Jordanian prime minister delivers lecture at National Defence College

["Al-Dhahabi: The Hashimites Have Established the Foundations of a Modern Jordanian State, Thanks to Their Sound Vision" - Petra headline]

Amman, 22 Oct, (Petra) - Prime Minister Nadir al-Dhahabi has said that the Hashimites, thanks to their deep insight and sound vision, have established the modern Jordanian state on strong and solid foundations based on the noble principles of the Great Arab Revolt. These are unity, freedom, and better life. He added that the Hashimites have managed to consolidate the existence of this state and its role as one of the pillars of strategic stability in a region suffering from many regional conflicts and tensions.

The prime minister said: "The Hashimites have made Jordan a model of democracy, political pluralism, respect for human rights, and economic openness. They have also made it a model of rationality, political moderation, and commitment to making peace, maintaining the fundamentals and principles of the nation, and defending the nation's just causes."

This came in a lecture the prime minister delivered at the Royal Jordanian National Defence College. In it he reviewed the prospects for the Jordanian economy and the challenges facing us, as well as the repercussions of the global financial crisis, in addition to the challenges and political conditions facing our region in particular.

The prime minister noted that the young Jordanian state celebrated a short time ago the passage of 10 years on the assumption of His Majesty King Abdallah II, may God protect him, of his constitutional powers. He said these years were a continuation of the process of building and developing Jordan.

In his lecture, the prime minister reviewed the situation of the Jordanian economy during the six years which preceded the global financial crisis, that is, the period from 2003 to 2008, stressing that the economy is a top priority in the government's work programme.

Al-Dhahabi said: "With the grace of God and the vision of His Majesty King Abdallah II, our national economy has succeeded in achieving many positive results during the past years through the application of economic reform programmes since the early nineties and the subsequent national reform programmes that established the foundations of our national economy and created an economy able to absorb and overcome shocks and lay the financial and monetary foundations, which helped make Jordan a fertile investment environment for many investors from around the world."

He added: "The most important accomplishments of the national economy during the period from 2003 to 2008 can be summarized as follows: The Jordanian economy grew by 7.6 per cent annually and exports grew by 20 per cent annually. The existing balance of external public debt compared to GDP dropped from 75 per cent in 2003 to 24.2 per cent in 2008. Foreign currency reserves increased from $4.7 billion in 2003 to $8.3 billion at the end of 2008. These continued to increase reaching an unprecedented record level of about $10 billion at the end of September this year."

The prime minister indicated that the percentage of direct foreign investment compared to GDP rose from 4.3 per cent in 2003 to 12 per cent in 2008. Unemployment rates have dropped to 12.7 per cent at the end of 2008 compared to about 15.3 per cent in 2003. He stressed that the national economy was able to create about 65,000 new jobs in 2008 and about 70,000 jobs in 2007.

He said that although the service sectors accounted for 67 per cent of the gross domestic product, the national economy was able to establish a strong industrial sector that depended mainly on light industries like clothing, textiles, and pharmaceuticals, which enhanced economic growth in the Kingdom.

The prime minister reviewed the conditions of the Jordanian economy in 2008, noting that the whole world lived a state of confusion and disbelief. This began with the beginning of 2008 with unprecedented hikes in the price of crude oil and most basic commodities in world markets, indicating that the price of crude oil in July 2008 reached $149 a barrel and the price of iron in the local market reached 1,100 dinars per metric ton, something which posed a real threat to our national economy, which relies heavily on importing most major commodities and crude oil.

He said that in the light of this, the rate of inflation in the Kingdom rose to 14.9 per cent, trade balance deficit increased by 14 per cent compared with 2007 to reach 6.5 billion dinars, and the current account balance of payment recorded a deficit of 1.7 billion dinars.

