The London Conference for Syrian Refugees

Rethinking Relief

As part of efforts to make the Syrian refugee response more sustainable, the WANA Institute is throwing its weight behind a plan that promises to create thousands of jobs for Syrians and help develop Jordan’s economy at the same time. 

Significant support emerged during last month’s Syrian refugee donor conference for a plan to create thousands of jobs for Syrian refugees in Jordan.

The plan aims to shift the response to the crisis away from an overwhelming reliance on aid towards a more constructive and sustainable relief model.

Here, the WANA Institute, the Amman-based policy think-tank set up by HRH Prince El Hassan bin Talal, explains why it’s backing the plan and how it can prove beneficial for all.

As the Syrian refugee crisis enters a sixth year, its impact on natural resources, public infrastructure, and the economy are at the fore of public discussion. The narrative that most Jordanians are familiar with is that refugees are responsible for split-shift schooling, overcrowding in hospitals, rent price hikes, and escalating unemployment. Against such pressures, the resolve of international donors has been tested; that funding imperatives have gone unmet are harrowingly familiar headlines.

How Jordan got here—again—is a valid question and the answer lies in the coordination framework that has evolved to manage refugee crises. The model can best be described as a partnership, whereby neighboring states shelter the displaced and donor governments provide humanitarian assistance to cover the costs generated. The issue is that because there are no binding rules on burden sharing, donors tend to scale-back aid once the emergency phase has passed.

Countries like Jordan are conspicuously aware of these dynamics. Offering shelter to individuals fleeing conflict is a bedrock principle of the Hashemite tradition that has been exercised for decades. But having experienced the ‘donor fatigue’ dynamic more than once, it’s not surprising that the government now wants solutions that are consistent with, or at least not contrary to, its national interest.

Such interests include maintaining security, offsetting the costs incurred, and ensuring that existing economic challenges aren’t exacerbated. But might there even be scenarios under which the refugee population can contribute to the national interest? This was the question posed by the WANA Institute back in February 2014. After all, while refugees create fiscal burdens, they also bring with them a diversity of education, wealth, skills, and entrepreneurship. Finding answers lies in a dissection of the Jordanian economy, and the challenges and opportunities therein.

Over the past two decades, Jordan’s economic strategy has been to invest in a strong education sector geared towards technology-driven innovation. While sensible given the country’s size and demographics, along the way Jordan become caught in what’s referred to as the middle-income trap. Our economy is unable to compete with low-income countries in terms of providing low-wage labor for producing labor-intensive products, but has not developed enough to compete with advanced economies in terms of exporting technological know-how and knowledge-based goods and services.

Few economies have risen out of this trap without a manufacturing sector—a base long-hailed for creating jobs, transferring developmental know-how, and expanding exports. Significant progress has been made; economic zones have been set up throughout the country, complemented by an investment law and regulatory framework. There are still, however, entry barriers to global trade markets. Jordan must compete, for example, with Asia, which enjoys stability, uninterrupted coastlines, plentiful natural resources and a large, low-cost labor force. The Kingdom can’t do much to improve its geographic market access, the stability of its neighbors, or its natural resource base. It does, however, have two important assets. First, the country represents a beacon of stability in an undeniably unfriendly neighborhood. Its strategic importance means there are great incentives in play to promote Jordan’s stability, and these include investing in its economic potential. Second, Jordan is providing a global public good. No country wants to see refugees suffering; donor governments do not, however, want to have refugees on their soil in large numbers.

Syrian Refugees at the Zaatari Camp in Jordan

Syrian Refugees at the Zaatari Camp in Jordan

From a humanitarian perspective, this state of affairs is highly disconcerting. But it does bode well for Jordan breaking into and establishing a manufacturing cluster. A principal reason attributed to the under-utilization of some of the Kingdom’s development areas is the absence of a large and willing labor force. While Jordanians are perhaps overqualified for blue-collar jobs, the refugee population constitutes an immediately available, low-cost, semi-skilled set of workers.

Would this overcome the issues of neighborhood, natural resources, and market access for businesses to invest in Jordan? The answer is possibly yes, if it was perceived as a sufficiently good profit opportunity. Companies have identified a strong market for the sale of ‘safe’ products, those that are manufactured by refugees, therefore providing them with a livelihood while they are sheltering from conflict. Investing in Jordan may also be seen as a profit opportunity for companies looking to position themselves prior to a post-conflict reconstruction boom, or for companies forced to leave Syria.

To kick-start such investment, on February 4, world leaders and international humanitarian agencies came together to contemplate an ambitious new approach to addressing the needs of refugees and their hosts. In return for creating 200,000 job opportunities for Syrians, pledges of $700 million were received for 2016, plus an additional $700 million for 2017-2018, a plan for easing EU-rules of origin was mapped out, and international financial institutions committed to $1.9 billion in low-interest loans—loans that Jordan has long been unable to access due to its middle-income status.

So long as donors make good on their commitments, Jordan has been provided with all the tools it needs to break free of its current economic positioning. Donors also got what they needed. Admittedly, this includes stemming the refugee flow to Europe. However, they also want to see Jordan succeed, not just for Jordanians, but for the stability of the broader region. This new plan allows them to address the humanitarian situation, but in the form of something more constructive and sustainable than continuing aid.

While the economics of the situation is quite simple, the population still has legitimate questions that should be answered. Principally, how this strategy can be reconciled with the imperative of creating local jobs?

Although it may appear counterintuitive, creating opportunities for Syrians will create jobs for Jordanians—specifically new white-collar positions. Such opportunities are key to addressing the disconnect between the skills and ambitions of the youth population, and the number and type of available jobs. It must also be recognized that Syrians are already working in the informal labor market. Transferring them to the formal labor market grows the economy and allows the government to collect work permit and income tax revenues.

A second question is whether work opportunities will increase the likelihood of Syrians remaining in-country indefinitely, or encourage more to seek refuge? A critical element of the model is that investment would come from easily transferable ‘footloose’ industry. When the situation calms, companies will be well placed to expand their operations to Syria, taking a trained repatriating workforce with them. Existing factories, however, would remain in Jordan, the Kingdom having established itself as a safe and profitable business environment.

Workers at a QIZ in Jordan

Workers at a QIZ in Jordan

So what should Jordan do next? First, it needs to rapidly mobilize this opportunity by promoting itself as open for business. Reforms to the investment regulatory framework and strong protections for migrant workers would be positive moves in this regard. Second, Jordan must commit to use this opportunity strategically. Business as usual is not an option. Loans should be used to offset manufacturing development and subsidize plant establishment; pledges should be funneled into skills-building and incentive schemes to stimulate local innovation. Finally, Jordan should begin to position itself as the industrial hub for post-conflict reconstruction in Syria. As far off as a solution might appear, this war will end and when it does, Jordan is ideally located—geographically, culturally and linguistically—to lead the huge reconstruction effort that will follow.

This should not be construed as ruthless capitalization. The evolution of the Jordanian economy will only be successful if bold and innovative solutions are tried and tested. Up until now, the refugee situation has been perceived and understood exclusively as a burden or crisis. We should, however, also acknowledge that refugee entrepreneurializm will present an opportunity that host states, humanitarian agencies, and donors ignore only to their detriment. Forging inclusive refugee strategies produces synergies that grow Jordan’s economy to benefit all.