US embassy cable - 04AMMAN9226

C O N F I D E N T I A L SECTION 01 OF 04 AMMAN 009226 
 
SIPDIS 
 
E.O. 12958: DECL: 10/27/2009 
TAGS: PGOV, ECON, SENV, EINV, ETRD, SOCI, JO, IZ 
SUBJECT: ZARQAWI'S HOMETOWN 
 
Classified By: Charge d'Affaires David Hale for reason 1.4 (d) 
 
1. (C) SUMMARY: Zarqa, Jordan,s second-largest city, is the 
home of the bulk of Jordan,s heavy industry and infamous 
terrorist Abu Mus,ab Al-Zarqawi.  Zarqa has been on a losing 
streak for the past decade.  Underrepresented in the 
Jordanian government and the Parliament because of its large 
Palestinian population, the city,s fading, old-style economy 
and serious pollution problems leave its largely young, poor, 
and unemployed population with little to hope for.  As a 
result, disaffected youth are prey to extremist messages and 
recruitment.  Aware of the dangers, the GOJ is trying to make 
the city more liveable and produce job growth.  Unless and 
until these changes turn the city around, however, Zarqa 
seems likely to be an increasing source of problems for the 
GOJ. END SUMMARY. 
 
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"JERSEY CITY" OF JORDAN 
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2. (SBU) Zarqa is not a pretty place.  Stretching into 
Jordan,s eastern desert, at the northeastern point of the 
crescent formed by the Greater Amman megalopolis, Zarqa 
presents the casual visitor with a bleak facade of row upon 
row of concrete blocks housing its lower-income population, 
on the outskirts of which lie scattered, smoke-belching 
factories.  The city began as a settlement of Circassians and 
Chechens, established in 1902 and later linked to Damascus 
and the rest of the Ottoman Empire by the Hijaz railway.  The 
establishment of first a British (later converted to Jordan 
Armed Forces) military base in the 1920s, and then a 
petroleum refinery in 1954, attracted Jordanians eager for 
work, and this population of economic immigrants was 
supplemented with political immigrants, as Zarqa (1948) and 
Rusaifeh (1967) refugee camps were erected around Zarqa after 
wars with Israel.  The crossroads location of the city, the 
availability of water supplies, and the easy access to oil 
derivatives made Zarqa an attractive place in which to locate 
much of Jordan,s heavy industry base, whose establishment 
was made possible by a closed Jordanian economy and a 
paternal GOJ posture towards such industry. 
 
3. (SBU) The relatively recent and primarily private 
sector-driven expansion of Zarqa, along with the presence of 
the refugee camps, has left it with perhaps the highest 
concentration of Palestinian-origin Jordanians of any city in 
Jordan.  The population of Zarqa is younger - and poorer - 
than that of Amman (though neither as young nor as poor as 
many of the areas of Jordan outside of the Greater Amman 
area) and Zarqa governorate has the lowest household income 
of any governorate in Jordan.  The highly concentrated 
population, only a short bus ride from better-off Amman, does 
however seem uniquely suited for developing a culture of 
disaffection.  If the role played by Amman in Jordan is 
something like New York City and Washington, DC rolled into 
one, Zarqa would best be described as Jordan,s Jersey City. 
 
4. (SBU) The unfortunate corollary of Zarqa's state-sponsored 
industrialization has been a level of pollution - in all 
forms - so serious and so obvious that Zarqa stands head and 
shoulders above the rest of the pack as Jordan's worst 
environmental hotspot.  Successive Ministers of Environment 
have pointed to Zarqa as their number one priority, but with 
the exception of a recently completed, largely USAID-funded 
wastewater treatment plant, little has changed.  The Ministry 
shut down a politically-connected steel plant earlier this 
year, but the plant has reopened with a grace period to 
implement a plan for reducing dust and smoke.  The Zarqa 
Chamber of Industry has recently put forward a proposal in 
which several Chamber members would put up part of the 
startup money, supplemented with substantial USAID 
assistance, for a $5 million industrial wastewater treatment 
plant, which they will run on a commercial basis.  Both this 
group and the Ministry of Water, however, point to each other 
as the culprit in the lack of progress on this proposal. 
 