He noted that in order to relieve the citizens of the surge in prices, the government adopted a social safety net, which cost 800 million dinars in 2008, indicating that the main substance of this network was raising the salaries of military and civil servants and retirees, providing a one-time direct financial aid for families with per capita income below 1,000 dinars annually and are not covered above, and including 300,000 new citizens under the umbrella of health insurance, in addition to maintaining the current prices of water and electricity for small consumers and not fully liberating butane gas and fodder prices as well as increasing aid to the beneficiaries of the National Aid Fund and increasing the number of families benefiting from it by including 6,000 more.

He pointed out that an agreement was signed by the end of March 2008 to purchase at an early stage part of the debt owed to Paris Club at a total value of $2.4 billion and at a discount rate of 11 per cent. This, he said, contributed to a reduction in foreign debt to 24.4 per cent of the GDP.

The global financial crisis:

The prime minister said that as a result of greed and wrong employment of financial investment tools, and as a result of failure to observe the principles of prudence and caution, and as a result of excessive confidence in the financial markets, the world witnessed the emergence of a global financial crisis in the fourth quarter of 2008. It began in the United States and its repercussions spread to all world countries, including Jordan, but at varying degrees depending on the specificity of each country and the degree of its openness, economic diversity, and strength of its financial institutions.

He said the poor assessment of the degree of risk in complex transactions associated with real estate mortgage was one of the main reasons for the heavy loss suffered by world banks, indicating that the world has witnessed a state of instability because of disturbances in the credit market in the whole world. He pointed out that these disturbances were not confined to money, capital, and stock markets, but there were disturbances and breakdowns in financial institutions like investment banks, insurance companies, and financial institutions providing real estate financing.

Al-Dhahabi said all these disturbances caused uncertainty in the future and led to the collapse of confidence in the financial markets, stressing that one of the main reasons that led to the exacerbation of the crisis was lack of transparency and delay in disclosing the losses.

He said: "Some of us watched what happened and explored the prospects of the crisis from the very beginning and tried to make decisions to ease the consequences, and others realized late the seriousness of the repercussions of the crisis and tried to draw a road map for themselves to get out with the least possible losses. In all cases, the rescue plans pursued by all states did not go beyond the following points: Separation of bad assets from the good ones, and dispensing with the bad assets from the budget of financial institutions in order to show them in a better shape. Besides, the financially eligible banks acquired the troubled banks, restructured the capital of troubled financial institutions, and nationalized the troubled financial institutions. The government expanded the granting of guarantees to the various obligations of banks and injected more liquidity into the financial markets."

One year after the start of the global financial crisis:

The Prime Minister said that the financial crisis caused heavy economic losses worldwide. The IMF estimated these losses at about $4 trillion at the beginning of the crisis, including $2.7 trillion losses in the United States, while losses in Europe amounted to $1.2 trillion and $149 billion in Japan.

He noted that the IMF has finally re-estimated losses at $3.4 trillion, indicating an improvement in global financial stability as a result of the policies and plans put in place, pointing out that the Global Financial Stability Report issued by the IMF showed that the global banking sector incurred about 60 per cent of the total financial losses sustained by world economies.

Al-Dhahabi said that the number of banks which declared their bankruptcy as a result of the crisis was 81 banks in the United States only, noting that a recent study pointed out that there are 500 small US banks threatened with bankruptcy.

The prime minister noted that the IMF expects a decline in global GDP in 2009 up to 1.1 per cent, while the World Bank expects a decline in global GDP by 2.9 per cent, as the International Labour Organization predicts the number of people unemployed to be between 39 and 59 million in 2009. He confirmed that past events have led to a reconsideration of many of the practices that have become one of the fundamentals of the capitalist system. He said the US Government's acquisition or nationalization of giant financial institutions was a clear indication of a change in the mechanisms of the free market economy the United States used to demand countries of the world to follow, noting that there are voices calling for having international and local scrutiny bodies and instruments to control market performance.

