In the past few months, Jordan has captured headlines through its willingness to host thousands of Syrian refugees flooding across the border from its war-torn neighbour. On 22 March, the country received another visitor, US President Barack Obama, who spent the final day of his recent Middle East mission in the kingdom.

The cost of refugee assistance is extremely high because we are having to provide all the services for camps

Amman-based senior UN official

That the president should choose Jordan as his last stop shows the key role this country of just 6 million people is playing in the region’s efforts to deal with the fallout from the Syrian crisis. More than 1 million refugees have now fled the fighting in Syria, and more than 450,000 of those have come to Jordan.

The Syrian arrivals are just the latest of several waves of refugees to have sought shelter in Jordan in the 65 years since the first Palestinian settlements were established in 1948. Even before the latest crisis, the kingdom was home to 450,000 Iraqi refugees and more than 2 million Palestinians.

Economic burden

Speaking at a joint press conference with President Obama, King Abdullah II said Jordan would not prevent the continued flow of refugees across the border. But he also pointed out the cost to the kingdom of supporting this new population, estimated at $550m a year and growing rapidly. There is “an urgent need for the international community to help in humanitarian assistance to catch up with the challenges we are facing as countries bordering Syria,” he said.

By 24 March, international refugee agency UNHCR had registered more than 313,000 Syrian refugees in Jordan, while a further 54,000 had been in contact with the body to register.

The flow of arrivals into Jordan is accelerating. As recently as September, the number of refugees in the country was just 100,000. According to the UN’s Regional Response Plan, the number of people fleeing Syria was expected to reach 1.1 million during the first half of 2013, but this number has already been reached. As many as 3,000-4,000 refugees are arriving in Jordan every day, according to local press reports.

The economic burden associated with accommodating these new arrivals is great. “The cost of refugee assistance is extremely high because we are having to provide all the services for the camps, which has very high embedded capital costs,” says a senior UN official in Amman. “New roads need to be built, boreholes drilled for water supply and services provided.”

Some of these costs are being borne by the international community. Obama’s visit was accompanied by a pledge to provide an additional $200m in funding to Jordan, and at a donor conference in Kuwait in January, foreign countries promised $1.5bn in aid for Syrian refugees across the region. Only a fraction of these funds, though, has actually been forthcoming.

“About 25 per cent of what has been requested by the UN in its response plan has come through,” says the UN official. “To be 25 per cent funded in an appeal covering a six-month period that deals with an acute crisis involving thousands of people is a serious problem.”

Even if the UN operations receive full support from donor countries, this will still not be enough to compensate Jordan for its own costs in sustaining a new refugee population within its borders.

Pressure on resources

Roughly a quarter of refugees have been accommodated in the Zaatari refugee camp in northern Jordan, but about 300,000 Syrians are now living in towns and cities around the country, from Irbid and Mafraq in the north to the port town of Aqaba in the south. This is putting a huge strain on local infrastructure.

“The influx of people is exerting pressure on water supply, on energy, on education, and on infrastructure,” says Ibrahim Saif, senior associate at the Carnegie Endowment for International Peace Middle East Centre in Beirut and former secretary-general of Jordan’s Economic and Social Council.

The arrival of such a great number of people is putting pressure on an economy that is ill equipped to cope. “There is a very high cost for Jordan because basic goods are heavily subsidised and these are now available to Syrian refugees,” says the UN official. “There is competition over jobs, competition for water resources, and local people are slipping into poverty.”

The government is introducing new taxes and reducing subsidies … when economic growth is slowing

Ibrahim Saif, Carnegie Endowment for International Peace Middle East Centre

The problem for Jordan is that aid is targeted at relieving the immediate humanitarian crisis, rather than addressing the strains on infrastructure, services and government spending. “The costs for Jordan are unsustainable because there is not much support to the Jordan government,” says the UN official. “Jordan’s needs are a mixture of the structural and the humanitarian. But a development budget takes much longer to mobilise than a humanitarian budget.”