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"THEY JUST DON,T GET IT" 
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5. (SBU) Once a kind of showpiece of Jordan,s economy, Zarqa 
now seems increasingly out of step with King Abdullah,s 
vision of a "new Jordan."  The opening of Jordan,s economy - 
its deregulation, lowering of tariff and nontariff barriers, 
and cutting of subsidies - has left old-line, heavy 
industries of the kind that form the backbone of Zarqa 
increasingly exposed to more competitive imports.  While 
Zarqa industry is far from collapse, its growth has slowed 
substantially, and the city,s economic growth is no longer 
able to keep up with the expanding labor force.  This fact is 
reflected in recently published Jordanian poverty statistics 
that show a nationwide fall in the poverty rate in the period 
1997-2002 from 21.3 to 14.2 percent, but a rise in the 
poverty rate of Zarqa governorate - the only governorate in 
Jordan to show a rise over that period. 
 
6. (SBU) Emblematic of the problems faced by Zarqa's industry 
is the Jordan Petroleum Refinery Co. (JPRC), the foundation 
of Zarqa,s heavy industry base.  The refinery,s expensive 
construction, initially financed by Jordanian private sector 
stalwarts with substantial GOJ support, only made economic 
sense when paired with a 50-year concessional agreement that 
began in 1957. This concession gave JPRC the exclusive right 
to refine crude oil entering Jordan and to sell and import 
all oil derivatives, while limiting the company,s profit 
margin to seven percent.  In practice, as the GOJ Ministry of 
Energy was given the task of procuring crude supplies for 
JPRC, the Ministry would set the prices both of JPRC,s 
inputs and final product in such a way as to guarantee that 
the profit margin did not fall below seven percent. 
 
7. (SBU) This concessional agreement is now close to its 
expiration, the GOJ has announced its intention to end its 
expensive subsidy program within five years, and the JPRC, 
which has made only a few, incremental improvements since its 
foundation, now faces a stark choice: find $700 million for a 
complete revamp of the refinery, or face probable extinction 
in the face of cheaper and higher-quality fuel product 
imports.  The latter possibility would at a stroke wipe out a 
bulwark of Zarqa,s middle class: the 6,000 relatively 
well-compensated refinery workers.  The minor restructuring 
that JPRC has planed to date - spinning off and/or 
outsourcing non-core functions such as its fleet of delivery 
trucks - has already provoked the wrath of its powerful 
union, which has twice in the past two years extracted 
concessions from the refinery after threatening work 
stoppages. 
 
8. (C) Coupled with the loss of their privileged status in 
the domestic market over the past five years, Zarqa,a 
industry has had to deal with the more recent loss of another 
protected market: Iraq.  The fall of the Saddam regime in 
April 2003 marked the end of the Iraq-Jordan trade protocol, 
under which Iraqi oil was traded directly for Jordanian 
products.  Jordanian industrialists took full advantage of 
this arrangement, setting up or expanding production of goods 
such as pharmaceuticals and vegetable oils.  The trade of 
uncompetitive goods has not survived the end of the protocol, 
and some of the factories have consequently felt considerable 
pain.  Adding insult to injury, Zarqa-based contractors and 
construction suppliers have had a difficult time securing 
contracts in the reconstruction of Iraq. (In a revealing 
statement, the Chairman of the Zarqa Chamber of Industry 
announced in April 2004 that due to the Chamber,s moral 
opposition to the "occupation," his members would no longer 
continue their efforts to support Iraq,s reconstruction. 
This measure would not negatively affect Zarqa,s economy, he 
added, because his members weren,t getting any contracts 
anyway.) 
 
9. (SBU) Even in cases where opportunities do present 
themselves, Zarqawis show themselves to be no different than 
other Jordanians in picking and choosing the ones they will 
accept.  The CEO of EAM Maliban, a recently established Sri 
Lankan garment factory at Ad-Dulayl Qualifying Industrial 
Zone (QIZ), on the outskirts of Zarqa, complained that after 
enduring tendentious bureaucracy in his quest to set up the 
factory and a training center, he had finally opened both, 
only to find that he could not attract even one serious 
applicant to the training center from the Zarqa region.  In a 
subsequent meeting at the recently and expensively remodeled 
Zarqa Chamber of Commerce (which now boasts a machine that 
reads the fingerprints of the Chamber,s few dozen employees 
upon their entry and exit, replacing the passe punch-card 
system), the Chamber,s board members all regretted the 
inability of the factory to generate any interest in its jobs 
in a city with such high unemployment, but unanimously agreed 
that helping to solve this and similar problems was outside 
the Chamber,s scope of work.  Emboffs were then treated to a 
lecture elaborating on the common Jordanian argument that the 
current 85 JD ($120) minimum monthly wage is too low to 
attract entry-level workers, who would rather remain 
unemployed, and positing a doubling of the minimum wage as a 
solution to this problem -- a rather surprising argument to 
hear from business owners. 
 
