Jordan's Diplomatic Balancing Act: How Stability in Gaza Shapes MENA Investment Flows

The Middle East and North Africa (MENA) region has long been a theater of geopolitical tension, but Jordan's nuanced diplomatic approach to the Gaza conflict has emerged as a stabilizing force, indirectly reshaping investment flows across the region. By balancing its historical ties to the Palestinian cause with pragmatic security cooperation with Israel and Gulf states, Jordan has positioned itself as a critical node in regional economic integration. This strategic duality-advocating for peace while maintaining stability-has attracted foreign direct investment (FDI) and spurred cross-border partnerships, particularly in energy, infrastructure, and technology.

Diplomacy as a Catalyst for Economic Resilience

Jordan's role in Gaza has been defined by a dual commitment: to alleviate humanitarian suffering and to prevent regional escalation. Since the outbreak of the Israel-Hamas conflict in October 2023, the Hashemite Kingdom has delivered extensive aid, including establishing field hospitals and airdropping medical supplies to Gaza, with the UNA-OIC describing Jordan as a humanitarian lever for Palestinian support. King Abdullah II's consistent calls for a ceasefire and his advocacy for Palestinian statehood have reinforced Jordan's image as a mediator, earning it diplomatic credibility. This reputation has not only bolstered Jordan's influence in international forums but also reassured investors wary of regional volatility.

According to the World Bank's Jordan Economic Monitor, Jordan's economy demonstrated resilience in 2023, with a 2.7% real GDP growth, despite trade disruptions in the Red Sea and a decline in tourism. The kingdom's ability to navigate these challenges-while maintaining its peace treaty with Israel-has made it an attractive partner for Gulf states seeking to diversify their economic portfolios. For instance, the UAE-Jordan Comprehensive Economic Partnership Agreement (CEPA), signed in October 2024, is a direct reflection of this trust, according to an ORF analysis of the UAE–Jordan CEPA. The agreement aims to deepen trade, streamline logistics, and integrate Jordan into global value chains, leveraging the UAE's infrastructure and Jordan's strategic location.

Green Hydrogen and Renewable Energy: A New Economic Corridor

One of the most striking examples of Jordan's investment appeal lies in its green hydrogen ambitions. The country has secured partnerships with the European Bank for Reconstruction and Development (EBRD) and private sector players to develop a competitive green hydrogen industry. By 2025, Jordan had signed 13 memoranda of understanding for green hydrogen projects, positioning itself as a regional hub for clean energy, as reported by The Jordan Times' piece on green hydrogen. This initiative is not merely environmental but economic: it aligns with Gulf states' decarbonization goals and creates a new corridor for energy exports.

The synergy between Jordan's renewable energy projects and Gulf investment is evident in the Gulf Railway initiative, which aims to connect Saudi Arabia, Jordan, and the UAE via a high-capacity rail network. This infrastructure project, coupled with Jordan's solar and wind potential, has drawn FDI inflows of $1.3 billion in the first three quarters of 2024, with Arab nations accounting for nearly half of the total, according to Arab News' report on FDI inflows. Such investments are underpinned by Jordan's political stability-a rare asset in a region where conflicts often deter capital.

ICT and Digital Infrastructure: A Talent-Driven Hub

Jordan's focus on information and communication technology (ICT) further illustrates how its diplomatic stability attracts investment. The kingdom has digitized 65% of its public services and launched 21 new investment opportunities in high-value sectors, including ICT and renewable energy, in an official announcement. These efforts have positioned Jordan as a "data corridor" in the Red Sea region, complementing Saudi Arabia's AI ambitions.

Data from fDi Intelligence indicates that Jordan's ICT sector saw a 3.7% year-on-year increase in FDI inflows in Q3 2024, reaching $457.8 million. This growth is partly attributed to Jordan's ability to maintain regional stability, which reduces operational risks for tech firms. For example, the UAE-Jordan CEPA includes provisions for digital trade, enabling Jordanian startups to access Gulf markets while benefiting from Jordan's well-educated workforce.

Challenges and the Path Forward

Despite these successes, Jordan faces headwinds. The Gaza conflict has strained its tourism sector and disrupted trade via the Red Sea. Additionally, domestic political pressures-such as protests against the 1994 peace treaty with Israel-highlight the fragility of its balancing act. However, Jordan's strategic partnerships, particularly with Gulf states, have mitigated these risks. The World Bank's country page for Jordan underscores this, highlighting support for green growth and private sector development.

The key to sustaining investment lies in Jordan's ability to maintain its diplomatic neutrality. As the MENA region grapples with fragmentation in supply chains and geopolitical rivalries, Jordan's role as a mediator and economic bridge will remain critical. For investors, this means opportunities in sectors where stability and innovation intersect-particularly green energy, digital infrastructure, and cross-border logistics.

Conclusion

Jordan's diplomatic stance on Gaza is more than a political strategy-it is an economic lever. By fostering regional stability, the kingdom has attracted Gulf capital, spurred innovation in green energy, and reinforced its role as a logistical and technological hub. As the MENA region navigates a complex geopolitical landscape, Jordan's ability to balance peace advocacy with economic pragmatism offers a blueprint for sustainable investment. For now, the Hashemite Kingdom stands as a testament to the idea that diplomacy, when executed with precision, can be as transformative as infrastructure.