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Cablegate: View That Iraqis in Jordan Are Only a Burden On the Economy

VZCZCXYZ0002
RR RUEHWEB

DE RUEHAM #4773/01 3390601
ZNR UUUUU ZZH
R 050601Z DEC 07
FM AMEMBASSY AMMAN
TO RUEHC/SECSTATE WASHDC 1126
INFO RUEHGB/AMEMBASSY BAGHDAD 5617
RUEHDM/AMEMBASSY DAMASCUS 3753
RUEHEG/AMEMBASSY CAIRO 3436
RUEHLB/AMEMBASSY BEIRUT 2746
RUEHAK/AMEMBASSY ANKARA 0579
RUEHRH/AMEMBASSY RIYADH 1868
RUEHNY/AMEMBASSY OSLO 0081
RUEHTV/AMEMBASSY TEL AVIV 0877
RUEHJM/AMCONSUL JERUSALEM 4718
RUCNDT/USMISSION USUN NEW YORK 0004
RUEHGV/USMISSION GENEVA 0629
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS AMMAN 004773

SIPDIS

SENSITIVE
SIPDIS

DEPARTMENT FOR NEA/ELA, NEA/I, AND EEB

E.O. 12958: N/A
TAGS: ECON PREF PGOV JO IZ
SUBJECT: View That Iraqis in Jordan Are Only a Burden on the Economy
Not Substantiated By Available Data

REF: A) Amman 4575
B) Amman 4338
C) Amman 4217
D) Amman 3819
E) Amman 3813
F) Amman 3752
G) Amman 3661
H) Amman 3009

Sensitive but unclassified; please protect accordingly. Not for
internet distribution or use outside the USG.

1. (SBU) SUMMARY: The prevailing view shared by the Jordanian
public and government officials is that the Iraqi presence has
further strained Jordan's already stretched budget, with a
significant negative impact on the education and health systems, and
an inflationary impact on prices. After reviewing what numbers are
available, however, there is little direct evidence that Iraqi
refugees in Jordan have had a detrimental net impact on the economy.
The first large waves of Iraqis after 2003 served as an economic
stimulus, with Iraqi investments in industry and real estate
contributing to Jordan's sustained growth in recent years. Iraqis
are also disproportionately represented in higher education,
teaching in popular fields such as computer science, management
information systems, and economics. Concerns about the negative
economic impact of Iraqis in Jordan are amplified by fear that
continued regional instability could result in an even greater
refugee flow to resource-poor Jordan as it struggles to implement
tough economic reform measures amid rising prices and inflation.
Even if the net impact of the Iraqi presence on Jordan's economy is
not as negative as often asserted, this does not lessen the depth of
feeling among many Jordanians about the perceived burden, nor does
it alter the basic fact that Jordan's education and health care
systems are being stretched. END SUMMARY.

Increased Spending Not Purely a Direct Result of Iraqis
--------------------------------------------- ----------

2. (SBU) Irrespective of Iraqi flows to Jordan, GOJ expenditures
have increased across the board, and despite a second budget
supplement, Jordan still faces a substantial deficit (Ref B).
Rising global fuel and grain costs are largely behind the shortfall,
but many believe increased costs are due, in part, to the presence
of thousands of Iraqis in Jordan. Senior GOJ officials have at
times cited the annual cost to Jordan of Iraqi refugees to be USD
1.4-2 billion. These figures are broad estimates because no
concrete data is available, explained Fida Gharibah, Director of the
Iraqi Coordination Unit in the Ministry of Planning and
International Cooperation (MOPIC). Gharibah's office monitors the
economic impact of Iraqis in Jordan, and coordinates donations and
cooperation with the Iraqi Government and international community.
One verifiable expense, according to statistics from the Ministry of
Finance, is a steady increase in "security costs," which increased
from USD 288 million in 2003 to USD 392 million in 2006. While the
bulk of these costs includes pensions for military retirees and
other, clearly domestic Jordanian-induced costs, a significant
portion was likely allocated to border security. Central Bank
officials told Econoffs that Jordan had no option but to increase
military expenditures given regional tensions and the 2005 terror
attacks on three hotels in Jordan carried out by Al Qaeda in Iraq.


