CNBC Interview with the Prime Minister of Jordan, Omar Razzaz, from the World Economic Forum 2019

CNBC Interview with the Prime Minister of Jordan, Omar Razzaz, from the World Economic Forum 2019

HG: I am thrilled to be able to welcome his excellency, the Prime Minister of Jordan, on behalf of the World Economic Forum and CNBC News, and I just want to mention that we are going to be broadcasting this, both live, and in a longer form feature programme, so if there’s anyone you’re sitting next to, that necessarily you don’t wanna be seen sitting next to, I suggest you move now.

[Laughter]

HG: But just to get underway, obviously, what’s been happening with Jordan in the last several years, it’s a country that’s in a very tough neighbourhood, and you’ve had to juggle over 1.3 million refugees, which has cost Jordan over $10 billion, at least. You’ve also, of course, had to juggle the fact that your traditional trading partners, in Iraq and Syria, have been off the table now for several years. And that has forced the country to be very, very resilient, but at the same time, it’s also forced Jordan to reach out to other countries, as well as the IMF and the World Bank, in terms of finding support. Do you feel today, that the west, and in particular the United States-,

OR: Mm.

HG: Has done enough to support Jordan? Because this is really a question not just of economics, but also of security.

OR: Mm. Well, first, thank you, Hadley, and thanks for CNBC for hosting me, the WEF has been an amazing opportunity to talk about these very issues. As you said, we do live in a difficult neighbourhood. That’s destiny for us. However, what we do with that neighbourhood, within that neighbourhood, is a matter of choice, and a matter of determination. Jordan has been, through the last hundred years, since its inception, determined to do good, and do well. Do good with its neighbours, mend fences, build bridges, host refugees, lessen the pain associated with all the crises, and, at the same time, be a safe, stable environment for business, and for-, for economy. It’s gotten harder, over the last ten years, but we are determined, we’re-, we have a-, a vision that we’re working to realise, about resilience, about, uh, renaissance, the future of Jordan, and we’re thinking about it in terms of our youth, empowering them, economically and politically, we’re thinking of it in terms of renewable energy, and moving away from traditional, sort of, fossil fuels, and developing a model of a country, as I said, that does good, and does well, at a local, for its own population, at a regional, and at a-, at a global level. Has the international response and the US response been, uh, enough? I’d say we’ve had the US, and many other countries, that have come forward to help Jordan in-, in major ways, realising that a lot of the-, the debt that we’ve incurred over the last ten years, the slow economic growth, and all of these things, are not-, they didn’t happen because Jordan was partying. They happened because there were-, we were surrounded by crises that spilled over in Jordan. So, we’ve got a lot of friends, and we have a lot of support. The question for us is, how do we now, together, move from a-, sort of a band-aid type approach, to resolving the crises that we are facing, to a sustainable, growth-oriented approach, that realises the full potential of Jordan. Jordan is a small country, but has an incredible-, it has human capital, it has infrastructure, it has resources highly-educated, uh, during those difficulties, we were exporting our best and brightest, all over the world, and that’s great, but now we wanna say, ‘We are back in business,’ and we wanna have both our talented population, but also investors, businessmen and service providers, businesses from all over the world, come to Jordan, and realise the-, share with our dream of renaissance, um, in the Middle East.

HG: Walk me through some of those potential partners, because we’ve seen the United States, in particular, withdrawing, under the Trump administration. Who are you looking to, for potential investment partners, when we’re talking about the global investment scene? Are we looking to Europe? Are we looking to Russia?

OR: Well, just to make sure I-, there is no misunderstanding, the United States has not withdrawn from Jordan, and-, and its support for Jordan, neither financially, nor policy-wise and politics-wise. Jordan has had very clear positions on-, on issues of-, of-, of a-, a Palestinian state, the-, the capital of which is Jerusalem, we’ve had strong issues about, uh, Syria, united, and reaching a political solution for the crisis, and this has not damaged our relationship, uh, with the United States. So we have this goodwill, frankly, with the US, with Europeans, with a lot of our neighbours, and-, in the Gulf, Iraq, Egypt, and, uh-, and-, and it’s partly because Jordan has historically played that role of-, of-, of trying to be a bridge, within the region, and on a global level, towards peace, understanding, respect, tolerance, and-, and-, and it’s-, it-, it-, it’s been hard, but it pays-, it pays off, because we, um-, we do have access to these resources.

HG: Walk me through what happens next in Syria, because one of the themes this year at Davos has been the potential reconstruction of Syria-,

OR: Yes.

HG: The different companies, across the Middle East, that are looking to get involved in that space. One question, though, the US Congress has just passed a bill, whereby they would potentially sanction any country or business that decided to do business in Syria. Will that stop Jordan from moving forward with their plans?

