Thursday, January 2, 2003
Iraq war will spell disaster for Jordan economy: Experts
Agence France-Presse Amman, January 2
Jordanian officials and economic experts warned that a US war on Amman's key trade partner Iraq will spell "disaster" for the national economy in 2003, despite the economic achievements recorded in 2002.
In interviews with AFP the sources said a drawn-out war on Jordan's eastern neighbour will undermine 2002's positive growth rate, rise in exports and increase in the trade volume of the Amman Stock Exchange. "Any strike against Iraq will cause a serious problem to Jordan and we will be the most affected party in the region after Iraq," National Economy Minister Samer Tawil said.
"According to our worst scenarios a military strike on Iraq will be a disaster for Jordan, particularly if oil imports from Iraq are halted," Tawil said.
Jordan gets more than five million tonnes of oil from Iraq annually, half of it free of charge and the rest at preferential market rates, while more than 20 per cent of its total exports are sold in Iraq.
A halt in Iraq's oil flow to Jordan will hit the country's budget, bringing an additional deficit of 700 million dollars, Tawil estimated.
"The impact of such a war on the Jordanian economy will depend on its duration and magnitude, and on how long a halt in oil imports lasts," he said.
Official sources have suggested that Jordan could lease an oil tanker to be filled with fuel reserves and moored at the Red Sea port of Aqaba, or be forced to purchase oil on the international market.
A war on Iraq will have a backlash on industry and tourism as well as disrupt the busy transport sector which sees 7,000 trucks travel between the two countries, officials say.
It will likewise cripple Jordan's efforts to attract new investments amid a 385-million-dollar reforms programme launched a year ago to fight unemployment and poverty.
Over the past 12 months Jordan has made remarkable strides in improving its cash-strapped economy, despite facing a seven-billion-dollar foreign debt. According to government statistics, growth rate in the first ten months of 2002 stood at 4.9 per cent while exports rose by 15.7 per cent and foreign reserves reached a record high of around $3.9 billions.
Jordanian exports to the United States, namely textiles, reached 220 million dollars in the first nine months of 2002 compared to a mere $5 million in 1997.
Trading on the Amman Stock Exchange (ASE) increased by 43 per cent by year's end to reach 950 million dinars ($1.3 billion), the highest level since the bourse was established in the late 1970s.
"If political stability prevails in the region, Jordan's economy in general, and the bourse in particular, will benefit," said Jalil Tarif, the chief executive officer of the ASE.
"But this will depend on whether a war breaks out next door (in Iraq), and if so the Jordanian bourse will be among the losers," Tarif said.
But Jordan's economic achievements in 2002 have not been all rosy.
The tourism industry continued to reel from the effects of the 27-month-old anti-Israeli Palestinian uprising and the aftermath of the September 11, 2001, terror attacks on the United States.
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