For a town that was wracked by riots in August, Karak doesn't give much indication of unrest. Life seems humdrum: Scores of unemployed young men idle away on corners, while the market's shops bustle with activity. But underneath the apparent calm remains a smoldering anger at Jordan's commitment to economic restructuring and its effects on the man in the street.
Rage boiled over when the government, at the behest of the International Monetary Fund (IMF), cut subsidies on several important commodities, including wheat and fodder. Overnight, the price of bread jumped from 13 cents to 30 cents a kilo. In a country where the average salary is $130 a month, and where bread is the most important food staple, the hardship was too much for the citizens of Karak, a poor town of 20,000 about 145 kilometers southwest of the capital, Amman. "No one can accept such high prices," says Nazih Ammarin, a member of Parliament from Karak who submitted his resignation over the issue. "Economic recovery shouldn't be on the shoulders of the poor." The rioting, during which demonstrators burned half a dozen government buildings and banks, lasted just three days but shocked a nation that prides itself on being a bastion of moderation and loyalty to King Hussein.
Jordan has been following an IMF restructuring program for several years and had received kudos for enacting reforms, curtailing inflation, and boosting foreign currency reserves. But ballooning government subsidies remained a problem. While this year's budget called for $54 million in subsidies, the IMF put the actual figure Jordan would spend at around $260 million. With pressure to cut the figure or not receive the second tranche of $270 million in IMF credit, Prime Minister Abdul Karim Al Kabariti made the hard choice avoided by previous governments. The subsidy reduction was made, bread prices soared, and two weeks later the IMF released $60 million, praising Jordan for its commitment to reform. Officials say a "social safety net" will soon be introduced to tackle unemployment.
POOREST REGION. The government says the subsidy cut did just what it was supposed to--reduce waste. "Bread consumption has dropped by 35% across Jordan," says Bassem Awadallah, special economic adviser to the Prime Minister. He says much of the subsidized bread was used for fodder or smuggled out to Syria and Iraq because of the low price. To offset the price hikes, the government is giving every person monthly compensation of $1.80. But Jordanians say that's not enough to cover the loss. The country's Consumer Protection Agency lists 462 products that have gone up in price since the subsidies were lifted.
The price rise hits Jordan's south hardest, since it is the poorest region of the country. Ironically, Jordan's main industries--potash, phosphates, and cement, along with its best tourist sites--are in the south. Yet Karak residents claim that only 30% of workers in these sectors are local, with the rest coming from the north, and that profits aren't invested locally. Unemployment in Karak is above 20%, and a peace process that has yet to deliver economically gnaws at Jordanians who are still waiting for better times.
In the oven-heated air of Maher Saub's back-alley bread shop, it's clear that many Karak residents haven't cooled off since August. He says the higher price of bread is a death knell for him and others who live on the poverty line. "Bread--this is life for most people here. No matter what the government says, people will just buy less bread. Of course we're frustrated."
None more so than Adnan Qatawi, who arrives to deliver flour. "Business is terrible," he moans, then launches into a tirade against government policy, drawing hearty nods of approval from a small crowd that has gathered to join in. One man who gives his name only as Fuad says the price increase means he can only afford half of what his family needs. And forget about goodies like cookies or sweets. For folks like Fuad, economic restructuring means pulling the belt even tighter--way past the last notch.