Tunisia Snapshot: The Economic Fallout of the Uprising & Libya

Unemployed in Gafsa (August 2010)Francis Ghiles writes for Al Jazeera English:

A few weeks before the month of Ramadan sets in, Tunisia faces the economic fallout of two very different recent events. The first happened nearly five months ago and swept General Zine el Abidine Ben Ali from power in a popular uprising which wrought minimum damage on the fabric of Tunisian farming, manufacturing and tourism infrastructure - indeed there were numerous instances of workers defending factories against marauders or Ben Ali's militia. The second has been in Libya, where the three month UN-authorised military intervention, formally led by NATO, in what had already become a civil war, has inflicted considerable damage to the country's infrastructure. The instability attendant to a prolonged military campaign in Libya presents a serious strategic threat to its northern neighbour, Tunisia.

Three immediate consequences are worth noting: at least 250,000 Libyan nationals are reckoned to have crossed  into Tunisia; the risk of increased infiltration by al-Qaeda in the Islamic Maghreb - whose network of activists are present in Algeria, Mali, and Niger --- is real; finally, the pictures of fighting in Libya being flashed across western TV screens are complicating the task of the Tunisian government - as it seeks to convince European tourists, whose number had declined by 42 per cent to 928,000 as of the end of April compared with the same period in 2010, to return. 

Tunisia's economic losses since the start of last winter's revolt can be summed up as follows: an estimated $2bn worth of material damage suffered by buildings and infrastructure during the revolt, with a further $600m added to the existing import bill of oil related products and foodstuffs due to rising prices worldwide. Put another way, this is the equivalent of 5-6% of its Gross Domestic Product, a fall which includes $1.2bn lost from the decline in tourist receipts and $1bn from events in Libya, home to many immigrant Tunisian workers and the destination of many Tunisian exports - white goods, foodstuffs and industrial equipment. North Africa's smallest economy had benefitted over the years from the many Libyans who chose to spend considerable sums of money in Tunisian hotels and clinics. According to a recent survey by Ernst and Young, many Tunisian businessmen are more worried about the fallout from Libya than from the current situation in Tunisia, having confidence in their own country's future. 

Foreign Direct Investment declined by 24.1% to 580m Tunisian Dinars ($420m) during the first four months of the year and industrial production fell by 9.4%. Production in the mining sector dropped by 60%, due to continued strikes. GDP has fallen by 3.3% during the first three months and is not expected to be above 0-1% for the year as a whole.

Unemployment, meanwhile, has increased from an estimated 14% at the end of 2010 to 19% and is estimated at 750-800,000 people. Should unemployment figures reach one million, that could constitute a political time bomb. Unemployment in the regions where last December's revolt took root, the western uplands around Jendouba, El Kef, Kasserine --- and further south in the phosphate mining area of Metlaoui --- is, at 18%, twice what it is on the coast and affects up to 40% of young people.

Government programs to help 200,000 young people at a cost of TD 500m ($360m) this year only offer a short term remedy to what is the most intractable problem facing Tunisia's interim and future governments, one which, contrary to the conviction of many outside observers, is more pressing than speculation about the number of votes the Islamic En Nahda party might poll in October.  

Lukewarm western response to Tunisia

When they met in Deauville just over a month ago, Western leaders pledged $20bn to help Tunisia and Egypt during the next few years - but no further details were forthcoming, nor was there any mention of possible concessionary terms for such aid. US President Barack Obama announced $2bn extra of OPIC guarantees for Maghreb countries, which is fine --- except that it does little to meet current Tunisian needs. French President Nicolas Sarkozy talked of $1.2bn in fresh money from the European Union for both countries --- but will this really translate into new money?

Some observers feel the EU leaders acted with undue caution, even pusillanimity: they were grandstanding, a behaviour which has become the hallmark of such summit meetings. Others saw no reason why more aid should be extended to a weak interim government in Tunis, where economic decision making is scattered among eight different ministries, the Prime Minister's office and the central bank with no apparent coordination.

Tracing the money the extended family of Ben Ali stole is an arduous affair and unlikely to yield large sums quickly. Tunisian ambassadors abroad have been asked to help, but the country's diplomatic corps has lost the quality it could boast until the late 1990s - because it has been debilitated by years of crony appointments.

Tunisia deserves stronger support from the EU than it is getting, if only because the country has characteristics which make it unusual among southern rim Mediterranean countries. These characteristics suggest that moves towards a more democratic form of governance stand a reasonable chance of succeeding; success in the region's smallest country would be of benefit to 10.2 million Tunisians but also to tens of millions across North Africa who could look to a "success story" which offers hope for their own future.

A better governed Tunisia spells a slowing of the brain drain which sees many of the country's brightest university graduates never return home from the universities in Europe and North America where they are studying; it means more jobs for the many young unemployed people who spearheaded last winter's revolt; it offers some hope that 100 million North Africans have a future, a dream that can sustain the hard work needed to repair years of robber-takes-all rule.

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