Title: Israel/Jordan: THE PURPOSE OF PEACE IS COMMERCE
Author: Jonathan Ferziger
After decades of enmity, the financial centers of Israel and Jordan are doing business
together, and the two governments are eagerly courting investors to develop a joint
ôValley of Peaceö in the desert between the Dead Sea and Red Sea. Despite long-term
potential, newcomers to the region should tread carefully--taking account of gaping
differences between the two countries in language, style, religion, and standard of
living.
Some 3,500 years ago, a desert-weary Moses climbed to the top of craggy Mount
Nebo, caught his only glimpse of the Promised Land, and dropped dead on the spot.
The view from Nebo, which sits on the western edge of modern-day Jordan,
hasnÆt changed very much since it was first described in the Book of Deuteronomy.
The valley below remains a barren wilderness bordering the Dead Sea, the lowest point
on earth. Bedouin tribesmen still herd goats in the Judean Hills and the palm trees of
Jericho contribute a traditional oasis of green in the distance. Every once in a while,
however, an Israeli F-16 fighter-jet shoots through the sky on a training flight.
In recent decades, this was the dividing line between the modern nations of
Israel and Jordan, between the Jewish state and the Arab world. Foreign businesspeople
interested in the region had to make a clear choice between Israel--tiny, but lively and
entrepreneurial--and the Arab megamarket, spanning 22 countries, and crowned by the
oil-rich states of the Persian Gulf. A pan-Arab economic boycott, enforced since 1948,
sought to ensure IsraelÆs isolation.
Now, with the peace treaty signed by King Hussein and Prime Minister Yitzhak
Rabin last October, the parched Syrian-African Rift is being transformed from an
intimidating barrier between hostile societies into a fertile cultural and commercial
bridge. Not only are the financial centers of Tel Aviv and Amman doing business
together, but the two governments are eagerly courting investors to develop a joint
ôValley of Peaceö in the stretch of desert that connects the Dead Sea and Red Sea. The
project, which envisions five-star hotels, posh mud-bath spas, and an ôunderwater
park,ö is planned as a spearhead to the regional economic integration preached by the
Israeli foreign minister, Shimon Peres; a grand plan to build a new Middle East.
In the short term, foreigners looking for new business opportunities would do
well to tread carefully here. For the last half century, the entire 250-mile border
between Israel and Jordan has been one long minefield. Even with the historic peace
agreement, there remain gaping differences in language, style, religion, and standard of
living--all of which constitute potentially explosive barriers between the two societies.
Complicating the stew are the Palestinians, a people caught in the divide. Although
they dominate JordanÆs business sector, they are uneasy that King Hussein has
reconciled with Israel even as the Jewish state continues to occupy much of the West
Bank, as well as the Gaza Strip and East Jerusalem.
Nevertheless, as both Israel and Jordan emerge from long periods of economic
isolation, they are making determined efforts to cater to international investors.
Prodded by the US and other trading partners, the two countries are hacking away at
Customs barriers and bureaucratic red tape, with varying degrees of success. Early this
year, Israel eliminated protective tariffs on virtually all American goods, unleashing
everything from Chevy vans and GE refrigerators to cellular telephones and kosher
pastrami on the consumer-goods-crazed Israeli market. Somewhat more modestly,
Jordan is trying to woo new business by directing foreigners to a one-stop investment
center run by its Ministry of Industry and Trade--an effort to shortcut the maze of
government agencies that has tended to drive away all but the most determined
outsiders. ôPeople want stability,ö explains Barry Friedman, the US EmbassyÆs
economic counselor in Tel Aviv. ôNobody from outside was going to invest real money
in this region when things were so damned unstable. Now, weÆre starting to make some
progress. As Thomas Jefferson said, æThe purpose of peace is commerce.Æö
Even during the long years of their formal state of war, from 1948 to 1994,
Israel and Jordan always had much in common. Both are tiny. Israel, with 5.4 million
people, is about the size of New Jersey. Jordan has a population of only 4.2 million
and it is not much bigger than Indiana. In both countries, much of the land is desert
unsuitable for agriculture. Both countries were ruled by the Ottoman Turks for
centuries before coming under British control in 1917. They won independence within
two years of each other, after World War II. Their capital cities, Amman and
Jerusalem, share virtually the climate and nearly universal building material, a native
stone known as Jerusalem or Hebron stone. Both countries mine the Dead Sea for
phosphates, and draw tourists to beaches in the far south, on the Red Sea. On both
sides of the border, falafel is the national snack food, although fast-food burgers are
catching up.