The prime minister said the financial crisis also led to reconsidering the role of developing countries in achieving the desired growth in the world and restoring balance to world economy, noting that the G-20 meeting in Pittsburgh on 25 September agreed to increase the share of developing countries that are not represented correctly in both the World Bank and IMF by no less than 3 per cent at the expense of the big and rich countries.

Al-Dhahabi noted that World Bank President Robert Zoellick stressed the important role that should be played by developing countries to activate and increase demand in global economy, and said we should not rely on developed countries to increase demand for goods and services. He said the developing countries represent a significant and essential part of the global economic growth equation. Hence, he called on developing countries to play a vital role in global economy and the world's rich countries should provide the necessary funding to them to bridge the development gaps and implement projects that contribute to raising productivity, noting that the IMF has pumped $250 billion recently to promote international liquidity to face the repercussions of the financial crisis, as well as to increase the capacity of states to borrow from it.

The future of the financial crisis:

The prime minister said that under the plurality of opinions, different methodologies, and conflicting economic indicators, it is difficult to judge the current situation or to predict future status. For example, despite the fact that some key indicators in some countries of the world showed an improvement in performance during the second quarter of this year compared to the first quarter, many reports continue to point to the continuation of the repercussions of the financial crisis on the economies of the world, and global economy is not expected to begin to recover before the beginning or middle of 2010, especially in light of the continued negative impact of swine flu on the world economy, which created a new challenge to global economic recovery.

Jordan's economy in light of the global financial crisis:

Al-Dhahabi said: "Although we have a firm belief in the strength of our national economy and the soundness of its financial institutions and its ability to overcome crises, the repercussions of the global financial crisis on our economy will remain the main concern and most difficult challenge in the next stage. We are cautiously watching the performance of all sectors of the economy." He added that the government noted the following this year: Slow growth of the national economy. Growth rate was 3 per cent during the first half of 2009 compared with 8.9 per cent during the same period in 2008. National exports fell by 19.4 per cent during the first eight months of 2009 compared with the same period in 2008. Remittances of workers abroad dropped by 6.5 per cent during the first nine months of 2009 compared with the same period in 2008. Tourism income dropped by 0.6 per cent during the first nine months of 2009 compared with the same period in 2008.

He added that despite the rise in domestic revenues during the first nine months of this year by 2 per cent, compared with the same period in 2008, the overall revenues of 2009 are expected to be lower than estimated in the 2009 budget law by 13 per cent. Foreign aid and grants that support the budget dropped by 79 per cent during the first nine months of this year, compared with the same period in 2008.

The prime minister said the budget deficit during the first nine months amounted to 876 million dinars, compared with 349 million dinars during the same period in 2008. He added that the deficit is expected to amount to about 1.1 billion dinars at the end of this year, noting that the industrial production index dropped by 2.1 per cent during the first eight months of the year 2009, compared with the same period in 2008. The unemployment rate during the first three quarters of 2009 rose to 13 per cent, compared with 12.7 per cent during the same period in 2008.

He said that in spite of past fears and their implications, the international institutions expect our national economy to achieve a growth rate of 3 to 4 per cent in 2009 at a time when they expect the US and euro-zone economies to register a decline of 2 to 3 per cent.

The prime minister said: "In order to alleviate the repercussions of this crisis on our national economy, the government has taken a number of measures at an early time. These can be summarized as follows: It set up a higher ministerial committee under the chairmanship of the prime minister to address the effects of the financial crisis on the Jordanian economy. It insured the citizens' deposits in banks operating in Jordan without fixing a ceiling for the deposited sums until the end of 2009. It ensured the availability of the necessary liquidity through guidance issued to the Central Bank not to issue certificates of deposit during the next phase, to reduce the banks' compulsory reserve rate from 10 per cent to 7 per cent, and to lower the market interest rates by three percentage points."

