US embassy cable - 03AMMAN1063

C O N F I D E N T I A L SECTION 01 OF 03 AMMAN 001063 
 
SIPDIS 
 
E.O. 12958: DECL: 01/27/2013 
TAGS: PGOV, PINS, ECON, JO 
SUBJECT: JORDAN: PILLARS OF THE REGIME, PART IV OF IV - THE 
ECONOMIC ELITE 
 
Classified By: Ambassador Edward W. Gnehm, reasons 1.5 (b,d) 
 
SUMMARY 
 
1.  (c)  Along with the military/security apparatus and 
tribal networks, Jordan's economic elite as a group round out 
the pillars upon which the Hashemite monarchy leans for 
support. This elite, representing no more than five percent 
of the population, controls some 85 percent or more of the 
kingdom's wealth.  As a group, they have traditionally 
supported the royal family and its interests as a matter of 
course, and they give King Abdullah high marks for his focus 
on economic issues.  The group itself, however, is somewhat 
amorphous, with sometimes overlapping - but often divergent - 
interests to advance with the king.  These divisions have 
become increasingly apparent as Jordan moves farther along 
the path of economic reform.  As King Abdullah faces 
challenges in his neighborhood and at home, he will be 
increasingly challenged to balance these interests and 
maintain the united support of this group for his policies 
and his continued ability to govern. 
 
COMPOSITION 
 
2.  (c)  Jordan's economic elite can be broadly split into 
three groups.  The first, and often most visible, is the 
(often Christian) Palestinian business class.  This group is 
represented by a relatively small number of family groups, 
many with historic ties to the West Bank and Gaza, who have 
been running successful businesses in Jordan since 1948 or 
before.  This group is involved in literally every aspect of 
economic life in Jordan - agriculture, light and heavy 
manufacturing, trading, services, banking, real estate 
development, shipping, tourism and travel, and the list goes 
on and on.  Some of the more wealthy families have direct 
ties to the monarchy, either through family friendships or as 
informal advisors.  What is unique about this group is its 
conspicuous absence from formal politics.  Palestinians are 
few and far between in the senior ranks of the government and 
have not organized any identifiably Palestinian political 
parties or groups.  While Palestinian-Jordanians hold 
ministerial positions from time to time (including the MinFin 
in the current cabinet), key positions, including that of 
Prime Minister, are usually held by East Bank Jordanians. 
Palestinian businessmen are widely believed, though, to 
control the vast majority of commercial activity in the 
kingdom. 
 
3.  (c)  The second group consists of long-established "East 
Bank" families, wherein the head of the family's business 
concerns is also usually a highly placed member of the 
family's tribe.  A majority of these families have 
traditionally been heavily tied into trade with Iraq - 
industrial and chemical goods, agricultural products, and 
"middle man" services - and many continue to trade with Iraq, 
either legally through the Oil for Food (OFF) program and the 
trade protocol, or illicitly outside of these programs. 
Since there is usually a significant tribal overlap to these 
businessmen, they are expected to use the family business in 
part to take care of the tribe in rough times.  King Hussein 
and his predecessors had a constant dialogue with these 
businessmen as part of a broader tribal management strategy 
(explained septel).  King Abdullah has less of a dialogue 
with these groups, but most still support the monarchy out of 
long historical and cultural affinity.  East Bankers can be 
found atop many of the government-sanctioned (and mandatory 
membership) business and professional associations in Jordan. 
 Many members of these families, including current Prime 
Minister Ali Abul Ragheb, have rotated between the family 
business and government service - or in some cases, have held 
both positions simultaneously. 
 
4.  (c)  The final group is best characterized as "new 
economy" entrepreneurs.  This group includes both "real" 
entrepreneurs who are carving out new niches in Jordan's 
economy, as well as scions of prominent families from the two 
groups above, most of whom are western educated, understand 
western business practice, and are looking for new business 
opportunities to capitalize on.  This group has benefited 
markedly from the King's ambitious program of economic 
reform, which is creating a western investment climate in 
Jordan and forcing many Jordanian industries (like telecoms, 
IT, and pharmaceuticals) to improve product and service 
quality for a demanding global market.  They are the smallest 
component of the pillar as businessmen, but many still retain 
important family connections with the two groups above.  This 
group supports the king because it identifies with him as a 
contemporary, relies on his continued reform mindedness to 
ensure the future of their businesses, and looks to the 
monarchy for support internally, as it often finds itself at 
odds with much of Jordan's more conservative, old world 
population.  This group is probably the most vocal supporter 
of the king's focus on economic development and reform. 
 