So much for the similarities. The differences are much more apparent. In mood,
style, religion, and business style, Israel and Jordan are worlds apart. Integration will
not come easily, partly because of the historical animosities, and partly because the
playing field is hardly even. IsraelÆs US$76 billion economy Gross Domestic Product
in 1994 was some 15 times the size of that of its neighbor across the river. Its US$25
billion in exports last year dwarfed the US$1.4 billion exported by the Hashemite
Kingdom. While some Jordanians see great prospects in teaming up with Israel to
develop trade--and have actually started to cement alliances--others view their former
enemy as a voracious economic engine with whom they have little chance to compete.
Says Gahith Shocair, corporate-finance manager for the Arab Banking Corp. in
Amman, ôIt might help for the really serious businessman to do a little homework
before coming out here.ö
ISRAEL: A UNIQUE EMOTIONAL PULL
Israel exerts a unique emotional pull on virtually every visitor, whether Christian, Jew,
or Moslem. It is impossible to escape the biblical and Koranic echoes that resound
wherever one steps. Go shopping in the desert city of Beersheba and a salesclerk tells
you that this mall was built beside the well that Abraham fought over to water his
flock. Visit a factory in the Galilee and discover that this plant overlooks the Basilica of
the Annunciation in Nazareth, revered as the site where the angel Gabriel heralded the
birth of Jesus to the Virgin Mary. Wander past the shopkeepers in JerusalemÆs Old City
souk, and youÆll find yourself standing in front of the Dome of the Rock, where the
Koran tells of MohammedÆs horse-drawn journey to heaven.
If the country comes alive with legends from the past, it is also a modern-day
fairy tale. Israel is built on legends of military heroism that enabled the Jewish state to
beat its collected Arab neighbors in five separate wars. These same Zionist pioneers
also developed revolutionary new agricultural techniques, such as ôdrip irrigation,ö that
have allowed them to ômake the desert bloomö--at least in parts.
Though largely secular-minded, Israelis like to believe that their very existence
as a nation is a divine miracle, an epic story stretching from the parting of the Red Sea
to the Six-Day War. But they have also taken to heart the lessons of the Holocaust, in
which six million Eastern European Jews were exterminated by the Nazis. Their
experience with genocide has bred a culture that rests both on determined self-reliance
and constant fear of extermination. Israelis are proud of the oasis they have built in the
midst of the Third World, but they remember Arab vows to ôpush them into the sea,ö
and maintain a hair-trigger level of military preparedness. Periodic suicide bombings
by Islamic fundamentalists tend to reinforce such fears.
The constant threat to national survival has spawned an aggressive attitude that
says to the rest of the world: WeÆre here, whether you like it or not. This brash style,
cultivated from the cradle, takes some getting used to. When my wife and I were
looking into day-care for our infant son, we learned that one of JerusalemÆs most
popular pre-kindergartens was just down the block. There, we questioned the director
on her approach to handling one-year-olds. ôThey learn to play. They learn to fight,ö
she told us. ôThey learn to get what they want.ö She sounded more like my high-
school wrestling coach. We looked elsewhere.
THE MILITARY INFLUENCE
To understand Israel, you have to grasp the influence of the military. Both men
and women are drafted at 18, but men are called to the reserves for up to 45 days every
year--until the age of 55. This means that key business deals can often be delayed more
than a month because the senior vice-president youÆve been negotiating with is out
patrolling the Lebanese border.
While renowned for its high motivation and fighting ability, the Israeli armyÆs
notion of discipline would give a West Point drill sergeant the hives. Soldiers tend to
call commanding officers by their first names, and male reservists often sport ponytails
and stud earrings. Fraternization between the sexes is actually encouraged. In the
Jewish state, the army has turned into the national matchmaker.
