The gas is flowing again. Egypt and Jordan announced on Thursday that the flow of gas from Egypt to Jordan had reached 240 million cubic feet, which is the level that the two countries had agreed upon. At a press conference following a meeting with Egyptian Prime Minister Hisham Qandil, Prime Minister Ensour said, according to Jordan Times (not a direct quote) that relations between Egypt and Jordan “will never be hindered by any developments and will always be at their best.”
At the meeting Morsi and Qandil were said to have discussed the issues of Egyptian gas supplies and Egyptian laborers working in Jordan, and Egypt agreed to maintain the flow of natural gas according to the agreement. Qandil also held discussions with King Abdullah and gave him an invitation from President Morsi to visit Egypt. So, apparently, all issues between Egypt and Jordan will be resolved now that the flow of gas has been restored, but is it really that simple? First of all, given the numerous disruptions that have occurred due to attacks against the pipeline since the Egyptian revolution, it is not clear how long, exactly, the supply will actually be restored for.
Just a few days ago, King Abdullah criticized Egypt and threatened to deport Egyptians working in Jordan, and also pointed out that Jordan is a conduit for both Egyptian workers heading to the Gulf and Egyptian vegetables being exported to Iraq. He said at a meeting, according to witnesses that Jordan “has bargaining chips it will use when the time is right.” That sounds, according to the article, like a chill in relations between the two countries, and it notes that Morsi called King Abdullah and requested a halt to measures against Egyptian workers. So is everything really resolved? An analysis of the situation reveals that the fundamental structural issues remain, and that Ensour’s praise for Egypt at the press conference actually underscores the economic situation that Jordan faces both presently and over the long term.
In 2019, a major issue looms: the expiration of the gas supply agreement that was reached in 2004 between Egypt and Jordan. As King Abdullah said at the meeting, the disruption in supplies to Jordan cost the government about JD5 billion (about $7 billion) because it had to use more expensive sources of fuel. To put that in perspective, the cost was equal to the $5bn shortfall that Prime Minister Ensour said that Jordan would experience in its budget this year that was originally projected for 2012 back in February. It was also a factor in the government’s decision to raise fuel prices which triggered protests across Jordan. Disruptions in gas supplies from Egypt, then, have caused fundamental economic problems in Jordan, while the issue of Egyptian workers is important (particularly with the unrest occurring in Egypt now) but not nearly as fundamental as the issue of gas supplies to Jordan.
To put the leverage in this situation in perspective, it is helpful to note the amended agreement that Egypt and Jordan signed in December 2011. Egypt demanded – and got – an increase of more than 100 percent in the price of gas supplied to Jordan, to about $5 per BTU from $2.15-2.30 per BTU. The two countries also agreed to review the price of gas every two years, meaning another review will take place in 2013. Ensour can say that all issues between Egypt and Jordan have been resolved, but in fact this shows that tensions are likely to continue for years to come.
This is another example of the precarious economic situation that Jordan faces, that has been exacerbated by the regime’s continued failure to implement reforms. The regime is facing major problems and rather than implementing political reform that could give a new, democratic, government the mandate it needs to tackle them it is instead pressing forward as though these difficulties have all been resolved due to an agreement that in fact resolved only the immediate short-term chill in relations.