FILE CU! |AS22FLE LI &~u Restricted

This report is restricted to use within the Bank]

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

DEVELOPMENT PROBLEMS

OF

JORDAN

AND THE ROLE OF THE BANK

T.U1- In, JWU

Department of OperationsAsia and Middle East

Prepared by. F. G. Bochenski

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CURRENCY CONVERSION

$i.00 = JD 0.357SD 1 - $2=R8

ID 1,000.000 = $2,800,000

J. flJ-'4J OF.I. 'r.J .±lIS tJrPage

Basic Statistics

Chart: jordan's depenaence on moreign aid

Introduction

Surmmary and Conclusions ii

I. The Country and the People 1

II. Resources and Development Projects 3

1. Agriculture 3A. Present Position 3B. Development Possibilities 3

(a) Irrigation 4(b) Extension of Farming Land 5(c) More intensive Use of Existing Land 6(d) Animal Husbandry 6(e) Forestry 6

2. I4ining 7A. Phosphates 7

(a) Present Position 7(b) Development Possibilities 7

B. Dead Sea Kinerals 8

C. .iIanganese 9

3. . Industries 9A. Present Position 9B. Development Possibilities 9

. Transport and Communications 10A. Railways 10B. Roads 11r. Aviation 12D. Port of Aqaba 12E. elee.o.munThations 13

,ab.Le oU. UUIIUntents (nUUIL%,UJ

Page

III. Finance 14

1. Public Finance 12. Mioney and Banking i53. External Finance 17

DV. External Assistance and Development Planning 19

V. Magnitude of the Investment Required 23

VI. impact of the Proposed Investment 25

1. On Employment and Income Levels 252. On the Balance of Payments 27

VII. Role of the Bank and Recommendations for 29further Action

Map of Jordan

BASIC STATISTICS

Total area 9,,66.,o000 ha.

of which: cultivated approx. 850,000 ha.cropped annually ' 565,00o "

Population (estimate)

East Jordan 49o,oooWest Jordan 390,000Refugees 470,000

Total 1,350,000

Currency

Unit Jordanian dinar (JD 1 - 1000 fils)Exchange rate JD 1 U.S. 12.8

Principal crops_ _ - ~~~~~~~~~~(1000 tons)

1949 1950 1951* 1952 1953

Wheat 139 106 69 225 100Barley 56 141 30 92 13Lentils 8 8 4 11 10fll v s 62) n.a=

From 1 d a for ast d Wst Jrdan

(M JDmil lin) o)

End of December 1950 1951 152 1953

Currency in circulation 9.1 9.3 8.7 9.3CUM. depoositU- s 'O . 7- I

Total 16.1 157. 177 19.0

-E Including probably Government and time deposits

Basic Statistics (cont'd)

Public finance(JD million)

1950/15 1951/52 1952/53 1953/54(actual) (estimates)

Receipts * 10.3 11.7 12.8 13.3Exprrenditur9s 9.1 13.7 15.2 15.1

Surplts + Deficit _ 4. 1.2 - 2.0 - 2.tz 1-

Foreign Trade(JD rmillion)

1950 1951 1952 1953

Imports 13.5 16.2 16.8 17.9Exports 1.9 2.0 2.1 2.7

Trade deficit - 11.6 - 14.2 - 1L.7 - 15.2

Ralanne of naNmentson current account

Trade deficit _ 11.6 - 14.2 - 14.7 - 15.2RSr.i nes (nAt) 0.9 1.2 1.0 1.5

Remittances and o.9 8.9 11.0 1h.2

Survlus n- Deficit - _ 3.8 - 4.1 - 2.7 t 0.5

JORDANJORDAN'S DEPENDENCE Ovi FOREIGSN AID

GOVERNMENT FINANCES(MILLIONS OF JD)

20 20YEAR ENDING MAY 31

15 1EXPENDITURES

RECEIPTSS\/ n .%_ARAB/ >'*VAI ~~~~~~7~~C LEGION

DDM I C )

FOREIGN SUBSIDIES KEhH Hi VV)AND LOANS -AMETSCm OOCRA-EET

DOMESTIC REVENUES ORDINARYEXPENDITURES

190 01jr_FIIA OAIN

1950-51 1951-52 1952-53 1953-54(Actual) (Est.) (Est) (Fst)

*Epniue include Arab Legion and development.

BALANCE OF PAYMENTS ON CURRENT ACCOUNT(MILLIUNS OF JD)

0 GOODS 5EMIGRANT Io S I1I50 AND SERVICES REMITTANCES I

RECEIPTS

PAYMENTS ... GOODS AND - ICE .

RECEIPTS AX XA AAA; ~ DAVMACKJTS

RECEIPTS i...~ PAYMENTS _____________.:: ::.::'..

1953

RECEIPTS

PAYMENTS [I.* I l.

7/8/54No.907 IBRD- Economic Staff

i

L'4TRODUCTION

In lIarch 1954 the Government of the Hashemite Kingdom of theJordan expressed a general interest in the possibility of a Surveyi-ission from the Bank visiting Jordan.

In view of the fact that a number of development projects ofJordan had been surveyed already by various agencies as well as indivi-dual ecperts, it was agreed between the Bank and the Jordanian Governmpentthat before a decision was made on the subject of the dispatch of aGeneral Survey Iission, the Bank should be given access to the resultsof the more important studies carried out in Jordan.

Accordinglyj the Bank's special representative in the IiddleF,ast and the writer of this report visited Jordan from April 29th unltiliIay 1kth. During this visit.they had a number of conversations withofficials of the Jordanian Government. with representatives of inter-national and foreign aid agencies as well as with individuals conversantwith problems of Jordan's economic development. They also received overeighty various documents concerning Jordan's economic situation anddevelopment projiects. It is exuected that these documents. which rangzefromn general memoranda to preliminary engineering studies, ,ill bethoroughlv studied by the interested denpartments of+. the Bnnk-

Pending the results of sunch detrl t iA invAq+APti onn the fol-lowing brief review of the fields covered by the aforementioned studieswas prepared as arbasis fnr a Aitnliczsion of the recoPm'.nandat+ons forfurther action to be taken by the Bank.

In order to show the various development projects against thebackr,roun.d of J_T- eor..3the rpor ..s.o. yt ftpae, sor.pt: v ' Trw .Ai I V- 1 -,v. ,-~ ~ ~ , *1 + '-*

basic data about existing economic conditions., In view of the fact thatth Bnk hes nevrer sn a ',ns n oe +-o -Trda,I for tnr lei""+

1 1 0 tir.e., -

report is almost entirely based oil data collected by others..* They weresupplemer.ted~~~~~~ by obevtXn .d 1r6tg ort vst oJ.a

betw^een l952 and 195h.

7- Apart from special studi0s muentioned below, data on general econormicconditions were found in particular in papers prepared by the IMddlepastern Departzment of thule IN, by R.S. Porter oI thle British MiEddleEast Office, by the U.,S. Treasury Representative in the Riddle East,by ulwA and uy the Economic Planning Division of the JordanianMinistry of Economy.

ii

SUMI4IARY ATD COIT'CLUSOIMS

1. Jordan is a poverty-stricken country with comparatively fewdevelopment possibilities. The Palestize i.ar and its after-effectsdeprived Jordan of its main market and traditional outlet to the sea. Italso trebled the "eiw'11 n+A r.v" but+. intreanoarl the rcovun+ Yr.aurlr

only very little by the incorporation of some of the more barren high-la~n-A-ds of 1 ,'^stine One+hd .~ of'4 th popla.+iow ,r,~r,

4con+t of reuge l.

are maintained on a subsistence level by food rations from UI.Jh')A. They+'na ' I ., .- 1a ,r -; Al 'I -nnvr n.fnwatN.I~ .- rr1funl r

a depressing influence on wage levels.

2. '.'opulation pressures have extended cultivation to rmiarginal lands-.rhich suffe, Lfror. fret.-uent d'roughts. Since thell ir1L.'.L& ofL newj 1pop.Lu.Lul

Jordan has had a wheat deficit in most of the years but has regularly1 --- I _r _ ._L _L __ _ .__- _ _._ -- -. - !1 J __n2___ :twm

UAC,pUvl-Ueu J.lEUJLU EaUIl U vW'tatU E tU;* lilt mottUbk, v ' SIpIJU; tJ1i UUVULUPillBIeIb pOUj4S-OU±.L-

ties consist of enlarging the area under irrigation and of increasing yieldsby lm prUveU agric-uiLural techniques.

3. ,lining resources known to e;dist in commerciai quantities includemanganese, gypsum, minerals in the Dead Sea and phosphates. Only phios-phates are at present exploited and they only on a mouest scale butadditional deposits are being surveyed. Development of the exports ofminerals is attractive as a quick way of increasing foreign exchangereceipts but its success depends largely on the opening of newi transport-ation facilities.

4.. Existing industries are insignificant. Development possibilitiesexist in the field of fuller processing of domestic raw materials; produc-tion of superphosphates and a domestic petroleum refinery might perhaps befound economically justified. Hydroelectric power could be provided by ajoint project with S3yria on the Yarmouk river.

5. The transportation system, which had to be re-oriented after thePalestine l.ar around a Nqorth-South axis, is inadequate. iiost overseastrade uses the port of Beirut and suffers from delays and high costs fromthe long overland haul. The need to save foreign exchange makes it im-portant to develop tne port of Aqaba. The final justification of thisproject may depend on whather mineral deposits from the south of thecountry can be exported. There seems to be no coordinated planning oftransportation development,.especially with respect to railways versusroads.

6. Tourist trade could easily be increased by minor investments lead-ing to auick returns in the form of additional foreign exchange receipts,

7. Internal and yxternal finnanes of .TnrAn dePend to a v'rv higihdegree on foreign assistance. British subsidies maintain most of theA-rmarl Pn'roec annd 1-a.r +hrp hnlaneT the irdi nnyr hbiudtjt, whilp 4'4 +Ac.th

interest-free loans have so far provided the bulk of externally financedcapital expen-diture on. dewvelopment pro4ects. The .7an"uiar..M. Mvn+nir sy-

temr managed by a Currency Board in London is based on full cover bysterlin 4 ssts- , V- W nS +-^)ic ar pot byn '-r.vpO+- c *

excludes the possibility of inflationary expansion but its adequacy duringa pe od of m'OMe i.ten s iwVe devellopm,ent. oug,ht to be ir.ve-stigatedoA 'i'h nha,4-+- _nn - Aan;a "n-Pln +-A, 4t- +-a,fa4 >n,n+1 4 nA; r;n+

we - E .3 0 4 -r vs V O6 V f- Ip . .JtA, 1 - t 1 .11... _..LA\S,V 1 USCl 4 _ 3

and exorbitant rates charged by money lenders, has led to excessive indebt-eA-.ess ofP 4the agut> ouainwihhsbe,-^ -4-4ecte byror-.^

laws since 1947.

