Slow and Steady Wins the Race: How the Gradualist Approach Eliminated Jordanian Bread Subsidies

Joud Tabaza

Jordan’s bread subsidy policies have long been regarded as the last red line in the social pact between the government and the people. Previous implementations of lifts in bread subsidies under the direction of the International Monetary Fund have led to notorious bouts of political upheaval in what people remember as the ‘bread riots’ of 1989 and 1996. Yet, the Jordanian government resolved late in 2020 that it would eliminate the bread subsidy policy with no public turmoil in sight. This article argues that this policy transformation’s success is the product of a gradualist approach to structural reform in contrast to the ‘big bang’ approach of previous attempts.


1. Introduction

“If bread is no longer considered a red line, no lines will remain,” wrote the Editor-in-Chief of Jordan’s daily national newspaper, Al-Ghad, amidst Jordan’s 2013 food policy debate (Ghunaimat 2013). Journalists, policymakers, and members of the public alike have long regarded Jordan’s bread subsidy program as “the last red line” in the social pact between the government and the people (Martínez 2018). With a population of 10.1 million and a 2019 GDP of $44.5 billion (“Jordan” 2021), Jordan imports 800,000 tons of wheat annually, with an average annual consumption of 90 kilograms per capita (“Iqtisadiat urdoniyyah” 2017). In the eyes of Jordanians, bread has value that extends beyond nutrition and calories: it has a communal and symbolic power that different strata of society share, and that testifies to the long cultural history of bread in the region. Moreover, bread has long been synonymous with the people’s perceived right to subsistence and the obligation of state authorities to provide it (Martínez 2018).

This perceived right is rooted in the precedent that the Jordanian government set in the late 1960s when it led efforts to subsidize staple foods, providing strategic commodities such as wheat and sugar to the public. This state-led economic development model ultimately collapsed in the face of a national fiscal crisis fueled by the regional recession of the mid-1980s and accumulating debt. As the government resorted to international financial institutions for budgetary relief, it was forced to prioritize structural adjustments that included the removal of subsidies. By 1992, Jordan managed to eliminate most of its food subsidies, with the notable exception of bread—not only because bread is a staple but because it commands such a symbolic power (Martínez 2014a). On multiple occasions in its recent history, the Jordanian government attempted to remove bread subsidies in accordance with the direction of the International Monetary Fund (IMF), which advised indebted developing countries to make policy shifts to reduce their budget deficits and improve their positions to meet loan obligations. Such attempts have repeatedly led to episodes of political instability—notably in what people remember as ‘bread riots,’ such as those that took place in Jordan in 1989 and 1996 (Martínez 2018).

Over the past 25 years, Jordanian analysts have described governmental efforts directed at modifying bread subsidies as not only a waste of time but also a “recipe for revolt” (Ersan 2017). They have claimed that the political and socioeconomic importance of bread goes far beyond the government’s financial expenditure on the program, which amounted to 265.34 million Jordanian Dinar (JD), or 374.25 million USD, in 2014. For the better part of the past two decades, the government has found itself caught between the IMF’s austerity-related sanctions and the sociopolitical sensitivity of bread subsidy reform. This is noteworthy given that the government has long been eager to avoid stoking hostilities of the kind that may jeopardize its stability (Martínez 2020).

Despite this politically charged historical backdrop, the Jordanian government resolved late in 2020, while the COVID-19 pandemic was raging in Jordan and worldwide, that it would phase out the bread subsidy policy entirely, effective in 2021 (AlDbeibseh 2020). This exceptional decision came with no notable public turmoil in sight as of May 2021. While the elimination of a half-century-long practice of subsidizing bread may initially come across as quantum leap, I argue here that this policy transformation—and its sociopolitical sustainability to date—has been the product of a slow and gradual approach of structural reform that took place over a period of 25 years. In other words, the end of the bread subsidy in 2020-21 did not follow the kind of ‘big bang’ approach that occurred in the elimination attempts of 1989 and 1996. I will further argue that this difference in approach, in the 2020-21 measures, compared to the earlier 1989 and 1996 measures, illustrates that the bread welfare program in Jordan may not have drawn as rigid a ‘red line’ as observers long assumed.

