Jordan's defense outlays have been burdensome for a small country without major resources or a highly developed industrial base. Offsetting this burden to some degree has been the positive impact of defense spending on the national economy. Soldiers' pay, the employment created by the military and security forces, and the contracts and support services generated in the name of national security provided important stimulation for what generally has been regarded as a sluggish economy. The financial and military subsidies that Jordan traditionally has received from other Arab states have represented a net benefit to the economy while reducing the actual burden of the military effort to somewhat less than it appeared to be in statistical terms. Nevertheless, the Jordanian defense effort was facing acute budgetary and financial difficulties in the late 1980s, as a consequence of decreased financial aid from the oil-producing Persian Gulf states and reduced remittance levels from Jordanian workers in other Middle Eastern countries. Together, these sources had brought in as much as US$2.5 billion annually in earlier years. Although other Arab states had pledged at the Baghdad Summit in 1978 to provide Jordan with more than US$1.2 billion annually for ten years, only Saudi Arabia had fulfilled its commitment (see GDP by Sector , ch. 3 Military Relations with Other Countries , this ch.).

The 1988 defense budget of JD256 million (US$763 million) was about 60 percent higher than the allocation of a decade earlier. When inflation was taken into account, however, officially acknowledged defense costs appeared to have remained fairly steady until 1986, when an upward trend became evident. Possible explanations for this rise included moderate increases in the number of men under arms, pay raises, some domestically absorbed equipment outlays, sharp increases in the international price of armaments, and a higher amortization level of foreign military debt. Published government figures were incomplete since they did not include important elements of defense spending and were therefore understated. The United States Department of State estimated that a little more than half of the subsidies from other Arab states was reflected in the budget, with the remainder applied to off-budget defense expenditures.

The military debt had become a serious problem by early 1989, as the difficulties of meeting the kingdom's overall debt-servicing obligations continued to mount, placing additional strains on the balance of payments. It was reported that Jordan was running about eleven months behind on its military debt payments, with more than US$95 million overdue.

In 1988 the officially acknowledged defense budget constituted 15.4 percent of gross national product (GNP--see Glossary). In a comparative analysis by the United States Arms Control and Disarmament Agency (ACDA) covering 1987 defense outlays, the proportion of Jordan's GNP 790 P absorbed by defense in that year (13.9 percent) was near the average for the Middle East, which was 11 percent, and among the highest in the world, although below that of Israel (16.6 percent of GNP). Nevertheless, defense expenditures as a ratio of GNP have followed a declining trend from 35 percent in the early 1970s to 20 percent in the early 1980s. According to the same ACDA study, Jordan's defense expenditures in 1987 were 22 percent of total government expenditures, well below the Middle East average of 32 percent. The portion of Jordan's government spending devoted to the military also reflected a steady decline during the 1970s and 1980s. Military expenditures of US$285 per capita in 1987 were also lower than the average of US$396 per capita for the Middle East as a whole. Jordan had one of the highest proportions in the world of men under arms, with 36.4 uniformed personnel per 1,000 of population. Its ratio of armed forces to population was exceeded only by such countries as Iraq, Israel, Syria, and North Korea.

Data as of December 1989