Sunday, February 25, 2007

Raiding Social Security

The Social Security Corporation is a massive retirement fund in Jordan. The corporation was established in 1980, and currently covers the retirement and disability insurance needs for over half a million wage earners. The wage earner contributes 5.5% of his wage to the SSC, while the employer pays 11% of the total wages of their employees. The result is that the corporation controls assets of over 4 billion dinars.

The proper investment of this money is crucial for the long term viability of the corporation, which will eventually have to pay retirement and disability for the insured and death benefits to their family members. At the same time, this fund is viewed as being an important tool for economic development, and thus must invest the monies inside Jordan.

The question of who makes investment decisions is an important one. The board of directors of the SSC consists of seven government officials, four workers chosen by the labor unions and four representatives of employers chosen by the chambers of commerce and industry. The Social Security Investment Unit consists of seven members, consisting of three members of the board of directors and four members from the private sector who are nominated by the board of directors and ratified by the government.

So, the government has a strong influence on the investment decisions of the SSC. While the life expectancies of governments of Jordan are around one to two years, the SSC has obligations that should last decades from now. This means that what is expedient for the government may contradict the long term welfare of the SSC and the employees who are counting on it for their retirement.

While there are many examples of SSC investments being failures, these do not represent the total picture of their investments. It is not unusual for any venture to fail. However, how can we tell if an investment failed because it was not viable in the first place (but was approved due to political pressure) rather than due to other factors? These issues were raised last week by Salameh Dir’awi at al Arab Al Yawm. The issue was precipitated by a statement by the government that they will be borrowing 100 million dollars from the SSC to fund the building of new embassies and ambassadors residences around the world. This prompted Emad Hajjaj to publish this cartoon, showing the prime minister shoveling the money of the SSC while regular people (tax payers and SSC contributors) are begging for housing loans.


Anyway, Dir’awi strongly attacked the way the decision was made, saying that it only required a letter from the minister of finance to get the money. He also attacked changes in the makeup of the investment unit to increase the number of private sector representatives, with the implication that they are gambling with money that is not theirs. He pointed to a 950 million dinar loss in the stock exchange, which miraculously disappeared by adopting different accounting standards. He also questioned whether it is a priority for the government to spend on embassies and ambassador residences.

Fahed Fanek wrote an article defending government intervention in the SSC, although he said that interventions should be “rare, justified and transparent, with the government taking the responsibility for the outcome”. Previously, he wrote that the previous gains in the stock market over the last three years were much greater than the losses that were sustained with the market drop last year. Moreover, most investments are for long term dividends, and not for speculation.

Be that as it may, mechanisms to ensure the proper investment of SSC money should be in place in order to protect the stakeholders from political manipulation of SSC investments. It is, after all, OUR money.

Wednesday, February 21, 2007

New press law frozen

The parliament today abruptly shelved the proposed press and publications law. The proposed law was seen as an improvement over the previous one, although it still allowed the jailing of journalists and imposing prohibitively high fines on anybody who “breaks” the press law.

What is most interesting is the reason for this decision. The MP’s are insisting on the return of the Ministry of Truth Information, which was abolished under the misguided notion that we can actually have a free press. The government had wanted to subject the press to the ministry of trade and industry, which would have treated the press as other commercial enterprises. The MP’s want to give the press more prestige, and so are demanding the return of the MoI. It seems difficult for them to comprehend that, yes, the media is an industry. One of the vestiges of the MoI is the press and publications department, which still is performing its Don Quixote role of banning books.

Please make them stop.


Friday, February 16, 2007

The nerve of some people

After announcing the hiring of the son of the minister of municipalities in the Amman municipality, somebody had the audacity to say that he has better qualifications than the genius who happens to be the son of the minister in charge of the mayor. Here, a guy who has a B.Sc. in engineering from the University of Michigan at Ann Arbor, as well as an M.Sc. and a Ph.D. from UC Berkeley has offered to do the same job for half the salary.

Some people don’t know their place.

