Jordan is going through testing times. A truckers' and public transportation strike over high fuel prices has stalled the economy and interrupted supply chains. The government made it clear that it cannot afford to abolish taxes imposed on oil derivatives because of the negative impact it can pose 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, a statement that may have triggered the crisis.
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As strikers held their ground, riots broke out in various parts of the Kingdom, especially in the poverty-hit Maan Governorate, where the 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 takfiri terrorist was responsible for the cold-blooded murder, and during a police raid at the suspect's hideout, three police officers were killed and five injured. The suspect was killed on the spot.
The tragedy has rattled the country and put pressure on 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 dropped in December and that prices of oil derivatives in the Kingdom are expected to come down too at the beginning of the New Year. However, while the strike may have ended, the root cause of the crisis remains, and the government may be challenged once more soon.
Intriguingly, the government had not anticipated a public backlash as it approved a historic hike in fuel prices in early December, even though Jordanians have complained about the steady rise in fuel prices for months.
Intriguingly, the government had not anticipated a public backlash as it approved a historic hike in fuel prices in early December, even though Jordanians have complained about the steady rise in fuel prices for months. The surge in fuel prices has affected the cost of living in Jordan, where the average monthly wage is about JD500, or about $700. Currently, the cost of 1,000 liters of kerosene — essential heating oil for the poor — is roughly JD850 or about $1,200.
The government has imposed a fixed tax on fuel derivatives that reaches more than 40 percent of its base cost. This tax generates about JD1.2 billion or $1.7 billion annually of revenue. More than 60 percent of the state budget of about JD12 billion, or $17 billion, is generated in taxes and customs duty. Despite this, the government is struggling to close an annual budget deficit of JD2 billion or $2.8 billion. To close this gap, it has to resort to borrowing.
The poverty rate stands at a dangerous 15.7 percent and is increasing. And for the majority of Jordanians, the government has failed to gain their trust, and right now, the whole country finds itself at an impasse.
Borrowing is not new. For over a decade, successive governments had 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 the public sector employees. After paying interest on loans and servicing debts, little is left for capital investments. Between 2004 —when Jordan agreed to work with the International Monetary Fund to restructure the economy — and now, the Kingdom's national debt had jumped from less than JD7 billion, or $9.8 billion, to over $40 billion.
The cause for concern here is that certain key indicators have been worsening or remaining stagnant. Unemployment remains at a historic high of more than 24 percent, reaching almost 50 percent among youth. The poverty rate stands at a dangerous 15.7 percent and is increasing. And for the majority of Jordanians, the government has failed to gain their trust, and right now, 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 drastic decisions over changing the current trajectory.
A moment of late awakening did come — the government has adopted an Economic Modernization Vision that hopes to create a million jobs and attract over $58 billion in 10 years. This is a tall order, made even more difficult with the current geopolitical challenges facing the world and the region.
For years, various polls and surveys showed rising discontent among Jordanians concerning the economy. A recent study indicated that over 80 percent of Jordanians do not approve of the country's direction. That alone should have sounded alarm bells at decision-making quarters. Still, the government's main concern has been to generate revenue to pay public sector salaries while pushing consumers back to the wall by hiking oil prices.
The truckers' strike is a serious incident that should have been anticipated and dealt with wisely, prudently, and quickly. There is bitterness and frustration among the majority of Jordanians, and the economy remains the number one worry. Running things the way they have been run in the last decade no longer works. There is a need to take drastic decisions and change course.
People's demands remain focused on their living standards, and the strike was the tip of the iceberg. Failure to address these demands, and to do so quickly, will cause them to expand and present a new set of challenges.
Osama Al Sharif is a journalist and political commentator based in Amman.
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