France’s ambassador to Jordan says King Abdullah’s recent visit to Paris, which included a fruitful meeting with a group of high-profile business figures, proves that despite some challenges, economic ties between the two nations are stronger than ever.
By Dina Al-Wakeel
During a working trip to Paris in September, King Abdullah met representatives from the international arm of the influential French Business Confederation. Six, mostly commercial, memorandums of understanding were signed between Jordan and France on the back of the visit.
Economic ties between the two countries stretch back decades. But most of the 35 French firms currently operating in Jordan arrived in the 1990s with the start of its large scale privatization of key industries like energy, telecommunications, and water. The investments of these firms in the Kingdom are estimated to now be worth almost $2 billion.
This year also marks the sixteenth anniversary of the creation of CAFRAJ—the French Chamber of Commerce and Industry in Jordan. The organization, which has some 250 members, remains highly active in promoting business ties between Jordan and France.
For France’s Ambassador to Jordan Caroline Dumas, the importance of French companies’ presence in the Kingdom goes beyond the volume of their investments here. She believes it is the fact that many of them have chosen to remain in the country, despite the hardships some of them have been facing.
Can you give us some details about the deals signed between Jordan and France during King Adbullah’s visit to Paris?
His Majesty’s visit was a very good one. The different partners signed agreements which are very important. First of all we signed a memorandum of understanding wrapping up French presence and Franco-Jordanian partnership in the water sector, which in just the last 10 years we’ve invested $320 million. There were agreements signed that related to the Yarmouk Water Company, the upgrading of the Amman distribution system, and the extension of the Disi water pipe to Zarqa.
Things have, as well, moved rather quickly in the last months on Amman’s BRT project. It is now going to get a big investment as well, supported by a loan of up to $166 million from the French Development Agency to the Greater Amman Municipality. It’s going to be signed before the end of 2014.
We had several other agreements on the table. Another is an MoU wrapping up all of the French Development Agency’s engagement in this country. In the last years this has amounted to no less than $790 million for the development of Jordan, mainly in the sectors of water, energy, and transportation.
Also during the visit, I gather King Abdullah’s delegation heard the concerns some French firms had about operating in Jordan. What were these worries?
I was in that meeting when his Majesty kindly accepted to meet with some of the CEOs of French companies with investments in Jordan. The meeting was open and very positive. It was the first time that some of the French CEOs could meet directly with his Majesty.
Orange expressed one of the best examples of what the company is and the French state thought was a bit frustrating. Orange invested a lot in this country and its one of its success stories. It has become a “domestic” company employing several thousand Jordanians. The CEO of Orange just expressed frustration about some inequity in the way the renewal of its 2G license was done. His Majesty said he would investigate. Altogether, our companies have around 4,000 employees. Orange must be an employer of half of them. Some others raised the question of fair return on investment and on the business environment that allows them to have a clear strategy. Very few of the companies have also encountered security problems in parts of the country.
But it was not at all negative. It was more of a [dialogue] with a great openness from the Jordanian delegation.
Do you think companies like Orange and Lafarge have been treated fairly in Jordan?
You should maybe ask them. But what I can say from my position is that at one point Orange was rather cross. At one point, if you have a CEO in France who looks at a [world] map and sees that he is making a lot of money in some parts of the world, like in Europe or Asia in the case of Orange, I know that the CEO has thought about the situation in Jordan and wondered if it was wise to go on investing for the mid and the long-term.
Lafarge had difficulties in 2013, starting with security problems and the problem of the shared market, so they requested a just environment and an equal treatment for their competitors and themselves. Provided that the environment is absolutely secured, they know they want to stay and they would accept. At the moment, when this environment is not assured, they might again look at the whole map of the world and say well we put our investment somewhere else where it is easier to have a return.
Now you have one French company which has retreated, which is Veolia. This was not a happy story. Veolia had a contract and agreement with the government and with the Yarmouk Water Company, and they felt that the agreement was not respected.
I really feel that French companies are mostly happy, feeling that the environment is mostly positive. On average, they have good relationships and dialogue with the government and with their partners. But of course, they may be vigilant. They are watching the situation. They of course have requirements in terms of transparency and framework. They like to be treated equally to other investors, whether they’re from the region or Western investors.
Besides these development projects, were there any pledges to help with Jordan’s budget deficit?
We will be in favor of renewing our sectoral budgetary aid. France granted the Kingdom $190 million between 2012 and 2013. We haven’t pledged any amount yet. It is under discussion. What we would like is having simultaneously budget support, project aid and support of structural reforms. The water sector is our priority.