OR: Well, for us, being-, having long borders with Syria, and having 1.3 million Syrian refugees, the story is a bit complicated, and I think the US understands that. Uh, our-, uh-,

HG: But not Congress, potentially.

OR: Well, no, I-, we’re-, we’re-, we’re explaining the-, the complexity of the situation, because you have-, uh, you know, almost now more than 10% of the Jordan’s population are Syrian refugees, another 10% are refugees from other countries, so we do have a unique situation. We do-, we have maintained that we are very much for a-, a-, a-, a peaceful resolution of the Syrian crisis, and for Syria to extend its authority over the whole territory of-, of Syria, and for things to get back to normal, eventually. Because we do want a Levant that’s-, that’s at peace with itself, that is-, that builds relationships, we’ve-, we’ve-, we’ve moved very strongly, on very concrete steps, with Iraq, which has been a-, a neighbour and a partner for-, for the-, for a very long time. So, the-, the challenge with the refugees, Syrian, and-, and others before it, is you get-, the-, the immediate reaction, international reaction, is relief. The-, the-, support with relief of the refugees, providing them with-, with direct aid, etc. And that’s fine, and needed, and it helped a lot. But what we’re seeing is a new model, I think, global model, where the west is saying refugees need to stay in their region of origin, and not come-, move to-, to-, to the west. Now, you know, we accept that, but that’s a global-, there is a global cost, and there is a public good now being provided by countries like Jordan, Jordan is not the only one, that hosts refugees, and in this case, not for six months and a year, now we are in the ninth year of the crisis, and we-, we are committed, because His Majesty the King is committed to the idea that we host refugees, and that we serve them, and no child would be left behind in Jordan, in terms of education, and health, and even access to-, to the labour market. So, that’s costly in the-, on the long term.

HG: So if they want to expect that you’re going to keep people, over the long term, they’re going to have to pony up to help you do it.

OR: That’s-, that’s what we’re posing as a question. How do we come up with a model, that says-, okay, certain countries are going to look across their borders, and see waves of refugees coming. They need to make that decision on opening their borders, on-, on pure humanitarian basis, but they need to understand that there will be global support. That it’s not going to be subject to donor fatigue quickly, because the countries that are receiving the refugees are experiencing host country exhaustion, not fatigue. So we need a long-term structure, for helping countries, like Jordan, be able to help refugees, invest in their human capital, education, health, and-, and skills, and one day help them repatriate in their countries.

HG: Would you see that help coming from the west? Or, more particularly, does the onus need to be on countries in the region, like Saudi Arabia, like the UAE, to help Jordan, in that regard? Because they’re all interconnected, particularly the economies.

OR: And they’ve all helped. Saudi Arabia has been-, has offered great help for Jordan, same with the Emirates, same with Kuwait, Qatar, lots of countries have offered help, and Europe, definitely, Asia, Japan, the United States. The challenge is, we know that this-, eventually, the issue, sort of, on the barometer of-, of-, of media, starts to be third and fifth, and-, and thirtieth, eventually. How do you move from this being a top issue, that is on-, on people’s mind, and they allocate resources, versus the medium and long-term requirements, to make this a viable-, a viable model, for certain countries to say, ‘Okay, we’re gonna take the brunt of it, but we need medium and long-term help.’

HG: And in terms of what happens next for Jordan, you’re looking, as you say, to revitalise, revamp your economy, in the sense that you want to be open for business. What’s the sell there? Because you have a conference coming up in London, and you’re looking to promote several sectors. Walk us through that.

OR: Well, the sell is that, with everything that’s happened, over the last ten years, crisis after the other, this is a country that’s maintained its political, social and economic stability, we-, we took very harsh measures, macroeconomic measures, when these were needed, fiscally, we are doing well. Um. If I-,

HG: But you did pay a political cost.

OR: It was a huge political cost.

HG: And including-,

OR: Jordan’s-,

HG: Losing your predecessor.

OR: Uh-, uh-, yes. It was a political cost for the government, it was a political cost for the people. Unemployment among youth is approaching 40% in-, in Jordan. Our-, there’s water shortage, schools overcrowded, classrooms overcrowded, etc. So the average Jordanian citizen very much feels the pressure of the last ten years. So, what-, our challenge is to say, ‘Bear with us, as we get ourselves out of this,’ because we have everything that it takes. We have everything that it takes. If you look at Jordan’s economy, our growth in the last four, five years, has-, has been around 2%, which is not what we expected. There was one time when we were growing at 7 and 8%. And if you look at our economy, it ranges from the high-end research, synchrotron accelerator, that 12 different countries are involved in, doing physics research, and chemistry research, and pharmaceuticals research, and archaeology research in-, in-, in that place, all the way to semi-skilled and low-skilled garment work, there are 200 firms, selling to J. C. Penney, and-, and Gap, and Walmart, and-, so-, so you have that whole spectrum, and you have creative industries working, we have a great cinema industry, hosting movies like The Martian, and Star Wars, and for those with grey hair, the-, uh-, Lawrence of Arabia-,

HG: The best.

