AMMAN, Jordan — Escalating economic pressures on Jordan threatened to turn into a political crisis on Monday, as the prime minister resigned amid nationwide protests against proposed tax and price increases in a country that has suffered through years of declining living standards.
Prime Minister Hani Mulki stepped down after two years in office, but there was no sign that his departure would mollify the protesters or change unpopular austerity policies proposed by the government and backed by the International Monetary Fund.
The replacement of a prime minister is a tactic frequently used by King Abdullah II, Jordan’s ruler, in an attempt to placate the populace when discontent threatens the stability of the kingdom. But behind the recent protests is a collision of international factors that are far less easy to manage.
Western lenders are demanding painful measures to balance the budget and liberalize the economy even though Jordan’s standard of living has been declining for years. And at the end of 2017, the petroleum-rich Persian Gulf monarchies cut off $1 billion a year in aid that had covered many of Jordan’s big expenses for the previous five years.
Recent signs of distance between King Abdullah and some important Persian Gulf rulers have raised questions about whether they are holding back aid solely because the falling price of oil has squeezed their own budgets, or also partly because of political differences.
The king, who appoints the prime minister, the cabinet and members of the upper house of Parliament, appointed Omar Razzaz, a former World Bank official and education minister, to replace Mr. Mulki and lead a new government. It was not clear whether Mr. Razzaz would pursue the proposal to increase the tax rate on workers by at least five percentage points and on businesses by 20 to 40 percentage points.
The country’s economic picture is already gloomy, with the official unemployment rate above 18 percent and the poverty rate even higher. Hundreds of thousands of Syrian refugees live in Jordan, compounding the country’s economic troubles, while the civil war in Syria has also cut off what had been one of Jordan’s most important trading partners.
Incomes in Jordan have stagnated for years, as prices have soared. Amman, the capital, ranks as the most expensive city in the Arab world, and it has a higher cost of living than much wealthier cities, like Dubai, London and Washington, according to the Economist Intelligence Unit.
“Successive governments have failed in the eyes of the public,” said Fares Braizat, chairman of NAMA Strategic Intelligence Solutions, a research, polling and consulting firm based in Amman. “This is a statement about bad public economic policy planning and execution.”
The loss of $1 billion in annual support from the gulf states hit Jordan particularly hard, said Ibrahim Saif, an economist who studies the region. “It had covered much of the government’s capital expenditures and many initiatives to try to develop the economy and create jobs,” Mr. Saif said.
Jordan has increasingly charted a course independent of its gulf patrons. While Saudi Arabia and the United Arab Emirates have cut off trade and diplomatic ties with neighboring Qatar, King Abdullah has refused to follow their lead. He has also pushed back far more vocally than other Arab monarchs against President Trump’s decision to recognize Jerusalem as the capital of Israel, rather than wait for its status to be resolved in peace talks with the Palestinians.
Many residents of Jordan trace their origin to the Palestinian territories, so anything involving those talks is politically delicate. The Persian Gulf monarchs have shown more interest in building a common front against Iran with Washington — and, tacitly, Israel — than in confronting Israel over the Palestinians.
Economics alone could also explain the decision of the Saudi Arabia, the United Arab Emirates and Kuwait to discontinue aid to Jordan, Mr. Saif said; the gulf kingdoms have raised their own taxes and prices in an effort to move their economies away from dependence on oil.
“They are trying to consolidate their own budgets,” he said.
Last Wednesday, more than 30 labor unions and professional groups staged a strike in Jordan, the largest in years, to protest the austerity bill, which they said would penalize the poor and the middle class. Doctors walked out of hospitals wearing white lab coats, lawyers walked out of courtrooms in their black robes and shopkeepers shuttered their stores, hanging signs that read: “We are closed. We are on strike.”
A day later, the government increased the price of fuel by more than 5 percent and electricity by 19 percent. The strike turned into daily nationwide protests by thousands of people, the largest in the country since the Arab Spring in 2011.
King Abdullah ordered the government to suspend the energy price increases, but the demonstrations continued.
The protests have drawn diverse crowds — unemployed youths, women, store owners, families, Bedouins and employees of high-tech companies. They have been eager to show that they do not come from any particular political or demographic group, but represent a broad spectrum of poor and middle-class Jordanians.
The only banner flying in the crowds has been the national flag, and protesters have gone out of their way to say that they were standing up for police officers, as well.
“Do you hear us?” crowds chanted in Amman, addressing the government. “Hear us now. We came to say you have left us with nothing. We are broke. The people want the downfall of the government.”
The protests have taken place in the evenings because it is Ramadan on the Islamic calendar, when Muslims fast during daylight hours. A woman wearing a red and white kaffiyeh, or scarf, held a sign that read: “Go away government, so we can go. My father doesn’t like me staying out too late.”
The proposed tax and price increases are the latest in a series of austerity measures Jordan has imposed since 2016, when it received a $723 million, three-year line of credit from the I.M.F. The fund says the sacrifices will lower the government’s debt of $35 billion, advance economic overhauls and promote growth.
While much of the popular anger is about the economy, some experts say it is also about a steady decline of freedoms since the Arab Spring, a lack of democratic change and a perception that corruption is rampant. Protesters blame politicians for squandering public funds.
“The protesters also want a changing social contract,” said Sean L. Yom, a professor of political science at Temple University who studies Middle Eastern governments. “The Jordanian state is asking citizens to pay more and live more frugally, but in return offers little political concessions or more democracy.”
Polls show a significant decline in public confidence in government, particularly in the past year, Dr. Braizat of NAMA Strategic Intelligence Solutions said.
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