3. (SBU) Food prices have also risen, reaching a peak last Ramadan
(Ref E). According to a study from the University of Jordan's
Center for Strategic Studies (www.jcss.org), food prices have risen
21 percent since 2002, and in 2006, rising food prices accounted for
half of that year's total inflation. The study attributes rising
costs to a variety of factors, including a decrease in the
availability of local products because of the export of Jordanian
dairy products and product to feed U.S. troops in Iraq. Still, the
Ministry of Agriculture (MOA) has not reported any significant
increases in the demand for basic food commodities that could have
been caused by an increase in the Iraqi population in Jordan. MOA
reports show a slight increase in the demand of beef to 23,394 tons
in 2004 from 20,208 tons, a rise that may have been due to the
initial Iraqi migration to Jordan. Recent decreases in net demand

(19,467 tons in 2005) can be attributed to higher prices resulting
from increased costs for animal feed (Ref G).

Education Sector Swells Due to Iraqi Presence
---------------------------------------------

4. (SBU) A reported 24,000 Iraqi students were registered at
Jordan's already-crowded schools as of September 26. Financially,
their enrollment was made possible through UNHCR, with considerable
support from the U.S. and other donors, to cover some of the annual
costs, estimated at USD 700 per Iraqi child for primary school and
USD 1,000 for secondary education (Ref F). Ahmad Shaheen,
spokesperson for the Ministry of Education, issued assurances that
the door would remain open for more students regardless of the
residency status of their parents. At the post-secondary level,
2,209 Iraqi undergraduate students and 294 graduate students
attended Jordanian universities in 2007. Munther Batainah,
Assistant Secretary General of the Ministry of Higher Education,
said almost all went to private universities "and therefore were not
a burden to the system" as they paid private tuition rates, an
average of USD 4,230 per student per year and estimated annual total
of USD 10.5 million.

5. (SBU) While elementary and secondary schools have had to adjust
to accommodate additional students, Jordan's higher education system
would suffer without an Iraqi presence. Samira Arrar, Head of the
Jordanian Council of Higher Education, reported that 90 percent (718
of 797) of non-Jordanian, Arab professors in Jordan were Iraqis.
The majority were graduates of reputable U.S. or UK universities who
specialized in high-demand fields such as computer science,
management information systems, and economics. Outside of the
education sector, very few Iraqis are formally employed in Jordan.
A Ministry of Labor report shows that at the beginning of 2007,
1,645 Iraqis were registered legal foreign workers compared to
201,591 Egyptians.

Conflicting Data on the Impact on the Health System
--------------------------------------------- ------

6. (SBU) MOPIC's Gharibah also reported that the Ministry of Health
did not keep records on the nationalities of foreigners, explaining
that registered users were listed simply as either Jordanian or
non-Jordanian. She said healthcare services in Jordan were
subsidized at a rate of 60 percent, and thus MOPIC estimated Iraqis
cost the health system USD 42.3 million annually, an amount
completely covered by the GOJ's budget with no use of foreign aid
funds. This estimate includes doctor visits at USD 7 per person,
hospital stays at USD 99 per night, and vaccinations at USD 42 per
child. Gharibah added that the health system was under pressure
because of increases in common diseases and the introduction of
high-risk diseases like tuberculosis which had heretofore not been
prevalent, with which 700 Iraqis were diagnosed in 2006.

