The Aqaba Special Economic Zone: A Model for Reform?

The debate surrounding the complex relationship between economic reform and political reform has become dominated by two schools of thought: one granting precedence to economic reform, the other political reform. In the MENA, this debate has been pursued with both greater interest and confusion since the economic contraction and political stagnation of the 1980’s. Both contrasting approaches do, however, agree that there is a direct linkage between the two reform processes, in which developments in one inevitably impacts upon the other. The source of confusion lies in determining which is the catalyst and which is the subsequent responder; if indeed the precede/succeed balance exists at all. Having apparently missed the ‘Third Wave’ that saw democracy emerge in Latin and Central America,

Aqaba is Jordan’s only port city and has been vital for some of the kingdom’s major import and export industries, but had, until ASEZ, lacked significant growth.

 

Photo courtesy of ASEZA

Central and Eastern Europe, Sub-Saharan Africa and large parts of Asia, the MENA has distinguished itself for its ability to resist political change. Likewise, while globalisation has delivered considerable economic rewards to those economies that have made the (often painful) adjustments necessary to engage and integrate with the international economy, the MENA has yet to undergo a transition from economic reluctance to its amalgamation with the global economic system.

 

The dual-resistance to economic and political reform prevalent in the region has seen the MENA lose considerably in a global system that does not accommodate economies and governments that are slow to adjust. As such, the region does not reveal many case points with which to argue the linkage debate. Whereas the political reforms of the 1970’s-1990’s in Latin America were followed by strong economic performance, indicative of the lead-role democratization in those countries heralded, the Chinese Model of rampant economic expansion in what remains a closed political system – a case of deep interest for many MENA observers. Likewise, political liberalisation throughout Central and Eastern Europe in the 1990’s was followed by significant economic reorientation and capitalisation, in contrast to Lee Kuan Yew’s Singapore and Park Chung Lee’s South Korea where economic gains were closely protected by authoritarian governments. The former and latter cases are supportive of the contrasting paradigms and are equally convincing.

 

In a cautionary tone, it is probable that there is no specific formula, no synergy between the two processes in question that applies to a universal equation. It is far more likely that determinants of social and political history, economic reality and a current qualified relativity to the international political and economic environment are instrumental in defining the balance. In short, each case is different and needs to be approached with this in mind. That said, trends and historic precedence constitute considerable inputs to the study and forecasting of issues yet to be determined, such as those of the MENA region.

 

The development community has traditionally attributed one of two key obstacles impeding upon the progress of economic and political reform in the region: too much or too little ‘state’. Syria, for instance, with its firm resistance to economic transformation continues to spend more on defence than it does on education, imposes significant international trade regulations and maintains inequity in a monstrous public sector that squeezes out both merit-based opportunism and the private sector, to a large extent. Combined, such policies hinder the prospect of Syria joining the WTO and integrating further with the regional and international economies. Politically, it remains an authoritarian state governed by an old vanguard surrounding the Alawite dynastic presidency. Considerable deficits in political liberty are widely noted. These inactive conditions are coincided by a strong, pervasive state system. Whether they are the foundations for the state’s enveloping nature or the state the foundations for a tightly controlled economy and closed political system is another debate in itself.

 

Somalia, on the other hand, has lacked any real state presence since 1991 and the fall of the Barre regime that constituted much of the state’s cohesiveness. Since, the country’s economy has been negated to internal micro-markets and an absolute lack of growth. Corruption and piracy are widespread and there is very little to no regulation in much of the country. The political system has been just as frail and fractured. Militias and warlords rushed to fill the power vacuum left by the collapse of the state and years of civil war have resultantly torn the country apart and wracked hopes of economic revival. The dramatic events of the summer in 2006 shifted the balance considerably and, although the Islamic Courts have been forcefully removed, the Interim Government has been able to extend some form of central authority across much of the country – albeit vulnerable and thus far untested. In Somalia economic and political change rather than reform has been dramatic, but this for the worse and prospects for reconstruction have been all but abandoned by most in the absence of a viable state system (Kusow, 2005). In effect, too little state.

