Subsidies test Dahabi government: with the oil price at a record high and the cost of cereals rising, Jordan's subsidies are unsustainable. But plans by the new government of Prime Minister Nader Dahabi to cut them carry significant political risks.(Jordan)

MEED Middle East Economic Digest | December 7, 2007| | Copyright

In the recent book 'The Life of King Hussein in War and Peace', the king is quoted as saying: "We were totally cut off and we needed oil and there was only one way: to fly it across Israel into Jordan."

Hussein was recounting Jordan's oil crisis in 1958 when the kingdom found itself without any source of oil after the Iraqi coup that year. Almost 50 years later, the country faces a different type of oil crisis. Unlike 1958, Saudi Arabia and Egypt are both prepared to sell oil and gas to Jordan. The problem is, Jordan cannot afford to keep buying it.

When ...

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