Sunday, April 09, 2006

Fuel rises again

The government has been preparing people for a while for a new rise in fuel costs (or what they euphemistically call lowering of subsidies). Ever since the last raise in September, it has been clear that this is on the way, to the point where some columnists called for raising the prices already. Well, last night they did just that.

The extent of the rise is what is shocking to most people, with the cost of diesel and kerosene going up by 43% from 22 piasters per liter to 31.5 piasters. There were also hefty raises in the cost of gasoline and liquefied petroleum gas. This issue is the subject of most conversations I have been involved in today.

If fact, this price rise will have serious effects on the cost of living for most people, despite the compensations which the government has set aside for lower income individuals. The formula is complex, but the bottom line is that the poorest families will get a maximum 150 JD per year. I have argued before that this will do little to help the poor, and other ways of spending the money might be more useful.

Anyway, the IAF tried to take advantage of the unhappiness by organizing a series of demonstrations. While the response to the call for the demonstrations was termed "good" on their web site, there is no definition of what good is. The web site complained that the authorities forced the dispersion of the demonstrations. It seems that the effort was a dud, because nobody I have spoken to even mentioned that there have been demonstrations.

Meanwhile, the labor movement took the side of the government, saying that the rise in prices came in the framework of the higher national interest, and criticized those who have "special agendas". They also hinted that they want the government to raise the minimum wage, presumably as a payback for this stand.

In reality, people understand the mathematics behind the need for this. Nevertheless, they are anxious about the implications of this rise. As I said, people will be hurt by this.

What people still don't understand is why there has been this drastic cut in Arab and foreign aid to Jordan, despite all our efforts to please the "powers that be". What do they want from us?


At 3:36 AM, Anonymous Anonymous said...

Wasn't the government books balanced when it had high import taxes on cars?

Fuel is a very basic commodity, the knock-on effect is dramatic - everything now is more expensive. We did not hear anything from the government about the rationale for this step except that it helps the government privatise the petroleum sector.

Yet with those big decisions being made, the government never polled the concerned citizens. The government sees itself as the guardian on a people who are immature and cannot take decisions for themselves.

At 5:40 AM, Anonymous Anonymous said...

Honestly, and I hate to admit this, but gas prices in most countries that are not oil producing are high. I think it's natural that in a country like Jordan, that doesn't produce oil, and that is facing a sudden decrease in foreign aid like you pointed out, that fuel prices are gonna go up.

Maybe after this increase, the country is going to start seriously addressing problems of effeciency in fuel consumption, enhancing public transportation so that people especially inside Amman can start relying more on that instead of their own vehicles, etc.

Still, this only releases some of the burdon on the government by taking away its subsidies on fuel. I would like to see real increases in government income by way of giving us a real balanced income tax law, however not the like of that that was recently suggested by the last government.

At 7:13 AM, Blogger Khalaf said...

Anon: While I agree that this will have far reaching negative effects, the parliament agreed to this when they ratified the budget.

Hamzeh: I agree on all points. The issue of public transport is especially important. Unfortunately, the only answer the government seems to provide is scooters.

At 4:38 AM, Blogger moi said...

While Arab aid may have decreased, isn't it true that US aid to Jordan has increased dramatically over the past 4 years (b/c of the Iraq war), making Jordan the 4th largest recipient of US aid? Much of this is directed at development programs that address problems in the water, education, health and governance sectors. Does anybody know where this money is going?!

At 12:44 PM, Anonymous Anonymous said...

Moi: Jordan gets about 500 million a year from the US.

This does little to offest the 700 million we used to get from Iraq as well as higher aid levels from the other Gulf countries. Most people beleive that the US has told the other Arab countries not to help, to soften our stands on some issues and to make us more beholden to the US. The reason is still not clear but soon we will be blackmailed into decisions that are not to our liking.


At 3:24 PM, Anonymous Anonymous said...

The underlying problems in the price increases is the unbalanced growth in the country, with high unemployment, significant numbers of people living below or near the poverty line, high inflation, and rural stagnation.

As long as these problems are supported through, at best, lip service and, at worst, deliberate neglect, reductions in government subsidies will continue to be hard to swallow.

A national concord needs to be developed to address these issues, and the national agenda needs to take these into account - rather then focusing on moving Jordan to a market-led economy with an incredible assumption of trickle down to all sectors and segments of the popultation.

At 8:08 PM, Blogger Khalaf said...

Anon: Are you some kind of commie or something?


Seriously, I agree that not enough effort is being done for more equitable distribution of wealth in the country. The problem is that nobody in the opposition is articulating any reasonable alternative economic paradigm. In the mean time, we are mixing the disadvantages of laiser faire capitalism with the disagvantages of big government, with all of it's inefficiency, waste, bloated workforce and red tape.

Of course, this is all due to a Zionist and Imperialist plot.


At 1:28 PM, Anonymous Anonymous said...

I do hate the use of the term communist as an offense. Communism is an ideal, so is paradise. Call me a dreamer but I'd rather be a communist than a paradisest - primarly because I believe that individual human rights (not only political rights but rights for water, food, shelter, employment etc or in another way of speaking the right for pursuit of happiness) need to be respected in our mundane world.

But my comments have nothing to do with either. What you rarely deliberate on, Khalaf, is the situation of the poor in Jordan, which is the key issue, together with water, that Jordanians need to address to make Jordan a better place for all. Living in West Amman it is easy to pretend that poverty does not exist. But the figures speak of quite a bad situation, and one that will clearly only get worse - if no actions are taken with immediate urgency.

I am not saying that subsidies are important or should be maintained. My argument is that as long as poverty is not addressed, its quite the norm to expect resistence of those suffering from hardship, to the removal of subsidies.

And I dont see why you seek to place the responsiblity of making progress on poverty on the opposition! It would seem obvious that the first to be held accountable would be the government (which, unlike the opposition, has had and continues to have the means to do something about poverty in Jordan).

Your comment on zionism and imperialism, I dont understand, and I dont see how it is pertinent to these issues. But allow me to comment that I can very much understand if you are tired of hearing conspiracy theories. Nevertheless it's a real pity to hear you belittle the impact of zionism and imperialism in shaping Jordan's policies. After all Jordan is widely recognised as the US and Israel's best friends in the region. You may agree with this position for Jordan, but it would be more honest to advocate this position while recognising its impact and implications, rather than supporting it by trying to belittle or deny it.


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