U.S. Calls for ‘Generous’ Aid for Jordan : Sanctions: Amman is now in full compliance with the U.N.-imposed embargo against Iraq, the Administration says.

Jordan, once regarded as a massive gap in the trade-sanctions ring around Iraq, now is in full compliance with the U.N.-imposed embargo and is entitled to “generous” economic aid from the world community, the Bush Administration said Friday.

The new assessment is a dramatic reversal of the Administration’s earlier complaints that Jordan, for years Washington’s closest Arab ally, had thrown in its lot with Iraqi dictator Saddam Hussein.

“We now consider Jordanian compliance with sanctions to be good,” State Department spokesman Richard Boucher said. “When we have made our concerns known to Jordan, Jordan has addressed them and taken steps to meet them. Jordan’s economy is being particularly hard hit by this crisis; we believe that Jordan’s compliance warrants generous support.”

Boucher’s comments came as Michel Marto, deputy governor of the Central Bank of Jordan, was visiting Washington in search of support for his nation’s fragile economy, which was devastated by the loss of its traditional markets in Iraq and Kuwait. The U.N. Security Council imposed the trade embargo shortly after Iraq’s Aug. 2 invasion of Kuwait.

Although Marto conceded that it took some time for the Amman government to wind down its commerce with Iraq, he insisted: “We are now 100% . . . adhering to the sanctions.”

Marto said Administration officials who gave him a chilly reception last month now demonstrate an “understanding of our problems.” He said he was assured that “it is in the interest of the United States to have stability in Jordan.”

Despite the U.S. endorsement, however, Jordan still faces deep economic problems. Congress has approved $35 million in U.S. economic aid. However, Saudi Arabia, once the source of massive assistance, is not yet ready to forgive Jordan’s King Hussein for his diplomatic flirtation with Iraq’s Hussein. (The two are not related.)

Before Iraq’s invasion of Kuwait, Jordan was exporting 500,000 tons of fruit and vegetables--a substantial share of its total production--a year to Iraq, Kuwait and Saudi Arabia, Marto said. Moreover, Jordan was receiving about $500 million a year in economic aid from Saudi Arabia, Kuwait and other gulf states. After the invasion, that trade and aid ended.

In addition, Marto said, before the invasion about 400,000 Jordanians were working in Kuwait, most of them sending part of their pay home to extended families in Jordan. Today, 150,000 of those workers have returned home in the face of rising unemployment. Those who stayed are being paid in Iraqi dinars, an unconvertible currency that is virtually worthless outside Iraq and Kuwait.

The economy will certainly contract, Marto said. If Jordan gets massive foreign aid, the decline will be about 10%. Without such a transfusion, the skid could reach 40%, he added.

Boucher said the United States will urge other international donors to increase their support for Jordan. He noted that the United States is acting as a coordinator for donors, including Saudi Arabia, the United Arab Emirates, Japan, Germany, the 12-nation European Community and the exiled government of Kuwait.

In response to questions, Boucher said Washington would support a resumption of Saudi aid and trade with Jordan.

But Saudi sources said there is little likelihood that the two kingdoms will patch up their dispute any time soon.

“The Saudi grievances are a lot bigger than that embargo,” one source said.

For instance, he noted that the Jordanian government allowed pro-Iraqi Jordanians to buy advertisements in Jordanian newspapers while refusing to permit pro-Saudi Jordanians to do the same.

King Hussein angered both the U.S. and Saudi governments by touring the Arab world in search of an “Arab solution” to the gulf crisis that would not require Iraq’s total and unconditional withdrawal from Kuwait. Washington and Riyadh have ruled out “partial solutions” that would leave Iraq anything to show for its aggression.

Asked why Jordan, which has suffered more than any nation except Kuwait from the Iraqi invasion, would support measures that would give Saddam Hussein a partial victory, Marto said: “We have always been encouraged to negotiate. The United States always tells us to negotiate.”

Marto confirmed reports that in the early days of the crisis, the Central Bank of Jordan accepted a $50-million payment intended for Iraq. But he denied that the bank was laundering money for Baghdad. Instead, he said, the money was applied to Iraq’s debt of more than $300 million to Jordan resulting from loans during the 1980-88 Iran-Iraq War.

“The $50 million has been frozen,” he said. “But we took it as payment. They (the Iraqis) owe us a lot of money.”