October 28, 2004

Jordan Times

Slower Pace, Safety Nets Needed
Editorial

The International Monetary Fund (IMF) is now telling us that full liberalisation of the oil sector would help the needy and free money from the Treasury to reduce poverty and unemployment. The Ministry of Finance responded favourably to the advice of the IMF's Middle East Department and announced that the government is indeed in the process of formulating a plan to gradually eliminate all oil subsidies during the next five years, ostensibly to protect the poor. The IMF has been pushing Jordan to continue its economic liberalisation policies and speed up its privatisation programme so that it may also reach the all-important oil sector. The international body is banking on its now familiar policy of promoting privatisation to eliminate subsidies and encourage the private sector to move in to fill the vacuum and in the process hopefully encourage foreign investment, create work opportunities and transform the economy into a market economy.

True, it may be difficult to quarrel with the IMF over its global objective of promoting privatisation and market economy on purely economic terms. But another look at the repeated warnings issued by none other than the UN Committee on Economic, Social and Cultural Rights (CESCR) against the unqualified endorsement of privatisation and market economy as a panacea for the suffering poor is certainly warranted. As a matter of fact, CESCR has directly communicated its concerns to the IMF and the World Bank on many occasions because there are persistent fears that this overall economic and fiscal policy may incur serious human rights violations, especially in the economic, social and cultural fields.

It may be easy to sell this new policy on privatising the oil sector by linking it to the noble cause of assisting the poor and reducing poverty, but the assumption that privatisation and market economy assist the poor has yet to be borne out in many countries that have been swayed to move in that direction.

In short, we say yes to privatisation and market economy, but not at all costs. There can be no doubt that privatising the oil sector would mean much higher prices for fuel at a time when the people have yet to adjust to higher prices for water and electricity and the additional taxes that continue to be imposed on them.

If these new fiscal and economic policies are pursued at a slower pace and after adopting the necessary social safety nets to rescue the middle and lower classes from the weight of more financial burdens, then, and only then, will Jordanians endorse the growing trend towards market economy and privatisation.