Jordan’s economy is being scrutinized by the IMF as part of its $2 billion loan to the Kingdom. Being an important member of the IMF, does France think Jordan has been doing enough to solve its deficit problem?
We do defend Jordan as much as possible at the IMF … Given all the constraints [on the Jordanian budget] that we know of, energy, budgetary, and political constraints, as well as refugees. But we always encourage the government, the Minister of Finance, the Prime Minister, to try to tackle the problem of the deficit. France is not the best example but we know what we should do and we try to apply the same recipe for Jordan. You’re missing two points of GDP that the IMF director is looking for. One of them is contributing to reducing the deficit through the Tax Law. As you know, most of the great countries in the world have to adapt their taxation system to their needs. Of course it’s a very sovereign decision, which has to be taken by the government and the parliament. Being an important member of the IMF, with an important share and important say, we do feel that there is still a margin of increasing the threshold of contribution from certain players on the economic scene here, [including] some households, not touching low or middle income households of course. I really feel that this government has been extremely courageous in reforms led by his Excellency Abdullah Ensour on important items; fuel subsidies and electricity as reducing NEPCO’s deficit is a big issue.
Very often we hear of a different loan that the government is trying to secure in order to pay for another one. Looking ahead what’s the potential the Jordanian economy has and is it safe for it to continue borrowing?
It is a difficult question. It’s a sovereign decision. The debt is high and the service of the debt is costly. I have to be modest and say representing a country which has a big level of debt that I cannot criticize. I know that some economies cannot survive without borrowing, and from one side you have US guarantees, the Jordanian signature is not a bad one at all, and I feel that there’s a safety net as well because you have the IMF watching.
Jordan energy challenges are well known. French firms have offered to help the Kingdom develop a nuclear energy industry, despite significant public opposition. Do you still think it’s a good option?
The French parliament just voted on a new law on the country’s energy mix, with a target to bring our nuclear in the energy mix down to 50 percent by 2025 and the renewable energy part will be increased. The law is now at our senate. In this country of course it would be wise, as well, as you have sun.
When I arrived in this country, the nuclear option was clearly on the table. There was a real commitment from the highest level of the country to go for nuclear energy as a good option for electricity in the longer term. We were asked our expertise and proposals, as were the Russians through Rosatom. So I did my job in helping our French company Areva with its proposal, and it was not chosen. It could be a good decision for Jordan to go into nuclear but of course then you have to be sure that you have the water supply, and that you have full safety [procedures] and this was insisted a lot on by the French experts. We really advised as well to maybe increase the part of renewable energy which could be done on the short-term with less investment and an easier accepted decision on social and political levels. We do see more potential in the renewable sector, or in the water sector at large. The nuclear page for the moment is closed for France. The first choice was Rosatom, and we do respect it. We are present in other sectors and we would love to participate in the development of the renewable energy sector.
How has France been assisting Jordan in handling its Syrian refugee crisis?
We tried to be there from day one. There was a decision to open the Zaatari camp by July 2012 and our Minister of Foreign Affairs came to Jordan in August to open the French hospital. In a few months it had a team of 100 whose expenses amounted to JD1 million a month. It was a huge cost for us. Then there were more medical offerings in Zaatari, and we decided to remove the hospital by the end of 2013 because it was needed in Mali.
On a parallel basis, by mid 2012, we added different levels of help targeted towards UN agencies, as the emergency at the time was to support the UNHCR, WFP, and UNICEF. Then little by little, we expanded our help in Zaatari and Azraq to help agencies like ACTED, the French NGO handling the water supply in these camps. Beyond ACTED, we have three French NGOs on a medical or a paramedical level that we do support, including Doctors of the World (MDM). Up to now we’ve spent $19 million helping these agencies, which is the maximum we could do. Altogether, this humanitarian aid and support aid to Jordanian communities hosting refugees mounts to more than $100 million.
Preparations have been up and running for CAFRAJ, how important is this event for both French and Jordanian companies?
Cafraj is our bilateral chamber of commerce. It has celebrated 15 years in the country … but it’s a more solid, efficient, and successful collaboration. Ahmad Armoush is the president of the board where we have extremely efficient people. The idea is to develop business to business contacts between French and Jordanian companies. You have 250 companies registered inside CAFRAJ, half Jordanian and half French. The Chamber aims to build bridges between companies and facilitate Jordanian investment in France, and French investments here. And to promote that every year we have a kind of “rendez-vous“ or dinners targeting companies. Now, we will have an important one this month called the “French week” with different events, including an energy one.