This article draws on an existing body of chronological journalistic evidence that documents the evolution of bread welfare policies and the sentiment surrounding them, public governmental data including consumption statistics and budgetary laws, and international development reports that track Jordan’s economic reform. It further examines the existing academic literature on approaches to economic reform and the historical significance of bread subsidies in the country, especially in relation to past bread riots.

I begin by providing a brief overview of the history of bread subsidies in Jordan, before examining the ‘big bang’ approach of the bread riots of 1989 and 1996, while underlining the sociopolitical foundations of bread’s significance. I then introduce the Jordanian government’s deliberate implementation of slow gradual structural reform for the past 25 years, while emphasizing the political arguments, strategies, and foundations that policymakers used to supplement this approach. Next, I demonstrate how this more nuanced approach has driven the difference in reception by the people. Finally, I discuss possible health and socioeconomic implications of this decision for the Jordanian public.

In this article, I use the terms bread subsidies, flour subsidies, and wheat subsidies synonymously as Jordanian authorities also do. I will later explore the subtleties of how these subsidies were enacted and the relevance of such mechanisms to the interchangeability of the terms.


2. A Brief History of Bread Subsidies in Jordan

In the early 1960s, Prime Minister Wasfi Tal led Jordan’s commodity subsidizations efforts in an attempt to “rationalize the economic foundations of Jordan’s patrimonial state” (Kingston 2001, 116). This state intervention took form in supply and price regulations on imported strategic commodities that included wheat, petroleum, and sugar initially, but that ultimately also covered coffee, tea, cigarettes, powdered milk, poultry, cheese, and rice (Baylouny 2008). Initially, Jordan’s welfare programs primarily supported East Bankers or Transjordanians in contrast to Jordanian citizens of Palestinian descent (Baylouny 2008). The former formed the state’s main support base and were often thought of as the mainstay of the regime (Baylouny 2008; Harrigan et al. 2006). As domestic inflation and the cost of living saw a rise in the early 1970s, welfare state efforts further grew to support public sector workers who consisted mainly of Transjordanians and were constrained by modest growth in salaries. But this expansion’s benefits reached Jordanians at large and was institutionalized in the creation of the Ministry of Supply in 1974 with a mandate to dispense staple goods (Andoni and Schwedler 1996).

For twenty years following the enactment of wheat subsidies, the price of bread was regulated through the government’s sale of imported wheat to flour millers at market prices, who in turn sold different varieties of all-purpose flour to bakeries at subsidized prices. The Ministry of Supply (later the Ministry of Industry, Trade, and Supply) reimbursed the millers for the discounted difference. Bakeries then sold subsidized bread to the public at roughly fixed government-set prices. Bread prices increased only slightly from 0.05 JD per kilogram in the 1960s to 0.075 JD per kilogram in the late 1970s (where 1 USD corresponded to 0.36 JD in 1960s and 0.32 JD in the 1970s prior to the devaluation of the JD in 1989) (Martínez 2014a; Baylouny 2008; “Jordan exchange” 2021).

In the early to mid-1980s, the global collapse in oil prices induced a regional recession and a corresponding decline in Jordan’s two primary revenue flows: labor remittances and oil-driven foreign aid (Karmel et al. 2014). As its revenues declined, Jordan’s national debt simultaneously accumulated such that by 1988 its debt was twice its GDP (Ryan 1998). The extent of the country’s crisis was heightened when it stopped making payments on bilateral government loans (Ryan 1998). This decline in income and dramatic increase in debt meant that the country’s state-led model of economic development (as well as that of many of its Arab socialist neighboring countries) was not sustainable as the regime confronted a fiscal crisis. As a result, Jordan resorted to what policymakers saw as the only source of relief: international financial institutions such as the IMF for assistance to renegotiate and reschedule its debt payments. The IMF’s budgetary relief was conditional on a negotiated structural adjustment program that involved curtailing the country’s public expenditures via cuts in state employment, in addition to “phasing out poorly targeted and costly subsidies and directing the savings toward public investment and better-targeted safety nets for the poor” (International Monetary Fund 2013). The IMF based its analysis on the assumption that the kingdom’s high levels of debt were restricting its spending freedom on commodity subsidies, which the IMF tended to characterize as an unnecessary, unsustainable, and inefficient form of public expenditure (Martínez 2014a). In fulfillment of the adjustment program agreed on by the government and the IMF in 1989, Jordanian authorities phased out or curbed most subsidies by February 1992, with the only universal food subsidy remaining in sight being the bread subsidy (Martínez 2018).


