The hidden costs of the Syrian refugee crisis

29 July 2015

At under $5,500, Jordan’s nominal per capita GDP is one of the lowest in the Middle East and North Africa (Mena) region, and was about half the world average in 2014.

Its debt level is at 89 per cent of its GDP, while the government revenue-spending deficit is estimated at $3.6bn, equivalent to about 10 per cent of the nominal GDP.

Despite its scarce resources, Jordan has over the decades extended a welcoming arm to its neighbours fleeing political conflict in their home countries. Almost half of its 6.68 million-strong population originates from the West Bank and Gaza (2 million), Syria (1.3 million) and Iraq (29,000).

Unique demographics

Its unique demographics underpinned Jordan’s refusal to become a party to the 1951 Refugee Convention, which defined a refugee, their rights and the legal obligations of states. Jordan’s constitution offers refugee status under political asylum in very exceptional situations. An amendment to this law is planned to expand its scope.

Key fact

The cost per Syrian refugee to Amman is more than $3,500 a year

Source: The Jordanian Economic and Social Council

About half of Jordan’s Syrian population is registered as refugees, estimated to be between 620,000 and 700,000 by the UN High Commissioner for Refugees (UNHCR). The vast majority arrived following the outbreak of the Syrian civil war in 2011. 

More than 80 per cent of all refugees live in host communities, with the rest living in overcrowded camps in the northern region of Jordan. The largest of these camps are Zaatari, Emirati Jordanian Camp (EJC) and Azraq.

Unsustainable policy

Strong indications are quickly emerging that Jordan’s open-border policy towards Syrian refugees may not be sustainable over the long term.

The influx of refugees has created intolerable demand for schooling, sanitation, housing, food, energy and water

Luigi Achilli, European University Institute Policy Centre

Both the Syrian refugees and Jordan are paying a high price for the protracted civil war. The Jordanian Economic and Social Council had indicated that the cost per Syrian refugee to Amman is more than $3,500 a year. The direct cost to the government has been estimated at $1.2bn, and could go as high as $4.2bn by 2016, or nearly 10 per cent of its projected nominal GDP.

The influx of refugees has created intolerable demand for schooling, sanitation, housing, food, energy and water, according to a paper published earlier this year by Luigi Achilli of the European University Institute Policy Centre.

This in turn is starting to change Jordanians’ attitudes towards the refugees from one of being welcoming to hostile.

An example is the impact the refugee crisis is having on the cost of housing.

Housing expenses

The majority of Syrian refugees are concentrated in the border regions such as Irbid and Mafraq, and the capital Amman. Their willingness to pay higher rents because they share housing units with fellow refugees has caused rents to triple or even quadruple in the region, a development that does not sit well with many Jordanians.  

In addition, the influx of refugees has affected the local economy’s job market.

Jordan Key economic indicators 2014
Population (million)6.67
Nominal GDP ($bn)36.6
Real GDP growth (%)3.5
GDP per capita ($)5,460
Unemployment rate (%)12
Source: IMF

Only foreigners with valid passports and legal residency status, and whose prospective employer is willing to prove that the required skill is unavailable among the local population, can obtain a work permit in Jordan.

However, some companies employ skilled Syrian refugees informally, creating intense competition in a market where unemployment already stands at a high of 12 per cent.

Border crossings

The complex political undercurrents have also forced the Jordanian government to enforce stricter border crossing policies.

Jordan’s support of the US coalition targeting the jihadist group Islamic State in Iraq and Syria (Isis) and Jabhat al-Nusra in Syria has inflamed sentiments among domestic Isis militants and sympathisers. This makes domestic reprisals a worrying prospect, making it imperative that the government implements tighter border controls to prevent militants entering Jordan.

However, organisations such as Human Rights Watch and Amnesty International have raised concerns that the stricter border controls has resulted in only a trickle of refugee entries since October 2014.

The two groups have suggested that these stricter controls may have involved procedures that violated the Refugee Convention’s non-refoulement clause, which makes it illegal to force refugees to return to their home countries.

