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05AMMAN4368 2005-06-02 13:07:00 CONFIDENTIAL Embassy Amman
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021307Z Jun 05
					  C O N F I D E N T I A L SECTION 01 OF 02 AMMAN 004368 


E.O. 12958: DECL: 06/02/2010

REF: A. AMMAN 3649

B. AMMAN 3551

C. AMMAN 3252

D. AMMAN 2969

Classified By: Charge David Hale, Reasons 1.4 (B) & (D)

1. (C) Jordan's eight-week old reform-oriented cabinet
continues to encounter stiff resistance from members of
parliament (now in recess) and their allies in the press.
This opposition stems from fear of genuine reforms,
antagonism toward the leading reformist personalities,
hostility toward the "western" orientation of the
government team, and the failure to consult parliament in
the choice of ministers (refs A-D). The new prime
minister, Adnan Badran, who only learned he would head the
government two days before its formation, was initially
caught off balance by the attacks, and made matters worse
by advertising his own reservations about such leading
reform ministers - and polarizing figures -- as Finance's
Bassem Awadallah.

2. (C) The palace and cabinet team, with the aid of the
security apparatus, is finally getting its act together to
counter the opposition. Planning Minister Suhair al-Ali
confided to Charge that the prime minister seemed to change
his mind on a strategy for gaining a confidence vote every
day. A key issue is timing: whether and when to call an
extraordinary session and face a vote, or delay a regular
session as long as possible constitutionally, until
November - at a high price of appearing cowardly and
slowing attention to critical reform legislation. Another
question is whether to accede to the MPs' demands,
principally to sack the Finance Minister and stuff more
southerners into the cabinet. The King has solved Badran's
uncertainty for him, indicating to Charge he favored a
summer extraordinary session, but would leave the timing to
Badran. The King is also insistent on retaining Awadallah
(whom Badran described to a visiting staffdel as a "genius"
but whose manner and style with parliament made him a major
liability). Badran told Charge on June 2 that he would
call parliament into session in mid- to late summer, after
he has had a chance to complete his tour of the provinces.
He has taken the most prominent reformist ministers on a
traveling road show, to southern Tafileh (the heart of the
MP rebellion) and Ajloun and Jerash in the north. He
claimed to Charge, as has al-Ali, that these visits have
been received favorably locally, and are working to crack
parliament's opposition.

3. (C) Perhaps more persuasive has been the intervention
of the General Intelligence Directorate (GID), which helped
fuel initial antagonism in parliament under its former
head, Saad Khayr. Its current de facto head, Muhammad
Dhahabi, has worked closely with the King to develop an
argument on the inevitable need for these MPs -
many of whom were put into parliament through the design of
Khayr - to accept reforms and the King's cabinet. He told
Charge recently that he has met with most of the 49
declared foes, and believes he is making headway. A number
of ministers themselves sensed a turning point with
Badran's May 25 Independence Day address, in
which he for the first time presented himself and his
agenda to the nation on live television, and came across as
a commanding figure with a human touch.

4. (C) While palace, GID, and cabinet all sense a
lessening of political resistance, we can see no such sign
in our contacts in parliament. Abd al-Raouf Rawabdeh, who
commands a substantial bloc in parliament and is so far
staying silent and neutral about a cabinet that does not
impress him, told Charge June 1 that Badran did not have
the needed votes. His advice to the King has been to go
slow on a confidence motion, delaying until August or
September when emotions will have cooled. Self-servingly,
he identifies the cabinet's biggest problem as the absence
of any politicians, who he claimed can be both committed
reformers and skilled parliamentarians (although the
examples he cited of "reform" made it clear that Rawabdeh
would need a long time in rehab before he fit the bill).
While East Bank traditionalists have criticized Badran's
cabinet as "too Palestinian," even some West Banker MPs are
inclined to withhold their confidence in the government.
Three of them told poloff May 30 that while they recognized
that ministers such as Awadallah and al-Ali were "bright and
dynamic," they were "too detached" from, and did not truly
represent the majority of Jordanian-Palestinians. These
MPs were also afraid that economic reforms pursued by the
cabinet could burden their mostly poor constituents with
higher fuel prices and taxes.

5. (C) Hanging over this entire process is a looming
fiscal crisis, little known outside the cabinet and palace
but one which, if unresolved, could itself cause the
collapse of the government. Despite strong economic
performance (over 7% growth this year), Jordan's public
finances are in a disastrous state. The Finance Minister
in confidence has suspended all payments except salaries.
Without relief from Saudi Arabia and other Gulf friends to
meet its oil bill, Jordan's budget deficit will soar to
over $600 million, twice what was stated in the budget
presentation last December. This is due to the difference
in the expenditures of oil at $45 per barrel for the
remainder of the year. The deficit would represent 5.2% of
GDP, the largest it has been since before King Abdullah's
accession. Higher prices will even further increase the
deficit. The obvious answer is to end the fuel subsidies
that so encumber the budget, but to do so now could prompt
protests and eliminate the chance of winning parliament's
confidence. The government is committed to that course,
but over a three year time span. Meanwhile, Awadallah is
accelerating privatization plans (the remainder of Jordan
Telecom being first on the auction block, with France
Telecom enjoying first right of refusal). He is also
desperate to
secure additional Gulf oil aid, a cash transfer of U.S.
supplemental assistance, and debt relief. Without these
steps, he and the King fear that Jordan's fiscal dilemma,
and its impact on the government's ability to cushion lower
income groups, will impede seriously an ambitious reform
agenda which populist politicians would then find even
easier to attack.