3. The Big Bang Approach: The Bread Riots of 1989 and 1996

On 15 April 1989, in an “incredible lack of foresight,” the Jordanian government announced a series of measures required to meet IMF lending conditions, including the freezing of public wages, salaries and employment, and an immediate increase in the prices of petroleum products (Wilson 1994, 87; Harrigan et al. 2006). Three days later, a subsequent increase in food prices proved to be the last straw in a series of cumulative successive adjustments that only spanned a few days. Riots erupted in the southern governorate of Ma’an and stretched out to other regions of the south, north, and even to university students in the capital of Amman. Rioters demanded not only the reversal of the policy, but also a new prime minister (Wilson 1994). Most of the rioters consisted of Transjordanians who were “amongst the first losers of the IMF-promoted reforms” due to their higher dependency on state employment and welfare programs (Harrigan et al. 2006). After four days of the worst episode of violence in Jordan since the Black September events of 1971 (a conflict between Jordanian armed forces and militants of the Palestine Liberation Organization; (Cowell 1989)), the official casualty toll was eight deaths and eighty-three injuries (Wilson 1994). Additionally, the government grew conscious of the ensuing vulnerability of its Transjordanian support base. While the vast majority of proposed policies remained in place, the IMF’s request for “complete elimination of all food subsidies” was not carried through when King Hussein intervened to reverse course (Harrigan et al. 2006).

Heeding the people’s warning in 1989, the government only chose to provisionally lift bread subsidies on 13 August 1996 in compliance with new IMF guidelines. Immediately after the decision, bread prices almost trebled from 0.075 JD per kilogram to 0.25 JD per kilogram (Ryan 1998). Increased bread prices also affected animal fodder and, indirectly, dairy prices (Ryan 1998). Residents in the southern governorate of Karak rioted against the move and the incumbent prime minister for two days until the army enforced a strict curfew (Andoni and Schwedler 1996). After a new prime minister was appointed, he chose to scale back the increase. Still, the retail price almost doubled in 1996 at 0.16 JD per kilogram of standard quality bread made from local flour (Martínez 2018). This backtrack in price hikes was subsequently accompanied by a cash transfer program through the National Aid Fund (NAF) to compensate the poor for the decreased subsidy levels (Sdralevich et al. 2014). However, because the 1.28 JD per Jordanian per month transfer allowance was essentially offset by similar increases in the prices of dairy products, it only managed to ease a fraction of the people’s sudden economic hardship (Ryan 1998).

Many citizens indeed saw the measures taken in 1989 and 1996 as unwarranted ‘overnight’ changes – a radical ‘big bang’ or shock therapy approach. In this approach, the government implemented market liberalization policies quickly, in a concentrated period of time, influenced by the urgency conveyed by the IMF as opposed to taking a gradualist approach that would have spread various reforms over an extended period (Wei 1997). After decades of dependence on government-sponsored bread, the abrupt decision that altered people’s relationship with the most basic foodstuff was not well-received. To add to the radicality of the reform, the government did not take actions to condition the expectations of the public in 1989, with little outreach or transparency (Sdralevich et al. 2014). The result was public confusion with respect to the purpose of the changes. In 1996, meanwhile, the government’s mitigation strategy consisted of parliamentary approval of the lift in subsidies, and cash transfers to the poor (Sdralevich et al. 2014). But even then, the change came across as extreme, given the short time span, meager dispersed allowances, and lack of communication with the public (Ryan 1998).

