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French Version

Iraq : No trade with insecurity

A recent opinion poll by the Amman-based Ipsos-Stat research firm admitted deep public fears over the negative consequences of the current conflict in Iraq on the Jordanian economy. According to the census, which was conducted two weeks ago and published last week, 65 percent of those polled believe the economy did not benefit much from the political changes in Iraq, while 24 percent said it had already.

Those who disagreed think that Jordan lost its biggest trade partner for good, due to the negative atmosphere generated since the war was launched on Iraq in March 2003. The Ipsos-Stat poll aimed at examining public reactions regarding the policies that the government has pursued since the start of the war.

While Jordanians generally believe their country was the biggest loser of the Iraqi war, the majority agree that the war only came “to satisfy the interests of the United States” which replaced Iraq as the Kingdom’s major trade partner. Official statistics put Jordanian exports to the US in the first half of 2004 at $440 million, an increase of 72 percent over the same period of 2003.

The statistics showed, however, that the trade volume between Jordan and Iraq is fluctuating; in 2003, exports to Iraq reached JD 250 million, down JD 100 million from 2002, while for the first half of this year the figure is already JD 260 million. Prior to last year’s war, Jordan signed annual trade protocols with Iraq, which formed the backbone for the local industries. These protocols were carried out within the now defunct UN’s Oil-for-Food program.

Jordan also received Iraqi oil supplies at preferential prices in addition to a free annual donation of oil worth $300 million, all of which enhanced the financial position of the Kingdom. Minister of Planning and International Cooperation Bassem Awadallah heightened public fears earlier this month when he said that the Kingdom’s trade deficit in the first half of 2004 reached JD 1.3 billion rocketing by 41.4 percent since last year. He attributed the upsurge in the trade deficit to the rising imports bill notably oil which increased this year by 62 percent to JD 361 million.

Meanwhile, a recent study, conducted by the Industrial Estates Corporation (IEC) earlier this month, found that 61 industrial plants are under the threat of closure. The study pointed out that the threatened factories face mounting impediments and financial problems as they heavily oriented their businesses in line with the Iraqi market. “Owners of these factories eventually were unable to secure alternative markets other than Iraq,” according to the IEC’s study. “The financial problems of these factories hinder their chances to enhance their exports in view of the rising operational costs and import taxes,” it added. Cabinet sources indicated this week that the government is still facing mounting obstacles in resuming the mutual trade agreements that were applied between Iraq and Jordan before the war.

The sources stated that the current violence in Iraq inhibits a return to normal trade. While the majority of those participating in the poll expressed resentment over the government’s tactics regarding trade with Iraq, about one-fourth of them were confident that the Kingdom would resume its strong trade ties with Iraq in the coming stage; however 11 percent of those polled remain indecisive over the issue.

Meanwhile, the Ipsos-Stat poll also highlighted people’s attitudes over the benefits accruing to the Kingdom as compared to the risks encountered by Jordanian truckers traveling the highway between Jordan and Iraq; 42.7 percent supported the continuation of traffic compared to 48 against. Those who voted in favor believe business deserves the risk since the truckers have no other means of income. Those who disagree emphasize the need to tackle the shaky security on the Amman-Baghdad highway more seriously, in cooperation with the interim Iraqi government.

The US-backed Iraqi Prime Minister Iyad Allawi stressed his government’s readiness to solve this problem with Jordan during his recent visit to the Kingdom last month; he has failed so far to translate his words into deeds.

Over the past 18 months, Jordanian truckers have been subject to frequent looting committed by highway robbers. While many were kidnapped and released later, 10 drivers were reportedly killed by the robbers. Results of the poll got positive reactions from local economists, who shared public doubt over the prospects to renew the Iraqi-Jordanian trade ties in view of the current realities on the ground. “The private sectors in Iraq and Jordan used to enjoy strong mutual trade relations since the 1980s. The US-led war on Iraq last year, however, put an end to that,” said Adnan Abul Ragheb, member of the Jordan Chamber of Industry’s board of directors. “Trade across borders are now subject to individual interests and are being conducted away from rules or mechanisms that regulate this exchange,” added Abul Ragheb, who indicated that the continued lapse of security along the highway would endanger the prospects to resume substantial trade soon. Jamil Jubran sees in the current fighting between the US-led coalition forces and the Iraqi resistance factions as “discouraging” to resumption of trade with Iraq. “Trade flourishes when there is security,” stressed Jubran, who is originally a businessman and one of Jordan’s big exporters to Iraq. “Some people like to take the adventure and resume trade with Iraq, but the Americans deny any substantial access to Jordanian businesses there.”

Jubran indicated that whereas before the war, the Iraqi government used to provide financial guarantees for Jordanian businessmen who wished to export to Iraq, “Today, these guarantees no longer exist,” he said.

Amman,08 31 2004
Ghassan Joha
The Star
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