 

In both instances, the state or its absence has had a big role to play in determining economic growth and reform. Politically-driven, highly interventionist states inflict a number of key detriments on investment and growth: deterrence of FDI (only 3% of world FDI has been targeted at the region and 1% of total portfolio flows to developing countries), investment disinterest has lead to local production inefficiency which the state does not address due to its obstruction of intra-industry trade, and denies the private sector growth space (Bellin, 2004). Politically-absent states deny any platform on which domestic production capacity and competitiveness can develop; not only deter but simply make foreign investment impossible; and leave trade completely untenable – all in addition to leaving economic activity entirely unregulated. In the case of an absent state, the question of economic and political reform is largely irrelevant and so it is here that this paper will leave analysis of such cases. Of course, in the case of an interventionist state it is not so much the presence of that state as it is the activities of that state. To what extent do aspirations of political control and those of economic gain motivate the conduct of the state and which of the two exert the initial influence on the other?

 

This is a very awkward question, as often in the MENA region political control and legitimacy is a currency that relies heavily on the condition of the economy and at the same time reforming the economic system relies on the legitimacy and stability of the government. Both are intermarried in a way that seems to be very hard to dissect for analysis. The course of this paper reviews the development of a particular case study – the Aqaba Special Economic Zone – and how it as a model for reform has interacted with these two processes.

 

The Aqaba Special Economic Zone (ASEZ): Overview

 

The Aqaba Special Economic Zone (ASEZ) is a 375 km² multi-sectoral, duty-free commercial, industrial and tourism hub situated around Jordan’s Red Sea Coast. The zone was designed as a model for economic reform intended to generate domestic production capacity and industrial competitiveness while increasing GDP and export share. Designed into its framework is a de-centralised mode of governance seen as necessary for the economic success of the economic reforms and liberalisations implemented (see below). It is, in effect, more than a Free Trade Zone (FTZ) inasmuch as it seeks to build long-term prospects and opportunities in transforming the domestic economy into an internationally integrated competitor. As a result of the duty-free status of imports and duty-free and quota-free access of Jordanian manufactures to the US and EU as well as other trade agreement partners in the MENA and internationally, ASEZ is an attractive destination of FDI – seen as vital to the reform and liberalisation of the national economy and a key motivation behind the zone’s design .

 

Its location is of regional strategic value as the main transhipment point for and international export site from Iraq outside of Iraqi territory and is central to the Egypt-Israel-Jordan-Saudi Arabian convergence – in addition to Aqaba being Jordan’s only port. With a population of 90,000 and a well-established skills base Aqaba has supplied investment projects with labour, basic and professional services and an immediate consumer base. The zone was established under the aegis of Law No. 32 for the year 2000 of the Jordanian Parliament and was launched in 2001. Since, it has attracted growing values of FDI, has stimulated job creation, stimulated the local private sector, facilitated regional and international joint-ventures and has inspired the implementation of a number of further Special Economic Zones in the country – including the US$750 million Mafraq Special Economic Zone announced in November 2006.

 

The Aqaba Special Economic Zone Authority (ASEZA) was also created as an autonomous authority with the mandate of regulating and managing the zone and acting as the zone’s Municipal government. The Authority reports directly to the Prime Minister but has a number of autonomous powers that are key features intended to support its independence and consequent ability to operate efficiently. ASEZA sets customs and taxation legislation – applied within the zone but not beyond its borders – certifies business registration, establishes corporate law – again applicable only within ASEZ – is responsible for environmental protection, governs land use, regulates all construction works as well as infrastructure – such as electricity, water, and transport grids – provides municipal services and is in control of the disposal and usage of central government land in the ASEZ (Law No. 32, 2000).

 

In addition to ASEZA, the authority and the central government in Amman set up the Aqaba Development Corporation  Private Share Holding Company Limited (ADC) in 2004. ADC was tasked with assuming full responsibility for the strategic assets of ASEZ in a manner consistent with the overarching policy directing economic development in the country and prudent private sector principles and practices (ADC, 2004).

