Possible US military attack on Iraq to threaten Jordanian economy

Published February 14th, 2002 - 02:00 GMT

Several weeks ago, Jordanian Minister of Commerce Wasif Azar and his Iraqi counterpart Muhammad Mahdi Saleh signed an accord enhancing bilateral commercial exchanges, currently estimated at over one billion dollars, and renewed an annual agreement which secured Jordanian oil supplies for the year 2002. 


However, in the event that Iraq faces an American military attack, the Jordanian economy is bound to be effected, bilateral agreements notwithstanding. In an exclusive interview with Jordan’s former Deputy Premier and Royal Court Chief Jawad Anani, Mena Report received a Jordanian outlook on the ramifications of a potential American-Iraqi crisis: 


How would a possible American military attack on Iraq affect the Jordanian national economy? 


The effect would depend on the magnitude of the military strike. However, the most crucial issue for Jordan is the possibility of a halt of oil flow from Iraq into the Kingdom. Iraq is Jordan’s sole oil provider. 


What can Jordan do to avoid economic damage that could arise from such an attack?  


The fact is the an attack would be disastrous to Jordan. Jordan has studied its options, should it be cut off from Iraqi oil exports. These options have all proved to be economically unfeasible. One possibility is to re-operate the Tapline between the Hashemite Kingdom and Saudi Arabia, which has been idle for a long time. Its total capacity is 460,000 barrels per day (bpd), 70,000 barrels out of which would be required to supply Jordanian local demand. Although it is still an option, it would cost no less than $400 million to re-open the site.  


Another alternative is to ship oil purchased on the international offshore market. This would be very costly for Jordan, due to the fact that it currently receives oil grants from Iraq, which will not be the case if it imports oil from other sources. 


The final option would be to develop storage facilities, which are not available at the moment, in the national port of Aqaba. Stored oil would then be transported by land from Aqaba to the Zerqa refinery, which is located 350 kilometers away. In this case, the costs of insurance and transportation will inevitably increase, which will lead to losses of up to $400-$500 million annually. 


How do you assess the current economic ties between Jordan and Iraq? 


The Economic ties between Jordan and Iraq have always been based on the fact that Iraq supplies all of Jordan’s oil needs, amounting to around 450 million Jordanian dinars annually. Jordanian exports of goods and services to the Iraqi market amount to JD110 million annually.  


What are the similarities and differences between Jordan’s present economic situation and its situation on the eve of the Gulf War in 1991?  


The Jordanian economy has been adversely affected by the Gulf war. We incurred great losses as our exports to Iraq and other Gulf States declined dramatically. In addition, more than 300,000 Jordanians who were working in the Gulf States were forced to return to Jordan. Only a small number of these returning residents managed to find employment back in Jordan, while the majority of them are still unemployed.  


Is Washington aware of the impact that a potential military attack on Iraq might have on the Jordanian Economy?  


King Abdullah II has clearly explained Jordan’s economic situation to the Americans during his visits to Washington. President Bush promised the King during his recent visit to the United States that he will increase aid to the Kingdom. During a previous visit, both countries signed a free trade agreement, which allows a wide range of Jordanian exports to enter American markets with low custom tariffs. 


The American Administration is aware that the Jordanian economy needs support. Europe is also aware of this fact. The key problem, which has no apparent solution thus far, is the oil issue. An increase in the price of oil will greatly affect the Jordanian economy as it will lead to an increase in the costs of all consumer goods and will put additional burdens on the Jordanian public, especially on the low-income families.  


In his latest meeting with the cabinet, the King noted that is an election year and it is essential for the elections to be run in an environment where people feel comfortable and assured as far as the economy is concerned. 


How do you assess the performance of the Jordanian economy at present and what are your expectations for next year particularly regarding the tourism sector? 


The Middle East tourism sector as a whole has been severely affected by recent international events. I believe the Jordanian economy has shown some improvement over the recent months. People in Jordan now begin to feel that the economy has started to flourish. One indication for this is the rise of the Amman Stock Exchange index, from 154 to 180.  


Another indication is an increase in demand for housing and real estate, and a third indication is that many of Jordan’s financial Institutions have secured reserves and began recording profits.  


The fourth indication is to be found in the Jordanian mining industry. This sector has incurred losses in the past, and recently began to witness a significant rise in exports, phosphates in particular. Tourism, of course, slipped due to the regional circumstances, but if a relative calm is achieved, I believe investment and the economic activities will increase. — (menareport.com)

© 2002 Mena Report (www.menareport.com)

© 2000 - 2023 Al Bawaba (www.albawaba.com)

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