By: Dr Ahmad “Jordan” Al-Zu'Bi
Jordan Daily - Much has already been written about King Abdullah II’s address to the United Nations General Assembly. I want to read it differently. Beneath the diplomacy lies an economic argument about how nations perceive risk, how institutions create incentives, how political shocks travel into household budgets, and how credibility becomes an asset for countries such as Jordan. Seen through political economy, risk economics, behavioral economics and institutional economics, the speech raises a larger question about our era of war and peace: why do we repeatedly ignore risks while they are manageable, only to pay vastly more once they become crises?
The World’s Scarcest Resource May Be Attention
Economics begins with scarcity. King Abdullah begins there too. “Attention has become a scarce asset,” he said, before making a more consequential observation: “attention is more than a cognitive resource. It is a geopolitical one.”
That is behavioral economics hiding inside diplomacy. We see the same phenomenon after a major flood or typhoon. Before disaster, households may underestimate an exposure, remain uninsured or purchase insufficient protection. Once catastrophe strikes, the risk becomes salient. Perceptions change, demand for protection can rise, and insurers reassess the exposure. The hazard did not suddenly appear; our attention to it did.
Geopolitics suffers from the same problem. Risks that receive insufficient attention do not disappear. They accumulate. As the King put it, “History rarely catches us entirely by surprise. More often, it catches us focused elsewhere.” Perhaps the most expensive risk, then, is the one we learn to ignore.
Welcome to the New Era of Risk: The Battlefield Has Borders; Its Balance Sheet Does Not
The King asks anyone who believes a Middle Eastern crisis remains in the Middle East to look at the energy and grocery bills of ordinary families “from Mumbai to Madrid to Minnesota.”
That is the New Era of Risk in one sentence. Conflict can disrupt trade, shipping and investment; those disruptions can affect insurance and freight costs, energy markets, production costs, food prices and inflation. What begins as political risk can migrate into economic risk, corporate risk and, ultimately, household risk.
Politics and economics are therefore not separate systems. They are two sides of the same risk transmission mechanism. A geopolitical shock moves through supply chains, financial markets and prices until an event thousands of kilometres away appears on an ordinary family’s balance sheet.
In an interconnected global economy, there is increasingly no such thing as a purely local war.
The World Keeps Paying Claims Without Reducing the Underlying Risk
The King describes the Palestinian-Israeli conflict in language that almost invites a risk-management interpretation. For decades, he says, he warned against leaving it unresolved. Yet, in his words, “the international community chose to manage the conflict, not confront it.”
Risk and insurance economists know the distinction. Financing the consequences of a loss is not the same as reducing the underlying exposure. Humanitarian assistance, reconstruction, emergency financing and ceasefires can all be essential, particularly in limiting immediate human suffering. But repeatedly absorbing losses without addressing their underlying drivers leaves the system exposed to recurrence.
That is the difference between crisis management and risk management. The former asks how we absorb today’s loss. The latter also asks why the loss keeps occurring, which incentives sustain the exposure, and what would reduce its probability or severity. The political economy of peace requires both.
When Enforcement Becomes Selective, Moral Hazard Follows
This is where the speech moves from risk to incentives. Speaking specifically about the Israeli government, the King argues that its sense of impunity has become so great that it no longer asks, “Can we get away with this?” because “It already knows the answer.”
He then identifies sanctions, asset freezes, embargoes and diplomatic isolation, noting that the international community has used such instruments elsewhere, while arguing that its response toward Israel has been different. That is the King’s political charge. The economic mechanism behind it is an incentive problem.
Rules influence behavior when actors expect violations to carry credible consequences. If enforcement becomes predictably inconsistent, incentives change. A double standard therefore has an economic consequence as well as a legal and political one: it changes the expected cost of violating the rule.
This is moral hazard translated into international relations. International law cannot derive its force from words on paper alone. Its credibility depends partly on whether actors expect comparable rules to be meaningfully enforced. Selective enforcement does more than weaken a particular rule; it can weaken confidence in the institution enforcing it.
Water Is Not Just a Resource; It Is a National-Security Asset
The speech then brings geopolitical risk directly to Jordan’s northern frontier. Discussing Israeli actions in southern Syria, the King warns of “new facts imposed on the ground, including around vital water resources.”
He then makes Jordan’s position explicit: “Any threat to our northern border, or our water security, is a threat to our national security.”
That connection matters economically. For a severely water-scarce country, water is simultaneously a natural resource, an input into economic activity, a food-security constraint and a strategic asset. Once water risk intersects with territorial instability and cross-border politics, resource economics becomes national-security economics.
Water security, border security, food security, investment and political stability increasingly belong on the same risk map. In the New Era of Risk, categories that once sat in separate policy ministries increasingly collide.
Trust Is the World’s Invisible Currency
Perhaps the deepest economic idea comes near the end of the speech. The King speaks of trust between nations, trust in agreements and trust that rules will actually be enforced. Then comes the warning: “Destroy that trust, and every challenge becomes harder. Preserve it, and cooperation becomes possible.”
Economics understands this intuitively. Banks depend on confidence, insurance contracts depend on credible promises, investment depends on confidence in institutions and contracts, and diplomacy depends on credible commitments. Trust is not diplomatic decoration; it is economic infrastructure.
When institutional trust deteriorates, uncertainty increases, risk premiums can rise, investment horizons can shorten, states hedge more aggressively, and agreements become harder to sustain. The effects can reinforce one another.
Trust is the capital we rarely price until we destroy it. Once credibility disappears, uncertainty becomes more expensive for everyone.
Jordan’s Most Valuable Export May Be Predictability
That makes one of the King’s simplest phrases economically richer than it first appears. He describes Jordan as “principled, open and steady” and, more importantly, as “a country the world can count on.”
There is an economics to being counted on. In diplomacy and country risk, it means that a state’s commitments carry credibility, its institutions and policies provide a degree of predictability, and other actors can make decisions with greater confidence about how that state will behave. Predictability supports credibility; credibility builds trust; trust reduces uncertainty; and repeated credibility accumulates into reputational capital.
This is Jordan’s sovereign reputational balance sheet, built over years and decades.
Jordan cannot eliminate the geopolitical risks surrounding it; its geography does not permit that luxury. Its comparative advantage can instead lie in accumulating credibility while surrounded by those risks. In a neighborhood where uncertainty can change by the day, predictability itself becomes both a political and an economic asset.
Peace Is Cheaper Than War, So Why Do We Keep Buying War?
Here lies the paradox connecting the entire speech. War destroys physical capital, human capital and trust. Peace preserves them. Yet prevention faces a political-economy problem: the costs of diplomacy are visible today, while its greatest benefits often consist of losses that never occur.
That makes prevention easy to undervalue. We see the bill for diplomacy, but there is no invoice showing the hospital that was never destroyed, the investment that was never cancelled, the family that was never displaced, or the reconstruction that taxpayers never had to finance.
The economics of peace therefore begins before the economics of war. It begins with attention, with recognizing exposures while they remain manageable, with institutions whose rules carry credibility, and with diplomacy that treats prevention as an investment rather than an expense.
King Abdullah closes with the same scarce resource with which he began: attention. “The future is shaped not only by what we do, but by what we choose to ignore.”
That sentence contains the economics of the entire speech. Ignoring risk does not eliminate its cost; it postpones its recognition.
The risks we ignore do not disappear. They compound until someone receives the bill. In this New Era of Risk, that someone is increasingly all of us.
