Embargo of Iraq threatens to destroy Jordan's economy

September 21, 1990|By Robert Ruby | Robert Ruby,Sun Staff Correspondent

AMMAN, Jordan -- For Munir Nassar and the travel agency he owns, this was to be the year when tourists began to think the Middle East was again safe, for they visited Jordan in record numbers and spent record amounts of money.

For Rudain Kawar and his family's shipping company, it was when the volume of freight through the Jordanian port of Aqaba was to show a healthy increase, thanks to Jordan's ties with Iraq, the neighbor that was Jordan's most important trading partner and diplomatic ally.

"It was going to be a tremendous year," said Mr. Nassar, contemplating the cancellations that have poured in from businessmen and tour groups. "We've had 100 percent cancellations through Christmas. You might find one or two tourists, but not more."

"The port is empty," said Mr. Kawar, contemplating a work force with nothing to do. "Basically all the companies were living off Iraqi cargo. You have to say the situation is bad and getting worse."

Jordan is the only country to have gambled its economic future on Saddam Hussein, the Iraqi president, a gamble Jordan

apparently has lost.

During Iraq's war with Iran, Jordan reoriented its commercial lif to satisfy Iraq's enormous wartime appetite for imports. Officials counted on Jordan's being rewarded when the fighting stopped with a prominent role in rebuilding Iraq's economy that would allow it to remain the main transit point for goods destined for the major power in the region.

The Iraqi invasion of Kuwait wrecked Jordan's efforts to steady its shaky economy, one dependent on grants and loans from the oil-producing states of the Persian Gulf and on the salaries earned by thousands of Jordanians working there.

Jordan's most generous benefactor was Saudi Arabia, which is unlikely to continue offering substantial grants to a country viewed as sympathetic to Iraq. As for the expatriate workers, more than 60,000 are expected to return home jobless from Kuwait by the end of the year.

Jordanian officials estimate that the losses total $2.1 billion, about half the country's annual gross national product. If their estimate is correct, and if Jordan does not receive substantial aid, then by any normal measure the nation's economy is on the brink of collapse.

"Jordan is experiencing very, very serious hardships," said Basel Jardaneh, Jordan's finance minister.

(In yet a further blow, Saudi Arabia stopped all its oil deliveries to Jordan, Arab oil industry executives said, according to a New York Times report yesterday.)

(Despite that notification, Arab diplomats here and in the gulf region said the oil cutoff was a clear expression of Saudi anger at Jordan, the Times reported.)

As described by Mr. Jardaneh and others, the international trade embargo against Iraq has caused economic side effects to every aspect of Jordan's economy:

* Jordan obtained 90 percent of its energy supplies from Iraq and Kuwait, with Kuwait providing oil and refined products worth about $60 million free. Iraq supplied oil at an artificially low price, trade Jordan is continuing in violation of the United Nations embargo because of its apparent inability to afford market prices.

* Jordan sold about 30 percent of all its exports to Iraq and Kuwait, business that helped attract freighters to Aqaba. Fear that war will break out has kept vessels away and created a shortage of ships for carrying exports to other markets, further depressing Jordan's trade.

* Jordanians returning from Kuwait are unlikely to find jobs and will raise the current unemployment rate of 15 percent. The local economy also will be deprived of about $320 million a year that workers in the gulf used to send to their families.

* Tourism may not recover for many years because a substantial part was based on Jordan's relations with Saudi Arabia and Kuwait.

Mr. Jardaneh has cited those losses as justification for Jordan's request for long-term Western loans and a rescheduling or an outright cancellation of its foreign debt.

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