As Parliament and Consultative Council reject oil price riseBajamal sandwiched between reform commitments & public uproar [Archives:2004/776/Front Page]

September 27 2004

Mohammed Al-Qadhi
The joint meeting of Parliament and the Consultative Council, rejected on Saturday – with the majority – the price increase of oil derivatives, proposed by the cabinet as a vital step in the overall economic reform package.
The meeting was called for by President Ali Abdullah Saleh, to discuss the interim report of the second Five-Year Plan of the government. Prime Minister Abdlqader Bajamal said in his report on Wednesday that it is necessary for his government to lift the subsidies on diesel and gas, alleging that this costs the treasury YR 150 billion per year. Bajamal pointed out that the government imports almost 70% of the market's need from abroad at a cost of YR60 per liter which is being sold to the people at YR 17 only. The government claimed that this low price encourages businessmen to smuggle the diesel to the neighboring countries.
However, Bajamal's justifications were not able to convince the members of the Parliament or the consultative council to accept his proposal to raise the price of these two materials. They strongly rejected the plan in a letter signed by over 250 and presented to the chairmanship of the joint meeting, considering the proposed price hikes as “fatal”. They claim that “the government was not sincere and serious in its implementation of the reform package and in fighting corruption,” adding that “such a price increase would have a serious negative economic and social impact on the masses.” The MPs even accused the government of being “corrupt, ineligible, and incompetent to run any reform program.”
MPs were shouting and carrying banners, rejecting the price hikes. Some of them were seen carrying loafs of bread as a signal of the potential impact of the price hikes on peoples standard of living, as figures presented by opposition MPs indicated that the unemployment rate had soared to 30% and poverty to 50%.
Despite the decision of the meeting chairmanship to adjourn the session without considering the vote on the proposed price hikes, MPs from both the ruling party (mainly the sons of influential tribal figures like Hussein al-Ahmar and Mohammed Abdellah al-kadhi) and the opposition, pledged to continue mobilizing resistance to the plan to lift the subsidies on oil derivatives. They even decided that the cabinet report should be discussed and debated by specialized committees in both the parliament and the consultative council.
Bajamal could hardly escape the premises of the parliament last Wednesday due to crowds of MPs escorts gathered at the gate of the parliament who started shouting in protest at the proposed price hikes. The escorts, who were holding cudgels and arms, were even joined by some MPs in chanting slogans condemning the cabinet's policies. “Down with Bajamal and Salami”, was one of their slogans, another described Bajamal as the “nastiest swindler.”
The government was very much angered by this move, which it considered as “an irresponsible act”. The state-run al-Thawra Daily, on Saturday, criticized the practice of arms carrying by the escorts of some officials and MPs, calling for an end to this phenomenon which should be stopped, even by legislation.
The government of Bajamal finds itself sandwiched between its commitments to the World Bank and the International Monetary Fund, which demand further reformation, and the MPs and public uproar against them.
There have been price hikes on some foodstuff like wheat, flour and eggs earlier in the year. The cabinet claimed, mid January, that external factors stood behind these price hikes like the worldwide cost of transportation. However, in its budget platform, the government said it would go on implementing the reform program sponsored by the WB and IMF. The rise in prices of these materials, which was received with harsh criticism by the media of the opposition and mosque preachers, is widely believed to have been done to test the public impulse.
The government was expected to implement this step last February but it was postponed by President Saleh, who seemed anxious about the potential of public unrest and uproar, like the violent demonstrations that took place in 1998. Saleh, even earlier, ordered a wage rise of 20% for military and civil service workers.
The next step of the price reform will cause an increase in oil derivatives including benzene, petrol and diesel. It is said that the economic reform program which will continue this year, which started with price hikes in basic commodities like wheat sugar, by lifting all subsidies, will be followed by steps targeting oil derivatives which will include a 50% increase in the price of benzene and diesel price. This, of course, will necessarily lead to knock-on price increases of all commodities. The next step was to include the implementation of 10% extra sales tax levied on all businesses in the country last July, but the plan was also delayed.