By Irene Hell In Amman

The aftermath of September 11th and war in Iraq had a devastating effect on Jordan's economy.

Petra is the highlight of Jordan's tourist attractions

Cheap oil supplies from neighbouring Iraq were cut off and many tourists cancelled bookings.

The hope in Jordan now is that the country will benefit economically from efforts to rebuild Iraq.

"I expect Jordan to be the gateway to Iraq," says Hatem Halawani, chairman of the Amman Chamber of Industry.

Jordan and Iraq have strong business ties, he says, expressing the hope that Jordanian companies will find plentiful business opportunities in Iraq.

Into the breach

Before the recent war in Iraq Jordan received all its energy - 90,000 barrels of oil a day - from Baghdad.

In the opposite direction went food, medicine and cheap consumer goods.

Business with Iraq represented 20% of Jordan's $6bn in external trade.

When war started, oil supplies were cut off.

Saudi Arabia, Kuwait and the UAE stepped into the breach temporarily, providing three-months-worth of oil for free.

But Jordan, which has no significant oil or gas reserves itself, is keen to re-establish links with its former supplier.

Free trade deal

The Jordanian economy depends on foreign grants, especially those from the US.

The 1994 peace treaty between Israel and Jordan was rewarded by the US Government with the relief of most of Jordan's debts.

Several years later, a free trade agreement with the US was signed which has boosted Jordan's exports to the United States.

Agreements with Arab and European states and membership of the World Trade Organisation also enhance foreign trade.

Exports are dominated by phosphates, chemicals and agricultural products while the main imported goods are oil, machines and food.

America is Jordan's main trade partner. Since signing the free trade deal in 2000, Jordan's sales to the US have grown from $31m to $389m a year.

In this way Jordan's exporters have found a new market place for marble, jewellery, machinery, food products, information technology and cosmetics.

Tourism job losses

But the country still misses export revenues from Iraq, formerly its main trade partner, with some factories having to work below capacity, given the reduced demand for their products.

There have also been substantial job losses in tourism, an industry that used to represent 10% of the economy.

Unemployment is officially at 15%, but in some areas it is double that.

King Abdullah's stated aim is for the economy to grow 4-5% this year.

And he has taken some unconventional measures to help achieve this, dressing up as a tourist guide for a documentary promoting the famous ancient sites of Petra and Jerash.

He has also had some input into a drive to make Jordan a more attractive destination for foreign investment.

One-stop shop

"He does not take no for an answer and the word impossible is not in his vocabulary," says Akel Bitaji, chief commissioner of the Aqaba Special Economic Authority.

"For certain forms you needed three or four signatures - this had to go," he says.

"Now we are a one-stop shop. You can now register a company in the zone on your internet within an hour."

The Aqaba Special Economic Zone is a model for other parts of Jordan to follow.

"We have already secured $1.5bn in investments, mostly in tourism projects, and we have provided 3,000 new jobs so far," says Mr Bitaji.

He hopes that, eventually, the zone will have created 70,000 jobs.

As the accredited port of entry for Iraqi food supplies, Aqaba is now a major trading centre attracting foreign companies such as rice and wheat distributors from Australia.

It is partly thanks to the success of Aqaba and the free trade agreement with the US that US President George W Bush recently announced plans to expand the free trade zone throughout the Middle East.

E-learning

But most tourists and investors avoid crisis regions, so the search for peace and stability remains high on the agenda for Jordanian policymakers.

Building an educated workforce with appropriate skills is also a priority.

About 30% of Jordanian adults hold a university degree while many children learn English and computer skills from primary school age.

And Queen Rania promotes an e-learning programme sponsored by hi-tech companies.

At present Jordan has about 80 hi-tech companies, with exports expected to reach $550m next year.

This still leaves Jordan considerably smaller than regional hi-tech centres Israel and Dubai.

But the country's leaders are hoping that an emphasis on education and a supportive legal and regulatory framework for business will allow it to compete effectively for investment with its larger neighbours.