(Re)Building Tunisia: High Hopes, Low Morale

Written by | Thursday, April 5th, 2018

To a major worry in Europe, the Tunisian economy is in turmoil. The recent changes in the leadership in the Tunisian Central Bank and overall lack of leadership skills to navigate the country in transition to democracy have forced the European Parliament to include Tunisia in the list of countries that are most at risk from terrorist financing and money laundering. This decision comes as a warning to the country to work on its regulatory regime and mainly on the oversight of financial transactions.

Leading the transition towards democracy is undoubtedly difficult, requiring great political skill, especially in a country with political infighting, rising inflation and indebtedness that is moreover situated in a troubled region. Needless to say that one of the country’s major trading partners – Libya – is an incubator for jihadism.

A few numbers demonstrate how serious the crisis is. Public expenditure and the civil service wage bill have increased by a factor of two since 2011. If this rate is to continue, an economic disaster will ensue. The rate of economic growth hovers around 2% amidst slowing engines of economic vitality: industry, tourism, phosphates and fertilizers and energy. Foreign trade deficit has doubled amidst faltering exports of goods and services, resulting in a major fall in foreign currency reserves. Currently, they only cover three months’ worth of imports. The Tunisian Dinar has lost 40% of its value since 2010.

Yet, not all trouble can be attributed to the lack of political competency in a turbulent region. Tunisia’s international partners are not without a blame for the recent developments. The World Bank, the European Investment Bank and France, as a key European influencer, promoted the country as a model of inclusive development in North Africa prior to the events of 2011. Both the World Bank and the EU, however, misjudged the influence of corruption and their endorsement of a compromised system under Ben Ali until his regime’s collapse in 2011. Unlike the World Bank, Brussels never had the courage to acknowledge this mishap.

Tunisian and European authorities now need to face uncomfortable truths. The stability of the tiny North African country is in jeopardy. More and more Tunisians are finding themselves just above the poverty line while the middle class is getting poorer and poorer. It is important to remember that the 2011 events were triggered by young unemployed people from the poor Western parts of the country.

Free markets alone will not be enough to build and sustain the social cohesion of Tunisian society. The authorities will need to fathom a sort of a Franklin-Roosevelt-New-Deal-kind of plan to give home to the ordinary people. That alone could bolster some hope in a very demoralized country. Additional support from EU institutions and the World Bank would be more than welcome.

Number one thing that will need to be done as part of such a plan is fighting the informal sector, as the country loses large amounts of money due to the growth of the grey economy. Number two thing that will be needed is the promotion of policies aimed at improving skills and education of young people while associating foreign schools with these projects. The EU – and especially France – is more than willing to help on this front.

When creating a new strategy for Tunisia’s way forward, it is important to remember that it took generations for countries like France, the United Kingdom and Spain to build modern democracies. Taking lessons from the post-Communist transition of Central European countries, it is obvious that transition is a painstakingly lengthy process requiring a combination of domestic political and societal determination as well as international support. It will be therefore key to ensure that both these elements are present during the protracted process of rebuilding Tunisia.

‘A Long Overdue Debate on the Tunisian Economy’ – Opinion by Francis Ghilès – Barcelona Centre for International Affairs / CIDOB.

(The Opinion can be downloaded here)


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