 

ASEZ accommodates major business in a number of rapidly expanding sectors, including shipping and transport, chemicals, agriculture and fertilisers, light and heavy manufactures, construction, IT, financial services, tourism, and environmental research. The zone is expected to generate over US$12 billion by 2020 in FDI and increase export revenues by US$600 million annually by 2020 in conjunction with the government’s intentions. To date, over US$200 million in FDI has been realised, a further US$8 billion has been committed for implementation over the next 12 years – some US$2 billion more than the initial value earmarked for the entire 2001-2020 period (ASEZ, 2006). Over 310 land sale/lease agreements have also been signed, an 800% cumulative increase in licensed construction – including the construction of four commercial shopping malls and an additional capacity of 1500 hotel rooms. The airport has received a year-on-year 65% increase in flights and the port facilities have taken an increase of 72% in cargo entering the zone each year while growth in port tonnage has increased considerably – 26% in 2003 over 2002 and 31% in 2006 over 2005 levels. Economically, it can be seen as a success story thus far, though infrastructure, industrial competitiveness and the degree of technological application in the local production base still fall short of the standards set by developed economies and more progress is needed.

 

Economic Reform and the Political Dimension of Trade Agreements

 

There are a number of proponents of the concept that economic reform and liberalisation will, or at least can, result in significant political reforms. The general argument here is not that trade liberalisation, private sector stimulation or other economic reforms will ultimately result in full-blown democracy, especially when considering the MENA region. However, trade agreements that the kingdom has signed with the EU and the US, in particular, do have a strong dimension of necessitated political reforms that are required in order to validate the eagerly sought after trade-side gains. ASEZ is a central model within these agreements based upon both trade-enhancement and economic development interests, as well as being a mechanism through which political reform in the kingdom can be encouraged. To a lesser extent, other trade agreements and relationships have been bolstered by ASEZ and vice versa, though purely on a trade basis, such as GAFTA and a series of bi-lateral agreements with extra-regional partners. Within these agreements, too, ASEZ has been supported and promoted as a vital component of developing trade regimes. This section briefly explores the relevance of ASEZ to the relevant US-Jordan and EU-Jordan agreements and provides some comments on its role in GAFTA.

 

Jordan has embarked on a far-reaching programme of economic liberalisations dating back to the troubled 1988 period, which has so far culminated in some significant market-orientated reforms and the construction of a range of bi- and multi-lateral trade agreements as well as over 50 Cooperation Protocols. Jordan became the 136^th member of the WTO in April 2000, which paved the way for the signing of a comprehensive FTA with the US in October of that year that has since seen Jordanian exports to the United States grow by an aggregate of 91% per year since to over US$1.6 billion in 2006. The FTA stipulates that all tariffs and regulatory barriers applied to trade between the two countries are to be entirely removed over a maximum 10 year period. Furthermore, Rules of Origin (RoO) dictate that there must be at least a 35% value added margin on all goods imported to the US from Jordan. However, up to 15% value added can transpire within the US, resulting in a potential minimum of Jordan-based value added as little as 20% on those products part-manufactured in the US (US-Jordan FTA, 2000). Both ASEZ and the 63 existing Qualified Industrial Zones (QIZ’s) distributed across the Kingdom as a mechanism of boosting the domestic economy and economic ties with Israel and the Palestinian Territories are seen as instrumental in this exponential growth. The US has subsequently become Jordan’s second largest trading partner after Saudi Arabia.

 

The USAID programme has, since 2001, directly supported the development of ASEZ with grants and the implementation of multi-component projects aimed at five primary areas. These include institutional development of the ASEZA and training of its personnel; development of regulatory, customs, and revenue systems; infrastructure and private provision of services; investment promotion and facilitation; and business and economic studies and support (USAID, 2003). Delivery of these investments and grants has been considerably broader and certainly encouraged under the auspices of the FTA Jordan signed with the US. The USAID programme has also been very proactive in the support and progression of ASEZ and ADC, establishing offices in Aqaba and funding the Aqaba Zone Economic Mobilisation (AZEM) project, which conducts extensive analysis and provides highly professional consultation services to ASEZA and other bodies operating in the zone. AZEM was implemented under the auspices of the USAID Support for Economic Growth and Institutional Reform Project for General Business Development and Trade Investment programme.