Even before the arrival of this latest wave of refugees, Jordan faced economic challenges. One of the largest net importers of energy in the Middle East, Jordan’s economic balance has always been fragile. Disruptions to the supply of gas through the Arab Gas Pipeline from Egypt have meant energy import costs have increased still further in the past two years. The government is running deficits in both the fiscal and current accounts, exports are falling, and external accounts are suffering from a fall in tourism and foreign investment stemming from the crisis in Syria and the economic downturn in Europe.

The Syrian refugee influx, which the UN warns could double or triple by the end of the year, could put unbearable pressure on Jordan’s economy. Unemployment is already high, the average wage is poor, and the cost of living is rising. Greater competition for jobs, housing and basic goods threatens to make all these problems worse. “The question is how well the government can cope with the provision of basic goods as food and water,” says the UN official. “We don’t want to be dealing with two crises in one country.”

When it comes to subsidies, the government’s task is particularly difficult. The Washington-headquartered IMF has agreed to help finance Jordan’s economy, but only in return for a government commitment to reduce public debt. This will inevitably entail cutting subsidies, which cost the treasury $2bn in 2011.

If the government cuts subsidies, however, it endangers an unspoken social contract in the country in which local people accept limited political freedoms in return for a commitment from their leaders to preserve their economic wellbeing.

“There is a risk that there will be a reaction from those who are low paid or those who begin to question the legitimacy of the regime or the status of the contract between the people and the state,” says Saif. “The government is introducing new taxes, reducing subsidies and introducing austerity measures at a time when economic growth is slowing down.”

Compared with elsewhere in the Middle East, social disruption in Jordan in the past two years has been minimal. There were demonstrations around the time of the Arab Uprisings in early 2011, and there were protests in November at cuts in subsidies, but there has been no obvious reaction to the added pressure of the Syrian refugee crisis. “So far, we haven’t seen major protests specific to the Syrian refugee influx, which shows the tolerance of the Jordanian people,” says the UN official.

Government reform

But as economic pressures mount, the shortcomings of Jordan’s political system are likely to come under greater scrutiny.

The government has made some efforts at political reform, but so far the results have been disappointing. In July 2012, parliament approved changes to the electoral law in which the number of seats reserved for political parties in an expanded 150-seat parliament was increased from 17 to 27, and which enabled voters to cast ballots for both a constituency candidate and a party. The king also pledged to name his prime minister from one of the largest political blocs.

But there are still numerous weaknesses with the new system, say opposition groups. Opponents claim that the system unfairly prejudices rural parts of the country most loyal to the political establishment. Urban areas were allocated less than a third of parliamentary seats despite representing more than two-thirds of the population. There is also frustration that political parties are still allocated only 18 per cent of the seats, rather than the 50 per cent demanded by opposition parties.

The most recent elections, on 23 January, highlighted these systemic weaknesses. The 27 seats reserved for political parties were shared by 22 different groups, while the main opposition party – the Islamic Action Front (IAF), affiliated to the Muslim Brotherhood – boycotted the polls. The IAF has since claimed that the official 58 per cent turnout was artificially inflated.

The reform process has not yielded greater political stability. There have been five prime ministers since February 2011, and the current incumbent, Abdullah Ensour, has been struggling to form a cabinet since his reappointment by King Abdullah II in early March. The country’s disparate opposition groups, meanwhile, have shown little desire or capability to coordinate their efforts to bring real change.

Deterred by a tradition of loyalty to the monarchy, a degree of political participation and the sight of what has happened elsewhere in the Middle East in the aftermath of popular uprisings, there is little appetite among Jordanians to foment political instability in their own country.

“They are not pushing for more violent conflict,” says Saif. “There is a question mark over parliament, but at least there is a parliament. At least there are institutions to carry out debate and manage the challenges.”

But ordinary Jordanians are growing exasperated by the lack of basic living standards and economic opportunities. The latest influx of refugees will only make the chance of significant improvement less likely in the short term.