The Jordanian government maintains it has never deliberately blocked asylum seekers from entering the country, or restricted entry just to the most vulnerable, such as those who are injured, women or children.

Foreign aid

There are two sources of external funding that assist Jordan with the economic and financial burden of hosting Syrian refugees.

The first is an emergency financing programme from the Washington-based IMF, called the Stand-by Arrangement (SBA) and totalling $2bn.

Jordan’s SBA with the IMF has been built around the need to support its economy amid an extremely difficult environment resulting from the conflicts in Iraq and Syria.

One-fifth of the fund is due to be released soon, following the fund’s favourable review of Jordan’s economic policy reforms to help stabilise its economy. According to the IMF, the government’s initiatives to ease fuel, energy and water subsidies have contributed to a substantial decline in its public debt.

Funding appeal

The second funding source is the Regional Refugee & Resilience Plan (3RP). This is a funding appeal initiative that was launched to raise money so that countries hosting refugees, the UN and non-government organisations (NGOs) can implement programmes to address the needs of Syrian refugees.

The 3RP requires $5.5bn in funds, of which $1bn will go to host governments and $4.5bn to the UN and NGO groups. Host governments include Egypt, Iraq, Jordan, Lebanon and Turkey. 

Syrian refugee registration in Jordan
YearRefugee registration
Pre-20119,080
201122,588
2012186,369
2013320,069
201482,969
2015 (January)336
Source: UNHCR

However, UN- and NGO-sponsored projects, which include the provision of shelter, education, healthcare, water and sanitation, are in danger of collapsing due to a shortfall in funding. As of June 2015, only $1.06bn of the estimated $4.5bn that the UN and the NGOs require to implement their projects had been received.

In late June, the UNHCR issued an appeal among partners and donor countries to release the funds during the second half of the year to avert a major crisis in its refugee programme.

Some $1.2bn of the 3RP’s $5.5.bn in funding was destined for Jordan, but in the first half of 2015, the government received only $272m.

If the remaining money does not reach Jordan in time, about 750,000 Syrian refugee children may be denied access to education and half of all refugees may not be unable to access primary healthcare. Insulation and blanket supplies during the winter months may also be cut, along with further reductions in cash and food assistance.

Bleak prospects

Without foreign economic intervention, the Syrian refugee issue could bring Jordan’s economy to its knees and erode the modest economic gains it has made over the past few years.

The government is well aware of this. Jordan’s Minister of Interior Saleh al-Kilani recently made a passionate appeal for the international community not to forget the country.

“Jordan plays a large role in controlling the region and keeping it safe,” he said. “It is helping to contain the effects of the conflict and, by extension, protecting the economic interests of many Western nations.”

Western interests include billions of dollars in assistance to Jordan’s economy over the years from European, US and global funding organisations, as well as investments by multinational companies across the country’s infrastructure, tourism, manufacturing and information technology sectors.

As a country with scarce resources struggling with a disproportionate burden of hosting refugees fleeing conflicts, Jordan has always preferred diplomacy to taking a hardline political stance. But without financial support from the international community, it will struggle to continue providing humanitarian aid to the refugees entering the country.

The refugee’s road to Jordan

There are formal and informal access routes for Syrian refugees to enter Jordan, although the process usually begins the same way. Asylum seekers travel by foot along roads that sometimes cross a firing line between opposing sides in the conflict.

Those coming from Homs, Daraa and Aleppo typically enter Jordan through the eastern border crossing. If refugees choose a formal border crossing procedure, they are transported to Raba al-Sarhan, home to a transit centre managed jointly by the UN High Commissioner for Refugees (UNHCR) and the Jordanian government.

Once they are registered with the UNCHR, they are transferred to one of five camps: Zaatari; Azraq; Emirati Jordanian Camp; King Hussein Park; or Cyber City.

Each registered refugee is given an Asylum Seeker Certificate (ASC), which entitles them to UNHCR services such as cash and food assistance. The ASC is a prerequisite for obtaining the Ministry of Interior service card, which allows refugees access to public health care and education.

Those who opt to leave a camp to join an urban host community or return to Syria are given a “bail-out” document.

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