Economy, energy, youth: An interview with Ambassador Karim Kawar

Karim Kawar is a Jordanian businessman and diplomat. He is the President of Kawar Group, an Amman-based company operating across the MENA region with investments in shipping and transport, travel and tourism, information and communication, healthcare, and energy. He is a founding member of the American Chamber of Commerce in Jordan and the Jordanian Intellectual Property Association. He is also a trustee of the King Abdullah II Fund for Development, a co-founder of the Jordan Strategy Forum, and the former Vice-Chair of the Jordan River Foundation, chaired by Queen Rania. In 1999, Kawar was appointed by His Majesty King Abdullah to the Economic and Consultative Council, the first body of public and private sector leaders established to advise the King on economic and social issues. From 2002–2007, he served as Jordan’s Ambassador to the United States. This interview has been edited for length and clarity. H.D. Wright: Between 1998 and 2008, Jordan’s economy grew at an annual rate of 8 percent. Yet after the Arab Spring in 2011, growth slowed to 2 percent. Jordan is a leader in Middle Eastern politics, a prime example of stability — so why has this reduction occurred, and what steps can be taken domestically to recover the growth pattern? When you look at Jordan’s power sector in general, we are in a good place in terms of energy security. But in terms of the cost of generation, we can do much better to bring down the cost of electricity.Karim Kawar: After the Arab Spring, we’ve seen turmoil in the region: war in Iraq, the challenges that Syria has faced, and the same in Egypt. Our trading partners had challenges that affected the Jordanian economy directly, as well as the influx of refugees. Jordan has to attract investments. The organizations that deal with citizens should be operated by the private sector, by the companies who have the expertise to do so. This creates an opportunity for investments, for national Jordanians and international investors. They can take on these projects and bring them up to world standards. A good example is the Aqaba container terminal. The management was granted to a Danish company in 2003, and that has been running for the past nineteen years without incident. Similarly, Queen Alia International Airport is operated by the Airport International Group. These inflows into Jordan will continue to have a great impact on the economy. HDW: Where should those investments come from? KK: I don’t have any bias in that respect. International investors with expertise in a certain field should be invited to participate. I know that there is sensitivity on whether those investors are coming from the East or the West. I personally believe that US companies and investors can look at those opportunities, and are welcome. Many of our European friends have been investing in Jordan. France, for example, is one of the largest investors in the Jordanian economy. HDW: A significant opportunity for economic growth, for both the private sector and the Jordanian people, is through a transition to renewable energy.  As a former public servant — the Ambassador to Washington — what role do you think the Jordanian government should play in encouraging a transition to renewable sources? KK: As you know, Jordan used to import as much as 97 percent of its energy. With the investment in renewables, today the contribution of energy generation from renewables is over 20 percent. I think we can do much more. It’s not just about power generation. It’s also about smart meters, a smart grid, taking advantage of electric vehicles, where batteries can be used for storage and to power homes. A lot can be done in that space. We have had an economic plan that also touches on this issue, but primarily we have been over-invested in conventional power. When you look at Jordan’s power sector in general, we are in a good place in terms of energy security. But in terms of the cost of generation, we can do much better to bring down the cost of electricity. HDW: To what extent should leadership in this sector come from the private sector versus the public sector? We love to support our Lebanese brothers and sisters, but if that (electricity) price can be offered to a neighboring country, why don’t we offer it to the industries in our economy that will create jobs? This is where the commercial sense is lost.KK: Jordan has undergone a privatization program in the electricity sector. So we have what we call IPPs, Independent Power Producers, which are private-sector run and operate generators of energy. In Jordan, we have a single-buyer model, so all those generators are sold to NEPCO, the National Electric Power Company. NEPCO in turn sells to three distribution companies that are regional: the Jordan Electric Power Company in the center, Irbid Company in the north, and the Distribution Company in the south. In 2011, the government made a decision to freeze the tariff for electricity, and that will result in losses over the next three years of more than $7 billion. It is a monumental loss. Today NEPCO is under pressure to recoup those losses. NEPCO is a government-owned company, so I have been an advocate of transferring those losses from NEPCO’s books to the treasury, which would help NEPCO on a commercial basis. At the same time, you can see the results of dependency in Europe — any country that has been dependent on Russian gas is facing serious challenges, which affects consumers and industry. Jordan has been in discussions with the US to see how they can export electricity