OR: (? 12.44.50) who’ve seen that [laughs]. So, Jordan has-, we have a great pharmaceutical sector, healthcare, IT is-, is prime, in the region, we’ve put-,

HG: But sir, one of the things that so many investors that I speak to say to me, is that they want to put more money in Jordan, they want to be more invested in Jordan, and build their businesses, but they’re still unclear, from the government, in terms of a strategy-,

OR: Mm.

HG: And not just a one-year strategy-,

OR: Sure.

HG: They want to know, five and ten years down the road, what they can expect, in terms of regulation, and that’s why they would prefer, potentially, to go to the UK, or to the United States, somewhere they can be sure that the next round of people that were put in to government, the next round of politicians that come in, aren’t going to change the game on them, because that’s, frankly, all about investor risk and sentiment.

OR: Absolutely. Now, the-, the-, the message we are sending, and very clearly, is we have started getting our house in order. We’ve taken the fiscal measures that we need to take, we’ve taken the governance measures, we have very transparent procurement laws, we even have disclosure policies, about what public officials own, every year, we all have to disclose. So we’re getting to an environment that is predictable, that is safe, that is transparent, and we’re committed to it for the long term. Has Jordan had to make hard choices, over the last three, four years? Yes, we have. Have we had to decrease our public expenditure, by 8%, which is among the-, the biggest shifts, in-, even compared to countries like Spain, and Italy, and Greece, and-, and Argentina? Yes, we have. But these were harsh measures we took, and maybe they shocked some of the private sector in Jordan, but we had to do it, so that we create a stable macroeconomic environment. Now, for the first time, we-, our deficit is 2%, as opposed to 5.8%, at one point, our inc-, our debt to GDP is going down, rather than up, and we’re preparing for a series of events, the upcoming one is the London conference, where we are going to look at the structural transformation that the economy is going through, uh, dealing with a-, a debt facility, that will help us smooth the debt structure, over the next four, five years, and, more importantly, the business environment, and a pipeline of projects, part of which we have, a lot of it related to energy, and moving towards renewable energy, but other sectors that-, as well, whether we’re talking creative industry, tourism, , the, um-, IT, which has all-, which has always been a-, and back office services, mainly for the Gulf regions, helping with the reconstruction of Iraq and Syria the-, some of the trade agreements, that are fantastic, that we have with the United States, with Europe, with-, with East Africa, all of this, I think, allows us now to-, to have a-, a-, a different narrative, if you will, about the future.

HG: And when you look at cross-border trade, in particular-,

OR: Mm.

HG: And one of the conversations we’ve been having, alongside at this World Economic Forum, is the need to scale businesses inside the region, and obviously, we’ve seen the United Arab Emirates and Saudi Arabia, recently, coming to an agreement, in terms of making that a much more fluid process, in terms of cross-borders, and regulation, as well. Do you see Jordan making similar agreements with its neighbours?

OR: Yes, and-, and-, and I think we have a comparative advantage, especially in exporting services. Today, a company, uh, Microsoft, or Expedia, or Amazon, based in Jordan, um, if they have a Jordanian, working in the Emirates, or the-, or-, or-, or Saudi Arabia, it’ll cost them five times as much as if that person is working in Jordan, providing services in-, in-, in that region. So, all the business process outsourcing is a tremendous competitive advantage, because we have a highly-educated workforce. Highly-educated, bilingual, and can offer tremendous, uh-, so we’re-, we can always improve on trade-, trading of goods, but given that energy cost is still relatively high, compared to Saudi Arabia, and-, and the Emirates, where we really have a tremendous competitive advantage is the export of-, of-, of services, in-, in general, and particularly on-, on business and-, and back office services. I mean, we have tremendous engineering, accounting, uh-,

HG: Sir, I’m gonna-,

OR: Legal-,

HG: Cut you off-,

OR: Ser-,

HG: Only to say, and forgive me, do you think that Jordan has a PR problem, in terms of getting that message out there? Because we all spend a lot of time in Jordan, or we’re from Jordan, we know the value-add, but not necessarily those on the outside. I mean, when you look at success stories like Dubai, for example, is the end goal to get toward a Dubai-like model, for Jordan? Or is it something else? I mean, are you going to be able to get that message to investors? Because that’s really what it’s all about, when you-,

OR: Yeah.

HG: You craft these conferences.

