Thursday November 15, 2012

I've Been Thinking:

Yesterday Jordan lifted subsidies on food stables and on fuel. The move caused riots throughout the Hashemite kingdom.

The main supporters of the riots and its organizers were Islamic extremists, mostly from the Muslim Brotherhood and al Qaeda.

Jordan is suffering from a $3 billion debt. That debt amounts to 11% of their gross national product. And that is a recipe for disaster.

Subsidies artificially keep prices down below market prices. They are a large reason for the deficit because the government must pay the difference. Subsidies, in essence, are a gift to the people.

Since the Arab Spring began, Jordan has wanted to reduce subsidies.

But the King feared that any change like that could cause riots and, quite possibly, lead to situations similar to the uprisings in Egypt, Syria and Libya.

The Jordanians cannot put off their decision any longer.

The Islamists will try to capitalize on the lifting of subsidies in hope that the economic crunch will gather momentum and that the greater masses will be galvanized and eventually, King Abdullah will be ousted.

We have to monitor this very carefully. At any moment, it can go either way.

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