In many ways, IsraelÆs business culture draws from the relative casualness and
intimacy of the army--as well as its rudeness and chutzpah, or daring. Another
influence has been the kibbutzim, the collective agricultural settlements that were key
building blocks of the state. The emphasis on socialist comradeship in the kibbutz was a
deliberate break from the formal, hierarchical ways left behind in Europe. In many
ways, Israel, with its sandal-wearing, tieless executives, was the precursor to the laid-
back style of CaliforniaÆs Silicon Valley. More recently, however, as Israeli companies
have started to look outward and grasp for a role in the global economy, Israelis have
begun to adopt the more buttoned-down ways of Wall Street. ôAmericans used to come
to Israel and wear a tie to a banking meeting and the [Israeli] bankers used to come
with an open-necked shirt,ö says Leon Koffler, a transplanted Canadian who has built a
profitable chain of drugstores under the name Super-Pharm. ôToday, because theyÆve
heard about the Israelis, the foreigners come in open-necked shirts--and the Israeli
bankers show up in ties.ö
IsraeliÆs business world is firmly rooted in Tel Aviv, together with its sprawling
suburbs where close to one-third of the population now lives. The city, which sits on
the Mediterranean seashore alongside the ancient Arab port of Jaffa, is the symbol of
the new Israel, crafted by European Jews who immigrated in the 1920s. Remains of the
Utopian, egalitarian society they sought to construct are evident in the Bauhaus office
buildings and international-style housing blocks, now gray with soot and pockmarked
with peeling plaster. High-rises like the IBM Building and Shalom Tower can be seen
from miles away, but Tel AvivÆs skyline is predominantly low-slung and decidedly
honky-tonk.
Billed as ôthe city that never stops,ö Tel Aviv does, indeed, have the most
active nightlife in the Middle East, boasting dozens of movie houses, theaters,
museums, and a new opera house. New restaurants appear and shut down by the
month. Japanese, Thai, Mexican (along with various eclectic nouvelle cuisines) are
current trends. Life is closely anchored to the beach. Office workers, lawyers, and
even ambassadors on seaside Hayarkon Street often extend their lunch breaks to take a
dip in the Mediterranean surf. Particularly in the northern suburbs, where the houses of
the political and business elite are framed by backyard tennis courts and swimming
pools, the lifestyle comes surprisingly close to that of southern California.
ôTHE APPROACH IS, æLETÆS DO BUSINESS.Æö
In the boardroom, too, Israel is not as much of a cultural stretch for Americans
as its neighbors are. While Hebrew is the national tongue, virtually anyone involved in
foreign business speaks English well enough to be understood. Outside of a few well-
marked areas--where traffic is barred on the Sabbath and violators risk being stoned--
Israel is a boldly libertarian society that often shocks visitors with its embrace of
Western ways.
Striking up a business relationship is usually a straightforward process, with no
prescribed courting behavior. ôThere are very few formalities, sometimes you wonÆt
even get coffee,ö says David Rosenberg, American-born research director of Pacific-
Mediterranean Investments. ôThereÆs very little posturing. Israelis like answers
quickly. The approach is, æLetÆs do business.Æö
Maintaining a relationship--and achieving success--can, however, depend on a
lot of ôproteksia,ö or knowing the right people. Many top firms are headed by former
generals or ranking army officers. In Israel, army connections count for so much that a
business school is being set up in the north specifically devoted to turning retired career
officers into business executives.
Despite continual rumblings from Palestinian extremists, the peace process has
enabled Israel to recover much of its international footing. Since the 1991 peace
conference in Madrid, Israel has established diplomatic ties with no fewer than 58
countries, many of which had broken relations in 1967, when Israel doubled its size
with territory captured in the Six-Day War.
Although the peace is still a patchwork--until Syria and others sign on the
bottom line--doors have already opened for Israel around the world. Israeli
businessmen are not waiting for Syria to give the thumbs-up before making bold moves
into new markets. ôIf they [the Syrians] want to make peace, fine. If not, so be it,ö
says Stef Wertheimer, chairman of Iscar Corp. Wertheimer, who built his Tefen
Industrial Park just 10 miles south of the Lebanese border, has plans on the shelf for a
twin facility across that frontier. ôIÆd be happy to be a partner. I think theyÆll gain
[make money] from it,ö he says.
