Several of you, like me, obsessively check the news on what breathtaking headline comes out of the United States. There are over a dozen stories to follow, some of them brief flashes of shock and others that have long-term effects. For Jordan, the most shocking may be the swift collapse of USAID and the midnight disappearance of millions of dollars of funding. Everyone had their own opinions and grievances over US foreign assistance - especially if you already had a dim view of US foreign policy in the Middle East. Other complaints were more personal about a handful of employees consistently giving millions in grants to a handful of favored Jordanian groups. But the truth is that USAID had tremendous reach in Jordan with several millions of dollars spanning all governorates of our Kingdom and several sectors. The impact of that sudden withdrawal did not hit us immediately, but we are reeling now and will be for the next several months if not years. A brief history is that on Jan. 20 President Trump ordered a 90-day program-by-program review of all foreign assistance programs and cut off all foreign assistance funds almost overnight. Gradually they began cancelling projects that they stated did not align with US national interests. Initially, no projects in Jordan were cancelled. Suddenly, this week, USAID closed 432 projects in Jordan - a clean sweep. These projects included work on public health, water access, support for schools, supporting mayors and municipal services, election support, teacher training, and developing small and medium businesses. These essentially all were cancelled Thursday.
Three things you should know:
Bursting the Bubble:
Foreign assistance brings a certain economic bubble with it. The scale of USAID funding in Jordan functioned as a mini-economy with its own fiscal structure (this is why you have Jordanians working under a US fiscal year and paying taxes under a Jordanian tax year.) The large cadre of well-salaried expats fueled a parallel economy, of higher-end restaurants, products and snacks that remind them of home, and high-priced private schools. The abrupt withdrawal of USAID funds, make these businesses face financial stress. Those projects also employ Jordanians. Each USAID project hired dozens of Jordanians and then contracted services from drivers to cleaners to translators. Those contracts now disappear. Smaller Jordanian organizations that depended on USAID grants to support schools, hospitals, municipalities, and community centers lost their funding overnight, forcing potential closures. More critically, people who relied on this funding—whether to launch women-owned businesses or train communities in water conservation—saw their opportunities vanish.
The influx of cash from USAID into Jordan was tremendous. It was not phased out. It was not reduced. It was suddenly cut. No market could effectively respond to that. Few economies operate under the financial strain this puts on Jordan. Among USAID recipients, only Ukraine, a country at war and three times Jordan’s size with vast natural resources, received more funds.
Worse, the departure of funds created instant debt. Jordanian businesses and organizations—ranging from law firms and insurance providers to conference venues and civil society groups—had already completed work for USAID projects and remain unpaid. They are absorbing the costs, accruing debt, pursuing legal action, or simply waiting for the old days to come back. Some of the projects were business focused, providing grants and training on franchising, marketing, startups, and management. That money disappeared along with the opportunities for those recipients.
Media reports that between 35,000 to 40,000 Jordanians will be directly affected economically by this. Given how few two-income homes we have, that likely means 40,000 families. So, the expat workers are leaving, Jordanian employees fired, Jordanian partners closing, Jordanian businesses left unpaid.
Brain Drain and Capital Flight:
As I noted, foreign assistance creates a bubble economy, and its swift removal has profound consequences. Many Jordanians held high positions in USAID projects, earning between 3,000 to 6,000 JOD monthly—salaries far above Jordan’s median income of 480 JOD or so. In many cases, project directors and procurement specialists earned more than MPs or ministers, as dictated by the ‘CSO market’. But with the disappearance of that market, these professionals now face three options: accept significantly lower salaries in Jordan, wait for U.S.-funded work to return, or seek employment abroad. This is how brain drain begins.
Without the return of those projects and funds, Jordan suffers the effects. First, this is an educated and experienced workforce which will contribute to productivity and innovation elsewhere. The sectors they leave - education, healthcare, research, service delivery - could stagnate. That sectoral stagnation contributes to wider economic stagnation. The loss of their income in Jordan means they do not spend money here, lowering domestic demand, trickling down into the service and retail sector. That also means they are not contributing in taxes. With fewer taxpayers, government revenues shrink. When these professionals relocate abroad, their children are raised in countries like the U.S., UAE, or Australia. The likelihood of them returning as Jordanian taxpayers is low, especially if economic conditions remain uncompetitive. Brain drain is not seasonal.
