EU’s €3 Billion IMEC play in Jordan
The deal with the EU aims to cement Jordan’s position as a key partner in the IMEC.
On 29 January, King Abdullah II of Jordan signed the Joint Declaration on the Strategic and Comprehensive Partnership with the European Union (EU) in Brussels, marking a significant step towards enhancing cooperation between the two. The partnership, valued at €3 billion, builds on the strong ties established by the Jordan-EU Association Agreement signed in 2002. Moreover, in light of potential cuts to the United States Agency for International Development (USAID), this deal could be seen as the EU stepping in to fill that void, should Jordan be cut off from the American agency’s support. The partnership maintains and further deepens the West's influence in Jordan, guaranteeing Jordanian alignment with Western interests and minimising the likelihood of resistance efforts in the event of wider regional instability.
It also strengthens Jordan’s role in the India-Middle East Economic Corridor (IMEC), which links Asia with Europe via the Middle East. Originally, Jordan was not a party to the signing of the MoU for the IMEC, but it has since deepened its role in the project, and the partnership ensures further Jordanian integration into the Abraham Accords and EU markets.
EU Partnership’s Impact and Focus
The Jordanian economy has faced increasing challenges in recent years, with unemployment remaining around 25% due to a variety of factors, including the refugee crisis, crippling debt, and Western neoliberal policies. The new EU partnership aims to help stabilise the economy and includes five main areas of cooperation: politics, security, economics, human capital, and refugee affairs. Building on the 2002 Association Agreement, the new deal seeks to realise ‘the full potential’ of the Euro-Jordanian Free Trade Area aspect of the agreement; this would increase bilateral trade and investment, which is currently characterised by a trade imbalance favoring the EU.
Another focus of the partnership is addressing smuggling and border security, which likely refers to previous incidents of weapons smuggling to Hamas in Gaza and efforts to prevent the arming of groups that could fuel an imminent uprising in the West Bank. This also includes preventing Jordanian resistance operations, such as the one carried out by Maher al-Jazi at the Allenby Bridge crossing in September last year. The refugee aspect of the ‘border security’ cooperation is reportedly to prepare Jordan, along with neighbouring countries like Egypt and Lebanon through similar aid programmes, to receive deported refugees. Specifically, it focuses on Syrians, in light of the recent change in Syria’s government and the ousting of former President Bashar Assad.
Of the partnership’s total €3 billion, €1 billion is allocated in concessional loans, which are a form of Macro-Financial Assistance (MFA) that the EU is well-known for. Since 2013, Jordan has received €1.08 billion in MFA programmes. These loans are provided on favourable terms, such as low interest rates and extended repayment periods, but they come with the condition that the recipient country implements specific reforms. In line with Western reform practices, the EU policies are likely to reinforce the widely criticised neoliberal and privatisation approaches characteristic of the 2002 Association Agreement and other engagements the EU has had in Jordan and the broader region. €1.4 billion will be allocated to investments, and the remaining €600 million are grants.
EU Filling the Void Left by USAID?
As one of the economic resilience goals in the partnership focuses on "promoting water, energy, and green transition for a resource-efficient green economy," some of the aid provided through this new partnership could potentially fund Jordan’s recently signed water desalination deal with French investment bank Meridiam. Brokered by USAID, the project is set to be financed by multiple European companies. Given concerns over former US President Trump's decision to cut off funding for such initiatives, this deal may signal the EU stepping in to fill the gap left by American funding. The shift could not only provide the necessary financial support for critical infrastructure projects but also strengthen the EU’s role in shaping Jordan's future economic and environmental policies. With the US scaling back its involvement, this shift in funding priorities might lead to a greater European influence in Jordan’s economic landscape, gradually reducing the previously dominant role of the US in the region.
Jordan at the heart of the IMEC and the Abraham Market
Jordan plays a pivotal role in the IMEC, serving as a key transit country that links the Arabian Peninsula to the Mediterranean to Europe. The proposed infrastructure includes railway lines connecting the United Arab Emirates to Israel via Saudi Arabia and Jordan, as well as electrical and data cables and pipelines for exporting hydrogen. The inclusion of Jordan in the IMEC underscores its strategic importance in regional connectivity and economic development. By participating in this corridor, Jordan stands to benefit from enhanced trade opportunities, improved infrastructure, and strengthened economic ties with neighbouring countries and Europe.
During the Gaza war, Jordan worked on strengthening its role in the IMEC and the Abraham market by signing several free trade, energy, and connectivity agreements with relevant partners. The war served as a catalyst for further normalisation and integration into the US-led regional order. The deal with the EU aims to cement Jordan’s position as a key partner in the IMEC.