The big bang approach has succeeded in other countries and settings, such as in 1985 Bolivia when the government used shock reform to end hyperinflation (Wei 1997; Cachanosky 2015). In less than 100 days, the Bolivian government liberalized exchange rates, significantly reduced employment in public companies, eliminated price controls and subsidies to public companies, and negotiated a debt swap with the IMF (Cachanosky 2015). In contrast to Jordan’s case, Bolivia’s shock reform process was associated with strong credibility and minimized resistance (Cachanosky 2015). But more importantly, said credibility and lack of resistance were driven by preexisting widespread political support for radical economic reform at all levels of society, especially compared to the alternative of no reform (Cachanosky 2015). Not only did no support of this kind exist in Jordan in 1989 or 1996, there was actual resistance to reform and a preference for the current state of affairs due to the adverse perceived consequences that the bread subsidy removal had on the average citizen, suggesting a possible cause for the failure of the shock approach in the country. Even though authorities claim to have led greater awareness campaigns to highlight the necessity of the change in 1996, the people rejected these exogenous shocks because they perceived them to rapidly threaten their routine, stability, and economic security (Ryan 1998). Some individuals’ protests not only entailed objections to changes in bread prices, but also to the government’s hasty dismissal of a sacrosanct contract—a bread pact. Many viewed the bread subsidy as part of the status quo and perceived the government’s actions as a violation of the ‘old way of doing things’ and a breach of the established government-citizen trust. This prefaced and engendered an overall culture of skepticism and lack of confidence in governmental institutions and policy, along with apprehensions about changes to come.


4. The Gradual Structural Reform Approach: 2007-2020

After two significant bouts of local upheaval and the subsequent recapping of prices, the bread subsidy remained largely unaltered for about 10 years. It did, however, face a harsh test amidst the dramatic rise in global food prices of 2007-8, when the skyrocketing price of the government’s imported wheat became infeasible within the existing subsidy structure, thus prompting authorities to revisit food welfare policies (Maharmeh 2017; Saif 2008). Guided by the shortcomings of its radical big bang approach in 1989 and 1996, I argue, the government put an alternative gradualist course to the test by resorting to the selective introduction of various incremental changes and spreading them over an extended period of time (Feltenstein 2003). This approach was mainly driven by domestic strategies under IMF oversight. The IMF provided greater guidance on necessary reform objectives, and more discretion to the local government on the mechanism of achieving those objectives in comparison to its active involvement in earlier attempts. Proponents of this approach—which, indeed, did prove more effective—highlighted its potential in avoiding sudden disproportionate reduction in living standards at the outset of adjustment implementation. It further allowed for trial and error and mid-course adjustment in reform programs, which helped authorities gain incremental credibility. This credibility served to temper forces of resistance and increase programs’ chances of survival.

Jordan’s gradualist measures commenced in 2008 when rather than unconditionally lifting the universal wheat subsidy, the cabinet made the decision to limit the wheat subsidy to only one variety of flour. Namely, it supported all-purpose, unified flour of 78 percent extraction rate, known locally as almuwahad, in contrast to the original universal program which had encompassed all types of wheat. The mechanism of the subsidy enactment relative to previous years remained unchanged: imported almuwahad flour was sold at free market prices by the government to local millers, who sold it at discounted prices to bakeries and got reimbursed for the difference. Policymakers further passed legislation that made it illegal for almuwahad flour to be used for anything but the cheapest bread, which is sold to the public at fixed prices (Maharmeh 2017). This decision was preceded by a strong emphasis from the government and the media on the regressive consequences of the universal wheat subsidy (Martínez 2018). Specifically, they highlighted that it unjustly supported the luxurious consumption habits of upper-class and middle-class citizens who purchased sweets and expensive bread made using subsidized flour rather than the poverty-stricken for whom the subsidy was intended (AlFarawati 2007).

