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For Jordan, Peace Seems Almost As Scary As War

On the outskirts of Amman, vast expanses of lavish houses and construction sites cover what was barren desert just a few years ago. Once a mere provincial outpost, the Jordanian capital has mushroomed into a thriving, modern city of 1 million during the 26 years of no-war, no-peace following the 1967 Arab-Israeli conflict.

Now, the Jordanians are anxiously wondering whether the recently signed accord between Israel and the Palestinian Liberation Organization is a plus or a minus for them. "We don't want to end up with a bigger problem than we started with," says Jawad al Anani, Jordan's Cabinet Affairs Minister and point man for negotiations with Israel and the Palestinians. "We have had our share of destabilization in this part of the world."

As they head into crucial negotiations with Israel and the Palestinians on such matters as security, border controls, tariffs, and monetary systems, the Jordanians have some legitimate concerns. They fear that opposition to the treaty in the West Bank and Gaza will trigger factional fighting that might deluge Jordan with more Palestinian refugees. They worry that their industries could be swamped by subsidized Israeli products and that the billions of dollars in planned development spending for the territories could stoke inflation in Jordan.

LOST BUFFER? Their most deep-seated fear is that a close Israeli-Palestinian relationship will reduce their country's clout in the region. Until now, Jordan, under King Hussein's deft leadership, has played an important role as a buffer state between Israel and the Arabs. If that changes, it could reduce the Hashemite Kingdom to a backwater that would be deprived of the foreign aid and other goodies likely to flow to the region. To press their case, the Jordanians are working up demands for compensation for playing host to 1 million Palestinian refugees over the years.

But if the king plays his cards right, Jordan is unlikely to be bypassed. The West Bank and Gaza seem too small to stand alone and will want some tie to Jordan to avoid being smothered by Israel. The Israeli Labor government has also long favored a role for Jordan, which has cooperated with Israel on security matters despite the lack of a formal peace treaty between the two. Analysts think that the Palestinians and Jordanians, and perhaps the Israelis, are likely to wind up bound together in an innovative new state designed to satisfy competing national aspirations for the same turf.

Recently Yassir Arafat visited Amman to try to ease Hussein's irritation over the PLO leader's cutting a deal behind the Jordanians' backs. Israeli Prime Minister Yitzhak Rabin also reportedly held a "secret" meeting with the king. Apparently reassured, Hussein is going ahead with the Nov. 8 parliamentary elections that he considered postponing for fear passions were running too high.

"NET GAIN." Hussein seems to have Jordan well-positioned to exploit any opening in trade and development. Compared to most of its neighbors, Jordan's $5.2 billion economy is open and well-managed, and strong in contracting, banking, and other services that the territories will need. Moreover, business in Jordan is dominated by Palestinian-Jordanians, who will want to invest in and trade with the territories. "If you open up the bridges, you have a market worth at least $1 billion," says Taher H. Kanaan, general manager of the Industrial Development Bank in Amman. Because Israel now keeps nearly all Jordanian goods out of the territories, he says, "any share will be a net gain for Jordan."

Kanaan says several of his clients have been adding capacity in anticipation of a peace agreement. He is not worried about competition from high-cost Israel, saying military strength does not equal economic competitiveness. Reflecting optimism, Jordan's active stock market is up 24% on the year.

The economy is already going strong, growing at a 6% clip this year on top of an 11% spurt in 1992. It has defied predictions that Jordan's tilt toward neighboring Iraq during the Gulf war would spell ruin. After the collapse of the lucrative Iraqi market, Jordanian manufacturers have diversified, lifting their exports by 23% in 1992. "If we have done this well under instability, we should thrive with stability," says Anis Mouasher, a leading industrialist.

But there may be turbulence until the new relationships among Jordan, Israel, and the emerging Palestinian entity are thrashed out. A wild card is the king's health. While his condition seems stable after last year's cancer surgery, Jordanians shudder at the thought of losing his leadership.

Arafat's renewed prominence threatens to fire up longstanding tensions between Hussein and the PLO over the loyalty of the roughly 50% of the 4 million Jordanian population that is of Palestinian descent. The two sides are also prone to vying for influence in the West Bank and East Jerusalem, which Jordan controlled from 1948 to 1967. But in the long run, the Palestinians and Jordanians will probably find their mutual needs outweigh their differences.

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