-------------------------------- 
DISCONTENT FUELS ISLAMIST APPEAL 
-------------------------------- 
 
10.  (SBU) According to the most recent census, around 
775,000 persons reside in the Zarqa governorate, representing 
about 15 percent of Jordan,s population.  While there is no 
hard data on the number of residents who are of Palestinian 
origin, most analysts estimate a figure between 80 percent 
and 90 percent.  As a result of electoral gerrymandering that 
favors rural, East Banker-dominated areas, only 10 out of 110 
seats in the Lower House of Parliament are allotted to 
winning candidates from Zarqa (9 percent of the total seats). 
 Three of these 10 seats are currently held by members of the 
Islamic Action Front (IAF). 
 
11. (C) MP Mohammad Arsalan (East Banker - Zarqa, 1st Dist.), 
told ECON/C and A/POL/C he was very concerned that Zarqa was 
becoming a "poor man,s city."  According to Arsalan, 
Zarqa,s population growth has been primarily driven by poor 
Jordanians from rural areas who seek work in greater Amman, 
but who cannot afford the high cost of housing in the 
capital.  Instead, they live in nearby, cheaper Zarqa.  The 
resulting concentration of poverty in Zarqa has led to 
increased social problems, a sense of discontent among many, 
and an exodus of wealthier residents, Arsalan added.  Recent 
GOJ initiatives to improve the quality of life in Zarqa are 
suggestive of the dismal state of Zarqa's public services: a 
planned government hospital in Zarqa announced by the 
Minister of Health, for example, would double the number of 
beds available to Zaqawis - to a still unsatisfactory 820. 
12.  (C) Arsalan,s concerns were echoed by MP Marzouq 
Habarneh (East Banker, - Zarqa, 4th Dist.).  Habarneh told 
Acting Pol Counselor that he was particularly troubled by 
growing restlessness among idle, unemployed young men in 
Zarqa and stepped-up efforts by Islamists to reach out to 
them.  With no jobs and an uncertain future ahead of them, 
these young men are increasingly turning to Islam - including 
extremist strains - to find hope and solace, said Habarneh. 
(NOTE: Habarneh confirmed that at least one of the unlicensed 
preachers detained by the GOJ in October - see reftel - was 
operating in Zarqa.)  This trend was bolstering the strength 
of the already influential Muslim Brotherhood in Zarqa, whose 
active network of charitable contributions and distribution 
of donated goods further broadened their popular appeal. 
 
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A FEW POINTS OF LIGHT 
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13. (SBU) The GOJ - in particular, King Abdullah - views 
these developments with some dismay, and is moving ahead on 
several projects (such as the new hospital mentioned above) 
to improve the climate within Zarqa.  The most ambitious of 
these projects is Zarqa New Garden City, a urban renewal plan 
under development by Mawared, a public-private land 
development partnership modeled on Beirut,s Solidere company 
which rebuilt that city's downtown zone.  Zarqa New Garden 
City will be developed in several tranches on the 
2500-hectare (6,178-acre) former military base, which fronts 
the main downtown street of Zarqa.  The initial $900 million 
tranche of the development - the infrastructure for which is 
planned for a mid-2005 completion - will create an 
attractive, mixed-use, multi-income neighborhood.  Mawared 
hopes to tap what they believe to be an unexploited market 
among better-off Zarqawis seeking a better quality of life. 
It is also targeting the local managerial class, most of whom 
now live in affluent western Amman but might want a shorter 
commute.  The goal is to make life in Zarqa a slightly 
lower-cost alternative to western Amman, with access to all 
of the amenities of the latter.  To this end, the GOJ has 
tendered a feasibility study on a light rail connection 
between the Abdali district of western Amman and the western 
edge of this new development.  The development would boost 
the local job market, as new, well-off Zarqawis kept their 
spending in Zarqa instead of making the trek to the malls of 
western Amman.  Just as important, the GOJ believes that the 
development will instill hope among Zarqawis that Zarqa is 
"going somewhere." 
 
