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Kuwait, Saudi and UAE offer $2.5 billion in aid to Jordan

MAKKAH: Jordan’s King Abdullah II (right) attends a meeting in Makkah with Saudi King Salman Bin Abdulaziz (2nd right), Kuwait’s Amir HH Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah (2nd left) and UAE’s Vice President Sheikh Mohammed Bin Rashid Al-Maktoum. – AFP

RIYADH: Saudi Arabia, the United Arab Emirates and Kuwait have offered $2.5 billion in aid for Jordan to ease its economic crisis following a wave of anti-austerity protests, the Saudi state media announced yesterday. Jordan has been rocked in recent days by mass protests against price rises and a proposed tax hike as the government pushes measures to slash the country’s debt, leading to the prime minister’s resignation.

A four-nation summit in the holy city of Makkah, hosted by Saudi King Salman, offered Amman a bailout in the form of a deposit in the Jordanian central bank, World Bank guarantees as well as budgetary support over five years. The decision was taken in the Muslim holy city where King Salman hosted a summit with Jordanian King Abdullah, Kuwait’s Amir HH Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah and UAE Vice President Sheikh Mohammed Bin Rashed.

Jordan is pushing fiscal consolidation measures required under an IMF financing program including tax increases and subsidy cuts that have weighed on poorer and middle-class families. Jordan’s newly designated prime minister, Omar Al-Razzaz, said on Thursday he would drop a proposed income tax bill, conceding to a key demand of protesters who had already brought down the previous government.

“In light of the close brotherly ties… it was agreed that the three countries (Saudi Arabia, the UAE and Kuwait) would provide an economic aid package to Jordan totaling $2.5 billion,” the official Saudi Press Agency said. The crucial summit was attended by Jordan’s King Abdullah II, who offered his gratitude to the three countries, adding the package will “contribute to overcoming the crisis”, according to SPA. The announcement comes after European Union foreign policy chief Federica Mogherini on Sunday announced 20 million euros ($23.5 million) in aid for Jordan.
Cash-strapped Jordan, a close US ally that relies heavily on donors, is struggling to curb its debt after securing a $723-million loan from the International Monetary Fund in 2016. Austerity measures tied to the IMF loan have seen prices of basic necessities rise across the kingdom-culminating in a week of angry protests over tax proposals that forced prime minister Hani Mulki to resign. The authorities on Thursday announced they were withdrawing the unpopular legislation, but still face a mammoth task to balance popular demands with the need to reduce the public debt burden.

The Gulf aid package appears driven by the desire to avoid a repeat of the 2011 Arab Spring uprisings, which saw pent-up public anger spilling onto the street across the Middle East, analysts say. “The speed and the gravity with which the Gulf states are responding is a very clear testament to their concern and determination to nip this unrest in Jordan in the bud,” Lori Boghardt, a senior fellow at the Washington Institute for Near East Policy said. “They are going to do all they can to thwart another Arab spring on their doorstep.”

Gulf states, except for Bahrain, largely avoided the pro-democracy protests unleashed by the Arab Spring, but they have sought to deepen economic links in the region following an oil price slump in 2014. Jordan blames its economic woes on instability rocking the region and the burden of hosting hundreds of thousands of refugees from war-torn Syria, complaining it has not received enough international support. The World Bank says Jordan has “weak growth prospects” this year, while 18.5 percent of the working age population is unemployed.- Agencies

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