 

AZEM has four primary components that are called upon in its efforts to support ASEZA and ADC. The first, Change Management, focuses upon the structural composition of the two authorities with the agenda of refining their self-reliance. By providing analysis and consultation on how best to manage people, organisational and technological assets, AZEM has aided in the cohesive nature of ASEZA and ADC management and operations, marked by its role in supporting the development of ASEZA’s strategic plan 2006-2009; the development of an ASEZA strategic planning unit; inputs to quality assurance divisions; and improving the efficiency communications departments. The Second, Capacity Building, has primarily been involved with training of ASEZA and ADC personnel. Specific targets achieved in the first five years of the partnership have been effective rates of attaining and retaining highly qualified personnel on behalf of ASEZA and ADC, optimising organisational structure, and continually measuring staff performance resulting in tailored training programmes. In effect, the Capacity Building component acts like a very well-funded HR department. The third component, Economic Development, is one of the most important partner-inputs to the ASEZ model’s development planning. This AZEM branch conducts extensive economic analysis of the zone’s comparative advantages and challenges, which helps policy-makers adopt long-term strategies for the zone. A simultaneous role exists in the human resource development of ASEZA’s own statistical and economic research unit, which is being established to help the authority build its own internal capacity in conducting economic and statistical research and public policy evaluation. The fourth component, Small Grants, is AZEM’s  short-term answer to economic development in ASEZ. It provides limited grants to local and qualified NGO’s in order for them to conduct small projects in the zone that pursue domestic capacity building and socio-economic development agendas. The primary ambition of this grants system is to assist in short-term tangible economic gains during the implementation phase of mid- and long-term economic and social returns expected to transpire. Dialogue between NGO’s, local businesses, community and interest groups and the zone authorities is seen as very important and useful for the success of the overall ASEZ model by AZEM, amongst others. Considering that the grants system has been identified as the most effective method that can be used to achieve prolific community-orientated projects, it has been charged with fostering these types of inclusive projects. These have included 43 student scholarships at the Princess Basma Community Development Centre, funding of 300 Jordan National Red Crescent posts, summer training courses for 130 trainees at the Noor Al-Hussein Foundation, graphic design traineeships at the Cultural Symposium Club for University Graduates, an Eco Tourism Project for the Jordan Society for Sustainable Development, establishment of the Women Business Professional Association, and the sponsorship of a Parents-Teachers Association in Aqaba, among others (AZEM, 2006).

Despite the sheer economic success of the USFTA and AZEM assistance they are not unique in their support of and interactions with ASEZ. There are two further agreements – both multi-lateral – that have played significant roles in shaping the processes of reform in Jordan (economic and political) drawing upon their multi-dimensional nature and certain geo-strategic factors that are simply not applicable in the context of the USFTA – the Jordan-EU Association Agreement (1997) and, closely linked to it in this perspective, GAFTA (1998). In 1995, Jordan became a signatory of the Barcelona Declaration, which entailed an ambitious process of redefining Euro-Mediterranean relations (by Mediterranean we refer here to the MENA party-states or Southern Mediterranean Partners - SMP’s).

The twelve SMP’s bordering – or in the case of Jordan and the Palestinian Territories coming close to but not quite located on the Mediterranean – have since 1995 signed Association Agreements (AA’s) with the EU that aspire to create a broad region of stability, mutual economic prosperity and greater cultural harmonisation (Leal & Deka, 2004). The EU-Jordan Association Agreement, like the other AA’s signed within the Euro-Mediterranean Partnership, does not only encompass trade-inspired economic market liberalisations, but rather extends much deeper into a cooperative framework. This framework approaches security and political concerns, social development agendas, environmental protection and sustainable development concepts as well as the economic FTA at the centre of the process’ dividend structure. The AA framework is a far more intrusive mechanism that invigorates dialogue and provides at the very least a forum in which multi-dimensional mutual development projects can be discussed and implemented. In Jordan, this has led to significant FDI and grant aid flowing from the EU and injected into a range of schemes, including water usage reform, environmental research and protection, technological development, training and education, as well as infrastructural and business investments, while promoting social, political and economic reform processes in the kingdom.