9. Nowhere is Jordan's economic weakness more clearly demonstratedX t _ : I- Lt_ 1_t_1_n_ ___ _ ______ ___t:_ _ ___ 1_X t.___ __ _ _ ___ _ __ .. __tlhani L1I vllth baLael1l Uo paymlnts Wihl z:shoUWs tlha the ulounry has a v-ry-

large gap between receipts and expenditures on account of goods andservices, over t'wo-thirds of expenditure auroad are Covered by donationsand subsidies. High priority must be given to projects which promiseto save or earn foreign exchange.

10. Development activities have been on a relatively small scaie sofar and have not made a serious impact on the economy. They have consistedlargely of manifold technical assistance projects sponsored and financedby the U.S. and U.K. Governments as well as by UNkTA and other U.N. agencies.The Development Board has been limited hitherto to disbursing Britishdevelopment loans. As a clearing house for various development agenciesit prevents, to a certain degree, an overlapping of efforts but does notseem to be preparing a coordinated development plan or to be decisivelyinfluencing the Government's economic policies. U.S. technical assistancehas done much spade work on projects and will now be followed by economic aid.UNM&A is supporting smaller resettlement projects and stands ready to financemost of the important Yarmouk-Jordan irrigation works on the condition thatthey Will provide new homesteads for refugees.

11. A brief review of Jordan's economic problems and development pos-sibilities leads to the following conclusions:

A. In view of the shortage of known resources to be economicallydeveloped it seems unlikely that under present conditions anyamount of investment would bring about a permanent, large increaseof existing income levels, or permit a settlement of all of therefugees in the country or make Jordan fully independent ofexternal aid.

iv

B. A sufficient number of sound projects might be found, however,to justify an investment program of the order of $150-200 million,presumably to be staggered over some 10 years. Such a programbears promise not only of improving slightly the existing percapita national income, but also of providing employment for thenatural increase of the population as well as for some of therefugees in Jordan# Balance of payments-wise, such a programwould reduce the present deficit on current account and might,perhaps, allow Jordan, after a number of years, to dispense withexternal, purely economic aid.

C. An investment of this magnitude in a small and poor country wouldrequire careful planning and skillful, well coordinated execution.It would have to be financed, especiallr in its early stages,almost entirely from foreign aid. If one could base estimates offuture aid on the availability of current aid it would not seemcompletely unrealistic to assume that development funds of therequired magnitude mieht become available.

D. General surveys of most of Jordan's resources and develonmentpossibilities have either been made already or are being preparedbv the various technical assistance agencies. Few of theexisting studies contain economic justifications of the contemplatedprnnetq The agneral suirvAeing work eonti niim Anrd with rgartdto the most important projects (Yarmouk irrigations, phosphates,Portt nf AnahA) a fiirth'r qt-aqp has hbAn reanhied Anrd ni neezingstudies are being carried out by reputable foreign firms. Inthese Gi rumstaneea the di spntch Of In large Survey tissi on by theBank for the purpose of reviewing all of the country's economicrescources seems Mnn c-es-sav".

E.I)n The P- could, hi4

ve-r, asss4

e+t- JTet"An in +i tev +40 oivM 1% f a

comprehensive development plan which would include all the worth-while py-4-cts ar.d ivnf J th rervc-ieraJti- of +he stepv ren-quir

.. --- pojqcts - in C 1u,h,.. ze - me - t-o -d the.. -ps .a. ~for the execution of such a plan. Such assistance is badlyrneedeA_ anA ft-A be- of -al sew-Ace to Tor-vn... T4t c-I A 1e~~ ~ V~~AL~A .-~ SJJ A %".6 &~ V.1 .dSUJL G&S 5 U %JIAJ.%AA I'

carried out by a small Bank mission, composed mainly of economistsand on orl in fiV Oel ;D D^S mq-iLi r vW>sV-,^6VV ;

surveys.

F. As this mission would have to base an important part of its workon. studi;4s -0.,d out by U.S., U no, ard U.N. agencies, and as itwould recommend an investment program to be financed largely byaid from the above mentioned sources, the success of iLt WOrk wVulddepend on the full support not only of the Jordanian Governmentbut also of all these partWis -who are contrbUutlag to 'the co-untry'sdevelopment. It therefore seems logical that-before sending ami8sion the Bank shouid enquire of the U.S. and U.K. Governments,and of the interested U.N. agenciess as to their attitude towardthis concept of the Bank's role in Jordan.

-r rrTr, f4rTTr-jT'fl'7 AiMn- T"n T T. FE

1. Transjordan was created after the dissolution of the Ottoman| ..9 .! ..; _ . n I _ _ - - - 1 -_ 4.- - - _ _Fiiplre at tuhe end oI VI'rlU :1r I, largely as a CUiP;VIIL Use UVbetwee cU1olic-

ing commitments of Western European powers. Starting as a British mandate,the country gradually became a politically inldependent kingdorn linkedwith rGreat Britain by a treaty of alliance. Economically, Transjordan was,to a certain extent, tne ;ninteriand" OI Palestine which provided marketsfor her agricultural products and sources of seasonal employment. Trans-jcrdan always received a subsidy from the U.K. for the Arab Legion but didnot seem to be given much economic assistancee

2. In April 1950 Transjordan, from now on to be referred to as EastJordanS was amalgamated into one single state with Arab Palestine (WestJordan). Thus the population, estimated at around 490,000 people--some cfthem Bedouins--was increased by sorae 390,000 people living in lest Jordan.In addition, out of the great number of Arab refugees who arrived from thepart of Palestine which became Israel, about 470,000 remain in Jordan.

3. Compared to the people of Iast Jordan, Palestinian Arabs have ahigher proportion of urban population and also more education and skills.On the average, however, they are at present even poorer than the EastJordanians. This applies not only to the refugees who are completelywithout means and depend on UI!W-A support but also to the residents ofWest Jordan. This country comprises some of the most barren and leastself-sufficient parts of Palestine. In addition, many frontier villagesare now cut off from their fields vhich remain in Israel and a certain partof the inhabitants lost their former employment in the coastal area. Thus,even among the non-refugee population of Tlest Jordan, about one quarterhas become destitute.

,4. Per capita income for the non-refugee population of Jordan isestimated at bet-ueen JD 20 and JD 25 per annum, (sayv around p65), which islao'er than in neighboring Lebanon or Syria, and represents about one-fifthof the per canita income in Israel. Reflaees exist on UTNRA rationsaveraging 1550 calories a day and valued at less than ;30 per person annual-lv. Jordan has extended citizenship and emnlovment rights to refugees inher territory and TlTRWA rations are withdrawn only in cases when wagesreneived by refivgees exceed a certain minimum. Refugee labor thereforeexerts a pronounced doimward pressure on wages and it is estimated thatincomes of tinekilled non-refugee workers are in certain cases hnrdlv abovethose of unemployed refugees. There is considerable unemployment anduneremployment even among the non-refuagee nanulation-

5. The settled population is crwTig at +he rate of at leas+ 2 5% Yrannum and the refugee population at the rate of 3%0. This means that everysr ov +Aha -^i n+.yr oa +.n ac-nni - +. otnther 292 2nr 'rrO pie ohn+e Q¶Trr wrtot, e- *oc_ _ _ -. - -ow .-- - -, JI_ ..the number of refugees in Jordan increases by 13,000. There are no pros-pecS, at p-s . Vent , of *, C4., , e part -P +H -^i.-,e ret 6ee pop 4on f4'

Jordan either back to Palestine or to other countries.

- 2 -

6. In these circumstances development must aim not only at in-creasing the standard of living of tlhe existing, settled population andat creating new employment possibilities for the natural populationincrease but also--if possible--at integrating at least a part of therefugees into the econorrj of the coun-try.

-3-

TI. RESOURCES AMM DEVELOP1M1ENT PROJECTS

1. Agriculture

A. Present Position

7. About 75% of the non-refugee population of Jordan depend onagi^culture for _-ei rw.ei ho^9. -; 'MI gh sor..e of the gmonr+. feti+Ale I aIn

are in the hands of big landlords small peasant ownership predominateson USAC V- .6WlO. Plu posi .4.n o .al .. i8 ,,.u, by a -

ance system which tends to fractionate the holdings further and by thecor.side rble6 d%egree ofL mleedes The M1,11ul =tiVaed aaTea Jis g-iven a t s omae85o,0Oo ha, of which, however, only about 565,00O ha are cropped everyyear, thke rest r-emia-M"JiPg 'lu. OutA of L01 talC. c.uUltvated-_ areaCC sOul

32,000 ha are irrigated. On the east the cultivated area merges into thedesert, the dividig line being m1al-rked roughly by the Hjejaz Railwa.Over 9712 of the total area depends on rainfall which decreases rapidlytowards the East and also varies considerably froum year to year. Becauseof frequently insufficient precipitation, as well as primitive method ofcultivation, productivity is low and the average yield in the rainfedland is only five fold.

8. The principal crops are wheat and barley in the plateau of Eastjordan, olves and grapes in the hills of ;est Jordan and fruits andvegetables in the Jordan valley. 'ivestock, mainly goats and sheep, isimportant especially for people living along the fringes of cultivatedlands and for Bedouins. Uhile East Jordan was able, in good years, toexport modest quantities of cereals the new state has frequently adeficit in wheat. Fresh vegetables are among the main exports but arehandicapped by the loss of tle Palestinian market and the long land haulto Syria or Lebanon.

B. Development Possibilities

9. Any plans for economic developnent in Jordan must be based verylargely upon the increase of agricultural output. Direct employment willbe created when additional land is brought under cultivation. A largeroutput of cereals and the possible cultivation of rice and sugar beet onnewly irrigated land wiould reduce the import of foodstuffs and thus makean important contribution towards narrowing the existing foreign tradegap. Development possibilities consist primarily of an increase of thearea under irrigation; there are also prospects of enlarging the dryfarming area either into the desert by range water spreading or into thepartly eroded hill slopes by terracing. It is believed that productivitycould be considerably improved by bett'er farming methods (seeds, implements.fertilizers, etc.) and by the extension of agricultural credit facilities. *

Section III o - r..o..