14. (SBU) Older GOJ initiatives are bearing more tangible 
fruit.  Ad-Dulayl QIZ and the idiosyncratic one-factory 
El-Zay QIZ are posting impressive growth figures (e.g., 39 
percent growth in exports from Ad-Dulayl over last year) and 
already account for over sixty percent of Zarqa's total 
exports.  The QIZs are also stimulating local employment, 
despite the apparent lack of active interest by the local 
population alluded to by EAM  Maliban.  QIZ factory owners 
are doing their best to recruit Jordanian staff.   Even the 
imported laborers, who still form a majority at Ad-Dulayl, 
have provided substantial knock-on benefits to  the local 
economy (evidenced by store signs lettered in Tamil); the 
local population of the village surrounding Ad-Dulayl has 
quadrupled since the QIZ was  founded, a clear sign that 
those workers who are willing to put the effort in can each a 
point beyond entry-level where they can make a livable wage. 
 
15. (SBU) The Zarqa Free Zone, established by government 
order in 1983 and the crown jewel of Jordan,s Free Zones 
Corporation, has also been the site of substantial growth and 
job creation.  The zone, which has volume of trade five times 
as large as the combined total of Jordan,s other three 
public free zones, saw its combined incoming and outgoing 
trade grow 66 percent in 2003 over 2002, largely due to the 
dramatic expansion in transit trade to Iraq.  However, some 
of the new activity in the zone (e.g., Jordan,s first 
assembly plant for "SamSync" branded personal computers, 
scheduled to open in November), show longer-term prospects 
for job growth.  Zarqa Free Zone estimates the number of 
people working inside it at roughly 2,000, and innovative 
projects like SamSync seem likely to drive this number 
further. 
 
16. (C) Apart from government and private industry, civil 
society groups are starting to play an active role in meeting 
the needs of Zarqa residents.  Community and women,s rights 
activist Nadia Bushnaq, for example, has established a 
thriving center in Zarqa that provides a variety of services, 
aimed primarily at women, that include computer classes, 
vocational training, legal advice, abuse counseling, and a 
job bank that matches potential employers with those looking 
for work.  During a tour of the center, which has expanded 
its programs several times since (in part with USG funds), 
Bushnaq told Emboffs that due in part to the influx of the 
rural poor (many with limited education and job skills), 
social problems in Zarqa ranging from drug use to spousal 
abuse were unfortunately on the rise.  According to a survey 
that her center conducted, approximately 50% of households in 
Zarqa contained at least one adult who was unemployed or 
underemployed.  While Bushnaq was justifiably proud of the 
center,s work, she said that their resources were limited 
and more civil society groups were urgently needed to provide 
assistance in Zarqa. 
 
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ZARQA,S MOST (IN)FAMOUS SON 
--------------------------- 
 
16. (SBU) Ahmed Fadil Nazzal Al-Khalayleh is Zarqa,s best 
known, if not favorite, son.  Under the nom de guerre Abu 
Mus,ab Al-Zarqawi, he has indelibly linked Zarqa with 
terrorism.  Zarqawi himself is not particularly 
representative of Zarqa, however.  An East Banker born to the 
Bani Hassan, Jordan,s largest tribe, he stands in sharp 
contrast to the vast Palestinian majority in Zarqa, most of 
whom have never lived anywhere else. 
 
17. (C) While Zarqawi,s background may be an anomaly for 
Zarqa, his brand of disaffection is not, and his message 
finds takers among East Bankers and Jordanian-Palestinians 
alike.  The relative economic decline, rising poverty, and 
political underrepresentation of Zarqa have created a large 
underclass of young men with few prospects, for whom 
Zarqawi,s revolutionary Salafist call to action offers the 
illusion of a purposeful life.  The royal interest in 
revitalizing Zarqa - if only to present an alternative vision 
to its youth - is prudent, but the GOJ's plans will take some 
time to bear fruit.  The growth in new industries is more 
promising, but we are not convinced this will be enough in 
the near term to offset the decline of some of the mainstays 
of Zarqa,s economy.  Zarqa will remain a concern for the 
regime for the foreseeable future. 
HALE