Last year, WertheimerÆs precision-metal-cutting tool company did US$237
million worth of business--12% of the entire world market. In many ways,
Wertheimer, 67, embodies the classic qualities of the Israeli--ingenuity, informality,
and no small measure of cockiness. While he is often portrayed as the biblical patriarch
of IsraelÆs booming high-tech sector--nursing young start-ups in an incubator
environment--WertheimerÆs company does 97% of its business outside Israel, a formula
he recommends: ôIf somebody wants to start a serious business here and thinks he can
live off the local market, I tell him, æForget it, itÆs too small.Æ If he thinks he can make
money quick, I say, æDrop it.Æ Take your time, build your reputation. Know the
people. Know their habits. Always start small, and build.ö As he speaks, Wertheimer
sits in his ultra-modern glass-and-steel office on a Galilee hilltop that overlooks
traditional Arab villages, olive groves, and grazing sheep.
When Wertheimer served in the Palmach underground in the 1940s as a
demolitions expert, his commanding officer was a young man named Yitzhak Rabin.
Today, Wertheimer maintains a close relationship with Rabin, now prime minister. He
was even invited to Oslo last year to watch his friend receive the Nobel Peace Prize.
Wertheimer says it is only a matter of time before the Arabs accept Israel fully
because, ôPeople get tired of war after 50 years. ItÆs only a time problem, a matter of
haggling. Both sides have no other solution.ö
AN END TO ISOLATION
Last October, Wertheimer was among those invited to the Middle East-North
Africa Economic Summit in Casablanca, a turning point for the region. Not only was
Israel included for the first time in a predominantly Arab conclave, but its business
leaders were assiduously courted by former enemies. Company presidents in Tel Aviv
like to show off the business cards they collected from new acquaintances in Bahrain,
Oman, and Kuwait--and other trading centers that have yet to make official peace with
the Jewish state.
Although the multinational oil companies have yet to set up filling stations or
regional offices here, global fast-food wars have found a new battlefield. In the past
year, McDonaldÆs has anchored itself in Tel Aviv, and Burger King took Jerusalem by
storm with its first kosher franchise in the world (sorry, no cheeseburgers). Now,
Kentucky Fried Chicken officials are stalking suburban malls in the countryÆs heavily
populated center.
For years, Pepsi-Cola dominated the Arab Middle East, leaving Coca-Cola to
ply the small Israeli market. Now Coke has been admitted to Jordan, Egypt, and even
Saudi Arabia, but Pepsi has stumbled in its initial foray into Israel. Its first billboard
campaign offended the key ultra-Orthodox consumer market by showing the evolution
of a chimp into a Pepsi-drinking teenager.
Overall, Israelis feel they didnÆt lose much as a result of the ArabsÆ boycott on
direct trade. It was the secondary sanctions that stung--letting companies around the
world know that they had to choose between business in the Arab market of 300
million consumers and IsraelÆs market of 5 million. Similarly, Israeli concerns donÆt
expect a bonanza from new trade with their immediate neighbors. More important is
the barrier that has been broken with Japan, China, India, and other major foreign
markets that no longer fear doing business with Israel.
For its part, Israel has moved beyond its traditional citrus exports and focused
on high-tech. ôBecause of the boycott, Israel was forced to develop in a distorted way
that now turns out to have been for the best,ö says Friedman of the US Embassy.
ôRather than continue on the orange and dates route, they started selling software.ö
Apart from political factors, international businesses have been put off, in the
past, by IsraelÆs largely state-owned economy, riddled with socialist-inspired labor
regulations. These days, the legacy of the kibbutz has been considerably diluted. While
many kibbutzim have succeeded in reconciling modern industrial production with their
traditional socialist-inspired values, the movement as a whole has been forced to
reassess its principles of collectivity in face of a dire financial crisis. Nearly all
kibbutzim maintain an agricultural base but the most successful ones have developed
their own industrial subsidiaries--including a large plastics factory at Kibbutz Neot
Mordechai, a thoroughly non-kosher shrimp farm at Kibbutz Maagan Michael, and the
Epilady line of womanÆs depilatory services at Kibbutz Hagoshrim.