Section III of this report.

a) - Irri .Lgat.dIdU

L0. JordCan Valley.- Fer U±le EMlU and tropiea± UL±1awe1 Uo

valley are promising good and diversified crops if irrigation water isprovided Irom the Jordan rLver anud its tribuUVaries, i.nc luUding thxe largest

of them, the Yarmouk, before these waters drop towiards the bottom ofthe depression and are wasted in the Dead Sea. Since the Palestine TJarsome surveys were carried out separately for the Je-wish and Jordaniansides of thne valley. Among surveys for Jordan the most important werethose of Sir I4urdoch MacDonald & Partners,* and of the U.S. group leadby irills E. Bunger; they concentrated on the use of the waters of theYarmouk river, which does not flow through Israeli territory. InAugust 1953, U10RWA reQuested the T.JVA. to prepare a desk study indicatingthe most efficient method of utilizing the wlhole of the Jordan viatershedin the best interests of the area. After the publication of the TVA'sreport on "The Unified Development of the UIater Resources of the JordanValley Region" the Arab Technical Committee worked out a counter-proposal.It is important to note that in botl last named studies the area to beirrigated in Jordan within the Jordan basin is the same, 4°0 thousand ha,although the amounts of water to be utilized by this area are estimateddifferently: at 829 million cubic meters by the TVA report, and at 975million cubic meters by the Arab Plan. The entire project would requirepossibly 5 to 8 years to be fully planned, designed and completed. Thetotal cost for Jordan would presumably be at least of the order ofmagnitude of JD 20-25 million (more than H260 million).

11. In June 1953 the Cooperative Departnent of Water ResourcesDevelopment in Jordan (a joint organization of the Jordan Government andUSOQ/J it4) entrusted the preparation of a Ilaster Plan for the Yarmouk-Jordan Valley to the Balker/Harza Group ** ,which has already submitted anappraisal report and a preliminary report on the Adasiya Diversion Dam.This Group is preparing engineering ind a2ronominal studies of the nroiect

and has recommended more detailed surveys relating to topography, geology,

elements of the project not involving Israeli territory or the use ofwater from the JoJran riverr s-uch as the Adas_ya tivArfmon Dam, thenorthern section of the main east bank irrigation canal and distributionsy-stem and the + nst-nnrti m n ot f five diversion weirs on small left banktributaries of the Jordan are regarded by the Baker/Harza Group assufficie.ntly wl I.l"i n1ed to permit ann ernly strnt t Of' rmc+t- rction. Nocost estimates for this advanced part of the project are available at

* Report on the Proposed Extension of Irrigationin the Jordan Valley - London, 1951

as- United States Operation Mission in Jordan, which isthe field office of FOA

*-8* Michael Baker Jr., Inc. Rochester, PennsylvaniaHarza Engineering Cot, Chicago, Illinois

-5-

12.~~. I is .esL+:mA+ hatCX the 4EpleJ,UmeIr.ta,.Lon ov t.2W Yar.,.o-_Jord. project would lead to an increase of the gross agricultural incorne of

I coun` '-y ID XJ.J 10rJ.J..L.o.. kuJ 9 Ill Un accoIdUr,L lo ,i.lepaLr-d *

who assumes that only 40 thousand ha would be irrigated.) To the extentthat the expected income per ha of the newlyr irrigated 1nd is based ona high proportion of export crops, such as bananas, citrus fruit, sugarbeets, rice and cotton, estimates may be overoptimistic considering theexisting high transport costs and the limited capacity of the nearestavailable markets (Syria and Lebanon). On the other hand, however,production in such a natural hothouse as the Jordan Valley would havethe advantage of being able to supply fresh products out of season andmarkets in the Persian Gulf area may be developed.

13. Linked ui-th the Yarmouk-Jordan scheme is the project for adouble purpose, storage and power reservoir higher up on the larmouk,presumably at Maqarin on the border between Syria and Jordan. Accordingto the agreement between these two countries, concluded on June 4, 1953,Jordan is to bear 95% and Syria 5c,3 of the still unknown costs of construc-tion and the maintenance of the HIaqarin Dam. Jordan has the right touse all of the water from this reservoir and 25% of the electric power,the rest going to Syria.

14. Other irrigation projects.- According to studies made by USOI/Jthere are irrigation possibilities for minor areas scattered around thecountry. The total land to become available for cultivation from theseprojects is sometimes given at 15 thousand ha.

b) - Extension of Dry Farming Land

15. Range Water Spreading.- An expert provided by USOM/J exDeri-mented on the construction of earth banks in suitably shaped terrains onthe eastern fringes of the cultivated area, to allow a fuller utilizationof water from sporadic storms. This system may provide more grazing andanimal feed and perhaps also an extension of the area under cealz Noestimates of the total area or of the cost involved are known.

16. Terracing.- Various experts have recommended increased terra-eing of the mountain slones in the areas of Tast and. leN1t. Jordan- i.rhi hreceive a comparatively high rainfall. Certain progress seems to havebeen made in this field nlrenr1v The total area to he gained for culti-vation by this method is sometimes believed to be as much as 60 thousandha. The -t0ra0n cos+. of +.trracin is -m 100 per 1h wheh wTo(lfld seOrn tomake it an economic proposition, considering that one ha of terraced land

pa.ed wit-h olive.s orgrapes wi-ll bri"ne, ir, an an,-l.al e.05s retil"n ofabout JD 60,

* FAQ Report No. 217 - Report to the Government ofthe Hashemite Kingdom of the Jordan on AgriculturalDevelopment by C.H.J. .Ialiepaard - Rome, 1954

-6_

c - Miore intensive use of existing land

17. At least two FAO experts and a number of specialists suppliedby B1EO and USOIVJ emphasized in their surveys that agricultural outputcould be substantially increased by the application of oetter methods ofcultivation including better seeds, i plements and fertilizers. In someareas plantation crops could be grown more profitably than cereals; sucha development would, hot'Tever, depend on the farmers being ensured oftheir supply of breadgrains from elsewhere. As the introduction of suchnew methods and improvements will depend on agricultural experimentationand research, a Research Section has been recently established in theDepartment of Agriculture and an Agricultural Experimental Station wasstarted in the Jordan Valley.

d) - Animal Husbandry

18. I'leasures to improve the condition of Jordan's livestock weresuggested in a report prepared by a British expert and US014J has providedthe services of a livestock officer who assists the Government in thisfield. The Livestock Committee of the Developmenit Board worked out a5-year program of livestock development.

e) - Forestry

19. Up to fifty years ago most of the mountains of Jordan werecovered by forests with oak. pine and iuniper trees prev2iling. Theseforests have suffered frorn overgrazing and overcutting, especially duringthe wars. At present only about 70,000 ha of land are covered by well-stocked state forests, but at least another 75,000 ha of open scrub ordenuded areas are available for afforestation.

20 Penommpndti ons for a long-tern forest nrocram were mode Tnainlvby a BIME0 Forestry advisor *. They were largely accepted and, so far asgoat control ni -oncerned, legislation has been passed alreayr. TheGovermnent's Forest Department being active and efficient provides thenr1-n-1ni.nstAtikae flyanmarmok forP a pan'lmn er -nnn.tsinn nf fny--sts.m TNnnnni -*requirements for a proper forestry service with a modest program ofafforn'ta+Atwio-.ar givn by the B>E e -et at a tot-al of nn o.5 millionfor the next 10 years, of which perhaps 50% would be covered by revenuefrome forests. A more .wibi- nA r +phn

head of the Forest Service, with an FAO expert, involves an averageanrr'.ual4 ,v.resn+ of abour,iv+ Tn 0.n1 rilion over+

4-%N-.a.,

of the expected return are available but the opinion has been expressedItr, +I,a +I.a.' 1 P +i ,n o m n,,.Vn' a 4 44< +vA .,sA ,..a-.a,, 441.. + _ 4'4Da. n 'IAn rQ

. W..%- CL. .4 4J%FL A. UJia '.d.~ W* ~' L Q US U a.I. YV v )' 0

the new forests may start bringing net profits. The general dearth oft.er prvailipgir, the,de st eems ^ eco nmend hig=r"A 'LorestL

development, which is also important to prevent further soil erosion.

114 t P a..F. r o 4o , 0.n.sL=l papers preparedr a A"f.Ac r

the British MLiddle East Office.

-7-

P. Minine

A* Phosph2tAe

) - Prven+. PoQiti nn

21. Deposits were ri% nmrnrer in f'nur places: at Rossifa nenr A,mmanaat Al Hasa, at Matan and at Naqb Ashtar. So far only the first nameddeosit hoe hoo on;. - A,nnii&l pntrr1+.; on et. Drseifadur zl-< 1953 wasaround 50,000 tons of phosphate rock and is increasing. The phosphate rockn.s of high quali+.yr, con.tining 70=8Odv calciuiuiA phoshate. As negotiation.swith a foreign concessionary company broke down in 1952 and the privateAn,,n .+ n .b4¶¶n n-+4 grou +n ,,l4 "an ke I -1rnA - + 'a.1 +P^e -- 4

Government took up some shares and now participates in the operation. Thereorganizued co.,.a-1MUy aRt, 1-1oseia ho0pes0 to 1inc.rease theU production1 UV atL least100,000 tons and eventually to 150,000 tons a year. Nwa mining equipmenthas bever oude,ed Wan shoulube insUta"'Lled d"-g U 15 ,4

22. unti nlw the greatest obstacles Ltu .lu-Feaus pu-odwu1iu s seenrredto have been the limited capacity of the railway which carries the phos-phate rock to Beirut and the nigh cos'. oi. transportation which absorbsabout three-fourthsof the price f.o.b. Beirut. The principal buyer ofjordan'sphosphatesaso faF has been Italy. 1N1arkets in Germany and Hollandare being explored and shipments to India and Japan through the Jordanianport of Aqaba are made on an experimental scale. To encourage exportsthrough Aqaba the railway has reduced its fare which now amounts toJD 0.95 per ton from Roseifa to the terminus of Naqb Ashtar; to this,however, the cost of truck transport from Naqb Ashtar to Aqaba and thecost of additional transloading must be added. The cost of transport fromRoseifa to Beirut amounted in 1952 to JD 2.43 per ton.

b) - Development possibilities

23. Jordanian phosphate reserves and marketing prospects had beensurveyed by engineers of an Italian group wJhich was potentially interestedin obtaining a concession and by experts supplied by U,S. TechnicalAssistance. As far as reserves are concerned, even estimates for theactive Roseifa field range from 4.3 million tons to 16 million tons andmore. l'1ith regard to the Al Hasa field 26 million tons were frequentlymentioned but according to the preliminary results of a British firm ofconsulting engineers * these estimates may have been too high. Thefinal report of this firm is expected in July of this year.

