Political and social upheaval shook the Arab world again when, on August 2, 1990, Iraqi forces invaded and occupied neighboring Kuwait. Due to its proximity to the crisis, its political stand and its role as Iraqs primary trading partner, Jordan suffered tremendous losses during and after the Gulf War on both the political and economic fronts.
Jordans political position during the crisis has been thoroughly misinterpreted, and deserves explanation. Jordan stood in full agreement with the international community that the Iraqi invasion and annexation of Kuwait was a breach of international law which could not be allowed to stand. However, from the Jordanian viewpoint Arab interests dictated that the matter should be settled on a regional basis. Jordan attempted to resolve the matter through the good offices of the Arab League, and King Hussein personally issued vigorous appeals to Saddam Hussein to yield to the demands of the international community.
Unfortunately, the intransigent positions of both Iraq and the UN coalition made a negotiated settlement impossible. Despite the political opprobrium and cancellation of economic aid the position brought, King Hussein stood squarely with the wishes of the Jordanian people, who sought to minimize the suffering of their fellow Arabs through a peaceful resolution of the conflict.
Aside from Iraq and Kuwait, no state suffered more from the Gulf Crisis than Jordan. With a population of only about three and a half million people at that time, the Hashemite Kingdom hosted over a million refugees from the conflict. While most of these were third party nationals in transit through Jordan, about 300,000 became permanent returnees from the Gulf. Many of these returnees were Palestinian refugees who benefited from Jordans unique policy of granting citizenship to any Palestinian who seeks it. The influx of these refugees led to an increased demand on the countrys limited water supplies and infrastructure, rising poverty and a sharp increase in unemployment to around 30%.
Iraq had served as Jordans primary trading partner, and the Gulf Crisis and international sanctions against Iraq created severe economic difficulties for Jordan. It has been estimated that the crisis has cost Jordan over three billion dollars in lost trade and declining revenues. Jordan has complied strictly with the UN-mandated sanctions against Iraq, although they have crippled the flow of commerce at the port of Aqaba and disconnected the overland trade route to Iraq. The Jordanian and Iraqi economies, which once prospered because of their interaction, are now effectively disconnected, to the detriment of both peoples.