For a tiny country, Israel has an amazing appetite for American products. While
it ranks 23rd among foreign markets for the US, Israelis, per capita, are the third-
largest consumers of US goods in the world, after Canada and the United Kingdom.
Meanwhile, the US is IsraelÆs largest single trading partner; two-way trade between the
two countries totaled US$8.94 billion in 1993. That year, the US was one of the only
countries in the world with which Israel enjoyed a trade surplus, amounting to US$110
million.
Overall, Israel did US$52.39 billion in foreign trade in 1993, racking up a trade
deficit of US$8.12 billion, about 90% of which is with Europe. One of JordanÆs goals
is to siphon off some of IsraelÆs imports from Europe. Amman economists make the
case their country can supply many agricultural--and some manufactured--products
Israel now imports from Germany, France, and Italy, at a fraction of the price.
Israel is also unique in maintaining free-trade agreements with both the US and
the European Union, a status that carries considerable potential but has been hamstrung
by government bureaucracy, strict labor laws, and other factors that have made it
difficult to attract foreign investment (such as wars and terrorist attacks.)
The trade agreements have, however, been a major selling point in the
development of a free-export processing zone outside Beersheba, approved last year by
the Knesset (IsraelÆs parliament) over strong opposition from powerful labor unions. In
the zone, on which construction is slated to begin this year, foreign-held businesses will
operate free from corporate taxes, value-added taxes, and duties on imports and
exports. They will, however, have to pay a flat tax of 15% on distributed profits.
Until recently, IsraelÆs state-owned military-industrial sector was the countryÆs
chief earner of foreign exchange. Military contractors from around the world flocked to
Israel because of its massive defense spending, assisted by the US$1.8 billion in annual
aid it receives from the Pentagon. Now, the country is also seen as a fertile
environment for civilian research and development, with recognized expertise in the
medical/pharmaceutical, agriculture, and biotechnology sectors.
Fueled in part by the influx of some 500,000 Russian immigrants over the past
six years, IBM, Microsoft, Digital, and Intel are among the global giants who have set
up major software installations. Tales abound of astrophysicists who were swabbing
toilets as janitors on arrival, and have since been recruited in leading labs such as the
Weizmann and Technion institutes.
Optimism about the long-term prospects for such ventures has grown with every
sign of progress in the peace process. For most of the last half century, Israel has lived
in a state of virtual siege, separated by barbed wire and minefields from its closest
neighbors. Now Israelis can go down to the Red Sea resort of Eilat, cross the Egyptian
border for a night of gambling, or spend a day in Jordan hiking through the ancient
ruins of Petra. In the rapidly changing Middle East, Israel stands at a threshold it had
only dreamed of in the past.
JORDAN: THE FIRST REGIONAL CROSSROADS
In Jordan, time tends to be measured by a series of intervals between disasters. Blessed
with few natural resources--phosphates for fertilizers, not the crude oil beneath their
Gulf neighbors--Jordanians have developed a rueful, self-effacing sense of humor.
Most often, this is evident only among close friends, sitting around the table after
dinner, rummaging through parliamentary politics and palace gossip. Lately, however,
many inside jokes have been brought into the open by Nabil & Hisham, a pair of
comedians who perform a biting, often bawdy, satirical revue that takes special
pleasure in puncturing the Middle East peace process.
These days, their opening sketch has one of the first Israeli tourists asking a
Jordanian taxi driver if he can pay for the ride in shekels, IsraelÆs currency.
ôShekels?ö the driver screams. ôWe are Jordanians. We take only dollars.ö
Middle East monarchs are not famous for their sense of humor--and certainly
not for allowing others to laugh at them. But Nabil Sawalha, the taller and zanier of the
pair, will never forget the dignified chortle King Hussein let loose when he sat in a
converted cinema on AmmanÆs Rainbow Street and watched himself lampooned on
stage.