From a social justice perspective, if the purpose of the bread subsidy was to equalize access to resources, then the state of subsidies at the time could be rightfully considered not only inefficient and regressive but also unjust. This stems from the large body of journalistic evidence that illustrated how the subsidy fostered consumption habits that led to misallocation of resources from the under-served, who the bread subsidy was designed for, to those for whom it was not meant for. By emphasizing the needs of the poor and the inherent mismatch between the developmental objectives of the subsidy and its tangible effects, the government managed to legitimize its austerity argument, persuade a broad swath of the Jordanian public and preempt dissent. In comparing it with previous attempts at reforming the subsidy, socioeconomic analyst Husam Ayesh described the policymakers’ strategy in defending the move via utilizing common values of fairness and social justice as “smart” (AlFarawati 2007; Martínez 2018).

With the first sign of a successful reform in place, the subsidy program remained intact until the influx of Syrian refugees into Jordan redirected it to the public attention in 2013. The trigger of the debate, which lasted for two years, was the request of the IMF to curtail the subsidy due to its concern that a welfare program intended to benefit Jordanians—as agreed on by the government and multilateral institutions—was disproportionally aiding the country’s non-Jordanian population. This population included 3 million Egyptians, Iraqis, Palestinians, and Syrians (refugees or otherwise) (Martínez 2014b). Some of these groups had assistance programs of their own, and, therefore, did not warrant targeting by the subsidy program (The World Bank).

The government thereby leveraged this phenomenon to subtly decouple and delegitimize the role of the bread subsidy in its traditional form in the social pact it had with Jordanians. It carefully placed more emphasis on the need to provide targeted support to Jordanians of all descent, as opposed to sustaining an inefficient blanket subsidy that inadvertently supported unintended beneficiaries (Martínez 2014b). In view of this, governmental bodies in tandem with policymakers, local experts, and analysts launched analyses and investigations into the efficiency and net impact of bread subsidies in their current form for the public. The findings were used as the main grounds for the government’s subsequent public arguments to promote the need to reform the subsidy to target its Jordanian beneficiaries before taking any concrete actions.

The backdrop to the government’s narrative was a volatile regional neighborhood battling unrest amidst the Arab uprisings. Social protection experts argued that the surrounding instability largely influenced the government’s approach (Osorio et al. 2017). It grew conscious of the need for nuanced reform and learned from other countries’ uprising experiences that abruptly removing subsidies can cause resistance and unrest and therefore a gradual approach that emphasized a more efficient channeling of benefits was more effective (Osorio et al. 2017). The people of Jordan, on the other hand, witnessing the turmoil of their neighbors, chose to abandon protests and grew more amenable as they noticed the government’s consciousness in designing reforms that aimed to better target them as beneficiaries (Harris 2015).

A study conducted and publicized by the Ministry of Industry, Trade and Supply reported in 2017 that subsidized bread was primarily consumed by non-Jordanians, who accounted for a third of the population and were not targeted by the program, and that 10 percent of subsidized flour was wasted due to mismanagement and poor storage practices (Maharmeh 2017). State authorities further strengthened their case for adjustment by citing estimates that only 13 percent of the subsidized bread was consumed by the needy, while 12 percent was consumed by wealthier segments of the society (Duwayri 2016). Minister of Finance Umayya Toukan argued in 2014 that subsidies structurally encouraged perverse incentives: “Currently, flour is wasted, smuggled, and used illegally. Government interventions inevitably create market distortions” (Martínez 2018). As of 2015, 25 percent of the subsidized flour was illegally used in other bakery products or the production of non-subsidized bread that was sold at high prices.

An investigation into bread consumption patterns found that in ten out of twelve Jordanian governorates there existed a flour surplus wherein supply exceeded demand by 152 tons or 35000 JD per day. This excess supply enabled the rise of a black market for the sale of flour by bakeries and millers at almost four times its subsidized price. This black market appealed locally to food factories and was smuggled to neighboring countries that suffered from high wheat prices or insufficient supplies. Proponents of the welfare program attributed these practices to the government’s lack of oversight, but—while acknowledging the need for increased surveillance—the Minister of Industry, Trade and Supply cited a shortage of supervising cadres as the main limiting factor (Maharmeh 2017).

