular mobilizations, failed to accomplish any concrete steps on a transformative path towards democracy. In fact, the prime minister that attempted to draft elections law that appeals to the opposition, most importantly the Muslim Brothers, was sacked.

The inability of the democracy movement, despite its width, to inflict disruptions on capitalists who are most effectively placed to lobby the state for reform goes a long way in explaining why things ended the way they did in Jordan in 2011-12. Workplace exploitation of migrant and refugee workers not only raises profits but also anchors stability and aborts democratic attempts to a great amount. Two years of futile attempts to democratize the country — including an uprising in November 2012 that was similarly sparked by a price hike — eventually ran their course, since noise can’t substitute for real disruption.

While internal pressure in Jordan failed to lead to concessions similar to Tunisia, Egypt, and Morocco, external turmoil and political instability on Jordan’s borders resulted with an even tighter authoritarian grip.

External Pressures

The government in Jordan explains its austerity by repeatedly reminding its citizens that the Arab Spring stopped the flow of cheap natural gas from Egypt for electricity generation because an insurgency erupted in the Sinai post-2011. The Arab Spring also brought roughly a million Syrian refugees to a country of seven million, and the ensuing war on ISIS closed off both the Iraqi and Syrian markets.

On top of that, as a result of their internal politics, the Saudis are downsizing foreign aid. These external pressures only magnified internal economic strains in Jordan, which existed despite aid and open markets. The new claim behind austerity is that Jordan is being economically punished for its divergent policy over Palestine than the one its backers are endorsing.

But Jordan didn’t stray from any plan that regional powers have chartered for it. The Jordanian government dispatched troops to crackdown on the Bahraini uprising, its air force to the war on Yemen, and its intelligence to the southern border of Syria. Jordan even imprisoned the secretary general of the Islamic Action Front, the Muslim Brother local affiliate and the only serious oppositional power, over a critical tweet of the United Arab Emirates. Jordan also contributed to the diplomatic blockade of Qatar for its Saudi-perceived role in destabilizing the region.

Jordan even joined efforts of engineering a succession, or even a replacement, to Palestinian President Mahmoud Abbas in order to guarantee that a negotiated outcome between the Palestinians and Israel could eventually, or even speedily, come to fruition, allowing a regional alliance with Israel against Iran to comfortably emerge in public. It was only Trump’s decision to move the embassy to Jerusalem that caused a severe embarrassment to Jordan.

The country administers and even exploits an ethnic division formed around the presence and citizenship of the Palestinian Diaspora, the largest portion of which is in Jordan. Given the sensitivities of the Palestinian issue to Jordan, there is an internal reason to voice opposition to Trump’s peace approach. The weight of handling the Palestinians is shouldered almost exclusively by Egypt’s El-Sisi, another anchor in the Saudi alliance. After successfully defeating a revolution, El-Sisi has been emboldened to peddle different options of complete submission upon the Palestinians – from attempts to reconcile the different factions to the intensification of the blockade on Gaza. Clearly, Egypt, not Jordan, is the major player when it comes to Palestinian politics.

If Jordan was indeed paying the price of a principled position on Palestine, why the entire ensemble rushed to its rescue in the wake of recent protests needs a better explanation. The Saudis and other Gulf states pledged a $2.5 billion package, the EU’s Mogherini immediately visited with her checkbook in hand, the IMF called for international support of Jordan and welcomed national negotiation of tax burdens, and of course, Trump’s threat to withhold aid from dissenters on UN votes didn’t apply to Jordan. Earlier this year, Jordan got even more aid than what it did under Obama.

Conspiratorial understandings of events in the region rarely see local social struggles as prime shapers of events. As the Arab Spring failed to bring any transformative change, the new middle class entrants to protests are better off acknowledging that they should look for the working classes for allies, not at the top.

The next round of workers strikes could benefit from networks of support that can provide legal and financial aid when needed. Middle-class activists should focus on strengthening solidarities, on creating the necessary infrastructure for popular politics to emerge and accomplish. This is a difficult task indeed given lack of experience, lack of organizations, precariousness, widespread nativism that undermines citizens of Palestinian origin, not to speak of the multitudes of migrants and stateless refugees. It is the only track for change.