ôContrary to what people think, we Arabs do have the capacity to laugh at
ourselves,ö says Sawalha, taking off his Yitzhak Rabin makeup backstage after a new
English-language version of his show for a packed 500-seat house. Both comedians are
in their fifties, and they are working on an act they hope to take to Tel Aviv.
Welcome to Amman in the era of peace. Slowly but surely, Jordan is opening
up to outsiders--and revealing a society that is an island of tolerance in a fairly uptight
region. While keenly aware of what they lack--money, for instance--Jordanians are
eager to cultivate the dividends of the peace process, presenting their country as an
excellent platform for foreign businesses to base themselves for plying the rest of the
Arab world. Finally at peace with Israel, Jordan has become the first true crossroads of
the Middle East. ô[Jordan] is not the place to be, but itÆs the place to go from to reach
the places you want to get to,ö says Riad al Khouri, an economic consultant who lives
in both the Jordan capital and Beirut. ôThereÆs a lot more business in Syria, Iraq, and
Lebanon--but for various reasons itÆs not such a good idea to be based in those places.ö
By contrast, Amman is a stable environment, a clean and polite city where
international executives may not run into the hottest nightlife, but will find a safe, calm
atmosphere to work and raise a family. The cost of living is low, and the labor force is
both cheap and well-skilled.
Setting up shop in Amman and making those initial contacts with Jordanians are
not difficult processes. But since many of the customs of traditional Arab society
prevail, itÆs best to learn your way around them.
Respect for authority, particularly for the king and royal family, is expected,
even if Nabil & Hisham have tested the limits of the palaceÆs tolerance. Islam,
practiced by 93% of the local population, is a subject that most people take seriously.
Careless or crass remarks are not appreciated. While Jordanians enjoy discussing their
elaborate fasting and feasting rituals during the Ramadan holy month, questioning the
kingÆs Muslim piety is likely to generate an embarrassing silence. ôJordan can throw
you off because it looks like a Western society,ö counsels Shocair, a privatization
specialist at Arab Banking Corp. who studied at the University of Texas. ôYou have to
remind yourself that this is the Middle East. Royalty and tribalism run very deep here
and people revere the king.ö
As a reporter, I got my first taste of JordaniansÆ sincere reverence for their 59-
year-old monarch on my first visit to the kingdom, three years ago. King Hussein had
just returned from cancer surgery at the Mayo Clinic in Rochester, Minnesota. After
piloting his royal jet by himself on the final leg home, Hussein was greeted by a truly
astonishing national embrace: One million countrymen poured into the streets of
Amman to greet his motorcade--nearly a quarter of the entire countryÆs population.
Despite the fact Hussein has been subject to more than his share of assassination plots
during 40 years on the throne, the diminutive king got out of his limousine and sat
beaming on the hood, as his subjects reached forward to touch him and shake his hand.
All along the route to the capital, Bedouin sheikhs erected tents where they slaughtered
camels and sheep in gratitude to God for the leaderÆs safe return.
ôWE NEVER COME TO THE POINT.ö
Disemboweled animals aside, Bedouin desert culture is embedded in the
Jordanian national psyche. Dark, roasted, sugary Bedouin coffee is a must to start off
business meetings, and the tradition of lavish hospitality to strangers is strictly
observed. Whereas Westerners tend to get down to business immediately, relationships
in Jordan generally need to be nurtured. They donÆt really get off the ground until
youÆve been invited to somebodyÆs house, eaten a seven-course meal, and accepted the
third dessert.
ôWe never come to the point,ö says a half-serious Munib Toukan, formerly the
kingÆs press secretary and now director of public relations for Royal Jordanian Airlines.
ôWe like to waste time and talk and eat and drink coffee and chat all night.ö The
reluctance of Jordanians (and other Arabs) to mention business, much less negotiate a
deal, during an initial meeting is often frustrating to newcomers. Explains Israeli Sara
Cohen, director of sales and marketing at the Hyatt Regency Jerusalem, ôWhatÆs very
strange is that your meeting finishes, and you have not finalized anything--including
even a discussion of your business objective. But that doesnÆt mean that they donÆt
know in their head what you are talking about.ö Cohen adds that while a typical
American business visitor will book a hotel room for only two days--and fill them with
lots of straight-to-the-point-business appointments--Jordanian business travelers usually
book themselves in for a week of much longer, far more indirect introductory sessions.
