Jordan's five biggest challenges, from ISIS to the Palestinian question

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Story highlights

  • Jordan is stable compared to its neighbors but faces huge challenges
  • An influx of Syrian refugees is putting strain on the economy
  • The threat of ISIS has also exacerbated security risks for the country

Bassem I. Awadallah was the Chief of the Royal Hashemite Court and the Director of the Office of King Abdullah II from 2006-2008. He has served as Jordan's finance minister, and is now the CEO of the consultancy firm Tomoh Advisory. The views expressed in this commentary are solely his. Got a question about Jordan? Let us know in the comments below and we'll answer the best ones on Connect the World on Thursday at 6 p.m. Amman time.

(CNN)On the face of it, Jordan must seem to the rest of the world like a welcome refuge from the violence engulfing many of the countries around it.

But if you scratch at the surface a little, you will find a country that is facing major, even unprecedented challenges from all sides.
Jordan's resilience speaks volumes about its leadership and its people -- but in reality, regional instability and continued domestic pressures mean the country has serious weaknesses and vulnerabilities.

    ISIS: The calm before the storm?

    The conflict and deep changes across the region -- particularly in Syria and Iraq, historically Jordan's two main regional trading partners -- have made the Middle East's future seem bleaker than ever.
    These wars, in addition to the stalemate in the Palestinian-Israeli conflict, have put immense pressure on Jordan. The emergence of ISIS and its control of vast regions in Syria and Iraq have exacerbated the security risks for Jordan, and drawn the country into the military campaign to defeat the terror group. In fact, Jordan views the war against ISIS as an ideological one within Islam, and clearly sees the potential threat that ISIs poses for global security.

    Full house: How many more refugees?

    The wars in the region have led to unprecedented massive human dislocations -- and Jordan epitomizes the political economic challenges that one country's conflict can impose on its neighbor.
    The country is now hosting 1.3 million refugees who fled the brutal four-year civil war that is consuming Syria -- and they're not cheap. The cost of the refugees is roughly $2.9 billion (eight percent of Jordan's GDP), according to the government, of which only 5.5% has been covered by the international community.
    The influx has placed immense strains on public services. 140,000 Syrian children have been enrolled in Jordan's already crowded public schools, and housing costs in the north have risen by a staggering 300%, according to the government.
    And with the arrival of more than 200,000 Syrian laborers -- around 10% of Jordan's workforce -- who are willing to work at below market wages, there are mounting pressures on the labor market.

    The Palestinian question

    But make no mistake.... there is hardly a day that passes by when Jordan is not reminded that the central cause of instability in the region is the Palestinian issue.
    No other country is as tied politically, socially, demographically, historically, and geographically to the Palestinians, and no other country's political dynamics are as adversely affected by their ongoing predicament.
    The lack of progress on establishing a two-state solution -- and the immeasurable human suffering in Palestinian territories -- continues to weigh heavily on Jordan, including on the fate of the more than 1.8 million registered Palestinian refugees in Jordan.

    Where are the jobs?

    Since 1948, and especially after 1967, the political instability caused by the Arab-Israeli conflict has cast its shadow on Jordan's economic development.
    Despite the constraints, it's hard to classify Jordan's progress in the past quarter of a century as anything but a success story. Reforms saw the country's economy explode -- an eightfold GDP increase between 1990 and 2014 -- and growth averaged 7% a year from 2000 to 2008, according to the central bank.
    But since then, growth has slowed and private investment has dwindled -- and despite achieving relative financial stability, Jordan still depends on foreign aid.
    One of the biggest problems could end up being unemployment. More than seven out of 10 people in Jordan are under 29. The economy would have to grow 6% each year just to keep them all in jobs -- and the current rate, around 3%, means only half the needed jobs will be created.

    Why we need a credible reform process

    For many in Jordan, economic reform is a necessary but not sufficient recipe for success. Like in many other developing countries -- transitioning from the old system to a modern, merit-based, inclusive civil society will be a long and difficult process.
    In resource-poor Jordan this will be no easy task. On the one hand, depending on foreign aid makes donor conditions very important for change. But on the other hand, embarking on important economic reforms without advancing better governance, political freedoms, and accountability is almost impossible to achieve anywhere.
    The problem is that reform measures are -- and will always be -- opposed and perceived as an existential threat by major constituencies in the country. For the reform process in Jordan to be credible, complete, and successful, a national consensus is required to define the road ahead.
    The 2005 National Agenda -- an attempt at wholesale changes to Jordan's political and fiscal systems -- failed to produce its desired outcome because it lacked the necessary national buy-in. For any reform process to succeed, a consensus must be reached among all parties to chart the way ahead.
    The quicker Jordan succeeds in forging a national consensus on its reform efforts, the easier it will be to positively address and fulfil the aspirations of its youth, regardless of the constraints. This is as true in Jordan as in most Arab countries today.