Al-Dhahabi said: "The measures included the provision of various incentives to specific economic sectors. For example, taxes on hotel rooms have been reduced from 16 to 8 per cent and 260 industrial production materials were exempted from taxes in 2008. Land registration fees were reduced from 10 to 7.5 per cent until 31 December 2009. The first 120 square meters of apartments purchased from housing companies were exempted from land fees if the total area of the apartment did not exceed 300 square meters, regardless of the number of times this exemption is taken advantage of. This exemption will expire on 31 December 2009."

He stressed that despite the negative repercussions of the global financial crisis, it has served our economy by achieving some positive results. For example, the inflation rate witnessed a noticeable decline due to the drop in the prices of crude oil and commodities, as well as the high exchange rate of the dollar against foreign currencies. He said the rate of inflation during the first nine months of 2009 was minus 0.7, compared with 14.9 per cent at the end of 2008. Also the trade balance deficit declined due to lower imports bill. The deficit during the first eight months of 2009 dropped by 23.5 per cent compared with the same period in 2008.

He said these positive indicators also include improving the status of the current account of balance of payments. The current account deficit dropped from 1,131 million dinars during the first half of 2008 to 541 million dinars in the first half of this year. Foreign currency reserves increased. These amounted to about $10 billion for the first time by the end of September this year.

The future trends of the national economy:

The prime minister said: "On the basis of the vital role played by investment in advancing economic activity, Jordan will continue to employ all of its resources and open all doors to attract more investments, especially in the real sectors generating employment. Jordan, thanks to God, enjoys political and economic stability and a distinguished strategic location, in addition to the existence of laws and regulations that preserve the right of the investor and facilitate the investment process. Moreover, we have signed several trade agreements with countries around the world. These enable the product to reach all markets easily."

He said the government has established a number of development zones equipped with infrastructure to attract specialized investment projects with the aim of distributing the benefits of development among all governorates and regions of the Kingdom and creating integrated development workshops that can create job opportunities, reduce poverty and unemployment, and achieve economic growth. The government has also started the implementation of several major development projects like the Disi Water Conveyance Project and expansion of Queen Alia International Airport.

He said agreements were signed with international companies in the field of prospecting for gas and oil shale, which will provide alternative energy sources and bring new economic revenues. Besides, the government signed agreements with international companies for the discovery and extraction of uranium at many sites, something which will open the door for using nuclear energy for power generation.

He noted that there are many development and income-generating projects, which will be implemented in various sectors such as energy, transport, and water like the Red-Dead Sea Canal, the transfer of the port of Aqaba, the establishment of an nuclear plant for peaceful purposes, the expansion of the Jordan Petroleum Refinery, and the implementation of railway projects in the Kingdom to link it with neighbouring countries through partnership with the local private sector. This is in addition to attracting more foreign investments, which will play an active role in promoting and sustaining economic growth.

The key economic challenges facing our national economy:

Al-Dhahabi said: "We realize that we still have a lot of work to do and we still have many challenges and difficulties that obstruct the process of our economic development. These are represented in the following: High budget deficit, high current account deficit of the balance of payments, high rates of poverty and unemployment, and instability in crude oil prices, which continue to pose a real threat to our national economy as a result of our fears that oil prices may go up again as happened in 2008. We, however, have faith in the ability of Jordan to overcome these difficulties and challenges, thanks to the wise Hashimite leadership, may God preserve it."

Political affairs:

With regard to political affairs, the prime minister stressed that the achievement of the higher national interests required the adoption of a balanced foreign policy based on providing the best livelihood and welfare for the Jordanian citizen, and protecting the state and ensuring its independence and maintaining its security. He noted that in formulating its foreign policy, Jordan adopted principles based on performing its pan-national duties and responsibilities towards the various Arab issues, particularly the Palestinian question, and extending bridges of cooperation and interaction with all states and forces in the world within the framework of mutual interests and non-interference in the internal affairs of others and without allowing others to interfere in Jordan's internal affairs. This is in addition to complying with the international charters and norms and the principles of international legitimacy, respecting human rights, and calling for resolving international and regional problems by political means and dialogue away from resorting to force and violence to find solutions to outstanding issues.

