* Protests break out around country
* Government says subsidy cuts needed to ease budget woes
* Prime Minister says Arab spring cost Jordan financially
By Suleiman Al-Khalidi
AMMAN, Nov 14 Protests erupted in Jordan's
capital Amman and provincial towns after the government cut fuel
subsidies in a move to secure a $2-billion IMF loan but which
sent fuel prices soaring.
More than 1,000 people spilled into the streets in the
capital Amman late on Tuesday and smaller protests erupted in
several provincial towns after Islamist and tribal opposition
groups said they would demonstrate.
Hundreds of protesters chanted against King Abdullah and
the powerful intelligence forces in slogans that personally
target the monarch and were unheard of before the wave of Arab
Spring-inspired protests hit the kingdom early last year.
"Freedom, freedom, down with Abdullah," young men chanted at
the main Dakhiliyah square in the heart of Amman as angry crowds
denounced the widely expected price hikes.
Authorities bolstered security across the country that is a
crossroads in the Middle East, bordering Saudi Arabia, Iraq,
Syria, the West Bank and Israel.
Street protests against autocracy, corruption and
mismanagement of funds have led to the overthrow of several
long-serving Arab leaders, including those of Tunisia, Egypt,
Libya and Yemen.
But unlike pro-democracy Arab Spring-inspired demonstrations
in neighbouring countries that have turned violent, Jordan has
not recorded a single death in nearly two years of peaceful
Elsewhere in the country, scattered protests went off
peacefully but a petrol station was burnt by angry youths in the
country's second largest northern city of Irbid.
The move announced by the cabinet and which takes effect
after midnight is the first major rise in petrol prices since
street protests early last year, inspired by the wave of Arab
unrest, pushed Jordanian authorities to expand social spending
and freeze major fuel price hikes.
The price rises range from more than 50 percent for bottled
gas used for cooking, 33 percent for diesel and kerosene for
transport and heating and 14 percent on lower grade petrol.
The government, mindful of public fury that exploded into
street clashes in the depressed south of the country after price
hikes in 1989 and 1996, had been reluctant to raise fuel prices.
Prime Minister Abdullah Ensour warned the mainstream
Islamist opposition, the Muslim Brotherhood, the country's
largest political party, against exploiting the price rises to
agitate. He also said that the price hikes were unavoidable.
"If the move was delayed we would have faced a catastrophe
and insolvency," he said in an interview with state television.
Most of the tribal and Islamist opposition has demanded
faster reforms but does not seek the toppling of King Abdullah.
He is seen as an arbiter among competing tribes and a
unifying force in a population divided between native Jordanians
and a majority of citizens of Palestinian origin.
The budget deficit is forecast to rise to $3.5 billion this
year, Ensour added, without saying how much would be saved by
cutting the subsidies. Jordan had been spending $2.3 billion
annually on subsidies, almost a quarter of its annual budget.
"The fiscal situation of the kingdom had been heavily
impacted by the Arab Spring," Ensour said.
The bombing of a pipeline bringing Egyptian gas has forced
Jordan to switch to costlier fuels for power generation and
Saudi Arabia declined this year to repeat its payment of a $1.4
billion cash injection to stop the economy heading to the brink
Jordan hopes the subsidy cuts will show its commitment to
fiscal consolidation and win support from the International
Monetary Fund, Western and Arab aid, and help it to tap capital
markets in a Eurobond issue.
Economists have said Jordan's ability to maintain a costly
subsidy system and a bloated state bureaucracy, whose salaries
consume the bulk of state expenditure, was increasingly
untenable in the absence of large foreign capital inflows or
infusions of foreign aid.
The government has been forced to rely heavily on domestic
borrowing from banks. Public debt has increased 19 percent since
last year to $22 billion and is now 72 percent of GDP. Foreign
reserves also fell sharply by 34 percent to $6.85 billion since
the end of last year.
Ensour said direct cash transfers will be disbursed to
Jordan's poorest households within a week to mitigate the price
impact. He also promised that energy prices would be adjusted
lower if oil prices fell below $100 a barrel.