CHANGING TIES 
 
5.  (c)  The ties of these economic elite actors to the late 
King Hussein were felt on a personal level, and were based on 
his many years on the throne and on Hussein's personal 
gravitas.  King Abdullah II does not have as much of that 
personal capital.  That has not translated into loss of 
support for the monarchy from the economic elite, however. 
Support from the business elite for the monarchy remains 
solid, in recognition of the King's key role in providing 
stability in the kingdom and allowing commerce to continue 
apace.  While Abdullah does not appear to have his father's 
touch with the tribes (septel), he is quite at home with the 
new economy entrepreneurs - even going so far as to appoint a 
tech company magnate, Karim Kawar, to be Jordan's Ambassador 
to the U.S. 
 
6.  (c)  Furthermore, Abdullah has made a sustained effort to 
co-opt much of the economic elite into his reform plans by 
establishing the Economic Consultative Council, a grouping of 
Jordan's leading businessmen that has been tasked with 
advising the king on the state of the economy, and with 
receiving the King's directives on sectoral priorities for 
development planning.  The prestige of sitting on this 
council, and thereby having the King's ear, is an incentive 
to buy in to the reform effort.  The net effect of all these 
changes is a slight shift toward performance-based support, 
but still based on a solid bedrock of visceral support for 
the monarchy and the Hashemites. 
 
THE PAYOFF 
 
7.  (c)  The support of this pillar is critical to the King 
in at least three major aspects.  First, this group - through 
its control of the vast majority of the kingdom's economy - 
can provide a layer of macroeconomic stability (and, in a 
pinch, liquidity for the government) in times of crisis. 
Simply by staying put, and by keeping their wealth in Jordan 
in times of heightened tension, this group provides a measure 
of confidence both within the kingdom and in the 
international community about Jordan's economic stability. 
This confidence is crucial to avoiding pressure on the 
currency (as was experienced after the death of King 
Hussein), pressure on the banking system, and pressure on 
Jordan's standing with its creditors.  The value of this 
stability should not be overlooked.  In February 2002, a 
widely-publicized banking scandal hit Jordan when a local 
businessman was discovered to have embezzled over $100 
million from local banks.  A weaker banking system might have 
collapsed under the weight of the ensuing speculation about 
the stability of Jordan's financial sector.  But Jordan's 
banks held up, mostly because there was no capital flight as 
a result of the crisis. 
 
8.  (c)  The willingness of the economic elite to ride out 
the crisis illustrates their contribution to - and 
self-interest in - continuing stability in the macroeconomic 
picture.  The same can be said for the early days - and 
periodic spikes in violence - of the Intifada, which threw 
the region into deep uncertainty on a number of fronts, 
impacting key economic sectors in Jordan, including tourism 
receipts.  Yet Jordanians kept their money in Jordan, 
mitigating the worst of the possible economic meltdown. 
Indeed, Jordan continues to enjoy strong growth in exports, 
reserves, and in the stock market in a difficult regional 
environment, at least in part because of the stability 
projected by the economic elite. 
 
9.  (c)  The second key contribution of this group is its 
influence, at least in a small way, as a bridge between the 
East Bankers and the West Bankers.  Tensions between 
Palestinian Jordanians and East Bank Jordanians are always an 
underlying current in the civic dialogue here, and have 
bubbled to the surface in ugly ways during the course of the 
Intifada (soccer fans shouting for the Hashemite King to 
divorce his Palestinian wife; East Bank police forces being 
used ostentatiously to contain pro-Palestinian 
demonstrations; etc).  But the economic elite has more to 
bind it together financially than to pull it apart because of 
ethnic-cultural differences.  While the Palestinian and East 
Bank economic elite are not tightly knit, they manage to 
coexist peacefully and work on common interests where 
possible. Moreover, both groups preach this peaceful 
coexistence to their own communities.  This has a moderating 
effect on the East Bank/West Bank dynamic, a real plus for 
the royal court. 
 
