US embassy cable - 05AMMAN7522

C O N F I D E N T I A L SECTION 01 OF 03 AMMAN 007522 
 
SIPDIS 
 
E.O. 12958: DECL: 09/20/2015 
TAGS: PGOV, PREL, KDEM, KISL, KPAL, KMPI, EAID, ECON, PINR, IS, IZ, JO 
SUBJECT: VISIT OF HOWARD DEAN AND NATIONAL JEWISH 
DEMOCRATIC COUNCIL TO JORDAN 
 
REF: A. AMMAN 7498 
     B. AMMAN 7283 
     C. AMMAN 7273 
     D. AMMAN 7112 
     E. AMMAN 5456 
 
Classified By: CDA Daniel Rubinstein for Reasons 1.4 (b), (d) 
 
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SUMMARY 
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1.  (C) A delegation from the U.S. National Jewish Democratic 
Council (NJDC), led by Democratic National Committee Chairman 
Howard Dean and accompanied by three state Democratic party 
leaders, met separately September 17 with Prince Ali bin al 
Hussein (acting as Regent in the absence of King Abdullah, 
his half-brother) and Deputy Prime Minister Marwan Muasher. 
Discussions focused on the Israeli-Palestinian conflict, 
Iraq, Jordan's economic situation, and reform.  End Summary. 
 
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ROYAL COURT MEETING 
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2.  (C) During the group's meeting at the Royal Court (also 
attended by Minister of Tourism Alia Bouran), Prince Ali 
expressed satisfaction with the recent Israeli withdrawal 
from Gaza, but said that continued U.S. engagement with both 
Israel and the Palestinian Authority was "crucial."  He said 
there was an urgent need to clarify the "next step" after the 
pullout, as well as to support the missions of General Ward 
and Quartet Special Envoy James Wolfensohn to ensure 
stability and security in the Gaza Strip.  Asked what was 
needed to move the peace process forward, Ali replied 
"courageous leadership" from both parties that reflected the 
will of the majority of Israelis and Palestinians.  Ali urged 
American Jews to lobby Israel to reject the agendas of 
"fringe or extreme groups," while noting that Arab support 
for the Palestinians had moved into a new phase with the 
demise of the "old" (i.e., Arafat-led) Palestinian Authority. 
 
 
3.  (C) On Iraq, Ali reiterated Jordan's continuing strong 
support for the Iraqi Transitional Government, as evidenced 
most recently by Prime Minister Badran's trip to Baghdad (ref 
C) - the first by an Arab head of government.  He warned of 
"interference" by Iraq's "neighboring states" (i.e., Iran), 
which could compromise the country's independence, and said 
the insurgency could not be defeated through force alone, but 
required dialogue with Sunni groups, though not with Zarqawi 
and "terrorists".  He further claimed that some sectarian and 
ethnic militia groups joining the Iraqi security forces "were 
just putting on the uniform" without laying aside their 
partisan objectives.  A premature pullout of Iraq by U.S. 
forces, Ali stated, would be a major mistake. 
 
4.  (C) Noting the threat posed by religious extremism, Ali 
stressed Jordan's efforts to promote the moderate, peaceful 
nature of "true Islam."  He highlighted the international 
conference of Islamic scholars held in Amman on July 4-6 that 
embraced the "Amman Message" and rejected the issuance of 
fatwas promoting violence (ref E).  According to Ali, Jordan 
is currently busy publicizing this message in Asia, and hopes 
to take it to Islamic leaders in the U.S. soon.  He added 
that Jordan was trying to organize a conference that would 
bring together leaders of different Iraqi factions to jointly 
denounce the killing of Muslims by other Muslims. 
 
5.  (C) Regarding reform and Jordan's economic situation, 
Minister Bouran described the government's current endeavor 
to create a National Agenda for comprehensive reform (ref A) 
using a "holistic approach" that incorporates specific 
benchmarks and milestones.  She thanked the U.S. for the 
positive economic impact of the U.S.-Jordan Free Trade 
Agreement and the establishment of the Qualifying Industrial 
Zones (QIZs).  Ali remarked that record-high world oil prices 
had been very damaging to Jordan's fiscal health, and 
necessitated a further lifting of government subsidies on 
fuel prices in the coming days (ref B).  Ali also made a 
pitch for a proposed pipeline from the Red Sea to the Dead 
Sea which, he stated, would provide electricity and 
desalinated sea water to Jordan, Israel and the Palestinian 
territories while saving the Dead Sea from extinction (ref 
D). 
 
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MEETING WITH DEPUTY PM 
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6.  (C) Asked by Dean to describe Jordan's economic 
challenges, Deputy PM Muasher noted that Jordan had good 
macroeconomic indicators with GDP growth of over 7% in 2004 
and 2005.  Exports to the U.S. had surpassed USD 1 billion, 
and economic reform measures were succeeding in attracting 
foreign investment.  (NOTE: Both Muasher and Prince Ali 
skillfully and forcefully described the real benefits to 
Jordan of the U.S.-Jordan FTA and of Jordan's increasing 
commitment to IPR in response to leading statement-questions 
from Dean and delegation contesting the value of free trade 
and IPR protection to Jordan and other developing countries. 
END NOTE.)  He continued, however, that the government was 
now "bankrupt" due to high oil prices.  Approximately 25% of 
the GOJ's budget, Muasher stated, was spent on fuel 
subsidies.  This financial drain, combined with an 
inefficient tax system and the high cost of debt servicing, 
had sent the budget deficit soaring.  Consequently, the GOJ 
had no choice but to further lift fuel subsidies (ref B) 
which, Muasher predicted, would make the government "even 
more unpopular" and could generate inflationary pressures. 
 