While pushing this narrative, policymakers “toyed with ideas [for reform] with great caution for fear of the public’s reaction” (Ghunaimat 2015). One proposed idea was that of a ‘smart card,’ wherein bread prices would be liberalized, and government agencies would reimburse beneficiaries of the subsidy program the difference in price, allowing them to withdraw cash from ATMs across the country. Another alternative was direct cash transfers to eligible citizens. All the while, the government repeatedly emphasized that all options were on the table as it cautiously read the public reaction. Media reports indicated that the government always had one foot out the door, as was the case when it withdrew its suggestion to implement the smart card proposal in 2015 when bakers, consumer protection groups, and activists condemned it on grounds of the plan being unclear and infeasible to implement, especially when it comes to utilizing the technology required in underserved rural areas (Martínez 2014a; Martínez 2020). During this debate in 2015, the same journalist who described the bread subsidy as a “red line” in 2013 commented on the government’s different reform proposals by writing “The problem is timing … postpone the [removal of] subsidies until better times are here” (Ghunaimat 2015), implying that after two years of public debate and open public policy experimentation the question was no longer whether to lift the subsidies, but when to lift them.

Government bodies seemingly deemed January 2018, when Jordan was hit by a lack of foreign grants, as “better times” when they announced their decision to lift the existing price restrictions on bread, increasing its market price between 60 and 100 percent. Simultaneously, they proposed to supplement this increase in price with targeted cash supports for the impoverished starting 1 February 2018 (Al-Khalidi 2018). The cash supports were expected to amount to 171 million JD in total and be delivered to around 6.2 million Jordanians and Palestinian refugees through electronic benefit transfer (EBT) cards (Khraishy 2018), with state authorities fostering promises of better targeting of those in need and a reduction in fraud and waste (Al-Khalidi 2018).

Still, a 2019 United Nations International Children’s Emergency Fund (UNICEF) report contended that in 2018, by international standards, Jordan was a big spender on non-targeted commodity subsidies with inadequate allowances for poverty-targeted social assistance programs because the bulk of social assistance spending in cash supports was allocated for the bread subsidy. This was supported by the fact that cash transfers were delivered to around 80 percent of Jordanians, which exceeded the 15.7 percent poverty-stricken segment (“Geographic” 2020). Accordingly, in an attempt to better target bread-related cash transfers and slowly ease people’s dependence on them, the government gradually increased the selectiveness of its benefits eligibility criteria, which consisted of 57 indicators to gauge households’ socioeconomic needs. In 2019 and 2020 the number of recipients decreased to 5.8 million and 4.5 million beneficiaries respectively (Alfaqr 2021).

After years of foreshadowing and incremental adjustments, authorities quietly implemented the complete phase-out of the bread subsidy program and its associated bread-specific cash transfers in December 2020, effective for the fiscal year 2021. No formal public announcement ensued, but state authorities tacitly slipped the decision into the general budget law for 2021, which allocated no allowance for said transfers, in contrast with previous years (“General Budget” 2021). This policy was endorsed in the thick of the COVID-19 pandemic in the country as the cabinet simultaneously announced 280 million JD worth of welfare assistance to support sectors and workers hit by the pandemic, which officials cited as a more justified form of public spending (AlDbeibseh 2020). In April 2021, some Jordanians on social media demanded the restoration of the subsidy program. But, in line with the underlying case for the gradualist approach which predicts an increase in the likelihood of policies surviving, the Minister of Social Development responded by saying that any move to restore the subsidy would be “highly unlikely” (“Jordanians” 2021).


5. Discussion and Implications

What will the complete end of the bread subsidy in 2021 mean for Jordanians in the short-term and long-term? Answers will vary according to the extent of people’s reliance on governmental support. Nevertheless, experts and journalists have discussed broad implications for the population at large, some of which the country has started to face, and some which remain to be put to test.

