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French Version

Calls for an end to economic relations with Israel

Unity with Egypt is central, according to economists

JORDAN (Star) - In the shadow of Iraq's declaration to freeze oil shipments Monday, Israel's unrelenting aggression on the Palestinian people and its considerable effect on economic and political stability of the region has come into sharp relief. The Jordanian and Egyptian economies have received considerable scrutiny from the rest of the Arab world for their affiliation with Israel.
Economists in Jordan and Egypt continued to urge their governments to cut all the diplomatic and trade relations with the Jewish state to fortify a tangible Arab solidarity with the Palestinians. Egypt cut all but political ties to Israel the first week of April. Analysts regard such an act as a freezing of economic relations with Israel. Jordan has yet to make such a change.

The visit of US Secretary of State Colin Powell to the region is regarded as an advanced step by the US to separate the repercussions of the Israeli atrocities from US interests in the region.

Recent warnings heard among Jordanian economists suggest the current Israeli aggression against the Palestinians could impose even greater hardships on the Jordanian economy-already facing difficulties in many sectors. Besides the difficulties faced in the tourism sector, many economic sectors have developed a dependence on the performance of the US-Jordan Free Trade Agreement and the Jordan-European Association Agreement to offer them potential alternatives and perhaps overcome the sluggishness in the local economy.

Jordanian-Israeli economic ties appear moderate; despite official assurance these ties are not effective in light of current circumstances. Economists estimate the trade volume between Israel and Arab countries at $500 million, pointing out that some 12 Arab countries are involved in direct and indirect trade with Israel.

Jordanian trade volume stands at some $75 million, with the balance of trade tipping toward Israel. But Jordanian economists strongly believe in the term, "political economy."

"The Israeli economic policy depends on cost-efficient productivity," said economist Mohammed Saqr. He explained Israel gains exceptional revenue when utilizing Arab resources. These include, most prominently, low-priced raw materials and cheap labor.

"The Israelis see in economic openness with Arab countries, particularly Jordan and Egypt, a hub for their industries. They can't use Palestinian labor due to the conflict there. So they transfer most of their industry to Jordan to serve their interests. They use our cheap resources through the Qualified Industrial Zones," Saqr told The Star.

The majority of Jordanian businesses haven't seen what they would consider substantial growth in their individual enterprise, even considering the peace treaty with Israel. Economists have warned if Arab governments fail to follow public sentiment and halt all relations with Israel they will have to face mounting difficulties in their countries, both politically and economically.

Jordanian officials indicate trade relations with Israel are limited to the QIZs. Official statistics reveal 30 percent of the exports from the QIZ in Irbid are made through Israeli transactions in the Kingdom. Israeli officials, on the other hand, express tremendous eagerness to expand trade volume with Jordan to over $100 million.

Egyptian statistics show losses are increasing as well. The tourism sector alone lost an estimated $2.5 billion. In 2000 Egypt earned $4.3 billion from tourism.

Arab economists believe Jordan and Egypt could not withstand the consequences of breaking relations with Israel due to the strong economic relations with the United States.

Economist Munir Hamarneh said many businessmen and investors wrongfully read the economic weight of Jordan's trade relations with world countries, focusing on figures of exports and imports, which may mislead the real objective of these relations. Hamarneh stresses the numbers for Jordan have nothing to do with politics.

"The political aspect of Jordan's economic ties with Israel becomes apparent in view of mounting public calls to cut these ties," Hamarneh told The Star. He explained if Jordan freezes all economic relations with Israel, following Egypt's lead, the simultaneity of the action would force the US administration to shift its policy in the region and protect its vital economic interests.

The US promises Jordan and Egypt ample aid yearly in return for their peace with Israel, certainly an aid and a hope for buoyant economies.

Saqr said a country like Egypt, which imports 50 percent of its food supplies from world markets, would find it impossible to hinder trade relations with the US for long.

"The decision to cut relations with Israel must be unanimous as it will have a greater impact on Israel," notes Saqr. Hamarneh, meanwhile, believes US President George W Bush's latest remarks reflect a degree of anxiety in US political and economic policies toward Arab countries. "The Zionist economic cartel in the US will lose credibility with the Bush administration as the Americans better understand the realities on the ground," Hamarneh concluded.

Ghassan Joha
The Star

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