7.  (C) Other challenges cited by Muasher included a bloated 
public sector employing 35% of the Jordanian workforce, high 
pension costs, and a young population - half of all 
Jordanians are under 15 years of age - that in the coming 
years could push unemployment well above 20%.  To tackle 
these issues, Muasher said the royal commission creating the 
National Agenda (ref A) had reached consensus on 
recommendations to reform the tax and pension systems, 
provide easier credit terms to small and medium size private 
businesses, and channel more investment to "labor intensive" 
growth areas.  These recommendations, if implemented, could 
sustain GDP growth above 7% over the next ten years and 
double the per capita income in the same time frame. 
 
8.  (C) Muasher stated that the GOJ was trying to increase 
the use of natural gas (in lieu of oil) supplied by a 
pipeline from Egypt.  Plans to convert all electrical power 
generation to natural gas in the immediate future could 
reduce the GOJ's oil bill by 30%.  Although Jordan has 
abundant oil shale, Muasher said this resource was only a 
long-term option as oil extraction from shale is not 
commercially feasible at present and poses environmental 
problems.  Asked about textiles, he responded that expansion 
of QIZs was a "short term" economic remedy.  Though the QIZs 
had created 40,000 jobs, this was "not sustainable."  Muasher 
continued that Jordan needed to focus on promoting other 
industries such as pharmaceuticals, potash, phosphates, and 
information technology (IT).  Tourism was another bright 
spot, as evidenced by a construction boom of new vacation 
apartments and resorts in Aqaba, though he added that tourism 
growth was limited by continuing conflict in the region. 
 
9.  (C) Despite an official unemployment rate of 12.5%, 
Muasher said there was a shortage of skilled labor in Jordan 
and a glut of graduates in "unneeded" fields from Jordan's 31 
public and private universities.  While some of these 
graduates in the past had found employment in the Persian 
Gulf, the inhabitants of Gulf states were becoming 
increasingly better educated and less in need of the services 
of Jordanians.  (Muasher estimated that there are currently 
300,000 Jordanians in the Gulf sending remittances of around 
USD 2 billion.)  Jordan is working to reform the education 
system - including the introduction of computers and the 
internet in every public school - to help better prepare 
students for the job market, while it also pursues judicial 
reform that will computerize the court system, train judges 
on relatively new issues such as intellectual property rights 
(IPR), and introduce laws to increased the judiciary's 
independence.  Since Jordan changed its IPR laws to join the 
World Trade Organization, it has developed a promising 
software export industry which, Muasher noted, had succeeded 
in selling e-learning programs to the U.S.  Though piracy 
still exists, he claimed that IPR awareness was expanding 
among the general public with more people buying non-pirated 
products. 
 
10.  (C) Turning to regional violence and terrorism, Muasher 
pointed out that Jordan "has been fighting al-Qaeda since 
1991."  He emphasized that Jordan maintains close security 
and intelligence cooperation with the U.S., as well as with 
states such as Saudi Arabia and Iraq.  Jordan was also trying 
to combat extremist ideology by its promotion of the Amman 
Message.  Muasher said that King Abdullah was making 
interfaith dialogue and the denunciation of violence in the 
name of Islam a central theme both in Jordan and abroad.  In 
response to a question about Lebanon, Muasher expressed hope 
that Amman and Beirut, which shared free market principles 
and other interests, could enjoy fuller cooperation and 
economic ties now that Syrian control of Lebanon had been 
broken. 
 
11.  (C) On the Israeli-Palestinian conflict, Muasher said 
that the basic parameters of a final settlement were well 
known:  an independent and viable Palestinian state on "most" 
of the West Bank and Gaza; Palestinian sovereignty over "Arab 
East Jerusalem" in a way that would "keep it open to all 
faiths;" the offer of residence in the future Palestinian 
state, resettlement, or some type of compensation to refugees 
- Muasher claimed that not even 5% of the roughly 5 million 
Palestinian refugees would choose to return to present-day 
Israel; and the guarantee of Israel's security by every Arab 
country.  The problem, according to Muasher, is that trust 
between the parties was at "an all time low," and the roadmap 
was stuck in "phase one or pre-phase one."  While Israel's 
pullout from Gaza was a "great first step," many are afraid 
that it will become "a final step" with Israel expanding its 
control over the West Bank. 
 
12.  (C) Muasher recognized that it would be very difficult 
for Israeli PM Sharon to move forward on the peace process 
due to domestic politics, but stated the international 
community must not allow the peace process to "fall 
backwards" through the continuation of Israeli settlement 
activity.  Muasher warned that proposed settlement 
construction linking Jerusalem to E-1 would effectively cut 
the West Bank into two parts and prevent the creation of a 
viable Palestinian state.  Abu Mazen was making the necessary 
tough choices, he added, and needed full Israeli and 
international support if Hamas was not to gain more power and 
popularity among Palestinians.  Muasher was gratified that 
the two parties, along with Jordan, had agreed to cooperate 
on saving the Dead Sea, which he said would disappear by 2050 
if present trends continue.  The World Bank had approved a 
2-year feasibility study to assess the construction of the 
proposed pipeline between the Red Sea and Dead Sea (ref D), 
but so far only the French had committed to paying "their 
share" of the project's costs. 
 
13.  (U) BIO NOTE:  The day prior to the meeting with Dean 
and delegation, Prince Ali's wife (Princess Rym) gave birth 
to the couple's first child, Princess Jalila. 
RUBINSTEIN