On the Dibbin controversy

I have noticed a concerted campaign going on to “save” the Dibbin forest from a development planned by Dubai Capital. Environmental groups have been pushing for a serious environmental impact study in order force DC to build its resort on the fringes of the forest. They did not like an earlier one that was submitted to the ministry of environment. They ask the public to sign a petition here, but I have not found the petition itself. What does it say? No project, move the project, EIA, what? I am amazed that people are signing a petition that they did not read. If anybody can give me a link to the actual petition, I will gladly read it and consider signing it.

A year ago, I wrote about the need to view ecotourism development as an approach towards sustainable use of our precious natural sites. Such development will take into consideration the economic and social needs of the local community and at the same time provide adequate stewardship to the forest and the ecosystem it sustains.

My post at the time complained about the elitist approach to ecotourism in Jordan. Not enough people are aware of the many great sites in the country, and those which are developed for tourism are designed to cater mostly to foreigners or affluent Jordanians. This inevitably leads to a sense of disenfranchisement and resentment on the part of most average Jordanians.

Thus, it is of little surprise that large segments of Jordanians show little interest in the issue. On the other hand, the local community is looking for improving its economic state through the project. The discourse of the local population in Jarash seems to swing between supporting the project, in the hope of creating jobs and economic opportunity, and rejecting it on the basis that it will do nothing of the kind. Most Jarashis view the archaeology of the city as a burden, and providing little to the local economy. Many feel that the Dubai Capital project will be the same. The environmental aspect of the debate is of little interest to them.

Now, not doing anything will not mean that the forest will be safe and protected. The rising cost of heating fuel the last couple of years has provided added incentive for people to illegally chop down trees for firewood. This year has seen increased firewood collection from forests all over Jordan. It is a safe bet that poor economic conditions, cold children, and the lack of economic incentive to protect the forest will ultimately lead to severe damage to the forest. This is not rocket science.

So, while I for one would feel much better if the DC project is moved to outskirts of the forest, I also feel that some development should take place there which would include the needs of the local population as well as of the natural ecosystem. Simply wishing that DC and their project will go away will do little for the people or for the forest.


Thursday, February 15, 2007

Just suppose….

Let’s say that you are a minister. Just for the fun of it, the minister of municipalities. Part of your job, among other things, is to recommend hiring or firing of mayors. Like the mayor of Amman. You can get him hired or fired.

Now, suppose that you have a super genius engineer kid, who is so interested in public service, just like his dad. Suppose, out of noblesse oblige, that this kid is willing to serve the public interest for a fraction of what his real genius is worth, say 2500 dinars a month (only 5 to 10 times what a non-genius peer would make). So, the mayor of Amman hires him.

Now, what would be wrong with that?


Tuesday, February 13, 2007

Now that didn’t hurt, did it?

At the end of Ramadan, I complained about how valuable work days are wasted due to the haphazard setting of the days of religious holidays, which are based on the lunar calendar. I also suggested that we should be able to calculate these dates, which would be a more progressive way to deal with this issue.

Since then, the feast of sacrifice (Adha) ended up lasting 9 days (it should only last four), due to sloppy dealing with setting of the holiday. At the time, it was estimated that this holiday cost the local economy 180 million dinars, and businesses were fuming.

King Abdullah later sent a letter to the prime minister asking him to reevaluate public holidays, and specifically requesting not to consider his birthday, or that of King Hussein, as public holidays. The king said that the best way to celebrate his birthday is to work hard and be productive.

Today, the prime minister announced a public holiday schedule for the next five years. In it, public holidays were reduced from 21 to 15 days per year. Also notable, the dates of Islamic holidays have been set according to the western calendar, taking away the guess work as to when they will start and end.

Finally, a win for common sense.


Monday, February 12, 2007

Irbid town meeting (on the internet)

Ammon news has a report on a new park that is supposed to be established in Irbid. Last summer, the king visited the city and donated seven million dinars for the project. Since then, little has happened, the previous mayor (Walid Masri) was fired (as I mentioned at the time), and the area designated for the park has been reduced from 244 dunums (24.4 hectares) to 177 dunums. Until now, the only visible achievement has been the laying of the foundation stone by the king.