* -acKay and Schnellman, London

24. Should eprnorts increase substantially dI i ffi ii It-i may nrisein ma.rketing the product in view of international cartel arrangements invhi,-.h Jo-rdan hna nro par+. It. is helie.edr tha-rvt. m.'-t1ca.st o f' Suez rTni cnd..

be more easily accessible. This adds momentwui to the concept of ex-porting, +,phosphlates through the -T,.A- iia-, por+ of Aqnha. All +t1he thr

non-operative phosphate deposits are much closer to Aqaba than Roseifaand~-_if e--liloitation shoul b11- P"n,d pr+,i^.iA-- -- + -Pv.le.o

fl~~A4.t c4 JJtt 'C.VJS.lU ~ SO A.ISAS-J j.J. 'S,O .U4L"9

-IA V OSVV-.LV wJS

transport facilities to and in Aqaba is apparently a necessary pre--A--,,4 _- + @e O- 4-1- _- . A -- ---- 4 _ r4- T1 -- -- 4- - co #ns_"er| re,.LAJ ~J4 i Ll:lJ4 UCV;' U VU.LVJ.AI4 . ± 1 J IJJI.; . UV W I

the investment reouired for the new sines jointly with the investment inroadus needed uv open up tlhe 1-e i e'1d 2-L ± ID II= the cess 1o lai ng

facilities in Aqaba. A study prepared by the Planning Division of the

of which JD 1 million for the mining installations and the rest for publictranSporV facilities. LILLS L ot ihe basis of 2?O0,000 tons yeauly fro0r1 Ai

Hasa. It is calculated that the cost of phosphate per ton f,o.b. Aqabawouid work at about JD 2.5 while the price is na above 3D 4 per ton.

25. A substantial increase of pilosphate exports from Jordan isgenerally regarded as the quickest way to increase the countryfs foreignexchange receipts. In the future, domestic production of superphosphatesmight become possible. Sulphuric acid, required for this production ridghtbe obtained from locally mined gypsum. A German group,* interestedin the erection of a plant in Jordan, reported favorably on this project.

B. Dead Sea l'inerals

26. These minerals., including potash and bromine, were exploitedbefore the Palestine l'iar by the Palestine Potash Camparny which in 1930was given a 75-year concession. During the wrar the installations werecompletely destroyed but since then a new company started exploitationin Israel on the southern end of the Sea. Jordan noi contenplatesstarting exploitation on its own. The Phosphate and Potash Alarket Sur-vey for Jordan *-, sponsored by TJ.S. Technical Assistance recoiuiends thatJordan proceed with plans for the developme.it of potash production fromthe Dead Sea, so that projects should be ready at a time when they couldbe profitably implemented. For the tiLae being, however, there is aworld surplus of potash and th-e price is falling. This situation wouldhardly permit Jordan to compete wit other producers, considering inparticular the high transportation cost. It must be remembered thateven when exports went through the nearest port of Haifa, half of thecost of the product was accounted for by transport. Shipments via Beirutor Aqaba are bound to be even more costly.

*y Farbenfnabriken Bnver, Leverkusen and rluxgii

Ges. Fuer Chemie und Huettenwesen m.b.H.

7F,- James A. Barr, Sr. and I.E. WeberWashington. L9q3

-9-

C. Manganese

27. Mlanganese ore deposits have been discovered in the 'Jadi Dana insouthern Jordan. A preliminary report * estimated that 106,000 tons wereavailable for mining and expressed favorable views about the economicsoundiess of the operation. The Jordan MIanganese Company was foundedin 1953 by private domestic capitial with some Government participation.It has since been discovered that copper content makes the ore of doubt-ful commaercial value; however, studies about the prospects of exploitationare being continued.

28. l'inor known mi.eral resources are clays for pottery, silica sands,ochres, bituminous limestone and raw materials required for the manufac-ture of cemert. ilarble is ouarried near Amman. polished locally andpartlv exported.

3. Industries

A. Present Position

29. Existing industries in Jordan are limited for the most part to+.ho nro-stina e nrriemItirn n' proct.s: There in r c ThAnt m 4n_ a

few machi e and metal working shops, cigarette factories and other consunergoods maifacturing Tn manv of thp. hnYTPrni on handrcrafts.

test Jordan his souvenir type industries, manufactures of pottery andglas.A em.a11 -ho',w f,..v,iv,,ty wa reer" escblse 1vrr DPal i-v>qr.s nea

Aman.

30. Iuhile Jordan has abundant supplies of manpower there are compara-4ave+J- Ww rw mter-ls on which J-d-str-1 '-1_ devoren ol e b.asedU.LV Q .LY VW 'L OJ 1v Ij .0SL. 0 VAL~ WVL.J 14 JJS,.4" LA. .J.CJ.. %A%W U ALWP L u11 %.;U"I.4.U v J~u .

and the high costs of fuel and diesel oils to generata power are a further

U1=UZ.LJ.t11U UV 41UA0UL_.e.. Ut-V .L P i 1!. W

31L. SA[Ir Glie tLhei iniure r1ectIj. .1iLLuslriu±a.L vunruures, bei.L.lng Ol a margin-ally competitive nature, failed to attract sufficient private capital.ThnIs induced te Governument to Uar-ticLpate Or tO contiemplLate participatLonas a minority shareholder in such enter-prises as phosphate and manganeseRmining cement and even Aqaba fisheries and refining oQ olive oil.

B. Development possibilities

32. Apart from the already mentioned concept of chemical industriesbased on phosphates and gypsum, the major industrial projects contempla-ted consist of the generation of hydro-electric power on tne Yarmouk andof an oil refinery. The refinery project has been already reviewed by anumber of firms .** and by a Bank expert; Jordanian officials seem to have

* by W.T. Denson, M1ining Engineer

7-' Head ,'rightson Processes Ltd. London. Socony Vacuum Oil Co. inc.S'l4 Co Also aL G.aanL .L. w.hose report 1.s r.ot aval4.aL.Je

- 10 -

the greatest confidence in tne last mentioned source. The project seemsattractive for three reasons: (a) petroleum products, which at presenthave to be hauled Dy truck over at least two mountain ranges and a dis-tance of over 200 miles fromn Beirut, become prohibitively expensive;(b) Jordan has to spend over JD 1 million of foreign exchange annuallyon these imports; (c) crude oil for a refinery could be drawn from theTrans-arabian pipeline which crosses the country. These factors may beoutweighed by the following considerations: (i) the difficulty of dis-posing within Jordan of such necessary by-products of the refinery forwhich there would be no local market; (ii) the loss of annual paymentsof s6OO,000 received at present by the Government from the Trans-arabianpipeline in lieu of the right to draw crude oil; (iii) lower costs ofimported products from the new AIOC refinery now under construction inAden to be carried by tanker along the Red Sea and landed atAqaba. Accord-ing to a calculation made in the Jordanian 14inistry of Econorm * a petro-leum refinery in Jordan with an output of 100,000 tons of petroleumproducts a year would cost around JD 1.2 million (4) 4 million). TheBank'ls expert estimated the total capital investment for a refinery ritha 150,000 tons output at JD 2.7 million ('7.6 million).*-,

33. Smaller industrial projects urnder consideration include a tannery(estimated investment about JD 100.000) to process the considerable supDlyof domestic scins which are now exported to Syria and Lebanon at lowprices while leather is among imports from the same countries. The con-cept of establishing a modern olive oil refinery for Jordan's averageannual production of 6,000 tons of edible olive oil was surveyed by anumber of experts *8. Recommendations wfere favorable for the construc-tion of a refiner. preferab'v linked with a soan factory. a margarineand oil hardening plant anl an oil mill. No cost estimates are knlon butsome o=' the enipinmnt needed is nlreaqiv on order.l Plants frn- thepreserving of fruits and vegetables are considered and may rate high

should increase. The intended erection of a local brewery might lead toa small swBrin of fooreigr. ex9.n

i.Transpor an.d GComm-nu.nications

A. R4ailways

J'4* The S* fc8 of the PJ. VA sti Wa nd tS VolGCir boycot o P~JJ'.~

Israel hsave blocked Jordan's traditional and most natural transportation

developed. For the former East-West direction, based on Haifa, new North-

large extent by what remains of the Hejaz railway, dating from the time

* Economic Planniir~g Division: ttProject for tile Oil Refineryin Jordan"'.

-<As~ Prepot nn Pet+nte,m- T!efA etv Pro.tcs for' Ci annd J',n (Revised). Universal Oil Products Compan~y, Des Plaines, Tllinois,

A- 1953.-

** Including E.H.E. Halewyn of the UMTAA and Harry E. Drobishpa consultant employed by u.S. Technical Assistance.

of ltih UL'toUIua±± VJLPp .ihiI tUlavests Ahie cULIU- y lVUIoI t1}- Sy1r1W1 Uorcdernear Derata to WTaqb Ashtar located 367 kim further to the south. The rail-way erds there and t-le re-mlaining 8h kU of steep descent to t-we port ofAqaba have to be negotiated by a road, a section of which is regularlywashed away during the rainy season. TJe capacity ox the narrow-gauge rail-way is limited and the 230,000 tons of merchandise carried in 1952 wereprobaDbiy close to the maA mum that could be handled by the railway withoutfurther investment.

35. The Development Board's 5-year program of expenditures foreseesiD 1.6 million for railways including the purchase of 14 locomotives, ofrolling stock and the construction of workshops. An overall analysis of theshortcomings as well as of the development possibilities and needs of thisstretch of the railwiay which is in Jordanian territory does not seem toexist, It is not lnowm either whether any study had been made of the rela-tive merits of a rail:ay or road development program on routes where bothmeans of transportation are competing or might coimpete in the future. Suchstudies should probably be made before further investments take place ineither roads or railways. The railway studcy should also try to ascertainthe possible effects on the Jordanian railway of the reconstruction ofthe railway line and services between Matan and iMiedina, which is allegedlyplanned by Saudi Arabia. WTith regard to the already mentioned missing linkbetween Naqb Ashtar and Aqaba, a decision has to be made as to whetiier therailway should be extended, the existing road improved or whether bothinvestments are necessary. It seems that the British consulting firrma whichstudies the Port of Aqaba * has been asked to survey the above problem aswell.