Socioeconomic analyst Hussam Ayesh, who previously commended some of the government’s past reform policies, suggested that the subsidy removal would not only increase the price of bread as a staple item, but would also trigger spillover effects to increase the prices of other basic goods (AlQaralah 2015). Accordingly, on the economic front, many experts attributed the increase in inflation in the previous years to the removal of the subsidy. Specifically, inflation rose in 2018 to reach 4.5%, up from 3.3% in 2017. This further engendered an overall decrease in consumer purchasing power, deepening the financial miseries of many, and increasing both the depth and breadth of the national percentage of people living below the poverty line (“Geographic” 2020). It remains unclear whether the government’s alternative targeted cash transfer supports will be sufficient to offset the impact of this decline in purchasing power. Additionally, some journalists argued that from the perspective of those who were long sustained by the subsidy, its removal signaled the government’s prioritization of international debt obligations and austerity over upholding its longtime commitment to support those who depended on it. This shift in expectations came across as a breach of trust and increased the distance between program beneficiaries and the governing authorities; thereby reinforcing an overall sentiment of skepticism and mistrust when it comes to policies that concern their economic well-being (Sweidan 2020).

On the commercial level, higher prices led to an overall decrease in demand for bread by 50%. In parallel, bakeries saw an increase in production costs (“Inkhifad” 2018). While bakery owners expressed distress caused by the difficulty of sustaining their operations with the drop in demand, the government announced that it managed to eliminate the black market for wheat and cut waste in bread that “used to go to garbage containers,” according to Prime Minister Hani Mulki (“AlMulki” 2018; “Inkhifad” 2018; AlDbeibseh 2020).

But this fall in demand for bread raises questions on the health front. What did the bread subsidy’s maintenance and removal entail for its recipients? A 2020 working paper by United Nations Food and Agriculture Organization (FAO) suggested that food subsidy programs in the Middle East and North Africa have significant implications in reducing the relative price of a commodity such as bread, which is considered an energy-dense food item. Cheaper bread may encourage people to overconsume it, while discouraging the consumption of relatively more expensive nutrient-rich foods (Abay et al. 2020). In Egypt, which has implemented a bread subsidy program since the 1920s, researchers were able to link its high obesity rate with said subsidy (The Economist 2018; Abay et al. 2020). But no studies have explored a similar link in Jordan. In fact, the direction of the health impact of the subsidy removal in the country could go in either direction. It is plausible that some of the drop in demand for bread was, in fact, due to Jordanians curbing wasteful and unnecessary consumption that was being fueled by the greater accessibility of bread as an inexpensive food item. This drop in demand, in isolation, could lead to better health outcomes. But if this decrease in demand is accompanied by a substitution effect, wherein the drop in consumption of bread is replaced by consumption of another food item, then the net health impact would depend on the nature of that substitute (e.g., are people opting for more nutrient-rich foods or cheaper, less nutritious items?). As a result, the overall health consequences of the subsidy removal in Jordan remain insufficiently researched and unclear thus far.


6. Conclusion

Jordan’s 60-year story with its bread subsidy program has no doubt revealed the nuanced significance that the staple item has held in people’s imagined right to subsistence and the function of authorities to provide it. Inevitably, it is also a story of a ‘last red line,’ which once seemed bright and clear to both the Jordanian government and the Jordanian people. Under the pressure of its budgetary adjustment program, the Jordanian government’s radical ‘big bang’ policy attempts at erasing subsidies in 1989 and 1996 and the associated bouts of sociopolitical unrest merely reinforced the bread subsidy’s significance. Mindful of the limitations of the former approach, state authorities’ subsequent employment of the slow gradualist approach for a period of more than 20 years has made all the difference. What was once a ‘recipe for revolt’ metamorphosed into what now looks, in 2021, like a recipe for realistic reform.

In this case, a combination of trial and error ultimately led policymakers to the gradualist path, but the question of which approach is optimal for subsidy reform in other contexts remains a delicate one. As they weigh the benefits of each approach, policymakers must repeatedly make a tradeoff between the unnecessary social and economic costs associated with the big bang approach and the possibility of incomplete inconsistent reform associated with gradualism. The impact of context-specific social, political, and economic factors on not only the choice, but also the development of a reform approach makes this question a predominantly situational one.



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