OR: Well, I think we have two-, um, two types of problems. One-, the first one is a-, um, if you will, the-, the neighbourhood issue, the neighbourhood effect, you know, people don’t zero in enough on Jordan, but they see the-, the mess our region’s been, over the past decade or more, and they kind of shy away. So that’s a reputation, if you will, issue, that we need to-, to-, to clarify. The second is, we’ve had to wean ourselves off the public sector, and move towards a-, a-, a private sector model, especially taking advantage of our young, educated population. So we’ve had to do a lot of fixing, ourselves, of our own internal model, so that it becomes fiscally and economically sustainable, and provides an environment for economic growth. So, what I-, yes, people have a lot of questions, I think we-, we’d love-, over the next several events that we’re having, we are showing what we have done, we are sharing some experiences. Instead of us talking about Jordan, we’re asking the investors and businesses, who have invested, over the past five years, to talk about Jordan, in-, you know, purely reflecting their-, their own experience, and I think they do a much better job than we can, in marketing the country. What I would say is I would really invite investors, industries and service providers, to look at Jordan again, from the perspective of what has been achieved, from the perspective of industries in-, located in Jordan, and-, and-, and give it another thought. And if they haven’t been to Jordan yet, come as tourists, and enjoy Petra, and some of the good food, and the good weather, and, um-, and make up your mind.

HG: When you take a step back, and you think about the challenges to what you’re trying to achieve, um, folks here on the ground have been telling me they are worried about, for example, the Trump administration’s desire to remove the United States, in so many ways, not just in terms of troop force, but also in terms of a-, a real presence in the region. There are concerns, deep concerns, about what Russia’s role is going to be, going forward, in spite of the fact-,

OR: Mm.

HG: That they seem to be, very much, having a-, an exciting relationship today with Saudi Arabia, there are questions and concerns. There is also concern about what Saudi Arabia’s renewed foreign policy efforts in Yemen, or what they’re doing in Lebanon, all of these things concern investors regionally. When you take a step back, and look at the challenges ahead, you’re better placed than most people, to make decisions about how you strategize that going forward. What’s worrying you?

OR: Well, I think you’ve just outlined what-, what one of our major selling points are. We avoid these… adventures, uh, at-, at the regional level, and we try to convince all our partners to try to find peaceful means of settling conflicts, in-, in the region. We have not been interested, and will not be interested, in further polarisation, and in-, in-, in-, in taking, uh, sides, etc. We-,

HG: You can’t afford to.

OR: Huh?

HG: You can’t afford to.

OR: We cannot afford to, exactly, thank you, so-, but this is exactly why Jordan has been stable. We’re refused, again and again, taking risky steps that undermine our sovereignty, and undermine our people’s livelihood, our-, and therefore, I think we-, it-, that’s why it’s been a stable model, in a very turbulent region. So, for investors who-, who want to see predictable policy at a local, regional and global level, Jordan has not shifted, on its stance towards its neighbours, its-, its own policy, the global policy. Again, we have tried our best to be good citizens of the world, and-, and this is a commitment, from His Majesty the King, down to the average person, who-, who’s opened their arms and their houses to refugees, to welcome them, in the-, in the country, in spite of the-, of the hardship that we were-, uh, we were experiencing. So, this is something that we’re very proud of, and very committed to, and it’s almost part of the genetic makeup, of the country and its people, and-, so that, I don’t think, will ever change, just because this has-, this has been the anchor, I think, and it’s provided an anchor for the region, to try to reach to understandings around many issues.

HG: Your Excellency, I want to close by asking you about what your message is, to the young people, not just in Jordan, but the region, as well, who are concerned about their future, concerned about employment, finding jobs, and having-,

OR: Yeah.

HG: Really, a stable life, given all of those, uh, regional conflicts and constraints What’s the message to young people?

OR: My message to young people in Jordan, and, as you said, in-, in the Arab world, we’ve suffered similar situations of, um-, of youth feeling disempowered. Disempowered socially, economically, and politically. And there is nothing harder, for a young man or a young woman, especially if you go to school, you go to university, to feel then that you’re-, nobody needs you for anything. It’s a very-, it’s a devastating feeling, and it creates anger, it creates frustration, it creates a sense that-, of alienation, and it creates a desire to act against society, and that’s where, uh, extremism and terrorism comes in the-, in the region. Our commitment to that generation is we will do everything we can, and we promise to change that status quo. We need our-, our-, our youth, we need them, they’re Jordan, and other countries. We don’t have much natural resources to speak of, but fortunately, we’re going in to the Fourth Industrial Revolution, which builds on talent, which builds on entrepreneurship, which builds on enthusiasm of youth, and their imagination, and that is the environment we will provide, and they will need to then take it up and run with it.

HG: Your Excellence, thank you so much for joining us-,

OR: Thank you.

HG: And thank you, everyone.

OR: Thank you.

[Applause]

ENDS