B. Roads

36. The development of the road system has not kept pace with thelarge increase in motor traffic. The roSd net is bAtter in the north ofJordan and in West Jordan thar in the rest of the country. The main needsara for; (a) a stronger linking of the .ortdnn Vnalley, anrd esnMiml)lr ofthe Yarmouk irrigation project area with the rest of the country and (b)the oerning un of the south of Jordan in nartinular if nhosphates;manganese and Dead Sea minerals should, be exploited and exported throughA.qaba,

-7. e;=vo oro!. nYmYin+. hna +Irgin -, 7o ! 1 ^ -ii 1-s .(r e+ n-; +A oh

Development Loan (see below) was largely spent on roads and substantialpa- ^of +1it 4foI1Pw r;" la as well as ore% f _,iIh of 4I.e TTC 11 e m.

aid program seem to be earmarked for the same purpose. USOIJ has made astudy of a !'Road Program for Jordan".

_ Rendel. Palmer .T.itton. London.

*Rendel. Palmer & Tritton. London.

_ 12 -

Ci A -vat^O

jg A ___3___ ____

_38.* VUw-dsnll has t-wo pWV 4.;-LV±A. c tiv LLJJV'L-, , oline r,eCaU Je-UsalmJi

one in Amman; both are being enlarged. These airports are served by a11L,iUJLt-.L- V.A C. F L. s L.WV IJ.L Wi"I.Ul cll't tJV.LUcU1±±CUI J).L..-U d-L.L ZjV1.LLeSb

exist with Egypt, Lebanon and Iraq. The importance of airline servicesfor Jordan is enUhanaceu by the tact that the COVUntI>y iS at presenLt prettydifficult of access by sea and land transportation.

D. Port of Agaba

39. Jordants only direct outlet to the sea is at Aqaba at the head o'the Gulf of the sarme name. This port has been used for some t1iie by theArab Legion and is now handling increasing quantities of comnercial im-ports as well as certain exports, loaded and unloaded by lighiters, (Inspite of the makeshift arrangements some 70,000 tons of goods were movedthrough the port last year)j Aqaba is about as far from Amman as Beirutbut the great attraction of shifting trade to Aqaba lies in the cutting offoreign exchange expenditure on transport to and from Beirut which naoamounts to the equivalent of well over JD 1 million annually. Accordingto soxi-e studies, once the port is developed, transport through it issupposed to be cheaper and quicker than trarsport through Beirut. Theselast points should probably be carefully checked to see whether sufficientconsideration had been given to the fact that Aqaba lies off the mainshipping lines.

40. The Aqaba Port Authority, an autonomous body which administers theport for the Government writh the assistance of a U1.1e. expert, is carryingout two schemes of port expansion; (i) a short range program of smallimprovements (suclh as a transit shed! cranes etc.) totalling JD 100,000.(ii) a long range program for major port extension which involves buildingnew deepwater wharves for direct loading and discharging of ocean goingvessels. Stage one of this program which is to cost JD 0.8 millionincludes the construction of one berth for general carEo and of a snecialberth with a system of belt conveyors capable of loading about 400 tonsof phosnlates per hour. The British firm of consulting engineers RendelPalirnr& Tritton prepared a report containing a master plan for present andf'uture dimrvopnnimnt of the nort,

),. The economic iustification of this cnnrPrtiuRe1v modest inst_ment program for Aqaba would be stronger if phosphate production shoulddevrelop inn +.he sou_th of the comntry or if lnrger earnnts fromRoneifa to

markets east of Suez should prove to be feasible. Both the priority ofroads in theP suth nf the runtry and the deeiopment of Aqaba hinge there=fore on the economic prospects of new mining developments, which are now1e uvy. Th1Y' aWY't isa O+:"^nr7 A "+.,y r in i^r. o +-1= - r . or _f J.v I-.s

X%* ~ 1 4 V 4. fl_a.-.bF.-I'' ---- -4. - - - .1 -* Jm) 14 W U VWA%4 .L

investment program emphasizes the importance of overall planning for theCrJln_v anA the r,eed --- A P a ^1 _nPrdir.atior ( of- the -4

.a -A. --Aprojec -ts .L1JJ. I. 6.1_ W.4. .IALVL J.WJU O U V dS4

projects*

- 13 -

42. In viSW OI ti-n poi.itical condiuions in 'e wnole area thakB revi-val of Jordanian transport via Haifa in the near future is unthinkable,even if that port possessed excess capacity. There are not the slight.estindications that the boycott of Israel by'Arab states should be relented.On the other hand, hcaever, any planning for the rnore distant futureshould not exclude the possibility of the reopening of Jordan'sshortest and most direct route to tne klediterraneano

E. Telecommunications

43. The general telephone system was the subject of a basic studyby UIMAA technicians. A program for expansion over a five-year period ata total cost of JD 352,ooo to cover additional lines and new exchangesin various cities was proposed. It is somewhat clWracteristic of thelack of understanding of IBRD development policies which prevails inJordan that this was the only project so far which has been recomnendedby the Development Board for possible financial assistance from the Bank.

5. Tourist Trade

44. Jordan has riany antiquities, places of pilgrimage and of generalinterest for visitors. Historical rem-ains are, in fact, among Jordan'smost important present potential income earning resources. Tlhe countryincludes lTithin its boundaries old Testament lands, Jerusalem--a citysacred to three religions--,Bethlehem, Jericho, thee Jordan river, theGraeco-Roman city of Jerash and. the rose red city of Petra. In spite ofthe absence of propagalda, of bad roads and inadequate hotels, as well aseeneral nolitical tensions in the area, about 3hO000 forei:-n visitorscame to Jordan in 1952; their estimated expenditure totaled about JD 1.2million- Tt seeRr nbvious thnt by imnroved amprlities fnr vi-1itorq andia proper publicity campaign the nuaber of foreign visitors carn be largelyincreased. TSONM/J sunplied an ex,pert wwho in association With JTordcinni,officials studies a program for improving facilities for tourists,inc.cudinn better access roads, hotel accom.modations, rehabilitat±.4 AflA

montuments, improvement of sanitation, etc. No cost estimates are avail-able but it. Voldl speem thnt this is a fielri in wbie-h a conrnatJirP1modest investment may give excellent returns.

1. Public Finance

45. The following table gives a sumnary of Jordan?s budgets forthe last four years.

(JD rmtlllon)Fiscal year (ending March 31) 1950/51 1951/52 1952/53 1953/54

(Actual)j 'fstimates )

RECEIPTS

Domestic revenues 4 .4 5.2 5.3 5e1Foreign subsidies 5.9 6.5 7.5 8.2

TOTAL 10.3 11.7 12.8 13.3

EXPENDITURES

Ordinrry ) ) 4.9 4.6Defersa ) n.a. ) n.a. 7.° 8.0Development ) ) 2.4 25

TOTAL 9.1 13.7 15.2 15.1

Surplus -+i Deficit l + 1.2 - 2.0 _ 2.4 - 1.8

1,6. Tndirect tAxes in the form of cu$toims and excise duties aeonnnunted for up to 60/a of total donestic revenues. Total annual tax revenueamounted to annroximately m i nper heard of the non-y-efuaugee -nnnfla +t-i onwhich corresponds to 17% of what is believed to be the per capita nationalincome. This would seem to be nuite high:

0-7. Foreign subs i1-. cnonsiet pi-i minrilv of' the TRr-ish n11hqiA,y ff-or

the Arab Legion but seem to include also smaller British grants forcgenera-l h1iiet0+.,?nr i-pio. - Itisno T+. ica n. whethi+.er t " s+hen oe 1°53/

54 total figure for foreign subsidies includes smaller contributionsreceii-ved nv t+In+ ye^pnt frory ^.ip ot-her CZ+n State P^-or +r1 v r.6f 4.1- '~ ~J ..& 7%Wa * -4'*- -6. J1 V- L.- W- -'. W *'..4 4 a .&44 6 ~J. U

Jordanian National Guard.

48. During tle last two fiscal years, on the average, about 53% oft.o4 l experiW-e -re.t fog4 'tene,abu 15 fo- deeo,u. _ L - 0ufJ'.J aJL 4ILJ 1 u .AJU.L W14L, J.LUJ..LL' Si ctj JVUU 4.A.~ 4LV.L- UU~VW UjJIUfLF11AUj ZiUliMt lJo

for security forces and around 4% for social services. Defense expendi-ture icl;udes pr' mar.y E Arab Lseuegio nl uLuD albu boiri oa±..L aUa.Lb±onaL

forces. Developmenit includes expenditure of the Development Board as wellas other expenditure by the Government, generaillr of a developmentai nature.According to some estimates about 46% of total current expenditures goesfor salaries and wages.

- 15 -

Lo9- The n ,; -deict ofp then las t.>xe .yearsn were- fiNMAnc b Rrit4 sh;+Adevelopiment loans (see below) and by drawings on the Government's cashbalar.ces .

finances. U1hile, on one hand, revenues cannot be very much increased in-rXe;w o° wthe estir6 lvw- U1comeL leWvels, a- reductilon ofL we**erULUd-Ues WV "o

almost inevitably lead to a reduction of Government personnel and thusUendU UV sL;IUdU WUyW1iVuLV.lR:W4, 11t; UA%;t:1.LS VV, UU.L$& U L U;U. bULLL-y ±V ;VUtU5 ±1

the small country is another consequence of the unsettled political situa-tion, 'the great nun-wer of reiugees anu frequent inCLidents along thearmistice line.

2. NIoney and Banking

51. There is no national bank or central banking systern1 in Jordan.The Jordan Currency Board, which was set up in London in Septemlber 1949,has the sole right of note issue. Other n-`ain functions of the Board are:(a) to establish a Currency Reserve Funcl and to keeo it in such manner asmill ensure the convertibility of the Jordanian currency into sterling;(b) to invest its assets in approved sterling securities issued by govern-ments other than the Hashemite Kingdom of the Jordan; (c) to establisha Special Reserve Fund to meet any losses incurred in investing the notecover.