On the subject of Arab malesÆ well-known penchant for kissing one another on
the cheek, Toukan cautions, ôMost of us know that Western men are not comfortable
with kissing, but you should try to tolerate getting hugged every once in a while.ö
JordanÆs culture, as a special nation, is marked by a degree of modesty, an
understanding that the kingdom lacks the material wealth of its neighbors, yet has
survived serial traumas--the latest of which was the harsh reaction to its soft attitude
toward Iraq during the Gulf War. Hussein paid for his mistake in spades, seeing all aid
cut off from his former patrons in Kuwait and Saudi Arabia, while becoming the target
of US-led sanctions that virtually shut down the countryÆs lucrative shipping business
through its only port, Aqaba.
In effect, the Gulf War was a purging process for Hussein, propelling Jordan
into the waiting arms of the West. The price was a breakthrough in the peace process.
The king, who now admits he secretly met with Rabin at least 21 times since 1967,
paid it willingly. In exchange, the Clinton administration promised to write off more
than US$700 million in debt, and to promote the idea of US firms doing business in
Jordan.
Initial talk about ôpeace dividendsö ballooned expectations that are only now
settling down to earth, as limitations become clear. ôWe are being promised the honey,
but nothing has been delivered,ö complains Mazen Darwazeh, general manager of Arab
Medical Containers Co., a division of Hikma Pharmaceuticals Co. ôIf nothing
materializes very soon in this country, we will have chaos. . . Now I think we need to
start having things develop.ö Darwazeh, whose family--like a majority of Jordanians--is
of Palestinian origin, is deeply skeptical about peace, and concerned that Jordan may be
isolating itself from the Arab world. ôThe West Bank and Israel will not constitute
more than 5% to 10% of our market, while 90% will be in Syria, Iraq, and Saudi
Arabia.ö
AN ECONOMIC TRANSFORMATION
Ironically, the latest influx of Palestinian refugees--deported by Kuwait en
masse--has produced an economic boom in Jordan. In much the same way that highly
educated Russians are fueling R&D in Israel, Palestinians who returned from Kuwait
have brought a formidable array of managerial, merchandising, and technical skills.
Between 1992 and 1993, the kingdomÆs GDP soared by an unprecedented 11% to US$5
billion, propelled by the massive investment in housing starts and other ventures made
by returnees from the Gulf.
Amman has been transformed by the Gulf story, undergoing a burst of both
office and residential construction that has created new neighborhoods such as Abdoun,
home of the fortress-like US Embassy. Accustomed to the amenities of Kuwait City,
the new residents have built cozy villas that sport backyard swimming pools, sculpture
gardens, and satellite dishes on every roof. Locals refer to the new southern section as
ôAmmanÆs Beverly Hills.ö
Although once rosy projections about JordanÆs ability to attract foreign capital
have been scaled back, local business leaders and foreign diplomats expect the peace-
process to fuel real growth. With the countryÆs traditional Dead Sea phosphates and
potash industry having suffered US$30 million in losses in 1993, because of poor prices
on world markets, Jordan is trying to promote computers and information technology
as promising areas for investment. Meanwhile, the US Embassy is fighting a battle
against the widespread violation of intellectual property laws in Jordan, particularly
computer software. Microsoft is experimenting with special discounts and other
incentives to get universities--and even government ministries--to buy authorized
Windows software.
Obviously, Jordan has a long road to go before it can compete in high
technology. Angus Blai, a Middle East analyst for Baring Securities in London, notes
that computers are still a curiosity in the Hashemite Kingdom: ôYou walk into a
company in Morocco and you see two or three people to a room, and one personal
computer. In Oman, you see a roomful of PCs, and no people. In Amman, you find a
roomful of people--and no PCs.ö
While trying to promote their country as a regional base for foreign companies,
Jordanians are also hoping they can reinvigorate their tourist trade, particularly in
cooperation with Israel. While the biblical sites of Jerusalem and the West Bank were
lost in the 1967 war, Jordan still boasts Mount Nebo to attract Jewish and Christian
pilgrims, as well as Ein Musa, where Moses is believed to have struck a rock and
brought forth water. North of Amman, Jerash has some of the best-preserved Roman
ruins in the Middle East. Queen Noor, HusseinÆs Princeton-educated US-born wife, has
initiated an annual performing arts festival there, drawing top international
entertainment before packed audiences. JordanÆs most spectacular site, however, is
Petra--the remains of an ancient Nabatean city built into the rose-colored hills of the
southern desert.
