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Can Aqaba offer port of calm in turbulent Middle East?

From John Defterios, CNN
updated 8:13 AM EDT, Thu July 3, 2014
  • Aqaba is a port city on the rise in Southern Jordan
  • Strategic location close to Israel and Egypt gives it trading edge
  • Conflict in Iraq has brought both uncertainty and opportunity

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(CNN) -- In the port city of Aqaba, southern Jordan, construction works are popping up everywhere.

This special economic zone on the Red Sea -- where key container shipping, manufacturing and tourism industries sit side by side -- lies less than half an hour from Israel and Egypt by shuttle boat.

It is also favorably positioned as an entry point for seaborne goods heading north through Iraq and central Asia.

Now, after the uncertainty of the global economic crisis and Arab Spring, Aqaba is beginning to fulfill its promise.

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The city's population has doubled since the year 2000 to 140,000 people today. Another 100,000 are expected to move in by 2020.

Businesses are also arriving. After $300 million of investment on cranes & equipment, shipping traffic has more than doubled in eight years.

According to Jeppe Jensen, CEO of Aqaba Container Terminals, which is nearly a third of the way through a 25-year lease on a one-kilometer area along the waterfront, Aqaba stands out as a place to do business.

"We are at the crossroads of three continents and four countries which makes us a natural hub," Jensen said.

But with neighboring Iraq paralyzed by conflict and faced with the very real prospect of breakup, regional uncertainty is once again an issue for businesses operating here.

Jensen believes, however, that his clients can bank on Jordan's alliances with Washington, Brussels and the Arab Gulf States.

"We now have the political instability which dampens the throughput to Iraq," he said. "(But) we do believe when Iraq is cleared out again there will be a huge potential for Aqaba."

Growth industries

Other companies spy opportunity amidst the uncertainty.

Streit armored cars is one of more than 1,300 companies calling Aqaba port home -- no doubt enticed by a 5% corporate tax on net profits despite the nearby chaos.

The company recently signed a long term lease to help double factory space and monthly production.

After political unrest and war in Syria and Iraq, demand is solid for armored personnel carriers (APCs).

"Six months ago we were 4,000 square meters now we are 8,500 within another six months we will be at 18 thousand square meters," said Ziad Al Essa, vice-chair and general manager of Streit

Makers of armored cars aside, companies are here are trying to read the regional headwinds.

As well as the increasingly complex conflict in Iraq, Egypt is under new rule after revolution and counter-revolution while the Israeli and Palestinian conflict still persists.

The ideal location for doing business, it seems, comes with risk attached.

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