Walking a Tightrope: The Hashemite Kingdom of Jordan Has Few Natural Resources Compared with Its Neighbours, and the Spectre of Political Upheaval Continues to Hover Ominously on Its Eastern and Western Borders. It Is Not Easy Keeping Everybody Happy, but Creating an Economic Environment in Which All Sections of the Community Might Prosper Would Be a Good Start

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JORDAN HAS GAINED FEW ADVANTAGES from its geographical location in recent years. War and instability lie on its eastern doorstep in Iraq, while the ongoing struggle between Israel and the Palestinians permeates almost every aspect of Jordanian life because of the sheer numbers of Palestinians living in the Hashemite kingdom. Against this backdrop, King Abdullah and his government struggle to balance the wishes of both reformers and conservatives, while at the same time creating a modern economy that can provide for the future.

A key element of Jordanian policy has been to strengthen ties with the US, the EU and Israel, both in order to boost domestic economic growth and to build diplomatic bridges between the Middle East and the West. This strategy has inevitably raised the ire of those who reject the idea of detente with either Israel or the West. A number of attempted terrorist outrages have been thwarted in Jordan this year and a large number of arrests have been made, as--at times--Jordan has appeared to be on the front line in the war on terror.

Jordan receives around $1bn from the US through a range of aid packages, so there is little doubt it is in the kingdom's best interests to side with Washington. But as ever international diplomacy is not a question of black and white. It would be fair to characterise Jordan as a US ally in the region, but King Abdullah continues to put political pressure on Israel over its treatment of the Palestinians. He cancelled a meeting with US President George W. Bush in April after the US backed Israeli plans to retain settlements in the West Bank, in a clear break with previous US neutrality on the issue.

The King is eager to see a peaceful settlement of the Israeli-Palestinian conflict and the creation of a Palestinian state that could welcome home a section of the 1.7m Palestinians currently residing in Jordan. But unlike some Arab states in the region he has attempted to being this about by consolidating relations with Israel. Following talks at the World Economic Forum, the two governments recently signed a new trade agreement to replace the original 1994 deal.

The new Qualified Industrial Zones (QIZs) agreement maintains the status of the QIZs in Jordan, where Israeli firms have set up a range of enterprises, primarily within the export orientated textile industry. However, it also makes provision for free trade in some goods across the Jordanian-Israeli border. In addition, the two countries have agreed to set up a science park in their common Rift Valley borderlands. While the Bridging the Rift centre, which is due to open in 2009, is designed to be a symbol of cooperation between the two countries, its desert location has been carefully chosen to minimise the risk of terrorist at tack. The complex will act as both a research and development centre, and a university campus.

While Jordan officially sided with Iraq during the first Gulf War, it now seems keen to support the new US backed Iraqi government. In a move that could infuriate radicals, King Abdullah has sent police and military instructors to Iraq to help with training the new Iraqi police force and the military. He has also offered to send troops to help with maintaining security. While some other countries in the region have employed a "wait and see" policy with regard to the new Baghdad administration, King Abdullah's intervention could prompt other governments to make a similar response.

The perception of Jordan as pro-western was underlined by the bomb attack on the Jordanian embassy in Baghdad in August 2003. Some commentators have talked up the threat front Islamic extremists, while the government fears insurgents may be trying to infiltrate the country from Iraq. In April, the government announced it had unearthed a plan by a group linked to Al Qaeda to launch a chemical attack on the Jordanian intelligence headquarters. This was quickly followed by the conviction of eight men for the murder of Laurence Foley, an official of the US Agency for International Development, in October 2002. …