 

Due to its commitments to IMF-designated reforms, the implementation of strategic domestic reform projects, – including the ‘Jordan First’, ‘Social and Economic Transformation Plan’ and the ‘National and Social Economic Plan’ – the signing of ‘horizontal’ trade agreements, and the degree to which legislative and regulatory frameworks have been modernised, Jordan is considered to be advancing rapidly within the context of its AA (European Commission, 2005). The process of pursuing reforms and developments within the AA framework has led to direct EU financing and practical support of the development and expansion of the ASEZ project. In its 2005-2006 Country Strategy Paper, the European Commission assigned a total indicative budget of €142 million for the year, directed at five identified priorities:

 

1. Enhancement of trade and institution building

2. Sustaining a stable macro-economic framework and economic reforms

3. Social reforms and the development of human resources

4. Enhancement of the private sector

5. Strengthening pluralism, human rights, civil society and the rule of law

 

Pursuing the implementation of the AA was defined as key to meeting these developmental targets in conjunction with the direct support of ASEZ. The zone is consequently instrumental in the continuation of the EU-Jordan AA and seen as a key component of the broader Euro-Mediterranean Partnership, as it integrates regional players and economies and demonstrates at least one contemporary type of model for economic and political reform.

 

Within the Euro-Med framework, the need for economic regulation and integration amongst the SMP’s is identified as being necessary for the overall success of the partnership. The EU, therefore, has an assistance role to play in the development of bi- and multi-lateral arrangements amongst the MENA party-states. Likewise, the SMP’s obligated themselves to the initiation and operation of talks aimed at building convergence of regional trade policies, which had been on the League of Arab States’ (LAS) agenda since as early as the 1950’s. The financial and consultancy support forwarded by the EU in the aftermath of the 1995 Barcelona Conference was not the decisive factor in the 1998 signing of the Greater Arab Free Trade Agreement (GAFTA), but was nevertheless a contributor.

 

GAFTA’s overarching commitments are less intrusive than those of the EU-AA’s in the sense that it is a trade regime agreement that defines trade de-regulation and the construction of a free trade zone (fully implemented in 2005 after a gradual process of annual tapering) but does not apply pre-conditions or targets of considerable political reform – as the AA’s do. The main reason why the EU was able to install a range of invasive clauses into the AA’s it signed but the LAS did not is two fold. First, the European Commission perceived the SMP’s as a potential security threat and intrusive regionalism as the answer – including political as well as economic reforms – whereas the LAS perceived the lack of MENA economic integration as a threat under the pressures of globalisation, rather than political discontinuity. Second, access to the EU’s internal market – the world’s second largest consumer market – is promised in the Euro-Mediterranean Partnership, whereas within the MENA increased intra-regional trade volumes and values are of less immediate reward and therefore do not warrant as much central government compromise as do the AA’s.

 

The country also signed a Free Trade Agreement with EFTA in 2002 and in 2003 initiated the Agadir project incorporating, Morocco, Tunisia, Egypt and Jordan in an FTA.

 

ASEZ and Political Reform

 

A long-standing and critical point debated within the development community has been the question ‘is economic liberalisation likely to induce democratic transition?’ This debate has been somewhat favoured over that delving into the potential and probability of democratic reform abetting economic liberalisation – largely due to the absence of success studies in the case of the latter but the presence of examples in that of the former since the 1980’s. The MENA continues to demonstrate its uniqueness in terms of resistance to change and reform, which only encourages the intensity of these debates within the region and disciplines related to it. The late 1980’s saw the introduction of a series of reform processes in Jordan, Morocco, Egypt and Tunisia that have been relatively successful. In all cases, with the exception of Tunisia, the extensive reform projects, designed and implemented by central government, have been compiled by both economic and political liberalisations – Tunisia’s experiments with change being almost entirely economic. But, the apparent order of precedence observed between the two branches seems to acknowledge that economic reforms have lead the way.