What is more interesting than the report has been the comment section has evolved into a virtual town meeting. Many people are using their real names, and are either impressed by the achievements of the previous mayor (and are against the current mayor) or openly opposed to him. Some of what is said is quite revealing.

One comment states that the ministry of public works owed the municipality 4.5 million dinars, of which an installment was due to be paid on August 6, four days after the Masri was dismissed. The new mayor “forgave” the ministry of the money, with the obvious implication that Masri was removed to achieve this result. One reason cited for why the area of the planned park has been reduced has been the lack of funds needed to confiscate the extra lands.

Most comments support Masri, and assert that the activities and services in the city have deteriorated since the appointment of the new mayor. A joint comment signed by 16 city councilmen says that work on the park project slowed down after the appointment of the new mayor. They imply that the story was written to harm Masri “for electoral purposes”. Other commentators accuse the new mayor of being an underling to the minister of municipalities, who held a grudge against Masri and wanted to sabotage his work. They assert that he expanded his office and purchased fancy new furniture even as he claimed the city was broke and services declined. They accuse him and his administration of misusing city vehicles for personal purposes, even giving details of where the cars go.

Others attack Masri, claiming that he wanted to raise the prices of land in Nueimeh by encouraging development towards that area. Other accusations include nepotism.

Anyway, I find it to be a riveting and refreshing debate. My vote is with Masri.


Thursday, February 08, 2007

Amnesty International and Sajida Rishawi

Emily has asked me about my thoughts on this Amnesty International appeal on behalf of Sajida Rishawi. Rishawi is due to be executed soon for her role in the Amman bombings of November, 2005.

To begin, I would note that there are two major lines of argument against the death penalty. The first is that state sanctioned deprivation of life increases tolerance for violence and degrades the value of human life. The second is that innocent people may be put to death, and since this punishment is irreversible, it may lead to injustice that cannot be repaired.

The AI appeal (unfortunately for her) relies on the second line of reasoning. Sajida claimed that she was tortured for over three months so that she would confess the day following her capture (she later told the court that interrogators had shouted at her, which is not torture, as far as I know). The problem I have with this, aside from the time issue, is that she came to Jordan with the bombers, and stayed with them in the same apartment. She was caught in possession of an explosive belt that had malfunctioned. Jordanian security officials didn’t know she existed after the attacks, and were tipped off only after Abu Musab Zarqawi issued a statement hailing the group of three men and a woman. At the time, security officials denied that there was a woman among the attackers, because they didn’t find her body. Only later was she apprehended in Salt after she tried to hide there.

So, with or without her confession, there is a lot of evidence tying her to the terror plot. I don't see why would have been tortured, as the case would be pretty much the same with or without the confession. The insinuation that she was convicted based on a torture extracted confession is misleading and dishonest.

Whether or not you agree with the death penalty, I think most would have to agree that this particular case is not one that would elicit much sympathy. I hope that AI will choose a better case in the future to open a meaningful debate on the death penalty subject.

Tuesday, February 06, 2007

More on the Karamah dam discussion

Yesterday, Minister of Water and Irrigation Zafer Alem gave his point of view with regard to the Karamah dam, which the parliament is now examining. He was deeply involved in the decision, so it is understandable that he would defend the project.

The main defense Alem offered was that the project was studied by a British consulting firm, Sir Alexander Gibb and associates. He says that the Gibb report suggested that washing out the dam a few times will remove all the salt in the area. He said that “the strategy to clean out the salt could not be implemented because of drought from 1997 to 2006 prevented it”. Of course, I have not noticed this 9 year drought that he is talking about, unless of course you are comparing Jordan to Scotland. The bottom line was that water managers had more pressing needs to meet than to waste 50 million cubic meters of water on a salty useless dam. Anybody who understands the water situation in Jordan would have foreseen that.

It is interesting that invoking the name of a British firm is believed to be enough to silence critics. It is as if the minister is saying “Since a tall, blond, blue eyed consultant said it was OK, then we are not to be blamed”. I mean, who are you going to believe, a local expert or a foreigner? This logic holds even after the project is a proven failure.