52. Jordar. belongs to the sterling area. The monetary unit is theJordanian dinar (Jr) t;hich replaced the Palestinian pound on July l, 1950.The dinar is at par with the pound sterling and is backed lOOC 'oy sterlingsecurities and sterling exchange. Notes cannot be issued against commer-cial paper or government obligations; it follows that it is impossible inJordan to create incomes by inflationary government financi4g. Import sur-pluses must be financed within the country either by spending the broceedsof loans from abroad or by sperding the accumu1lated savings of the people.Certain amounts of savings were available in l9h9. largely in the f orm ofassets brou,ht by sorme of the refugees, but are probably exhausted by now.A special study concerning the adaptability of the Jordanian monetarvsystem to the requirements of an expanded development program seems wellworthwhile. In this connection Jordants recent request to the T17'forthe services of an expert in the monetary field seems ve*r timely.'

53. The Ottoman Bank (British and French owmed) acts as the officialgovernment banit another foreign bank is the British Bank of tha Ticiddle

East. the Arab Bank is the only domestic bank; it has its headquarters inpAmann bhut has hrannchAe Alsn in nth.r Arnbh onnnt'ries The omhiv.rn hn1mincesheet of the commercial banks operating in Jordan for the end of 1952sqhrwoe total '14iabi+Atisan. assets balan.ce=at n+Jn 15.6 .tnll-ino-. Or.1 +-he

liability side paid up capital and reserves amounted to JD 3.2 millionan.d curren^t accouXnt de~os ts to nn 8.0} million.. iA".4on.g assets, advancesamounted to JD 7.5 million and discounts to JD 7.9 million and di$countsto nI L.9J L4r,'J&.l4...J4

- 16 I

54. There are two specialized banks in Jordan with a quasi-govern-mental status; the Development Bank of Jordan and the Agricultural BanK.The former has an auT6orized capital of JD 0.5 million. (JD 50,000 class Asnares reserved for private shareholders--of whicn J1 30,000 only havebeen subscribed so far, entirely by the three major banks--, JD 50,000class B snares subscribed by the Government, and JD 400O,O0W class C sharessubscribed by UlIRWA). A 5% dividend is guaranteed by the Government andU9I'JRWA while no dividend is payable to class B and C shares. The Bankstarted operations early in 1952 and for the year ending I45arch 31, 1953had a small loss. The purpose of the Bank is to grant medium and long-term loans for agriculture and industry, to take up equity participationin enterprises and to provide technical assistance to potential borrowersby enlisting experts from the various external assistance agencies opera-ting in Jordan. It can acquire real estate but cannot accept deposits atinterest or lend to the Government, The Agricultural Bank has its capitalprovided by a portion of the proceeds of the Land Tax. As of Narch 1953loanable funds available to this bank from its capital as well as frominterest-free Treasury loans totaled JD 440,550.

55. Another lending agency is the Arab Land Company established underthe auspices of the Arab League with an aEutorized capital of Egtptianpounds BE 1 million (of which iE 6ho,ooo were paid up). This Bank, whoseoriginal purpose was to counteract purchases of Arab Lands by Jews, is nowfinancing agricultural and construction projects in Jordan and in Gaza.Finally. the Jordan Development Board makes also some direct loans to in-habitants of the border villages in West Jordan for land reclamation andsimilar projects. As all these facilities proved to be insufficient. alarge part of agricultural credit operations is in the hands of moneylenders who, even on secured loans. charee from 205< to LO% interest(Bank interest rates range from 65, to 9%).

56. The heavy indebtedness of the mass of small farmers led thennvernment- after the excerptionally s crnn fni1lre in 1914?, to theimposition of a moratorium law prohibiting the seizure of mortgated agri-c-ultalv1 lr l n reduci.ng in.t-rest rates. This n%r%yna +w, to niw ir.1951 but, after another crop failure, was extended for several more years.It was recently somewhat modiAied in the in+trest of the creditors byauthorizing foreclosure under certain. conditions.

57. The main problems in the field of agricultural credit are: to14e,h+te,v the e,4-stir.g debtv burdeni- or. *4e agiu+ua populaton, whc is

estimated to total,well over JD 3 million; to supply new seasonal as wellas ,.eAdi,,. a.d 'o1r-terr,. nh%A-;ts. T -- ^ese ae ,.ort.

4 4 -a r.ot4

of4 4-_~Q 1-4uTs%AiL 6 CLu&U0oYALJ,-WI0WAa+ V U41J.L.AIJJ.*CULy 0.0 JL&0 U SJ.L vimOpossible lines of development in agriculture already mentioned reauireVIgV LVhUeVS1U WJ. iVS of"ik aIUi L. %zC%jJ.LLO IJ.,s ocJital VJ.MA. o LA4hi..4 .ZW.L I Lbe

available from loans. The following projects are considered: (i) reor-ga.tio.L ~ o -.gricult 0.al. BariA Car.d perhaps .Lbsuo of the D.-Vedvlo-pieni]

Bank and an increase of their loanable funds; (ii) wider application ofdirtct Loans for ViLlage UtVelVpMnt,1 Which had gxven good results;(iii) making loans through cooperative societies which had been active in

West Jocrdan before the Palestine War and eventually may spread to otherparts of tho country', These projects were surveyed by the DevelopmentBoard and BINO0 experts and certain allocations for them are provided inthe 5-Year program.

3. Z, Lo~erisal financeU

e 8.l The deedec ofP To-da3- coo.2or ;e i s lal

reflected in the balance of pan-aents. The following table gives balanceOj.jy u i acc ±UV 4W1-- 'I -. J.-.L of pay-ment's datoa f0or- W--e lastZ fo-- yeaaL'5*

1950 1953

(JD millions)I Gurrent Ac-oun-t 1g50 1951 152 ly>13

Debits

1. Importsa) Commercial 12.40 13.66 14.27 14.36bj UMRWA 1.08 2.52 2.58 2.53

c) TotA1 i-nnrts 13.18 16.18 16.85 17.89

2. Other expnendi+.tue abroad 1,23 1 1.35 1.76 1 77

3. Total goods and services 147o? 17.53 18.61 77BE

Credits4. Wo- aA re-e g -1.95 2.0 2.i .6L4 4-41J4. ~ flAA J.; U -V04 voJ.LJ.C 0VJ L

5. Other receipts 2.06 2.54 2.86 3.33

6. Total 4.01 4.54 4.97 5.99

7. Balance of goods & services - 10.70 - 12.99 - 13.64 - 13.67

Unilateral TransfersB. Emigrant remittances 1.56 2.03 2.30 2.359. Official transfers 5.36 6.91 8.67 11.85

L-. muvaj. to 81sluSrs 6.92 O.>14 W.9 14.20

11. Balance of Pavmentson Current Account _ 3.78 _4.05 2.67 , 0.53

II Capital Account

12. Private capital .... 0.25 0.12 0.l013 (Qlfficil n 0 1 00 .... 1.05 0.7214. Other official capital

transation , * *. 0,53 0.72 0.2015. Change in foreign exchange

an increase in holdings) 3.59 2.81 - o.67 - 1.6716. Total eip+tal (N-Jet) X, 59 3*59 1.22 - 0.6517. Errors and Omissions 0,81 0.46 1.45 0.12

- 18 -

-'-Item 7 in thne above table indicates tne extent to wnicn Jordanis unable to cover its current foreign exchange needs by the export ofgoods and services. in spite of a slight but steady increase of the coun-tryls foreign exchange earnings (item 6) the balance of goods and serviceshas the tendency to deteriorate. During the past 4 years earnings fromcurrent enports of goods and services covered on the average not more than26,% of the current payments for goods and services (and not more than 30%pif URWfA imports were excluded). The rest has been financed by assistancefrom abroad or by drawings on Jordan's foreign exchange holdings.

60. Under t'e hieading of Unilateral Transfer are shown all receiptsand p.Tnients which do not involve the exchange of goods and services.Official transfers include the total expenditure of UI'NRVA in Jordan (in-cluding the value of goods imported), British expenditure on the ArabLegion in Jordan, and the local expenditure of U.S. and other technicalassistance agencies. It will be observed that unilateral transfers in-creased markedly but there still remained deficits in the years 1950-52.Only in 1953, when t'hese transfers increased further, were they sufficientto cover all the foreign exchange expenditure and leave a Snall surplus.

61. The cumulative deficit for the years 1950-52 was JD 10.5 million.It was apparently covered uD to JD 2 million by the Portions of Britishloans disbursed during these years, up to JD 5.7 million by drawings onforeign exchange holdings,and up to JD 0.4 million by private capitalmovements, while the remainder can be explained by errc;-s and omissions.

- 19 -

77 VrT.1?DsTA T A Q AQCTATC T A NTr,. TTr ' T) Dv ¶ t'ri i p- DT A T,h1TTTT.TP

G2. ±44t4 h be.L entioned ± C'.Ly .LtV D.nLte. - g,.A frLfes aLr,ost

the entire Jordanian Army budget and, to a small extent, also other bud-getary exk-.ert-4.diture^,nd turl.1-604 Pro-WvuAt; ZLuppJlJx;.s forL th ,a-.nreoPalestine Arab refugees in Jordan. All the remaining e:xternal financialanrd techical assistance is geared to developmunt and such developmientbplanning as exists is linked with the utilization of funds and servicesI'tUUlIVUU 1 1'V4l1 dUl-Quau

63. The main sources oI this assistance are: (a) the United Ain_dominterest-free development loans now channelled through the DevelopmeintBoard and technical assistance from staff members of the British i4iddle3ast Office (BMO); (b) the United States througlh technical assistanceprovided by the United States Operations -Iission in Jordan (tuSOuI/J) and--most recently--also through economic aid funds to be channelled throughthe same agency; (c) U-M5RWA through funds allocated for resettlement ofrefugees and handled by the offices of this organization; (d) U.NTA throughthe services of individual experts attached to the Jordanian Government.

64. The United Kingdom has made so far three development loans toJordan: i 1 million in 1950, E 1.5 million in 1952, and i 2.3 millionin 1954. 1,hile the proceeds from the first loan were spent directly bythe Government (mainly for the construction of roads and minor irrigationschemes) the greater part of the second loan (E 0.93 million) and theentire third loan were made available to the Development Board.

65. This Board was created by snecial legislation in Mlay 1952 andstarted operations during the same month. Its purpose is in particular:"to look into the plans for the economic revival of Jordan, to coordinatethese plans, and to determine the priority of schemes and consequentlyto submit yearly programs to the Council of 1M.inisters". The execution ofprojects is in the hands of the various ministries but, with the approvalof the Council of itinisters. the Board may also enter directly intocontracts with individuals, firms or Jnstitutions for the studying orexecution of particular projects. The Board is comnosed of nine members.including the Prime Minister as chaimrimn, the iiinister of Economy andReconstruction as Vice-Chairman, and seven members appointed by theCouncil of IvIinisters. It has a British Secretary-General. Among themembers are renresentatives of UOMT/J and of INRIJA.

