Jordan is less than two weeks away from a parliamentary election, but the vote has been overshadowed by the government’s recent fuel price hikes and decision to lower cigarette prices.
Many Jordanians see the latter as either the government caving to business interests – a price floor made it difficult for manufacturers to compete – or an effort to distract voters from their dissatisfaction with the government as they prepare to go to the polls. A slash in government fuel subsidies late last year is hitting Jordanians hard in the pocketbook; a gas canister that used to cost 6.5 dinars now costs 10 (about $14).
The painful hike in cooking and heating gas took effect late last year, triggering days of demonstrations and prompting speculation that the Hashemite Kingdom might succumb to the popular unrest that upended governments in Egypt, Syria, and Libya, although those concerns did not materialize.
In what many see as an effort to placate angry, cash-strapped voters, last month the government approved lowering the minimum price of cigarettes, which are publicly regulated, to help manufacturers better compete with cigarettes smuggled over the border from Syria. The price for a pack of domestically made Marlboros dropped by 20 percent in December, from 1.8 Jordanian dinars to 1.4, and by the first week in January the prices of all locally made cigarettes had been slashed, reversing a trend from recent years in which Jordan’s government raised taxes on cigarettes. A comparable pack of smuggled Syrian cigarettes costs 2.25 dinars.
Not everyone is buying it.
“Some people are suckers for that, you know? The economy is bad,” says Madian Al Jazeera, the owner of Books@Cafe, a bar and bookstore where business is down as much as 40 percent since the gas price hikes, as Jordanians tighten their budgets. “Look around. No one is smiling. You don’t see the smiles, you see the spite in the street. People are on edge.”
The government decision has also raised the hackles of the health ministry and other public health advocates for promoting smoking. The ministry opposed the decision on the grounds that it violated a World Health Organization convention on tobacco control.
Gas prices crowd out politics
The unpopular gas price hikes were adopted at the request of the International Monetary Fund, which made them a condition for the Jordanian government to receive $2 billion in IMF aid to avert an economic collapse.
Jordan is struggling under a budget deficit of about 11 percent of GDP, and more hard times are likely on the way: After the parliamentary election, the new government is expected to raise electricity rates; the cutoff of cheaper Egyptian natural gas in 2011 because of attacks on the Sinai pipeline pushed up costs.
Mohammed Dairi, a parliamentary candidate running inAmman‘s third district, criticized the cigarette price cut as a bad public health policy but also acknowledged that Jordanians’ top concern right now is their pocketbook.
“People don’t talk right now about parliament. They talk about the price of gas,” he says. “Jordanians want to make sure that they have a job and enough food on the table. They aren’t interested in politics.”
Government distrust
Analysts and Jordanians say that the anger over the price hikes were enhanced by a sense that government does not work for them because it is corrupt and too easily influenced by groups withwasta, or connections. Some see the decision on cigarettes as a related problem: an example of the government bowing to a powerful business lobby.
Khalid al Wazzani, an economist, says that the government has defended the cuts by arguing that it will stimulate demand for cigarettes and generate more tax revenue for the government. The price cut has had the desired effect, from the government’s perspective. Demand for locally made cigarettes has surged since December, as their prices have become competitive with those of the smuggled cigarettes.
“Everybody is going for Marlboros because it’s now at a regular price,” says Hikmat Il-Turk, the owner of the Al Mhwarde Tobacco Shop in Amman. “They tried to make Jordanian cigarettes cheaper to compete with the illegal ones.”
However, Mr. Wazzani believes the cigarette price cuts are a symptom of a government that is “soft” when it comes to resisting business interests.
“If corruption is when you don’t do your job properly, then this is it,” says Wazzani, who also owns Is-Snaad, an Amman consulting firm. “If you insist on raising the price on gas, you should raise the tax on cigarettes. This is a precedent I have never seen anywhere in the world.”
He said that the short-term economic benefit would be offset by a long-term rise in health expenditures.
Even grateful smokers in Jordan couldn’t help noticing that the cuts were timed just one month after the removal of the gas subsidies. At the tobacco shop, Mandouh Hannoun said that he’d prefer to have cheaper gas prices and higher cigarette prices.
“Consumers are always happy for lower prices, it’s only natural,” he says. “It’s good for the cigarette companies. But it’s bad for the public health of the people.”
