Jordan’s strikes may be just the tip of the iceberg

Jordan’s strikes may be just the tip of the iceberg

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Jordan is going through testing times. A truckers’ and public transportation strike over high fuel prices has stalled the economy and interrupted supply chains, while the government has made it clear that it cannot afford to abolish taxes imposed on oil derivatives because of the negative impact such a move would have on the troubled state budget. Prime Minister Bisher Al-Khasawneh told lawmakers last week that the government does not have the luxury of subsidizing fuel.
But as strikers held their ground, riots broke out in various parts of the country, especially in poverty-hit Maan Governorate, where a majority of truck drivers reside. In one tragic encounter, a senior police officer was gunned down by an unknown assailant. It later turned out that a terrorist was responsible for the cold-blooded murder. In a police raid against the suspect’s hideout, three police officers were killed and five injured. The suspect was killed on the spot.
This tragedy rattled the country and put pressure on both the government and the strikers to reach a settlement. By Monday evening, it appeared that the strike had been suspended, with some of the strikers’ demands having been met. The government has said that international oil prices have dropped in December and that the price of oil derivatives in the country are expected to also come down early in the new year. But while the strike may have ended, the root cause of the crisis remains.
Jordanians have been complaining about the steady rise in fuel prices for months. The rise has affected the cost of living in a country where the average monthly wage is about 500 dinars ($704). At current prices, the cost of 1,000 liters of kerosene — essential heating oil for the poor — is roughly 850 dinars.
The government has imposed a fixed tax on fuel derivatives that reaches more than 40 percent of its base cost. This tax generates about 1.2 billion dinars of revenue annually. More than 60 percent of the state budget of about 12 billion dinars is generated in taxes and customs duty. And yet the government is still struggling to close an annual budget deficit of 2 billion dinars. To do this, it has to resort to borrowing.
For more than a decade, Jordan has turned to borrowing to cover running expenses, which make up more than 70 percent of the state budget; mostly just to pay the salaries of public sector employees. After paying interest on loans and servicing debts, little is left for capital investments.

The economy is the No. 1 worry for all Jordanians. There is a need to take drastic decisions.

Osama Al-Sharif

Since 2004, when Jordan agreed to work with the International Monetary Fund to restructure its economy, the country’s national debt has jumped from $9.8 billion to more than $40 billion.
What is really worrying is that certain key indicators have been getting worse or not improving. Unemployment remains at a historic high of above 24 percent, reaching almost 50 percent among the youth. The poverty rate also stands at a dangerous 15.7 percent and is increasing. Today, the whole country finds itself at an impasse. Simply put, there is no light at the end of the tunnel and the perception among many is that the system is incapable of taking the drastic decisions that could change the current trajectory.
However, a moment of awakening has come. The government has adopted an “Economic Modernization Vision” that hopes to create a million jobs and attract more than $41 billion in funds in the next 10 years. But that will be made more difficult by the current geopolitical challenges facing the region and the world.
The economy is the No. 1 worry for all Jordanians. There is a need to take drastic decisions. The truckers’ strike could just be the tip of the iceberg and, although people’s demands are focused on their living standards for now, if they are not addressed quickly then such demands may expand and present a new set of challenges.

Osama Al-Sharif is a journalist and political commentator based in Amman. Twitter: @plato010


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