Two Months After War, Jordan Still Aches : Gulf aftermath: Portraits of Saddam Hussein are long gone. Unfortunately, so is most of the business. Yet Amman’s hopes are still tied to Baghdad.

This nation’s binge of Saddamania is over now, and portraits of the Iraqi president are long gone from Amman’s shop windows.

But, oh, what a hangover.

Two months after the Persian Gulf War, Jordan’s pro-Iraqi populace still feels the ache, and will for months to come.

Cabdriver Musa Mohammed, telling his American passenger, “George Bush good, Saddam Hussein bad,” knows that words alone will not bring relief.

The owner of the fashionable Peking Restaurant now has time to personally greet every patron of his once-crowded room. Most are locals. “We lost a lot when the embassies sent their people home,” he explained. Many of his customers have not returned, nor have his Chinese cooks, who fled the Middle East when Iraqi tanks rolled into Kuwait nine months ago.

Unemployment in the kingdom is estimated at more than 25%, spurred by the estimated 200,000 Jordanians and Palestinians who returned from the Gulf. Only the traditional cushion of Arab family support has eased the blow.

The irony of Jordan’s despair is that its hopes for recovery are pinned primarily on one country: Iraq.

Government officials and private economists talk about developing new markets for Jordanian products--East Europe for instance. And eventually, they say, Saudi Arabia will put business before politics and reopen the border to trade in fresh vegetables and other products.

But planners cannot escape the Iraqi connection, no matter who rules in Baghdad.

“They (the government) think that foreign aid will continue forever,” complained economist Fahed Fanek. “They’re doing nothing. They should build a railroad to Iraq. They should build a pipeline. . . . We have very few choices but to go with Iraq.”

The connection is longstanding. Before the 1948 war that created Israel out of Palestine, Iraq shipped oil through Jordan by pipeline to Haifa. In the 1980-88 Iran-Iraq War, the Jordanian port of Aqaba became the starting point of the Iraqi lifeline, feeding a trade that developed the kingdom’s important transport industry.

When the invasion of Kuwait took place, Iraq was Jordan’s No. 1 trading partner, and Jordanian industry had tooled up to the needs and specifications of Baghdad’s economy.

War dropped the hammer. Gone in weeks was Jordan’s $550-million-a-year tourist industry. Trade with Iraq, Kuwait and Saudi Arabia fell by $400 million. The roughly $50 million or so in Arab aid from the Gulf states--the golden thread that had held the Jordanian economy together through hard times--was cut. With the return of the Gulf workers, another $150 million or more a year vanished, the money that had been sent to families back home.

The Iraqi connection (Jordan remained officially neutral during the Gulf conflict) seemed to have been nothing but trouble, according to the postwar, after-action reports here. “They made a serious mistake, and they know it,” said a Western diplomat. “Saddam was a loser.”

But with the Palestinian half of its population embracing the Iraqi leader and Jordan’s King Hussein himself convinced that Washington and its Arab allies had not given diplomacy a chance, the country’s Gulf policy was assured.

Iraq was grateful, and Baghdad’s trade minister, Mohammed Mehdi Saleh, in words that struck a politically itchy postwar topic here, declared last month: “Jordan will now become Iraq’s trade outlet and agent with the outside world.”

Subsequent reports, confirmed by Western diplomats, said Iraqi businessmen had been pricing products in Amman that are banned by the U.N. embargo. Then came an article in London’s Observer, denied by Jordanian officials, that Iraqi authorities had set up bank accounts in Amman to fund prohibited weapons purchases.

Charges like these are no help to King Hussein as he tries to mend fences in the wake of the war. Never renouncing his wartime policy, the 55-year-old monarch, nevertheless, has sought to return Jordan to its key role in Middle East politics. He toured European capitals, paid his first visit to Syrian President Hafez Assad in more than a year and met with Secretary of State James A. Baker III at Aqaba on Baker’s latest diplomatic foray in pursuit of Arab-Israeli talks.

U.S. diplomats call it simply the veranda speech, a post-meeting press conference by the king and Baker at Aqaba. And they call attention to Hussein’s amenable attitude toward the peace process that Baker was attempting to revive.

Said the king: “We should set our sights so this window of opportunity is not lost. . . . I mean, what makes one a better Arab to sort of stay out of it, and say that ‘I am a better Arab because I am not involved.’ No. There is a lot of question of meetings, contacts and old taboos, but the question is the question of responsibility in the times ahead, and I believe that if these are some of the impediments, they should be removed. . . .

“The Palestinian dimension has to be addressed by the Palestinian people. We will support them.”

Hussein’s apparent eagerness to move ahead on the peace process should play well in Washington, where the Administration and Congress responded to his earlier position on the Gulf War by freezing U.S. financial support for the kingdom, $55 million in the foreign-aid package alone, important to a treasury that needs every dollar.

For instance, Amman must pay $1 billion a year on its $8.4-billion foreign debt. It can’t, and it hasn’t. The debt amounts to more than twice the size of Jordan’s gross national product--the annual value of its economic activity--an inverted ratio to the situation in other countries.

With little to sell abroad but potash and phosphates, the resource-poor desert kingdom juggles accounts, borrows to cover its deficit, clings to a featherbedded government payroll and yearns for aid.

Wealthy Jordanians are still willing to pay heavy duties for European goods--imported furniture is a must in many households, for instance. But with most people scraping to get by, the glitzy lifestyle is unseemly.

However, the reintroduction of democracy last spring has at least put a brake on high-level corruption, formerly a source of great wealth in Jordan. With a Parliament stacked with fundamentalists of the Muslim Brotherhood and various blue-collar leftists, plus an unreined press, top officials are reportedly keeping their hands squeaky clean.

“They wouldn’t dare,” said economist Fanek of the prospects of heavy corruption returning.