Jordan's Economy Hit by Iraq War

Jordan's Economy Hit by Iraq War

IT'S BEEN WEEKS since most of them have found work, but having your hopes dashed again is still preferable to sitting at home with an empty belly. Lined up on the median, the tools of their trades spread at their feet, the day labourers try vainly to make eye contact with passing drivers. When a stranger stops, he is encircled in an instant and bombarded with the same question from all directions: "Are you looking to hire?"

Abdul Latif Abdul Hafas, a master craftsman, can normally command 15 Jordanian dinars - about $31 - a day for his tile-laying prowess. But since the war came to neighbouring Iraq there has been no demand for his services. With four kids to feed at home, he's willing to go for a third of his usual rate, or even spend the day lugging sand and bricks for two dinars - about $4. "It's bad times," he says, almost apologetically. "I've got to pay the rent and the other expenses." Mohammed Badawi, a house painter, says the profiteers are already on the prowl. He and his crew would normally charge about $1,800 for a good-sized villa. This week someone offered them a little more than $100. "The guys who are making deals like that are scum," he says. "But I feel even lower than them for having to accept it. The only other option is to starve." There's not a lot of bargaining room in a country where one-third of the population survives on less than $1.50 a day.

In a conflict where the casualties - civilian and military - are mounting daily, some of the worst collateral damage may be inflicted on a place that doesn't expect to see any bombs, missiles or gunfire. Jordan's economy, long subsidized by the flow of cheap Iraqi oil and heavily dependent on the markets of its larger neighbour, is already feeling the pinch. And a growing chorus is predicting dire consequences unless the U.S. moves quickly to shore up one of the few Arab nations still standing by its side.

"This is a scary situation," says Mazen Darwazah, chairman of Hikma Pharmaceuticals, the largest privately held company in the country. "The real unemployment rate here is already close to 20 per cent. If things get worse, there will be more and more frustration in the streets. And in this part of the world, frustration leads to extremism, and extremism leads to fanatical acts." Sitting in a plush boardroom at his corporate headquarters in Amman, Darwazah lays out the same concise set of facts and figures he used to lobby members of the U.S. government for aid a few weeks ago.

Since 1991, in gratitude for the late King Hussein's support during the last Gulf War, Iraq has been providing all of Jordan's oil at a deep discount - the price was the equivalent of about US$8.50 a barrel. Now that the taps have been turned off, the country will be forced to pay world prices - currently about US$28.50 a barrel - at an estimated additional cost of up to US$1.5 billion a year. Iraq is also Jordan's largest trading partner, purchasing some US$300 million in goods last year, about one-fifth of Jordan's total exports. Add in sectors that rely heavily on the cross-border trade, like transportation and pharmaceuticals (last year Darwazah's company did about 18 per cent of its business with Iraq under the UN Oil for Food program) and the total cost to the Jordanian economy of this war could be in excess of US$2 billion - at least 10 per cent of the country's current GDP. "The economy will be in a total shambles within 24 months," says Darwazah. "And in the case of my own business, it's only going to be a couple more weeks before I have to start laying people off."

Tourism, the other engine of the Jordanian economy, has been declining since the start of the second intifada in neighbouring Israel in September 2000. The attacks on the World Trade Center and Washington a year later almost entirely stopped the stream of visitors. Today, as a matter of policy, the Jordanian Ministry of Tourism refuses to provide journalists with visitor figures, but empty restaurants, hotels and attractions speak volumes. At Petra in the southern desert, Jordan's premier historic site, there are no crowds jostling to gape at the elaborate tombs and temples that the Nubataeans carved out of the dusky red sandstone 2,000 years ago. On a recent weekend, the visitor's book had just 19 names, including one American and one Iraqi - presumably travelling separately. "At this time of year, the high season, we'd often get 3,000 to 4,000 people a day," says Abu Ra'ad, the man in charge of the visitors' centre. "Today we sold fewer than 40 tickets."

On the highway back toward Amman, the owners of the Al Sultania Tourism House, a large restaurant and craft bazaar, can't even be bothered to turn on the lights. Sitting in the gloom, the chafing dishes for the buffet covered in plastic behind him, Ibrahim Mohammed smokes and frets. Twenty local families depend on the rest stop for their livelihood. They are all struggling to make ends meet. "We used to get thousands of people a day - 20 or 25 buses at a time," says Mohammed. "The parking lot would be full." The day before he had just two customers. "It will get better, inshallah."

But news last week of two alleged terrorist plots by Iraqi agents is unlikely to reduce travellers' apprehensions. In one, a crude incendiary device was detonated on an upper floor of Amman's Hyatt Hotel, the temporary home of hundreds of journalists and aid officials, causing a small amount of damage. The other, a bid to poison the water supply in the village of Zarqa in the eastern desert near where some American troops are based, was still in the planning stages.

For Jordanians already bending under the burden of their worries, it was simply more misery. In his offices above his Jeep and Chrysler dealership in downtown Amman, Hamdi Tabba'a, chairman of the Jordanian Businessmen Association, grimaces in response to a question about his current prospects. "Unfortunately, I sell American cars," he says wryly. A former minister of trade and industry, Tabba'a is in high dudgeon about what he and most of the 400 members of his elite organization see as a needless war. Although the U.S. administration recently earmarked $1 billion to help Jordan cope with higher oil prices, it is barely a beginning, he says. "Aid can't replace the momentum of an economy. We already have a budget deficit and we're not in a healthy situation." Even if America eventually ponies up more funds, Tabba'a has little optimism about the future. "Jordan has been through a lot of wars and crises - 1948, 1967, 1973, 1991 - but this time it's bigger," he says. "It's hard to get a grip on the American agenda - just how far they want to go in this region. It's like the crusaders. It's cowboy time."

A few blocks away, on a small patch of greenery in the shadow of some of Amman's ritziest homes and foreign embassies, Saddam Riyalat and two of his younger brothers are herding their sheep into a tight circle and binding their necks together with a long strip of fabric. Their family gets about $1.50 a kilogram for the milk the sheep produce each day. Riyalat's not optimistic about the future either. The price the dairies offer will fall, he predicts, as will the butchers'. Gasoline for the car and kerosene for the heaters in the house will cost more. Everybody, rich and poor, will feel the effects. "We've been tied to Iraq for so long. It's not going to be easy," he says. "I wish the Americans had thought a little more about all of this before they invaded."

Maclean's April 14, 2003