FILE PHOTO: A protester holds up a Jordanian national flag during a protest in Amman, Jordan June 4, 2018. REUTERS/Muhammad Hamed DUBAI (Reuters) - Saudi Arabia, Kuwait and the United Arab Emirates pledged $2.5 billion of aid to Jordan on Monday, a joint statement from the Gulf states said, following austerity measures that have sparked massive protests in the country. Price hikes and subsidy cuts pushed thousands of Jordanians to the streets last week against the government’s economic policies. The rare, peaceful protests prompted King Abdullah to sack the government and appoint a new prime minister, whose first pledge was to shelve steep tax hikes. Other monarchies are worried that unrest in the U.S. ally could spill over across the region where other countries such as Bahrain and Egypt have been facing similar challenges. The three wealthy Gulf states said Jordan would receive as much as $2.5 billion of aid to help it weather the economic and political crisis. The package includes a deposit in Jordan’s central bank, guarantees to the World Bank, annual budget support for five years, and development projects, the statement carried by the Saudi state news agency, SPA, added. The decision was taken in the Muslim holy city of Mecca in Saudi Arabia where King Salman hosted a summit with Jordanian King Abdullah, Kuwait’s emir, Sheikh Sabah Al-Ahmad Al-Jaber al-Sabah, and UAE Vice President Sheikh Mohammed Bin Rashed. Jordan is pushing fiscal consolidation measures required under an IMF financing program including tax increases and subsidy cuts that have weighed on poorer and middle-lass families. Jordan’s newly designated prime minister, Omar al-Razzaz, said on Thursday he would drop a proposed income tax bill, conceding to a key demand of protesters who had already brought down the previous government. Jordan’s biggest protests in years began eight days ago over tax increases and subsidy cuts pushed by the International Monetary Fund to reduce the country’s big public debt.<doc-sep>Three Gulf Arab states pledged $2.5 billion in aid to Jordan on Monday in an effort to stabilize the U.S.-allied kingdom as it faces its worst protests in years over government austerity plans that include tax increases. The money from Kuwait, Saudi Arabia and the United Arab Emirates will go toward a deposit in Jordan's Central Bank, cover World Bank guarantees for the kingdom, offer budget support and finance other development projects. The hope is the five-year aid package, which mirrors a similar aid package offered by Gulf states in 2011, will help Jordan come up with a new, more-palatable austerity plan to satisfy international lenders and its public. The money came after an early morning meeting in Mecca attended by Jordan's King Abdullah II, Saudi King Salman, Kuwait's ruling emir Sheikh Sabah Al Ahmad Al Sabah and Dubai's ruler Sheikh Mohammed bin Rashid Al Maktoum, the UAE's vice president and prime minister. Also on hand was Saudi Arabia's assertive 32-year-old Crown Prince Mohammed bin Salman, though he sat off to the side of a circular table that hosted the leaders. The statement quoted King Abdullah II as saying he hoped the aid would help his country overcome its fiscal crisis. In December 2011, the six-nation Gulf Cooperation Council that is headquartered in Saudi Arabia pledged to give $2.5 billion in aid each to Jordan and Morocco, both of which had been invited to join the regional group that year. The pledge from the GCC was to last five years. It expired last year and so far the six-member GCC has yet to offer any additional funding as the bloc remains split by a diplomatic crisis with Qatar. Jordan receives over $1 billion a year from the U.S., as well as aid from Europe and elsewhere. The announcement comes after European Union foreign policy chief Federica Mogherini on Sunday announced 20 million euros ($23.5 million) in aid for Jordan. Cash-strapped Jordan is struggling to curb its debt after securing a $723-million loan from the International Monetary Fund in 2016. Austerity measures tied to the IMF loan have seen prices of basic necessities rise across the kingdom, culminating in a week of angry protests over tax proposals that forced Prime Minister Hani Mulki, who was replaced last week with Omer al-Razzaz. Daily protests across the kingdom began on May 30 alongside a partial strike organized by unions, and continued for eight days, prompting King Abdullah to replace the prime minister and cancel an increase in fuel and electricity prices. It was the fifth raise announced by Amman to subsidized electricity prices for this year. According to official data, Jordan's