Sent : Monday, October 17, 2005 10:02 PM
To :
Subject : my article about the failed economic policy in Jordan

Jordanís Failed Economic Policy
Why They are not Learning from Past Failures

Since the 1990s, Jordan has struggled to recover from protracted economic difficulties. Ever since, income at the grass roots level has remained stagnantí inflation continues to be a serious problem, unemployment and poverty are rising, and Jordanís creditworthiness remains shaky.

While the stabilization programs implemented in the 1990s temporarily succeeded in achieving positive results, the overall macroeconomic management failed to capitalize on that progress. As a consequence, a deeper economic crisis is developing.

Fuel prices which have recently been hiked to offset the impact of world oil prices on the budget deficit are one symptom of the economic crisis. Due to oil price increases and a decline in foreign aid, the governmentís incompetent economic team is expecting that the projected budget deficit will increase to JD950 million or $1.3 billion this year. This figure is simply too large for Jordanís strained budget.

In the past, government officials failed to fully recognize Jordanís dependence on external resources and could have gradually liberalized among other things fuel prices so the market could have adjusted. As a consequence, the King and his ministers created a high budget deficit, a deficit that most likely will again threaten the countryís economic welfare. As such, they are once again mortgaging Jordanís future while making the country economically and politically vulnerable.

In addition, the King and his government continue to depend on individuals that do not have a deep understanding of the economic realities of the country and its challenges. It is ironic to see the Kingís cronies blaming each other for this emerging crisis. For example, the current Finance Minister, Adel al-Qudah, is blaming the problems facing his bureaucracy on the former Finance Minister Muhammad Abu Hamor, who, in turn, blames the former Prime Minister (Faisal Al-Fayez) and his Planning Minister (Bassem Awadallah), who in turn blames it on assumptions and bad luck, and Jordanís governance tragedy continues!

Regardless of those peopleís qualifications or lack thereof, they all share the same characteristic: they are pathetic and cowardly. However, the regime continues to reward them. For example, Abu Hamour is currently the head of the Privatization Unit at the Prime Ministerís Office and Al-Fayez is the Head of the Royal Court; and I am sure that a rewarding job offer for Awadallah is on the way. It is unconscionable what is taking place in Jordan. The king and his cronies ought to be ashamed of themselves!

In order for true change to begin, a system of accountability must be institutedóa system that must start at the top. First, the King must admit mistakes when they occur and hold those accountable to him to the same standard. Second, economic changes must be implemented to stop the continuously deteriorating standard of living for average Jordanian citizens. Those who are mostly living on fixed wages and salaries will suffer a grave hardship from their leadersí tragic, irrational policies.

To continue on the current path will certainly worsen Jordanís current conditions for years to come: large debt-service, high tax burden, large oil import bill, and increased pressure for greater than before government spending on social services. In addition, the continuous need to address rising unemployment, poverty, and high population growth.

So, my fellow Jordanians, be prepared for a series of unwelcome guests from the International Monetary Fund and the World Bank. These technical experts are coming to fix Jordanís economic house, again. Be patient, as they will be staying for a long time as they embark on prescribing a set of policy measures to remedy some of the countryís profound economic problems. They will be doing the government economistsí jobs. It is going to be, again, a long journey of economic austerity and deprivation. Regrettably, the majority of you will continue to be in dire poverty for many years to come.

Also, do not be misled by the Central Bankís published and manipulated statistics. They are used to serve as ďpoliticalĒ tools. Everybody remembers how an overvalued Dinar and rosy macroeconomic indicators published in the 1980s by the government led to serious economic repercussions. With incompetent or corrupt cronies in charge of implementing economic policies, there is a little hope that economic stability can be achieved.

Addressing these challenges requires mature political and economic leadership. However, we as citizens must also do our part. We must stand up and be counted. It is not enough to say, ďthe current economic situation is not acceptable.Ē We must also offer solutions. These solutions should be presented in an environment free of retribution and reprisal. Unfortunately, Jordanís political elite rubber stamps what the regime wants and the media continue to endorse the governmentís senseless policies. Alas, when our people are not informed or are ill-informed, they cannot hold government accountable when it is incompetent, corrupt, or both.

I must admit that am unable to propose magic solutions to tackle these challenges confronting Jordan today. However, I can say that Jordan will not overcome its economic challenges until corruption is checked and governance improves. The useless Marwan Muasher, the governmentís mouthpiece on democracy and reform needs to be reminded of that.

I also can add that unless there is an adept and sincere political and economic leadership, which Jordan lacks at this time, these challenges will continue to hammer the country and its people and thus undermine its economic survivability for years to come, and for that, I am very sad.

Let us be heard!

Awen R. Al-Meshagbah, PhD
Boston, MA