Iraqi Investment in Jordan
--------------------------

7. (U) Despite reports, which began in 2003, of a major influx of
Iraqis buying real estate in Jordan, Ministry of Finance reports
show municipal real estate sales tax revenues increased only
slightly from USD 50.3 million in 2003 to USD 52.5 million in 2004
and to USD 63 million in 2005. 2006 figures are not yet available.
Representatives from real estate and housing companies informed
EconOffs that most of their sales were made to Jordanians, and the
surge in prices was consistent with increases in the broader Middle
East region. Financial Advisor Sahel Annabi added that for
resource-poor Jordan, real estate historically has been the most
popular sector for Jordanian investors.

8. (SBU) Iraqi business investment, however, has been significant,
increasing twenty-fold between 2004 and 2006, according to the
Jordan University study. Jordan Investment Board (JIB) CEO Dr. Maen
Nsour confirmed that after Saudi Arabia and Kuwait, Iraqis were the
largest investors in Jordan, taking advantage of Jordan's investment
promotion law which offers tax incentives and some customs
exemptions. JIB statistics reveal that between 2000 and June 2007,
USD 3.82 billion of Iraqi money was invested in Jordan, of which

93.2 percent went to industrial investments, taxed at regular rates.
The remaining 6.8 percent represents a small number of Iraqi
companies that enjoy special tax exemptions under the investment
law. Nsour added that JIB carefully vets smaller investors (USD
500,000-600,000) as many Iraqis attempted to use their investments
as a means of obtaining residency permits. Iraqi Embassy Commercial
Attache Hadi Al-Safar recently informed EconOffs that Iraqi
businessmen in Jordan are now looking for new investment
opportunities and targeting the Gulf states and Turkey.

9. (SBU) El-Tigani Ibrahim, IMF representative for Iraq based in
Amman, commented to EconOffs that the IMF was not convinced Iraqis
represented a substantial net burden for the GOJ. On the contrary,
Iraqis have served as a stimulus to the Jordanian economy by
creating an increased demand for real estate, tourism, commodities,
and direct retail sales. Zaid Bader, the World Bank's Chief
Representative for Iraq, also posited that Iraqis in Jordan have
actually contributed to the economic growth of Jordan.

Number of Iraqis in Jordan Still Subject to Debate
--------------------------------------------- -----

10. (SBU) While the true impact of Iraqis on the Jordanian economy
remains contested, an even greater debate continues to rage
regarding the actual number of Iraqis in Jordan. Estimates of the
size of this population have varied from 130,000 on the low end, to
greater than 750,000. The GOJ currently estimates the Iraqi
population to be in the 470,000-500,000 range, which was recently
published by the Norwegian NGO research institute Fafo following
protracted discussions with the GOJ on methodology. In
conversations with Econoffs, the UNHCR and the International
Organization for Migration (IOM) favored the lower estimate, with
IOM commenting that its operations "were consistent with that
capacity."

11. (U) According to the demographic data in the November 2007 Fafo
report, the majority of Jordan's Iraqi population is composed of
families who arrived in 2004 and 2005 from Baghdad and now live in
Amman. 68 percent of the migrants are Sunni Muslims, 17 percent
Shiite Muslims, and 12 percent Christians. They are well educated,
and 22 percent of the adults held jobs; 13 percent of men, and 25
percent of women are self-employed. Only 25 percent of Iraqis in
Jordan own their residences; the remainder rent accommodations in
urban areas, and are dependent on, and benefit from, existing
infrastructures. Despite the high level of education and employment
rates, the Fafo results showed that the majority of Iraqis live on
savings or remittances from Iraq, making them particularly
economically vulnerable.

12. (SBU) COMMENT: While the numbers available fail to support the
argument that the Iraqi refugee presence has been solely detrimental
to economic conditions in Jordan, the perception remains, and
Jordan's key social services such as education and healthcare are
clearly being stretched by the Iraqi presence. More broadly, many
in Jordan fear the implantation of another semi-permanent refugee
population like the Palestinians. END COMMENT.

Visit Amman's Classified Website at:
http://www.state.gov.sgov.gov/p/nea/amman/

HALE

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