budget for this year suffers from a roughly financial deficit of $1.753 billion. The authorities on Thursday announced they were withdrawing the unpopular legislation, but still face a mammoth task to balance popular demands with the need to reduce the public debt burden. While peaceful, the protests threaten the stability of a kingdom strained by hosting those who fled the wars in Iraq and Syria. Jordan also is one of only two Arab nations to have full diplomatic relations with Israel and plays an instrumental role in the region and in Israeli-Palestinian peace efforts. The Gulf aid package appears driven by the desire to avoid a repeat of the 2011 Arab Spring uprisings, which saw pent-up public anger spilling onto the street across the Middle East, analysts say. "The speed and the gravity with which the Gulf states are responding is a very clear testament to their concern and determination to nip this unrest in Jordan in the bud," Lori Boghardt, a senior fellow at the Washington Institute for Near East Policy, told AFP. "They are going to do all they can to thwart another Arab spring on their doorstep." Gulf states, except for Bahrain, largely avoided the pro-democracy protests unleashed by the Arab Spring, but they have sought to deepen economic links in the region following an oil price slump in 2014. Jordan blames its economic woes on instability rocking the region and the burden of hosting hundreds of thousands of refugees from war-torn Syria, complaining it has not received enough international support. The World Bank says Jordan has "weak growth prospects" this year, while 18.5 percent of the working age population is unemployed.<doc-sep>
Jordan has been rocked in recent days by mass protests against price rises and a proposed tax hike Saudi Arabia, the United Arab Emirates and Kuwait have offered $2.5 billion in aid for Jordan to ease its economic crisis following a wave of anti-austerity protests, the Saudi state media announced early Monday.Jordan has been rocked in recent days by mass protests against price rises and a proposed tax hike as the government pushes measures to slash the country's debt, leading to the prime minister's resignation.A four-nation summit in the holy city of Mecca, hosted by Saudi King Salman, offered Amman a bailout in the form of a deposit in the Jordanian central bank, World Bank guarantees as well as budgetary support over five years. "In light of the close brotherly ties... it was agreed that the three countries (Saudi Arabia, the UAE and Kuwait) would provide an economic aid package to Jordan totalling $2.5 billion," the official Saudi Press Agency said.The crucial summit was attended by Jordan's King Abdullah II, who offered his gratitude to the three countries, adding the package will "contribute to overcoming the crisis", according to SPA.The announcement comes after European Union foreign policy chief Federica Mogherini on Sunday announced 20 million euros ($23.5 million) in aid for Jordan.Cash-strapped Jordan, a close US ally that relies heavily on donors, is struggling to curb its debt after securing a $723-million loan from the International Monetary Fund in 2016.Austerity measures tied to the IMF loan have seen prices of basic necessities rise across the kingdom -- culminating in a week of angry protests over tax proposals that forced prime minister Hani Mulki to resign.The authorities on Thursday announced they were withdrawing the unpopular legislation, but still face a mammoth task to balance popular demands with the need to reduce the public debt burden.The Gulf aid package appears driven by the desire to avoid a repeat of the 2011 Arab Spring uprisings, which saw pent-up public anger spilling onto the street across the Middle East, analysts say. "The speed and the gravity with which the Gulf states are responding is a very clear testament to their concern and determination to nip this unrest in Jordan in the bud," Lori Boghardt, a senior fellow at the Washington Institute for Near East Policy, told AFP. "They are going to do all they can to thwart another Arab spring on their doorstep. "Gulf states, except for Bahrain, largely avoided the pro-democracy protests unleashed by the Arab Spring, but they have sought to deepen economic links in the region following an oil price slump in 2014.Jordan blames its economic woes on instability rocking the region and the burden of hosting hundreds of thousands of refugees from war-torn Syria, complaining it has not received enough international support. The World Bank says Jordan has "weak growth prospects" this year, while 18.5 percent of the working age population is unemployed.