He stressed that under the guidance and direct supervision of the higher political leadership, the Jordanian diplomacy has succeeded on all levels in building an extensive network of international relations based on mutual respect and balanced ties with a large number of countries, and was able to consolidate the weight and political role of Jordan on the regional and international levels in a manner that has far exceeded the available resources.

The Palestinian issue:

The prime minister said: "Jordan stresses that the Israeli occupation of Arab territories is the basis of the conflict in the region, and the Palestinian cause is Jordan's central and primary cause. Jordan is committed to making all efforts to enable the Palestinian people to regain their legitimate rights and establish their independent state on their national soil with Jerusalem as its capital, in addition to the return of all Arab territories occupied since 1967 and guaranteeing the security and stability of all countries of the region. This will ultimately lead to the establishment of normal relations between Israel and the Arab and Islamic worlds according to the Arab peace initiative, which was adopted by the Arab League and the OIC and which was reasserted during their subsequent meetings."

He stressed the need for Israel to respond positively to the serious and large efforts led by US President Barack Obama and his administration on the basis of international consensus and support and on the basis of the sincere Arab and Palestinian call for launching serious negotiations leading to the implementation of the two-state solution and the prevalence of a comprehensive peace in the Middle East.

The prime minister stressed that Jordan, under His Majesty King Abdallah II, is committed to shoulder its responsibilities and to continue its positive role in regional peace-making through his tireless efforts to ensure an exploitation of the real opportunity that is available now to end the Arab-Israeli conflict because solving this conflict is not only in the interest of the directly concerned parties, but also in the interest of the world. It will also lead to the settlement of other regional issues.

He reiterated Jordan's support for US efforts to launch negotiations as soon as possible from the point where they left off, but in the presence of a monitoring and verification mechanism and specific timetables.

He added that Jordan stresses that settlement activity and peace are two opposites and to continue settlement activity, in contravention of international law and international humanitarian law, will undermine the chances of establishing an independent, viable, and geographically contiguous Palestinian state. He said that Israel must immediately halt all settlement activity in the occupied Palestinian territories, especially East Jerusalem, including the so-called natural growth, as well as stop the various unilateral actions such as house demolitions and displacement of population and excavations around and beneath the Islamic and Christian holy places.

Al-Dhahabi expressed Jordan's condemnation of Israel's defiance of international calls to halt settlement activity in the occupied territories, considering this a real obstacle to international and regional efforts to resume negotiations.

He said: "The Jordanian Government under the direct guidance of the wise Hashimite leadership is committed to continuing its utmost efforts to protect the Islamic and Christian holy places in occupied Jerusalem, thus proceeding from the historical Hashimite role in looking after and protecting these places. We condemn all the serious Israeli attempts to harm the Jerusalem sanctuary enclosing Al-Aqsa Mosque and create new facts on the ground aimed at the Arab identity of Jerusalem and at changing its demographic composition."

Al-Dhahabi added that Jordan invites the international community to maintain and even strengthen its support for the Palestinian National Authority and President Mahmud Abbas in a manner that serves the goal of building an independent Palestinian state and achieving Palestinian national reconciliation as soon as possible. He renewed Jordan's support for Egyptian efforts in this regard.

He said Jordan calls on Israel to lift its blockade of the Gaza Strip, where the humanitarian situation and the suffering endured by our people there as a result of the continuation of this unjust blockade cannot be tolerated in any way.

Jordan's Arab and international relations:

With regard to Jordan's relations with the Arab countries, the Prime Minister said: "Jordan takes great pride in belonging to the Arab nation and is keen to assume its national responsibilities towards the nation's just causes and towards unifying its position and mobilizing its energies for the sake of a future worthy of its history and role in human civilization."