66. Durin. the first year of its onprations the Board spent Tn

570,000, of which:

JD 199,000 on roadsLJE9jOOnon n- reieAf, >nnd 1oas to frontnie--r *v4l-Vaoe

80,o00 on a loan to the Hejaz railway50,000 on the subscription to the BTRD19000 on the Jerusalem airport7, oVV

66,000 on other projects and administration

- 20 -

TLheG f -Lrst rep%cr 04 theo Boa rd expesses regr,et at the sl.-, rate of ee,

diture which is attributed to the liriited capacity of governmentalagencies. Th s MI ' annual re- r of 4Uvo- 0o -is -4yavailable, but apparently expenditure in 1953/54 totalled JD .1.2 million.

67. For the five years beginning in 1953/54 the Board has p^^epareda plan involving an expendizure of JI 1.5.2 M-ii.L.ion to be financed entirelyfrom British loans. Further financial support for development wfithin theabove plan has been envisaged in talcs between the united Kingdom and theJordanian Governments. It should be understood that the Board's programis only an interim program of expenditure and not a development plan.It does not recommend arny general policies with regard to the allocationof all of the resources which may become available for development.(If the proposed five-year expenditure should imply a judgment on Prio-rities the question would immediately arise why some 80% of the proposedexpenditure have been earmarked for transportation and only 5e for totalIvestment in irrigation, agriculture and forestry.) The Board's programdoes not recommend any economic and financial measures to be adoptedduring the development period. Nor does it attempt to relate developmentto the country's absorptive capacity.

5-Year Expenditure Program-1953/514 - 1957/587

Proposed exDenditure by main groups

(J& 1000)

Roads 8,316Loans 1.623Railway improvements 1,614Airports 1,3314Port of Aqaba 978Irrigation k60Agricultural improvements 207Afforestation 1moVarious subsidies 291Administration 235

68. The Board has power of decision with regard to the funds at itsdisposal, although it appears that as all Of these funds at present comiefrom United Kingdom loans the approval of the U.K. is required beforeaUlocatrons for specific projects can be maade T oa has no infuenover the use of funds from other external sources. It provides, however,a meeting ground for agencies interested in the economic development ofJordan which helps to avoid an averlapping of activities. In certainspecific cases a division of labor betwieen these agencies has beenestablished.

_ 2. -

69. The U.S. 2eations ?iission has concentrated, so far, mainly onthe studying ofrojects and othert`chnical assistance. As of l.arch 31,1954 funds anountin- to about i.4*9 million seem to have been availablefor h8 projects in the fields of agriculture and water resources develop-ment, health and sanitation, education, transportation, etc. The mostimportant part of this work is on the Yarmouk-Jordan valley project forirrigation and power production. In a Policy Commttee established by theDevelopment Board, the United Kingdom, the United States and UM-WA cooper-

ate on the surveying of this project tfith the two last named partnerssharing the cost.

70. Apart from the preparation of this important project and othersurveying activities USOM/J has also financed directly the establishment ofa public health laboratory, the renovation of Roman cisterns and a numberof other enterprises. Its normal channels of cooperation with theJordcninn Governrpnt arn the sn-ca1lecl Coonerative renartments Andi theEconomic Development mund in which U.S. technicians work side by side withtheir Jordnnian o s niimhern

a I.-N-In 1ta,¶ of this ye- agre ien- wei d rr U:S. aid for Jordan from the foreign aid funds for Fiscal Year 195h. The totalon,,vlvrI-. ,^ iAn .aA i nr +Ihpm nywe' n-f ffR m nJIlien onA i+.C: +O+.n+.J-tra nllnnnc1r..._ ered - - - ^ th_ -de of iZ_ p___ _w_-tion may be as follows;

11ater spreading 2.0*- 4 .r 4ir,+ .an r.a e 3.0

Ground water surveys and wells 0.5Aforsa;o 41P--- .-- -eCtI.L±'.LV a = V-WL 'o,;

Roads 2.0Total f5 .r%

The forthcomring of this aid will create neL organLzational aLd finncicalproblems (including that of dollar disbursements in a country completelytied to sterling) and wili aiso require a higher degree oL coordinationbetween USOIA/J and other agencies of external assistance.

72 UNRVJA has apparently set aside a fund of ll million for generaldevelopment in Jordan and has also reserved 'Ju0 mllion for the execution

of the Yarmouk-Jordan project. As these amounts come from refugee t-;settle-ment funds, their use is limited to expendizures on projects which willresult in a programmed removal of refugees from therelief list. Projectsactually being carried out boy TUNKWHA in jordan include, apart from the al-ready mentioned participation in the Development Bank, several minor agri-cultural settlement projects and housing projects financed jointly by UHMI1Aand the Government.

- 22 -

73 UNTAA and some of the United Nations specialized agencies,including the FAO, have seconded a number of experts who are directlyattached to Jordanian Government departments. There is, at present, nocentral office coordinating the activities of these experts in the fieldafter their original assignments were made. It is worth mentioning,however, that the economic advisor delegated by UNTAA (Mr. Lindberg)assisted in setting up within the linistry of 'Jational Sconory an EconomicPlanning Division * which was to play a major role in the overall plan-ning of develo-ment activities in Jordan. With the termination of Mrr,Lindbergts assignment and the resignation of some other rmembers of thestaff the Planning Unit will pres=iably be discontinued.

74. One of the basic difficulties of development planning in Jordanis the uncertainty as to the amount of external aid that will be availablein the future. British funds which are nominally loans, altho-agh they arerather regarded as subsidies by the Jordanians, become available from yearto year only. It is already a great progress if, as has been indicated,financial support on a 5-year program basis is discussed. U.S. economicaid grants are also on an annual basis. UMRA funds are not only tied toresettlement but are at present limited by the ratio of total availabili.,ties to the total nmiber of refugees which this agencv wishes to resettle.This ratio amounts at present to about 1'3 per refugee and is. probably,too low. There are indications that the continued lack of oroaress inUNTMIA t s resettlement activities in the Middle East may lead to a liberal-imntAon of' the term rn,ider tvhhinh these flmdsi Gqan be ued anrl it seemslikely that even a partial success with resettlement within the area mayencolrage the allotion of 1larger tnds fovr this prl-pose, but- for the timpbeingj there is still a auestion mark on the amounts which Jordan may

* financed partly by UNRNA and partly byr USOMI/J

- 23 -

V. MAGNITUDE' OF THE ILNESTIIENTRnUIRED

A ereat many of the studies mpntioned before are of a very pre-liminary nature. They are often surveys of pote.ntialities rather thannrnnn qiHA F Pew of the studies attempt to annlyvze thorouphly theexpected profitability of projects and not all of them estimate the costs; m vl eiroA Tt i - +.h *rAfr%vr. i .. _ Qi a on- +.ho hn es e of +.he rn i Ihl nh

material to arrive at the total investment required simply by adding upt+he ex=endii-re on' rec projects.

'76 A ('tann so1¶-ces r aresn'aa>+. 1 cor.siderable eera~ier.^e ;a in0rdar.'sdevelopmer.t possibilities, have estimated the total investment requiredto. thw0 0 ,; ,of W .o of&a the aAr.v4s..a .-LWJa

4ac,V

a certain amount of social investment in health, education etc. atbi T11 50-A70 I,n i - -4n (s,r ';170 W,) - ion) Tt would p -+ -- 'weJ "euI r~t tJJ. W'J IW 41"LL.L.&L'J11 kOC,Y J ".&.VLUA .Jj ' I 4J.L....lJ LV VJVJIAiLL j'J.LVW L~.LJ'

be wise to assuxge that in Jordanian conditions an investnent of thisituirUll.AU Ow U Ue shuLdU be aJ.- .1. tL . UL. Uver th=ep, nfIfJ cUstor

ary, 5-year period.

Y77 The greatest difficulty in implementing a program of this mag-nitude might not necessarily arise from a shortage of funds i externalaid should materialize at the rate which is now sometimes envisaged.UNRJRWA funds, nof tentatively earmarked for Jordanian projects, add up to,1l million. U.S. economic aid, which is expected to amount to some-8 million for the current year--on top of the value of technical assist-ance--may well be expected to reach, in one for-m or another, a total of,say, `40 million during the next 10 years. British development loans areenvisaged at JD l5 million during the next 5 years. Finally, the JordanianGovernment'is own contribution which now is estimated at JD 1 million peryear, should continue at least at the snae rate. Total funds availablemight then be as follows:

JD (million ^equivalent to

UWRMA 18 51British development loans 15 42U.S.-economic aid 14 40Jordanian Government 10 28

57- 6

To this must be added returns from some of the projects (such as, forinstance, instalment Dayments for the land from farmers settled on theYarmouk irrigation scheme) which would start to accrue in the latter partof the period. Finally, under the impact of the development program,savings in the private sector of the economy should increase and contri-bute to the financing of further development, especially in agricultureand small industries.

78. Linmting factors for such a prograrm would more likely be:(a) a shuortage u reso-uorces to be UWnorr^calIy developed i.e. i m;ay bedifficult to find a sufficient nuwmber of sound projects for an investmentof- this magnitude; (i) lack of adi-irnstrative and technical sKiLLs tocarry out the program; (c) difficulty of absorption of such a program bythe country without serious ecoulQxiac dislocationrr

79. Total available income of Jordan is assured to be at presentof the order of JD 30 million, of wThich about two-thirds represent incomedomrestically produced and the rest comes from external aid., if this aidwrere to be increased by about one-lhalf to support an e xpanded developmentprogran, the total available incone TrLght increase to something likeJD 35 million during the developrent periodo. An a-verage annual invest-ment of JD 6 million (17%) mainly financed from abroad, seems high butnot impossible.- (In Israel about 25% of the total available resourcesare invested and only one-fifth of this investment comes from domesticsavings.,

VI. IiTACC OF1- THE PXOPOISLVThVESTIET

1. On employment and income levels

80. It is sometimes assumed that a capital investment.anounting to20O of the national product is required to increase income by 3% a year.If this calculation should apply to Jordan.! whose population increasesalmost in the same proportion, it might then be expected that the entireinvestment program will definitelv prevent a further deterioration of thepresent standard of living and also prevent an increase in the number ofreTfhreen bv absorbing the natural groirth of the refhuee noonulation. Itwould not seem however to leave much scope for a further absorption ofre'utgees or for a raising of the general level of incomes. On the otherhand,in Jorda; relatively great increases in agricultural output arenossibhe thrniuoli thpe annniratiion of more ef'finitnt metnlhorlm of nrnduction-

which are not in tlhemselves much more expensive than the prevailing ones.

