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Jordan Hard Hit By Iraq Embargo, Shortages Expected Soon

November 28, 1990

AMMAN, Jordan (AP) _ Business is bad in Jordan, one of the countries hardest hit by the Persian Gulf crisis. But food is abundant and promises of aid are trickling in from abroad.

The Hashemite kingdom, sandwiched between Iraq and Israel, has survived the turbulence of the Middle East since it was created in 1921. But many analysts consider Jordan’s current predicament its most perilous yet.

″God help us if there’s a war,″ said Fahed al-Fanek, a prominent independent economist.

Iraqi President Saddam Hussein, who faces an international army opposed to his Aug. 2 invasion of Kuwait, could drag Israel into the conflagration, exposing Jordan. The oil that comes exclusively from Iraq to meet Jordan’s domestic needs of 60,000 barrels a day would be cut off if war broke out.

The country would probably be flooded with refugees from Iraq and Kuwait, as it was in August and September when more than 735,000 refugees passed through. Many had to be fed and accomodated until they could be repatriated.

Prices of imported food, including meat, have increased considerably. But fruit and vegetables grown in the Jordan valley have become cheaper because they are not being exported to Persian Gulf countries anymore.

The Finance Ministry estimates that Jordan has lost $2 billion in revenue this year because of the gulf crisis. With a debt already at $8.3 billion before August, such losses could be catastrophic.

Fanek said Jordan will be able to keep its economy afloat with $1 billion in aid a year.

But so far, it has only been promised $115 million by Germany, $250 million by Japan, $20 million by France and almost $19 million from the Netherlands as compensation for abiding by the U.N.-imposed trade embargo on Iraq.

The European Community also has promised aid, but the amount has not yet been set.

King Hussein’s refusal to join the anti-Saddam coalition and his advocacy of a negotiated ″Arab solution″ has stirred widespread resentment in the United States, Europe and the Persian Gulf, where Jordan has traditionally found support.

Amman hesitated to implement U.N.-ordered sanctions on trade with Iraq, until August its main trading partner. The government came under fire by the international community and was accused of dragging its feet in pressuring Saddam, a longtime ally of King Hussein.

Oil-rich gulf countries opposing Iraq cut all trade with the kingdom to pressure it to join the anti-Saddam alliance. The Saudis cut off oil supplies, leaving Jordan no option but to truck it in from Iraq.

Fanek said Jordan’s losses have so far not yet seriously affected the kingdom’s 3 million people.

But he stressed: ″With the current stalemate, we may start seeing shortages in two months’ time.″

Jordanian companies have maintained production levels and are planning for what they hope will be a limited disruption.

″That’s why they haven’t fired workers yet,″ Fanek said.

But how long they can do that is questionable because they can’t export much of their merchandise. The U.N.-imposed trade embargo on Iraq has brought Jordan’s only port, Aqaba, to a virtual standstill.

The government estimates Jordan’s export losses since August at $440 million.

Many businesses are reporting a drop in sales of up to 60 percent. Supermarket manager Ibrahim Darakjian said business has suffered because the store has to close early under a government energy-saving plan.

The people most affected are the Jordanians who worked in Kuwait before Saddam troops invaded.

The government estimates that 300,000 Jordanians, most of them of Palestinian origin, were in Kuwait before the invasion. At least half have come back to look for jobs in a country where, by Fanek’s estimation, unemployment is about 20 percent.

Most of these people were remitting an estimated $800 million a year, two- thirds of Jordan’s foreign currency reserves.

Those who kept their savings in Kuwaiti currency became penniless overnight. Iraq decreed the Kuwaiti dinar, once one of the Middle East’s strongest currencies, equivalent to the Iraqi dinar.

Iraqi currency is not convertible. On the thinly-traded free market it was worth about one-tenth of the Kuwaiti dinar before Aug. 2, and less now.

The government estimates that Jordanian workers lost as much as $8 billion in property and savings.

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