10.  (c)  Third, the economic elite has had a moderating 
effect on a number of the monarchy's most sensitive policies. 
 By recognizing a peace treaty with Israel as a strategic 
choice for the kingdom, and by showing support for the 
"Jordan First" campaign, Jordan's economic elite are helping 
in a small way to dampen some of the most radical opposition 
to policy decisions on Iraq and on Israel-Palestine.  This 
does not translate necessarily into wholesale support for the 
King's policies, but it signals to the King, and by extension 
to the public at large, that the leaders of Jordan's business 
community recognize and respect the royal court's strategies 
(and red lines) on these issues.  This respect in turn 
encourages others to rein in their more radical emotional 
responses and, in the case of Israel, has led to a slow but 
perceptible change in attitudes toward normalization in 
certain sectors of society. 
 
CHALLENGES AHEAD 
 
11.  (c)  King Abdullah does not yet command the same sort of 
reverence that his father did, at any rate during King 
Hussein's later years.  In time perhaps that will change, but 
in the meantime, the king will be given less slack for 
mistakes and will be judged more critically on his 
performance and his choices.  In the near term, that means 
more scrutiny, even among the economic elite, over policies 
toward Israel and Iraq.  So far, he has in general received 
at least passing marks for his handling of the Intifada from 
the Palestinian business elite.  While deeply frustrated over 
the continuing crisis, they have been generally supportive of 
the king's approach to it, from providing medical care to 
Palestinian victims of violence to taking a leadership role 
alongside Egypt in trying to bring the parties to the 
negotiating table.  Most notably, the Palestinian business 
elite has not called for severing ties with Israel. 
 
12.  (c)  The Iraq issue, on the other hand, is particularly 
sensitive for the East Bank crowd, as damage to those 
long-standing business ties affects their ability to serve 
their traditional role of benefactor within their 
tribe/family.  Couple with that the strong cultural affinity 
between Iraqis and Jordanians, and there is deep-seated 
opposition to any policy that looks to be supporting U.S. 
military action against Iraq.  The king should be able to 
ride out any disappointment connected to military action in 
Iraq (provided it is quick and casualties are limited), but 
he will have to do more in a post-Saddam Iraq to represent 
the commercial interests of prominent East Bank families as 
Iraq rebuilds. 
 
13.  (c)  In the long term, his ability to maintain the 
support of all these sub-groups among the economic elite will 
come under even more pressure internally.  That pressure will 
be generated by his own continued commitment to economic 
reform and openness.  This commitment to reform is a must for 
new economy types and economically powerful families that can 
adapt to changing business realities.  The king's record to 
date on making tough choices for the long-term health of 
Jordan's economy has been impressive - WTO accession; free 
trade agreements with the U.S., EU, and regional neighbors; 
and a raft of new legislation to modernize and make more 
transparent Jordan's business climate.  By committing to 
these tough choices, the king has won the strong support of 
Jordan's new economy and has positioned the kingdom for 
sustained growth. 
 
14.  (c)  At the same time, though, these steps could expose 
the King to sharp criticism.  If stagnation in the global 
economy mutes the benefits reform is supposed to bring, the 
King risks associating himself with economic failure.  And 
even if Jordan's economy thrives under the new model, the 
King's commitment to economic reform will certainly 
complicate relations with traditional East Bank economic 
elites - the old school government contract brokers and 
monopolists who tie economic relationships to family 
relationships.  Such a model cannot work in a WTO-compliant 
Jordan.  As the economy marketizes, then, the King may face 
increasing opposition from professional associations, 
economically conservative Islamic groups, and the like, whose 
fortunes hang on the old status quo.  This split among the 
economic elite could prove to be one of Abdullah's greatest 
internal challenges in the years ahead. 
GNEHM