Jordan’s Economy Founders in Backwash of Trade Embargo : Mideast: Businesses lose markets in Iraq, and sanctions impede imports of raw materials.

SALT, Jordan —  Abdullah Nsour put plainly the woes of Jordan as seen from his city in the rocky hills northwest of Amman.

“People come to me and say, ‘Mr. Mayor, I’m going to be ruined,’ ” he said. “Our problem is poverty.”

Other cities are hurting more in the backwash of the trade embargo against Iraq. In the southern port of Aqaba, for instance, there are only two or three ships this week at docks with room for 16.

The shock was sudden in Aqaba. In Salt, it has been building through five years of national economic decline.

“We are farmers,” Mayor Nsour said of his city and its environs, an area with 65,000 people. But farming is difficult in these hills, dependent on rainfall, and young men have been leaving their family lands and going to the cities looking to improve their lot.

“For prestige,” the mayor said. “But they were not trained. Many of them took jobs as office boys.”

Others--about 40% of the work force here--have gone on the government payroll, a typical statistic in Jordan, where the big employer is the state and its bureaucracies.

That unsteady economic base has now been dealt a one-two punch: the return of workers who went off to Persian Gulf states to seek their fortunes, and the embargo against trade with Iraq.

“There are great losses,” Nsour said in his office in the center of the old city, which was the capital of Trans-Jordan under the British mandate in the early 1920s.

Many Salt companies had key markets in Iraq, selling pharmaceuticals, detergents, household goods and ready-to-wear clothing.

Amman-based diplomats say the Jordanian government, after initial hesitation, has complied with the sanctions. The blow has fallen here on what Nsour called the “full commercial circle--banks, transport, farmers and industry.”

Searching for a bright spot, he noted that the price of fresh fruit has fallen since the Iraqi and Kuwaiti markets disappeared.

Like most Jordanians, the mayor does not hesitate to place the blame. “The invasion,” he said--but he was not referring to Iraq’s Aug. 2 invasion of Kuwait.

“The main cause of the problem is the invasion of the Americans and their allies in the gulf,” Nsour said. “This is a local problem in the Arab house and could be dealt with. Had it stayed local, most of the people would have taken their guns and gone against Iraq. That spirit has changed.”

But the mayor’s immediate problems lie in the streets outside his window.

“Just to keep my city going,” Nsour said, he has in the last six weeks eliminated paving and road-building projects and furloughed 50 municipal workers “to decrease the monthly financial requirement” from Amman.

“This is not cultural; this is not civilized,” he complained of the embargo.

Five minutes from City Hall, at the Arab Pharmaceutical Manufacturing Co., Salt’s largest industrial employer, Vice President Samih Qaryouti was worried about his export market, which accounts for 75% of the company’s sales.

“There is no more Kuwait,” he said, “and Iraq is under embargo. We are adhering with government policy. The results are not yet clear.”

Qaryouti did not disclose sales figures, but he said, “Iraq, to the whole (Jordanian) economy, is something tangible.”

Arab Pharmaceutical Manufacturing sold to both private and government buyers in Iraq, including the military. Since the embargo, those sales have stopped, and enforcement of sanctions at Aqaba has affected the company’s raw materials as well. Shipping lines are reluctant to use the port and to pay the higher insurance rates brought on by the crisis.

“There are delays with imports,” Qaryouti said. “The shipment process is completely disorganized. Sometimes we find our supplies stuck in Djibouti or Jidda.”

So far, Arab Pharmaceutical Manufacturing has not laid off any of its 950 workers, many of them women on the bottling and packing assembly lines. It is looking for other markets, Qaryouti said.

“But that takes time,” he went on. “The whole situation in the area is stepping down.”

Jordan does not have a lot of time. Iraq supplied 87% of its oil, and Jordan cut the figure to less than 40% in partial compliance with the embargo. Saudi Arabia was expected to make up the difference, but it shut down its pipeline to Jordan last week, ostensibly in a contract dispute.

Diplomats say the decision was clearly a case of political punishment of Jordan, whose government says it is abiding by the sanctions but whose people steadfastly favor the Iraqi position.

The collapse of trade at Aqaba has idled two-thirds of the country’s truck fleet. Jordan’s living standards are falling, Western diplomats say, and the unemployment rate is 20% or more.

The construction industry, which once thrived on building summer homes for Persian Gulf Arabs and Palestinians who made their fortunes there, has been hard hit.

“The gulfies had begun to think of this place as another Beirut, the Beirut of happier times,” a diplomat said. “The weather is good, communications are modern, there are discos, you can get a drink.”

But even before the invasion of Kuwait, falling oil prices in the gulf countries had begun to pinch the construction industry. And now the fortunes made in Kuwait have gone up in smoke.

With its small population--3.3 million--Jordan still looks prosperous. It has excellent roads and clean cities. Compared to Syria, Jordan appears to be decades ahead in development. Buoyed by Arab aid and gulf remittances, Jordanians have kept up a fashionable front. But diplomats say poverty is growing, particularly in the outlying towns.

Some Western analysts insist that economic issues will come to color political attitudes here.

“People will be forced to admit that Saddam Hussein’s invasion was the cause,” one said, admitting that this has yet to come about.

Surprisingly, there has been little public discussion here of the billions of dollars in aid pledges rounded up by Washington to support Jordan, Egypt and Turkey, considered the three countries hardest hit by the sanctions.

Jordanian officials say the treasury will need $1.9 billion to get through the year. But foreign economic analysts question whether cash will solve the problems.

“What’s needed now is employment-generation and long-term development,” one said. “If they get cash, they will just use it to pay for big government and hold the rest for something else, probably more roads to nowhere. You give them the money and all it will accomplish is maintaining the status quo. They’re just not going to be able to absorb it.”