It is interesting to note that Gibb and associates were involved in another multi million Dinar disaster in Jordan. They designed a dike system for the Arab Potash company which subsequently collapsed (scroll to page 7). Oops. It seems that despite the fancy name, Sir Alexander Gibb and associates sends over people like this fellow, who, at the tender age of 17, and five years before receiving his engineering degree, was a Junior Engineer for Gibb, in charge of “Site investigation interpretive reporting and analysis of embankment settlement and stability (for Arab Potash Project, Jordan)”.

Now, there are thousands of qualified people in Jordan who are capable of doing engineering and geological studies. Why not ask them for their advice? They would certainly cost less than our foreign blue eyed friends, and they understand the local environment. The answer is that our decision makers still think that “Il frinji brinji” (what is foreign is good). At least, you might intimidate your critics with a fancy consultants’ name when things go bad.

Anyway, a friend of mine suggests a new use for the dam. He says that we can take the cucumbers from the Jordan Valley, and throw them into the dam to make a giant pickle factory. Too bad Alem didn’t think of that.

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Monday, February 05, 2007

The new municipalities’ law

Yesterday the parliament approved the new municipalities’ law, after some modifications over what the government had proposed. The current law was enacted in 2001, with the stated purpose of improving the effectiveness of local government. It is viewed as undemocratic because the mayors and half of the municipal council members are appointed by the government.

The new law is an attempt to remedy this flaw. Now, the mayors and councils are fully elected by the public (except in Amman, which will retain its current formula). The government had attempted to regain some control through the appointment of a city manager. This, we were told, was in order to ensure that the previous problems faced by municipalities would not recur. These included temptations to overstaff and to forgo tax collection from key constituents, which left most municipalities in dire financial situations. Anyway, the parliament approved the idea of a city manager, but this person will be appointed (and fired) by the council itself and subject to the approval of the minister of municipalities. This modification gutted the concept of much of its meaning. It is also a lean towards democracy. Time will tell if this was a prudent decision.

Other features in the law include a 20% quota for women in the council seats. The mechanism of how they will be chosen is not obvious yet. The deputies allowed for joint membership in both the parliament and in municipal councils. Fahed Khitan views this as selfish. To me, the idea does not seem to be practical, but this is up to the voters now to decide.

One feature is that the mayors of the larger municipalities are required to hold bachelors degrees at a minimum, while the mayors of the smaller cities will be required to hold the high school certifications (tawjihi). Some view this as undemocratic, as it runs against the concept of equal opportunity.

Anyway, the law stipulates that new elections need to be conducted within six months of the approval of the legislation. The clock will start ticking after approval of the senate and ratification by the king.

New elections! What could be more fun for political junkies?


Thursday, February 01, 2007

Custom exemption rumor

Al Ghad has a report on how people with old dilapidated vehicles are holding on to their cars, in the hope that the government will offer them a customs exemption in exchange for taking the cars off the road. Some of the owners are spending thousands of dinars each year just keeping the cars running, in the hopes of making a profit when they get the exemption.

An exemption for a high end car can be worth over 20000 dinars. Jordanians joke that the government makes more money on car taxes than the cost of manufacturing of the car. The more expensive the car, the higher the tariffs. So, many people driving the old piles of garbage on the road don’t do this because they can’t afford better cars. They do it because they hope to make a pile of money on them.

The Al Ghad report points out that the government has denied numerous times that such an exemption deal is on the way. From a financial point of view, giving exemptions for over 100000 cars is something that the government can not and will not do. A similar deal for public transport cars (servees) was done a few years ago, but this was a different issue. The servees deal was public service to passengers who had to ride in them, and to the environment. It was not because the government thinks that servees drivers should get a break.

Still, people are hoping. The prices for these old cars are inflated because of the rumor, and the government is content with simply denying this rumor. What will it take to get these cars off the road? They are a hazard to their owners, to other drivers and to the environment. The answer is simple. The annual tests to renew registrations should be used to weed out the cars that are not road worthy. I often marvel at how some of the cars I see ever pass the registration tests. Once the motor vehicle registration department starts taking this task seriously, then the nonsense about the customs exemptions can be put behind us, and these menaces can be taken off the roads.