to Lebanon, which is also in dire need. We love to support our Lebanese brothers and sisters, but if that price can be offered to a neighboring country, why don’t we offer it to the industries in our economy that will create jobs? This is where the commercial sense is lost. HDW: How do you think jobs can be created domestically? KK: Jordan’s biggest challenge by far is unemployment amongst the youth. In today’s stagnant economy, we are growing at just over 2 percent a year, which is dwarfed by the growth in population. We also have a large number of refugees, some of whom are working in the parallel economy. I am an advocate of digital transformation. I think that creates a lot of jobs for everyone in the IT sector. I believe fully in the private sector creating jobs in industry, tourism, and health. If given the opportunity, I think they can create a lot of space for young Jordanians to join the workforce. His Majesty is working to be more investment-driven, which I think will go a long way. Jordan’s biggest challenge by far is unemployment amongst the youth. In today’s stagnant economy, we are growing at just over 2 percent a year, which is dwarfed by the growth in population.HDW: How exactly does digital transformation create more jobs? KK: That was the silver lining of the Covid period. For example, we have a company called NatHealth — National Health Insurance Administration. We have deployed technology where we are using tablets, we didn’t use paperwork to process those claims. Of course, this eliminates certain jobs, such as data entry; but they have been replaced by other jobs. Now we need data science expertise. We need people with graphic design skills—to be able to design apps that are user-friendly. Old jobs become redundant, but you can create new ones, offering much higher compensation. HDW: Jordan has generously provided sanctuary to more than a million Syrian refugees, setting an admirable example of hospitality. Until that number decreases, through foreign acceptance or the unlikely reality of return in the short-term, is there a way for the public and private sectors to provide for both Jordanians and Syrian refugees? KK: The plan that was presented a couple of months ago has a target of creating over a million jobs over the next ten years. A lot should be done in the short-term. You look at how many graduates graduate from Jordanian universities with degrees in various disciplines. Those people are job-seekers, and we need to bridge the gap between graduates and the needs of the job market. Certification programs must be introduced, so that those graduates are more attractive to employers. It is a major challenge, which requires a huge collaboration from all parties. The private sector needs to be clearer about conveying requirements, ensuring that programs produce the right skills. The youth need to be more engaged. I can see that they have a lot of frustration, and just want to vent, but then what? Unless you can think constructively, and mobilize as a cohort, there is no plan. The older cohort is more than ready to listen.HDW: As the Youth Representative at the United Nations’ fund for education in emergencies, I witness every day the power of young people in a political context. How can political leaders ensure that young people are given space to share their ideas, collaborate across generations, and even lead? KK: Great question. I think the voice of the youth is already being heard, loud and clear. Today on social media, young people broadcast their messages. The older generation does listen. I am not a fan though of some methods of communication. There is a lot of negativity that is conveyed, and that is not helpful to finding solutions. In terms of where this conversation should be heading, it is toward a more constructive dialogue. With regards to energy, for example, I want to pay less for energy as a consumer; but just asking for lower prices without trying to find a solution, and understanding why prices increase, isn't enough. But to be invited to the table requires a change in attitude from some of the leaders, and we certainly see that in Jordan. His Majesty King Abdullah has focused on the youth, and has always invited them to share their opinions. Our Crown Prince, Prince Hussein, has been very engaged with the youth in Jordan as well. Does the political system allow for young people to take on leadership roles? I think that leaves a lot more to be desired. Jordan has put forward three plans. One is a political reform plan which calls for more active participation in political parties. And I think the youth can have their way through those parties. They don’t realize frankly how much power they can wield. They need to realize that their vote can have an impact. The youth need to be more engaged. I can see that they have a lot of frustration, and just want to vent, but then what? Unless you can think constructively, and mobilize as a cohort, there is no plan. The older cohort is more than ready to listen. H.D. Wright is Youth Representative at Education Cannot Wait, the United Nations’ fund for education in emergencies. As the first young person democratically elected to the governing body of a global humanitarian fund, he represents 80 youth-led NGOs from Africa on the Executive Committee and High-Level Steering Group chaired by UN Special Envoy for Education Gordon Brown.  Read more Opinion and Analysis Jordan News   (window.globalAmlAds = window.globalAmlAds || []).push('admixer_async_509089081')   (window.globalAmlAds = window.globalAmlAds || []).push('admixer_async_552628228')