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By Ala’ Alrababa’h (Twitter: @a_alrababah)

الاقتصادThe Jordanian Parliament is currently debating the 2013 budget.  The most controversial part of the discussion deals with reducing electricity subsidies.  Essentially, the government plans to increase electricity rates on households by an average of 15 percent.  To do so, it would lift subsidies on households that consume more than 601 kilowatts (kW) and industries with more than 10,000 kW per month.

Jordanian MPs have vehemently opposed plans for hikes in electricity prices.  When the cabinet addressed the Lower House of the Parliament on lifting electricity subsidies, only 40 deputies (out of a total of 150) attended, and half those withdrew at the beginning of the session.  One Deputy, Kholoud Khatatbeh, accused the government of trying to “manipulate the MPs into validating the increase of electricity prices.”  While urging the government to investigate alternative ways to reduce the budget deficit (estimated at JD1.3 billion, or 5.4 percent of the GDP), Lower House deputies asked the government to spend more by building new universities, hospitals, and roads without proposing any plans on how to afford such projects.

The parliamentary discussion of Jordan’s 2013 budget has been problematic for several reasons.  First of all, our MPs are discussing the 2013 budget more than halfway through the year.  The government passed a temporary budget at the beginning of the year (before the parliamentary elections).  Half the budget has been already spent.  Yet, MPs found it fitting to discuss this budget as if nothing was spent.  That’s why they are proposing spending money on various new projects. MPs are probably doing so to score political points. As Ghazi argued, much of the current MPs’ effort has focused on searching for legitimacy.  The budget is no exception.

However, there is something more problematic about the MPs’ deliberations.  As I mentioned, the government is lifting subsidies on households that consume more than 601 kW.  According to Malek Kabariti, Minister of Energy and Mineral Resources, 91 percent of citizens consume less than 601 kW, and are thus unaffected by the price increase  (a World Bank study seems to confirm this number).  The government essentially plans to stop subsidizing the rich, who receive a disproportionate amount of subsidies.  However, MPs want to keep subsidizing the rich, at the expense of the rest of Jordanians.

Why do MPs oppose lifting subsidies from the rich?  I have a few speculations.  Perhaps Jordanian MPs are among the rich Jordanians who would be affected by rising electricity prices.  They do not want to pay more themselves.  A more plausible explanation is the one I mentioned before.  Lifting subsidies and implementing other neoliberal policies has been widely unpopular in Jordan since the 1990s.  As MPs are aware of the unpopularity of reducing subsidies, they are seeking legitimacy by pretending to side with Jordanians, even though this could harm average citizens and the country’s national interest.

This also reflects a general misunderstanding among the public of how an economy functions.  One journalist criticized the decision to lift electricity subsidies because it would save only JD110-130 million.  He did not mention that this number constitutes around 8-10 percent of the budget deficit.  The same journalist showed hopes recent aid from Saudi Arabia and the US, estimated at $330 million, would allow the government to delay, or even cancel the planned reduction of subsidies. However, ignored that if foreign aid is spent on subsidizing the rich, the rest of the population, including poor Jordanians, would not benefit.  What is disturbing is that this journalist is probably not alone in his logic.  While I do not think that he holds any negative opinion of average Jordanians, I think that his views are motivated by a lack of understanding of how an economy functions.  That MPs seem to share this misunderstanding is quite disturbing.

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