GLOBALIST | 8 JUNE, 2018
Thousands protest austerity measures
The Hashemite Kingdom of Jordan, traditionally an island of stability in the region, has been wracked by mass protests during the past week.
Erosion of middle-class incomes, discontent with quality of life, the huge gaps between the elites that are close to the royal court and those needing to work at two or three jobs, the shortage of formal sector jobs, and corruption are said to be at the root of the protests by nearly 200,000 people across the country.
The demonstrators waving flags and shouting, “Bread, freedom, social justice” have been joined by 33 worker’s organizations and Unions of doctors, engineers, and lawyers. Many demanded the dissolution of parliament, and a change in the current political system making it more accountable to the public.
They also accused the regime of failing to curb corruption. Some commentators have hinted that King Abdullah II , who cancelled an overseas trip, could have reason to be alarmed as reports say that cries against the regime and not only against the Prime Minister were heard during demonstrations, with calls for removing the king. An escalation of the protests and people’s dissatisfaction with the regime could take a dangerous political turn.
Jordan's economy had been struggling for the past few years in the face of chronic deficits, as private foreign investment and aid has declined. The spark that triggered the mass protests has been the conditionalities imposed on Jordan by the IMF for a $723m, three-year credit line given to the kingdom in 2016.
The nature and size of the demonstrations, born of economic frustration, is said to have been the largest since 1989, when demonstrators demanded the removal of Prime Minister Zaid al-Rifai, the cancellation of the state of emergency, the enactment of democratic reforms and the repeal of harsh economic measures which included the end of subsidies and price hikes. Late King Hussein acceded to nearly all these demands. King Abdullah II has acknowledged that his country is at a crossroads saying he stands by his people and there is a need to adopt new ways to deal with challenges rather than following traditional ways.
Jordan’s economy has faltered. Long used to surviving on foreign help now Jordan has stopped receiving support from Saudi Arabia and other Gulf states because of Abdullah’s refusal to fall in line with Saudi policies designed to establish the kingdom’s regional hegemony. Jordan has had to begin banking on its own resources. The conflict in Syria and Iraq and a large influx of refugees several years ago have also impacted on the economy. Among those affected by the Saudi and Gulf attitude have been the Palestinians living in Jordan. UNRWA has cut the cash flow to support the Palestinian refugees and they would now have to look to other countries for help.
The IMF conditionalities called for Jordan to reduce its public debt, now more than $40 billion, through austerity measures. Insisting that he stands by his people, the king stressed the “need to deal with challenges in a novel manner, away from the traditional style.”
It was a new income tax law initiated by the then Prime Minister Hani al-Mulki, and now before parliament, that was the final straw. The bill calls for a 40 percent corporate tax, a rise from the current 35 percent. Manufacturers of food and other basic products will pay 30 percent income tax instead of 24 percent.
Al Mulki’s government insisted that the reform was necessary as the government needed resources to finance public services and that the reforms would reduce social disparities by increasing the tax burden on the rich—a contention disputed by the people who said it was the poor who would suffer. Under the bill tax offenders will now face prison terms and exceptionally high fines rather than their actions being treated just as mis-demeanours.
At least 80 of Jordan's 130 members of parliament have signed a statement pledging not to support the law which would in effect increase the proportion of taxpayers from 4.5 percent to 10 percent of the population.
Al Mulki’s government had imposed a sales tax on 165 items, including basic products, proposed an increase in the price of fuel, electricity and water, a 20 percent spike in the tax on tobacco and a 9 percent increase in the price of public transportation to meet the demands of the International Monetary Fund.
King Abdullah II, as had his father before him, took recourse to the option that removing the government was preferable to undertaking reforms that could lead to social unrest. He had ordered the government to shelve the fuel and electricity rises. He had also made Al Mulki resign from the Prime Minister’s office and appointed former World Bank economist Omar al-Razzaz to form a new government.
The King said the new cabinet must review the entire tax system and hold a dialogue over the pending income tax bill with political parties, unions and civil society. Jordanian officials have said that the country will ask the IMF for more time to implement reforms after the protests showed that excessive austerity could risk causing instability.
While the King has spoken about novel ways to meet challenges the fact that a change in the Prime Ministership has not caused a cessation of the protests could suggest an uphill process for the King. There are growing calls for more people’s representation in the functioning of the state and meeting the aspirations of the younger generation could entail facing down vested interests and focusing the reform process on political change.
Would that mean a change in the status of the King in the years to come? That possibility does exist as when political yearnings combine with economic unhappiness time tested ways of dealing with protest do not always work.