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Jordan: The Fire Next Door

Jordanians are facing sleepless nights as the siege of Baghdad proceeds. The images coming to us from next door are horrifying, and Jordanians have taken to the street in protest. Yet while contemplating the collapse of Saddam's regime, Jordanians are also now recognizing how closely our own society is tied to Iraq's, and how difficult it will be for Jordan to set out on a new course if the Americans end the rule of Saddam Hussein.

At the economic level, Jordan's ties with Iraq are very close. Nearly all of our oil comes from Iraq at highly subsidized rates. Replacing this oil at market prices could cost more than $600 million a year.

Former Minister of Trade and Industry Mohammad al-Samadi estimates that Iraqis buy more than $500 million of Jordanian goods annually. Our trucking industry - 5000 mostly family-owned trucks - is largely dependent on this trade. How much of it will be lost, particularly if a new regime in Baghdad punishes Jordan for its close ties with the Iraqi government, is a worrying question. Fahed al-Fanek, a leading Jordanian economist, estimates that the war could cost Jordan as much as 25% of its GDP, about $2 billion.

Such losses could be devastating. Increased debt and budget deficits are one likely result, putting at risk the accomplishments of more than a decade of effort to reform the economy. Already, we are expecting the tough conditions of the IMF's reform program to be extended from five years to six.