 

Rather than evidence supporting the doctrine that identifies strong, centralised state systems as being more capable of implementing awkward economic transitions, the trend is more convincing as verification of regime survival techniques and the centralised objective of finding new models that will defend the regime from both external and internal threats. Over the last three decades the GCC has also frequented economic reform processes that have been entirely inspired by the challenges of integration with a globalising world economy – of which the GCC states are inevitably and intricately linked as a consequence of the oil and gas industry on which they thrive. Over the course of the last six or seven years, this adaptive character has also incorporated political reforms to varying degrees, with legislative elections in Kuwait and Bahrain and more localised reform of governance at the municipal level in the other GCC states, amongst other gradual changes.

 

Although the MENA is by no means a homogenous region but is actually marked by an extensive range of identities, there are some glaring generalisations that can be made regarding the reform dynamic. Economic reform, essentially, has been the greater of the two though. Market reforms, trade liberalisation, bi- and multi-lateral trade agreements and specific attention on domestic capacity-building have far outweighed the extent to which party politics, national and local elections, separation of powers, civil society expansion and media freedoms, for instance, have been adopted. Externally, the spread of globalisation has come to present many challenges to the domestic economy and stability of MENA states, most of which have seen the gap between the OECD and NIC’s expand while the gap between them and those economies that had previously been far weaker performers has narrowed considerably. The domestic problems of unemployment and widespread economic decline that the failure to modernise and liberalise economic activity has resulted in has become a major concern of many regional governments. These threats have also exposed, to different degrees, the region’s states to intrusion and dictation by much stronger and more competitive, as well as increasingly growing foreign markets. Economic reform has become, therefore, entirely necessary for the preservation of state and regime as well as the domestic business community, presiding cultural forces, and non-political elite.

 

Internally, political legitimacy and popular support rely heavily on the performance of the ruling elite in protecting and improving the welfare of both society and the elites – business, communal or tribal (distinctively evident in Jordan and Morocco) and military. In the absence of an entrenched democratic system of elections, transparency and accountability these social strata are the main instruments of action and influence on government. The general sectors of society, however, can provide the critical mass required for effective opposition and dissent that has been granted a revolutionary ability to mobilise in light of technological developments (growing use of mobile communications, the internet and a younger generation particularly adept with modern technologies) such as in Jordan. Furthermore, the success of economic liberalisations such as those implemented in the construction of ASEZ – free-market adjustments, export orientation, privatisation, capacity and competitiveness building, and integration with external markets – require the collaboration of a skilled and professional civil society capable of and willing to participate in the government’s project. Subsequently, the nature of political reform in ASEZ can be defined as a process enhancing governance efficiency and one aimed at stimulating local engagement for the purposes of developing a professional society, meeting the conditions necessitated by trade agreements and political legitimisation. At Aqaba this has resulted in a close partnership between ASEZA and the localised civil society and private sector. ASEZA itself is an authority designed to operate largely in autonomy from the central government in order to reduce red-tape and identify closely with the specifics of the zone and the best governance practices to be applied within it.

 

ASEZA is headed by a Board of Commissioners who are appointed by a majority vote of approval in the Council of Ministers (the Jordanian Parliament’s lower house) having been nominated by the Prime Minister. The Council of Ministers can, at any time during the term of any Ministerial-level Commissioner, vote for him/her to be replaced by a successor appointed in the same manner but can also be voted in for a second term. All decisions of appointment, continuation or replacement are susceptible to intervention by a Royal Decree, all in all making the Board of ASEZA less than independent. However, there are a number of clauses in Law No. 32 that ensure the independence of all Commissioners from what could otherwise be termed conflicts of interest or vested interests. These include provisions that block any personal, financial or political investments in any of the zone’s aspects – a regulation that extends to members of the Commissioner’s spouses and first-degree descendants (Article 13; B, 1); - may not have any business relationship with any Registered Enterprise or investor in the zone (Article 13; B, 2); and are liable for immediate dismissal from the Board should such activities be discovered (Article 13; B, 3). Furthermore, in addition to recruitment from within the highest qualified civil servants in the public sector the Commissioners are directed towards the contracting of and consultancy with “financially and technically qualified entities to develop and administer the zone,” a condition ingrained as the order of operation by regulations set before ASEZA’s Board in the Amended Law No. 32 of 2000 (Article 17, A).