Finally, brain drain shows a weak market, which investors notice. As Jordan desperately tries to attract foreign investment, investors will note the sudden vacuum and look elsewhere.
Brain often leads to capital flight (a challenge Jordan has already had in past years). Essentially, the workers leave, they take their money with them and earn more abroad, local businesses suffer from declining consumer demand (maybe closing, maybe increasing prices, maybe laying off workers), banks have fewer deposits and thus provide fewer loans, investors lose confidence and pull funds, and so on. Jordan is a small country with a weak private sector. Even as few as 500 of these folks going abroad is significant for our economy.
More Anger:
While 40,000 Jordanians may be directly affected, the downstream effects for more will be severe, especially in Amman. Eventually, average Jordanians may see price rises, high unemployment, fewer opportunities in their communities. We are no stranger to a dismal economy. But how many citizens will look at these events and blame the USAID cut? Likely very few. Instead they will blame the system. They will blame the same government they have blamed for a decade for the economy. As research (and our own experience) shows, Jordanians typically hold the government responsible for unemployment, price increases, costly utilities, high housing prices, and any shortage. Some of that is justified due to the heavy hand the government uses in the economy (like fuel prices), some is dependent on external factors (like tourism) and some is a mix (foreign investment). But the removal of USAID funding so swiftly is not the fault of our government, but anyway they will end up taking the blame. The next months (maybe a few years) will be a major adjustment as these millions and jobs leave our economy. This is not Jordan’s fault. We are suffering from the bizarre decision-making in Washington. Our government cannot compete with this. We can’t offer the incentives for these people to stay, or the grants or tax breaks for them to return. We can hope that they send back generous remittances. However, the amount of brain drain will be large enough to affect our economy, but not large enough to result in notable remittance amounts.
An already aggrieved populace is about to become even angrier.
My Take:
There will be more anger against our government by those who hold our state responsible for all areas of the economy. But there will also be further anger against the US. While the world is shaking its head at Trump and concerned about his policies, many Jordaninas have been angry at the US for years over Palestine and especially Gaza.
In the year and a half of the war on Gaza, radicalization among the younger generation has risen significantly (more details from my previous work here). Additionally, public sentiment has taken a sharp turn against US policy on Israeli crimes and the indiscriminate targeting of civilians in Gaza and the rise of violence and displacement practices in the West Bank. All of which was happening before the Trump administration. Now with new directives in shutting down US foreign aid in Jordan, the statements on population transfer and the ongoing social media posts by the president, (like this distasteful video), will only increase Jordanian’s negative attitudes towards the US. Politically, the government will also be held responsible for its close relationship, almost dependence, on the US. For years, many opposition groups have been demanding that Jordan diversify its foreign policy alliances, open the market for other countries and review US military presence. The government was always able to keep these voices at bay with the millions of dollars contracts US foreign aid has been providing. This defense is no longer available, the voices will become louder and will be joined by others that will start to feel the effects of the economic downturn Jordan is about to face.
For many Jordanians they view the US’s funding cut as a political pressure tool and thus will most likely want to respond politically. Islamic groups in Jordan have already been riding the high wave since the beginning of the war and are expanding influence, Iran’s hegemony has been softened and Syria’s surprise government change has only contributed into the rhetoric of Islamic groups.
Where are our new political parties? They seem to be caught up in Parliamentary games and more focused on internal arguments and mergers and coalitions, rather than drafting legislation, or holding large initiatives in the region. Understandably, they are still figuring out their roles, less understandably they are still figuring out who they are and how to work with the public. If you look at their Facebook pages, their members are asking, “when will you visit Irbid?” or “why don’t we hear from anyone?” We knew this would be a long transition, but in a time of increased economic tension and heightened political grievance, the people need champions, they need representatives, they need advocates. This year is when parties ended to shine, or risk the permanent apathy of the public. Then we will see that wasta is the only way to survive, not political parties as vehicles to resources and influence.
The parties come from our political modernization, which is next to the economic modernization and the public sector modernization. All three had significant input and support from the US. With that disappearing, can the pace of reform continue? What about decentralization? The new curriculum? Revising the labor code?
The very sudden withdrawal of US assistance is bound to not only trigger the above three points, but expand resentment against the US and all that brings with it. Without strong guidance from our own government, it could also put brakes on our own reforms designed to bring all citizens into representation, invite investment, and make service delivery efficient.