Then thereÆs JordanÆs potential as a beach resort. Jordanians agree that
rejuvenating the Red Sea resort town of Aqaba is a formidable challenge. While the
Israeli resort of Eilat, across the bay, is abuzz with construction and teaming with
tourists, Aqaba struggles along with anemic hotel-occupancy rates. A measure of the
cityÆs doldrums is that the best hotel in town is called the Holiday. It used to be the
Holiday Inn, but standards slipped and the chain pulled out. Nevertheless, Aqaba has
the same weather, same beach, and same magnificent coral reef as Eilat--and lower
prices. Developers see potential.
ôNO MINISTRY OF CHEESEö
How to exploit that potential is the challenge. While making cordial contacts in
Jordan is easy, making money is not. Al Khouri, who runs a consulting business, says
that foreigners need help dealing with the formidable government bureaucracy. ôJordan
is not a Yellow Pages economy,ö he cautions. ôYou cannot get off the plane, pick up
your æJordan on Five Dollars a DayÆ guidebook, figure out where the Ministry of
Cheese is, and go sell them some cheese. This is still a Third World country, and if
you know the right people, especially at the top, you can make a lot of money here.
Otherwise, forget it.ö
The experience of Crown Cork & Seal Inc. of Philadelphia is instructive.
Seeing an opportunity to corner the market not just in Jordan, but in neighboring Syria,
Lebanon, and the West Bank, the Fortune 500 aluminum-can maker set out recently to
build a US$34 million plant on the outskirts of Amman. The idea was to sign contracts
with both Coke and Pepsi, and use the plant as a showcase of US-Jordan cooperation.
Unfortunately, Crown Cork discovered that its Jordanian partner, Shaheen Business
Investment Group, was bankrupt, and ShaheenÆs banks were closing in on its soaring
debts. Crown CorkÆs plant is still under construction as Shaheen undergoes some
restructuring, but the financial surprise sent a scare through Crown Cork and other
foreign investors.
The lesson, cautions Alex McCay, Scottish-born general manager of Crown
CorkÆs project, is that Jordan needs to work on being more helpful to foreign investors,
particularly in guiding them through the maze of poorly explained government
regulations. ôJordan is a lovely place to live,ö says McCay. ôPrices are low and the
quality of labor is excellent. But getting consistent, accurate, reliable information--this
has been a very big problem for us.ö
While Israel and Jordan are two distinctly different markets, can the gaps be
bridged? Can the two countries truly put aside a half-century of enmity, do business
with each other, and team up to attract ambitious foreign investors?
Months after the signing ceremony in the Arava desert, there are signs that they
are at least making the effort. Early this year, textile firms from both Jordan and Israel
held a conference together that climaxed with a joint fashion show at the Hyatt Regency
Jerusalem. Models sashayed down the runway in garments ranging from JordanÆs
Bedouin-inspired robes to Israeli see-through evening gowns. The conference was
called ôWeaving Peace.ö
For the international investor, hurdles remain but the growing prospects of
genuine peace in the region make the Jordan-Israel relationship worth cultivating. ôI
donÆt think it will be an easy marriage,ö says Rosenberg of IsraelÆs Pacific-
Mediterranean Investments. ôBut if it makes economic sense for both sides, they will
be able to overcome the cultural differences. The advantages are so compelling, it has
to work.ö
Jonathan Ferziger is UPIÆs bureau chief in Jerusalem.
For more information on this article, or to subscribe, you can contact Trade & Culture at 1-800-544-5684, by fax at 1-410-342-8560 or by e-mail at 74150.1265@compuserve.com
