Peace Brings Hope To A Sleepy Port...And The West Steps In To Help

Last fall, when President Bill Clinton came to Jordan for the signing of the Israeli-Jordanian peace treaty, U.S. officials were understandably busy with security arrangements for his arrival at the Red Sea port of Aqaba. But another issue raised concerns: Did Air Force One have enough runway room to stop before plunging into the sand? No problem, said Jordanian officials, but there were sighs of relief when Clinton rolled to an uneventful stop.

Sleepy Aqaba, population 50,000, is now a centerpiece in Jordan's drive to tap into the profits of peace. Long a haunt of vacationing students and backpackers, Aqaba is hoping that, like Clinton, investors will venture to the city now that peace has arrived.

MAIN OUTLET. Aqaba has always been a poor cousin to Eilat, with its cleaner beaches and better hotels. Only a few kilometers away in Israel, Eilat has more than six times Aqaba's 1,000 hotel rooms. While Eilat has benefited from Israel's huge tourist industry, Aqaba has languished. Only a few hotels rise above a three-star rating, and first-class restaurants can't be found. The coral is fabulous, the waters clear, but the city breathes an air of neglect. Tired-looking shopkeepers sit in front of flagging businesses, while idle young men--unemployment nears 20%--stroll the streets.

But many hope Aqaba's port will pick up the slack. The Aqaba Port Authority is planning a $35 million expansion, from more berths for ships to a large increase in storage capacity. By 1995, shipping tonnage had dropped 40% from its peak in 1989, when Jordan reaped a boom stemming from Iraq's loss of its Umm Qasr port during its war with Iran. City planners see the port as crucial to development. "By upgrading the port, we want to make Aqaba a first-class industrial city," says Fayez Khasawneh, director of the Aqaba Region Authority, which coordinates planning.

Part of the port's problems came from the U.S.-led naval interdiction of ships bound for Aqaba from 1991-94, on suspicion that the ships were breaking U.N. sanctions against Iraq. Jordan lost more than $300 million a year as a result. Since Lloyd's Register of England began a land-based system of inspections last July, authorities say that shipping lines that had ceased using Aqaba have started to return.

As Jordan's only port, Aqaba remains the main outlet for the country's leading exports: phosphates, fertilizers, and potash. Jordan's trucking industry lives off the port's business--tractor-trailers line the waterfront. The port sector employs almost 5,000 people. Israel plans to move all of its port activity from Eilat to Aqaba within the next six months. Plans are also being laid for a joint Jordanian/Israeli airport in Aqaba that officials hope to open within 18 months if financing can be found.

The revamped port is just one aspect of a master plan that will try to develop a city known more for its laid-back feel and palm trees than for its prominence on the business map. And Aqaba needs help. Local businessman Jamal Khouri, owner of the Muhannad Supermarket--actually a small, cramped store in a sleepy strip mall off the main thoroughfare--is glum: "Right now, we see little benefit to peace."


Aqaba wants to be both a resort and, with a bigger port, an industrial center

The new master plan is ambitious. It envisions a huge stretch of development on the south beach near Saudi Arabia, incorporating the expanded port as well as hotels, tourist villages, restaurants, even a 36-hole golf resort. But such bold moves require time. "We are not prepared for the coming two to three years," says Abed Zaro, general manager of the Holiday International Hotel, the favorite spot of Westerners in the city. "We need a minimum of five years." His hotel is adding 100 rooms and upgrading its restaurant and conference facilities.

International investors may be ready to jump in. Meridien, Sheraton, and Novotel are all submitting proposals for Aqaba's first five-star hotels. Exxon Corp., with a Japanese partner, is looking at a possible $2.5 billion oil refinery to process up to 150,000 barrels a day of Iraqi crude once U.N. sanctions are lifted. ABB Asea Brown Boveri (Holding) Ltd. just won a $140 million contract to build two electricity-generating plants. If even half the talk becomes reality, Aqaba could be swimming in the peace payoff.

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