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Michael Bociurkiw is a global affairs analyst and a senior fellow at the Atlantic Council.

It doesn’t take very long these days in the Jordanian capital to notice that the Israel-Hamas war raging next door is taking its toll.

The numerous five-star hotels and restaurants in Amman have plenty of spare rooms and tables and the regular flow of foreign tourists has all but vanished. Fearing that the conflict could spread to Jordan, many foreign workers fled back to their home countries.

With a 300-kilometre shared border with Israel and the West Bank and home to almost two million Palestinian refugees, when violence spirals out of control in Israel, Jordan shudders.

In fact, the small Arab country is facing its biggest internal and external security threat in recent years as it tries to balance the demands of the Arab Street for justice for Palestinians in Gaza against the need to maintain stable relations with the United States and Israel. About 60 per cent of the population nationwide and as high as 70 per cent in Amman has Palestinian roots. Thousands came from Gaza after the 1967 Arab-Israeli war.

The situation requires King Abdullah II to walk a fine line and not stray too far from the official position of the U.S., which sends about US$1.6-billion annually to the small desert kingdom.

Adding to anxieties among the kingdom’s leadership is the need to literally keep the taps flowing: As one of the most water-starved nations on the planet, Jordan depends almost entirely on water from Israel. Severing ties with its neighbour, as has been called for in loud protests in the earlier days of the war, could spell an end to that water deal, forcing the country to opt for more expensive solutions.

Already Jordan has recalled its ambassador to Israel and a proposed deal – the largest-ever between the two countries, which would trade solar energy produced in Jordan for desalinated water from an Israeli plant on the Mediterranean coast – has been placed on ice after Israel invaded Gaza. Proposed gas and tourism deals with Israel could also be jeopardized.

So far, King Abdullah and his wife, Queen Rania, who has Palestinian heritage, have been more outspoken than ever in terms of condemning Israeli assaults in Gaza, especially the heavy toll paid by women and children.

King Abdullah went even further at a peace summit in Cairo in October. “The relentless bombing campaign under way in Gaza is cruel and unconscionable on every level,” he said. “It’s collective punishment of a besieged and helpless people. It’s a flagrant violation of international humanitarian law. It is a war crime.”

On two separate occasions in November, using parachutes, the Jordan Royal Air Force was able to air-drop urgent medical aid into Gaza for its field hospital in the strip, an operation that involved Israeli co-operation. Presumably, Jordan can continue to play an important role as a peace player in this conflict, overtly and covertly.

“Jordan has done more than most Arab countries. They are doing their best to find an end to this madness,” Amman-based Palestinian journalist Daoud Kuttab told me. He said Jordan doesn’t want to be party to what he called Israeli war crimes by caving and accepting more refugees from Gaza.

But there is a limit to how far Jordan will go in terms of criticizing Israel or allowing protests to escalate. When Jordanian protesters approached the Israeli-controlled West Bank border in October, they were teargassed. Small-scale arrests and road closures have worked so far to contain protests in Amman.

However, Jordanians continue to display their displeasure with alleged U.S. double standards with their feet, boycotting the many American fast food chains in the capital, perhaps not realizing that many are franchises and that prolonged action could cause local job losses in the sector, which employs about 8,000 people.

But job losses could also worsen as tourists and pilgrims shun the region for more peaceful destinations. Even if calm prevails in Jordan, where tourism represents around 11 per cent of the economy, many tours to the Holy Land, which have all but vanished since Oct. 7, typically include add-ons to Jordan. Economics is always a powerful factor in any conflict.

With Israel renewing its attacks on the Gaza Strip, it is doubtful that even clever diplomacy will bring a quick restoration of relations between Jordan and Israel. In the meantime, King Abdullah and his advisers may need to further recalibrate their relations with the U.S. and Israel, and any move could be extremely costly.

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