He stressed Jordan's keenness to strengthen ties with the Arab countries and said its relations with the Arab countries take precedence over any other relationship in line with its absolute faith in the common Arab destiny and the interdependence and convergence of its interests with the interests of the Arab countries.

Al-Dhahabi said: "Based on this, Jordan has sought to strengthen the bonds that unite it with all Arab states and that give relations an institutional dimension. Jordan was careful to set up a high joint committee with a large number of Arab countries to organize cooperation at various levels."

With regard to Iraq, he reiterated Jordan's support for Iraq's stability, unity, territorial integrity, reconciliation among its people, and the participation of all entities in the political process to be able to restore its active role on regional and international levels, stressing that the visit of His Majesty King Abdallah II to Iraq came as the first visit by an Arab leader since 2003 to practically confirm this support.

He added that a number of Jordanian officials visited Iraq, including his recent visit to Baghdad which was a translation of the royal directives to do everything possible to support the brothers in Iraq and strengthen relations of cooperation between the two countries.

He noted that Jordan believes that the upcoming Iraqi elections represent a significant milestone in strengthening the political process in Iraq. He said Jordan calls on all Iraqi factions to participate in the elections and render them successful in order to assure the whole world that the will and unity of the Iraqi people are stronger than all challenges.

With regard to the Iranian issue, the prime minister said that Jordan welcomes dialogue between Iran and big powers, hoping that both sides will agree on the principles of dialogue between them in order to resolve the Iranian nuclear crisis through dialogue and diplomacy.

In this regard, he said: "We still warn of the dire consequences of any attempt to deal with this issue militarily." He added: "While reiterating its support for the right of countries to the peaceful use of nuclear energy, Jordan stresses that this should be done in accordance with the controls and safeguards established by the IAEA."

The fight against terrorism:

The prime minister said: "Jordan has for decades suffered and continues to suffer from terrorist operations against its national achievements and against its citizens and institutions in order to dissuade the country from continuing its moderate centrist approach as a country that calls for the establishment of a lasting peace and peaceful coexistence among the peoples of the Middle East." He pointed out that Jordan was able to face and thwart this danger, thanks to its security, which is based on the rule of law and institutions, and the strength of its vigilant security forces, which hit with an iron fist anyone who dared to destabilize the country and undermine its security.

He pointed to the important role played by dialogue among civilizations and religions in strengthening the foundations of understanding and peaceful coexistence among peoples and nations, alluding to the role of the Amman Message that was launched by Jordan within the framework of promoting the convergence of various cultures and religions in line with the message of coexistence and tolerance carried by Islam.

The prime minister stressed that Jordan, thanks to the determination of its leadership and loyal people, will continue its national march towards consolidating the foundations of democracy, freedom, rule of law, and economic wellbeing despite the various challenges that lie ahead. He added that Jordan will also continue its political role to establish a comprehensive, lasting, and just peace that opens up future prospects for the coming generations.

He praised the pioneering role played by the Jordanian Armed Forces - the Arab Army and security services - in supporting national interests by defending Jordan and its safety, maintaining its security and stability, contributing to peacekeeping operations in many parts of the world, and consolidating their leading role in building and developing the Jordanian state and promoting its development efforts.

Al-Dhahabi expressed his appreciation for the prominent role played by the National Defence College in order to mature the political and strategic thought of learners by following up world events and developments in various areas and fields.

At the end of the lecture, the prime minister answered questions by the students of the Royal Jordanian National Defence College and the Royal Jordanian Command and Staff College, who represented senior officers of the armed forces and security agencies and state officials, and a number of senior officers from the fraternal Arab countries and friendly countries. The questions dealt with a number of local and regional issues.

Brigadier General Ahmad al-Masarwah, commander of the National Defence College, thanked the prime minister for his acceptance of the invitation to deliver this lecture at the college as part of a college programme to meet and hold dialogue with officials on different local, regional, and international issues to enrich the experience of the class participants.