81. As the mnost important part of the proposed investment programTill consist o- i-creasing the cropped area it igh.t be of interest to

quote the following table prepared by the Economic Division of U1-RITA, whichtries to relate this increase to +n.he ep,ect-ed , th of popul%ation.

_ 26 -

Increase in Cropped Area

TT,,44e I 01fft -I o t -- )n -IN 1 st

Pop,ulat-ion (exclu eo± 'd4~~~~~~~~~~~~~~JJ.L~~~~~~~~ \. V J.LtQ..V J.

L,70,000 refugees), assuming 1000

Land cropp.ec waX- a the£iiu p L.U J)1UW±IJ.J41 UiALi

year) total 1000 ha 565 565 614 689

Rlainfed it 533 533 533 533low r-rigated 32 32 32 32

Potential hewly cropped area

Irrigation from Yarmouk-Jordan project - - 49

Other irrigation (Point IVestimate) 15

Rainfed (BI,E0 estimate ofpossible terracing) 6 0 - 60

Total converted to standardrainfed basis, assuming 5 harainfed Z 1 ha irrigated tl 694 694 936 1,073

Man-land ratio, assuming totalpopulation to total cropped personsland converted to rainfed per ha 1.27basis

Population that might besupported at present consump-tion levels, assuming 1.27 1000persons per ha converted persons 880 880 1,193 1,363rainfed land

- 27 -

82. T±ie calbJvv 'ati1on would iJcLate 96IJ e i.uih a'J orialpopulation wrhich might be supported by the country at present consumptionleVel,.s Y6lN LSe 4,000 or- about 29P,0V iiw L4fL-4uLe k5u[ 11w averagefamily to be composed of 5 people). For the r-ural population, actuallyliving r-om thn land, the present ra-io is' 106 persons per ha ofcropped rainfed land, or 5.3 ha per family. This is certainly a narrorbasis of existence but does not seem completely out of tune wfitn estimatesof the lot viable made for the area.o

83. It will be noticed that the UiMONA calculation does not alloiT forany increase of the existing ratio of cropped land to people, An improve-ment of incomes is nevertheless possible throu.gh increased agriculturalproductivity as well as tnrough additional incomes generated by develop-m2ent in otlher sectors of the econorny.

2. On the Balance of Payments

84. The deficit in the balance of payments on current accountaveraged in recent years--if official transfers are disregarded--some JD11 million. The question arises whether or to what extent this gap couldbe filled by the effects of the proposed development. As the scope ofthis development is still rather vague only gaessss can be offered inthis respect.

85. The greatest effects can obviously be expected from increasedagricultural output which would reduce imports and increase exports. Asestimated before, the cropped area may increase by sorme 20c and outputshould increase appro;ximatelr in the same proportion. If another 15is added for increased productivity we arrive at a 35% overall increaseof the gross value of agricultural output. Assuming that at present thegross value of agricultural output for the country is about JD 13 million,it would seem possible to expect an impact on the balance of payments ofas much as JD 4.5 million. Exports of an additional 250,000 tons ofphosohates woulds at present nrices.; yild foreign exshange elivalentfto approximately JD 1 million. A similar amount might possibly be ob-tained from an increase of tourist trade. Shiftinrg of a larae prnnpot nfof Jordan's imports to Aqaba might save another JD 1 million. If produc-tllon of the alreA1r Arected cement nl:,nt shoil-d -ceed satisfact0orirrabout JD O.5 million could be saved on imports of cement. Finally,some modest sa.rbigs and/or addition--1 receiPts - arise r 111nor jeots, such as a tannery, an olive oil plant, fruit and vegetable canning,etc. These various osshle effects on the balance of p-ments '-;,l'd addup as follows:

* in particular by'M.U. Ionides, Report on the WaterResources of TransjQrdan and their Development", 1939.andby Sir John Hope Simpson "Survey of Palestine" for theAnglo-American Committee of Inquiry. 1946.

-28-

JD millionIncreased agricultural output 4.5Additional exports of phosphates 1.0

to receipts from tourists 1.0Savings on transit through Syria/Lebanon 1.0

n on cement imports 0.5Other projects 1.0

Total 9.0

86. Larger incomes would obviouslv lead to an increased demand forimports. Among the agricultural population this increase might not betoo important ePxre-t for textiles which are not produced Tocallv. Onthe assumption that between one-fourth and one-third of those refugees.who are at prepe-nt in Jordan coiild be re:ettled1 TTT\TA exrpenditure woulddrop accordingly. Increased imports and reduced aid for refugees would,therefore, conteract toa cert.ain extent the expected impro-ements.

87. VThile the net effect of the proposed development on +he bahanceof payments obviously cannot be estimated at present with any claim toaccuracy- it does not seem impossible that on +he rompletion of thedevelopment program the present deficit on current account could be cut

sohing lik4e orw.e=.A4rd o.rvon or.j3l Thies uouiildi alloPwJ tfo ryo'liie.o

external aid in the future. The remaining gap would correspond roughlyto the amolu,ts of oJ. g .xhange . L.,r1n4^h TfS r% receiVs fy^M* +'he -ll.1S.

subsidy from the British Government. It is submitted that the nature ofth-4s subsidy f. r e-n- frorl ---- grva-n+s It -an-L be n

that the maintenance of the Arab Legion is a counterservice of Jordan-an 4hat it~ con.Sti44-u4e an inte^..s expor of -- s ces,, TIf To^ 4C&1A~ UAtC&U LL VAL'IDI.L% UUUDQ =14 Q..J.eqjA .Lv 1JJ.V U Ia. LLO J. J. VorJk.4an1 LMMU3

no treaty with Great Britain it would presumably not even attempt to_~~~~~~~~~~~~~ A . _ L__ __ - _.. fl 4 ___.1 ___ _

mIaintLavin such Ui large Ui-ruC US- Xit WU"Ud LoI' UUsUE'cury reasonUVbs e W meeit

altogether or, at least, associate itself strongly with another countryWlILL1 Wih'en m 'l g I'L hltljp ivLt to fiaFCl an arMy.

- 29 -

VTT RnTrEl nF Wrl. 1RANY( OMDREcOIwNDTDATIOTS FOR FURTHTR ACTIoiT

89. General Survey iissions of the Bank have two main tasks: (a)tIuo re-vi4e CdBvel0opment 4oeti'tis4 - he -our. -1-, a-A (b) to s.lg4us. J. V..~W U~V I~±'J'V4=1 J V 1.."L . J.5 Ji±. VL% ~W 4VJ ~A 'L I J

the outline for a development program. The foregoing brief analysis of

as to whether or to what extent the obuntry needs this forn of Bank

97. It tranSpires first of al' that, generallty speakigL, Jo anslresources are known and that major development possibilities nave been orare being surveyed, On cioser scrutiny oi. vue available material Banktechnicians will undoubtedly have a nuraber of cuestions to raise and theexpected, additional reports on minerals, irrigaTion and transportinvestment will require thorough study*. By and large, however, technicalassistance is not among jordan?s primary, unsatisfied neeas. Expertadvice on specific projects is available as well as aid funds to coverthe cost of this advice. If a general survey mission of the size andscope normally sent by the Bank to underdeveloped countries should visitJordan at present and should start its work by reviewring the. country'seconomic resources, it could hardly avoid duplicating some of the workwhich is currently done by others.

91. It is also clear that wlhat Jordan needs now, most of all, is abetter coordination of the scattered domaestic and external developmentactivities, an integration of all of the worti&ihile projects into acomprehensive plan and an adoption of financial and economic policieswhich would permit the country to absorb considerable imvestment in theshortest possible time. Advice on the preparation of such a plan andrecommendation of policies appropriate for its execution fall well intothe traditionalterms of reference of a Bank's Survey riission. In thecase of Jordan, however, this advice would be largely based on findingsmade outside the Barnk s rMission.

92. A development plan for Jordan vnuld need to have the two followingfeatures: (a) it would have to include most if not all of the economical-ly ijustified proJects; (b) it would have to rely predominantly on foreignaid for its execution.

93. The gravity' of the country's situation precludes any half-henrted annrnach to develonment. Its develonment nroblems are too inter-related to allow any piecemeal solution. Such limited resources as thecountry nosaenses would have to be nut to work all at once to make asignificant impact on the economy.

- 30 -

94. The magnitude of the investment required in relation to theeo7intry's present potentiaJ..iti.s in i +se If preclud es for the t me beingany large-scale lending operations. This is not a nonral underdevelopedo%mintry T whith hy a cer+tin inioP+-ion of slills and fuinds can be helped"to help itself"# Historic events, involving powerful interests fromabroad, played a predo.nannt pari*nthe vy + of thet s alater on added immeasurably to its present plight. It is therefore onlylogical that a+-nal assisa+nce 4i hgeing v r-+.gA +.to JTorr1dn an everincreasing rate. If loans should become available they would obviously#ome OM twre f. , ". *hA M +n + M -w.rouldA hb_ of m.-odest s4i

95. Tf +he PtlrX aV%" be ^nllmA iuyporn +o help Jordar. in +1, g vha p.0 "., a, -I.. .a.* . J*-W.A LJ-. t ~~.4 - -- -* - r k. -

tion of a development plan to be largely financed from external sourcesother 4. ha - t-he P-L. ri+ 7 -h the succes oP + 1s,4 .. rnr.l e predicated

on the continued availability of funds from these sources. In thisse s th A n - ^i____ 4_ - -1--* n P-- T--A- 1- 4-1 A - bA., UV j&vkXMC I-J.YLIV UXL Q. aJVVaV ;V.L VO '.LCLL1 Lj AlJV ' u11

be regarded as a multilateral rather than a bilateral operation. Beforet& he B-act-I) taknes any ac'r,tAheref-Or-e two be "s-rsble -&- en`list; the

support and cooperation of the Governments of the United States and of theTT-.2 --- Ib L 2 T..T-2 A y%7J.2- - t 4-urunied Kingdom, as well as of initerestued united Natons agencies, especial±Ly

UN7liWA.

N,~~~~~~~~~~~~~~~~

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