The Curious Case of Oil-Exporting Jordan
From time to time, the boring economic data regurgitated by Jordan’s amply staffed ministries offers up a tantalizing mystery. In the Monthly Statistical Bulletin (May 2004) published by the Central Bank of Jordan, for example, one learns that Jordanian export of refined oil products increased 46 times over from 2002 to 2003 -- a trend that continued well into 2004. This is certainly odd, since Jordan has no proven oil reserves.
Jordan is often called a “post-rentier rentier state,” because the official coffers require such regular filling with foreign aid -- much of it from Washington. Could the kingdom now be an oil rentier as well?
The Central Bank’s tables do not explain whence the oil came nor do they say where the exports went, but the most logical destination is Iraq.
Throughout the 1990s, Jordan imported cut-rate oil from Iraq in violation of the UN embargo -- with a wink and a nod from the US. Amman made a bargain with Washington in advance of the 2003 invasion: the interruption of Jordan’s supply of Iraqi oil would be compensated for by shipments from Kuwait and Saudi Arabia. Typically in such arrangements, the supplier state could also sell a certain amount of crude and remit the proceeds to Amman. Consequently, Jordanian government and royal court officials could assure a restless population that the invasion would not worsen their economic situation.
Well, petrol prices have risen for the average Jordanian and the economy remains stagnant. But if prices have risen, how is it that the Jordanian government can seemingly export petrol products? If the embarrassment of oil-rich Iraq importing from Jordan were not enough, then the specter of government officials reaping profits from sales to the Coalitional Provisional Authority while implementing price austerity at home seems explosive. That was precisely the claim made by a Kuwaiti member of parliament in 2004. The charge, quickly denied in Amman, was that Jordanian government officials requested that proceeds from a sale of Kuwaiti oil on Jordan’s behalf be directed to a private account in Europe. Revenue redirection notwithstanding, the simple fact is that US support for favored regimes involves more than direct aid. The question is: how long can such webs of political rent remain fixed? The last time Jordan encountered prolonged interruptions in exogenous revenue, the 1989 riots followed.