 

The Authority is, therefore, managed by a Board that is separated from its direct gains and elected by the legislative branch but the composition of the Authority itself is comprised of a combination of qualified civil servants on the one hand and professional and private bodies contracted for the efficient governance of the zone, on the other. In turn, ADC has also added to the advance of the privatized management of key assets within the zone from a purely economic and business perspective. In these contexts, economic liberalisations have assisted political reforms by introducing market mechanisms and encouraging the self-imposed limitation of government and state discretionary powers. The ASEZ model has been quite clearly motivated by the need to meet economic and social challenges facing the resource-poor Kingdom of Jordan, which relies intensively upon human resource development for its welfare. Economic gain and reform has undeniably been the primary motivation behind the zone in which political reforms have transpired in the decentralisation of municipal governance and a refined system of public access to governing structures. Both processes are clearly linked, intentionally so and with public acknowledgements by the authorities that this has indeed been a clear objective.

 

Summary

 

Political reforms have transpired both for the need of creating a conducive environment to investment as a result of stability, transparency and the rule of law, and for the purpose of activating a social base with the capacity and the opportunity to achieve competitive advantages in a free-market environment. De-regulation and improved governance have aided in the progression of the zone’s business successes and are seen within the relevant authoritative circles as entirely necessary for ASEZ’s future growth. This has not been, however, a process so far of what might be construed as Western Democratization. Ultimate control still resides with the national Parliament, the government and, naturally, the Royal Court. Political change, therefore, has been necessary for economic liberalisation in ASEZ and can be considered a precondition in this model. At the same time, it must also be acknowledged that political reform has not been entirely motivated by the ambition of a more internationally aggressive economy but has also been utilised to counter domestic threats to the regime and state. Such threats include popular opposition, the spread of Islamic radicalism, corruption and growth in organised crime, all of which can be stimulated by and rapidly expand in a stagnant economy with rampant poverty and unemployment levels (Tetreault, 2004). Similarly, in order to warrant the anticipated costs of both economic adjustment and the forgoing of significant political controls, the dividends of economic growth and public participation must be secured. ASEZ provides a case of both though there is considerable ground still to cover in fully opening up the political landscape both within and beyond its boundaries. So has economic reform resulted in political reform or vice versa? The short answer would be both, as each has required complimentary action in the corresponding dimension for its own successful initiation. Yet, the ASEZ project was conceived as a primarily economic venture and is likely to continue to pursue the best interests of its economic dimension regardless of what this may come to mean for political change in the zone.

 

Bibliography

 

Aqaba Development Corporation, (2004), ADC Information Memorandum, ADC Publications, Aqaba, Jordan

 

ASEZ, (2006), ASEZ: Business Gateway to Jordan and the Levant, ASEZ Publications, Aqaba, Jordan

 

AZEM, (2006), Aqaba Zone Economic Mobilisation Components, www.azem-aqaba.com, USAID, Aqaba, Jordan

 

Bellin, E., (2004), The Political Conundrum: The Affinity of Economic and Political Reform in the Middle East and North Africa, Carnegie Endowment for International Peace, Washington D.C., US

 

European Commission, (2005), Jordan National Indicative Programme 2005-2006, European Commission Publications, Brussels, Belgium

 

Kusow, A., (2005), Putting the Cart Before the Horse: Contested Nationalism and the Crisis of the Nation State in Somalia, Red Sea Press, US

 

Leal, I. & Deka, J., (2004), Euro-Med Association Agreements: A Guide to Implementation, European Commission Publications, Brussels, Belgium

 

Tetreault, M. & Denemark, R. (Eds), (2004), Gods, Guns and Globalization: Religious Radicalism and International Political Economy, Lynne Reinner Publishers, Boulder, CO

 

USAID, (2003), Strategic Direction of the US Foreign Assistance Programme: Jordan – Gateway to the Future 2005-2009, USAID Mission to the Hashemite Kingdom of Jordan Publication, Amman, Jordan

 

The Government of the United States of America & The Government of the Hashemite Kingdom of Jordan, (2000), US-Jordan FTA

MENAAR | March-April 2007