Jordan’s defence budget is relatively small compared to other markets and interestingly Jordan has a much larger homeland security budget. In 2013, Jordan is expected to spend US$1.2 billion on homeland security which is a far greater budget than spent on defence. In 2009, Jordan’s defence budget was only valued at US$1.4 million for a country which is ranked as one of the highest militarised zones in the World.
Out of the US$1.4 million defence budget, Jordan only allocated 2.5% of their defence budget to investing in new defence equipment and as a result foreign companies are not necessarily attracted to invest. In addition, Jordan’s dependency on US backed military aid weights their purchasing decisions to favour US –based companies.
Jordan, according to Transparency International is classified as a corrupt country and this is particularly the case within the defence industry. Jordanian’s police force is also associated with a high level of corruption and this has resulted in embezzlement and the mismanagement of the police budget which ultimately resulted in only a small percentage of the budget being spent on protecting internal security. These factors have heavily restricted any involvement from foreign companies investing in Jordan’s defence industry.
Jordan has close ties with the United States and is seeking help during a time when its neighbouring countries are facing continued troubles from civil unrest and a continuation of the Arab Spring uprisings. Jordan is surrounded by countries faced with instability and war. In 2005, Jordan witnessed a series of devastating bomb attacks by Al-Qaeda in Amman which was in retaliation to Jordan’s support to the US forces in Iraq. During the US-Iraq war, over half a million Iraqi civilians were estimated to have entered Jordan, adding to the two million Palestinian refugees living in Jordan since the formation of Israel. Jordan has to invest towards their own internal security with threats from militant groups such as Hamas and Hezbollah.
Jordan relies on defence hardware imports as the country lacks the infrastructure to manufacturer defence equipment domestically. The level of defence investment and imports peaks in 2009 and 2011 although the levels of investment has been sporadic and varied on an annual basis. Aircraft, missiles and armoured vehicles dominated imports during recent years with Belgium, Russia, Netherlands and the United States represented the main suppliers of this defence hardware.
Jordan’s defence market is forecast to increase at a rate of 4.83% CAGR during the next few years. In 2013, Jordan is expected to have spent US$343.5 million and by 2018, the annual defence expenditure is forecast to total US$354.1 million. In contract, Jordan’s homeland security budget reported strong growth of 8% CAGR over recent years and is expected to total US$1.2 billion in 2013. As Jordan concentrates on protecting its borders and internal security, the homeland security expenditure is forecast to increase to US$1.3 billion.
Lack of substantial economic development and job opportunities has given a boost to the dissent among the tribes who were traditional backers of the Hashemite rulers of the kingdom. Although at smaller levels, the Arab Spring impacted the demonstrations by the Muslim Brotherhood and Jordanian Youth Movement, also known as hirak / herak. Activists of the hirak movement called for regime change alleging corruption by King Abdullah II, Queen Rania, and other royal family members.
For more information on the Jordan defence market, see the latest research: Jordan Defence Market
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