Tunisia 2010-2020: A before and after. The challenges of a country

General information

- Official name: Tunisian Republic

- Nature of the regime: Semi-presidential (*)

- Head of State: Mr. Kais Saed, since October 23, 2019

- Head of Government: Mr. Elyes Fakhfakh, since 28 February 2020

- President of the Assembly of People's Representatives: Mr. Rached Ghannouchi, from 13 November 2019 

- Area: 162,155 square kilometers

- Capital: Tunis

- Main cities: Tunis, Sfax, Sousse, Gabès, Kairouan, Bizerte

- Official language(s): Arabic

- Common language(s): Arabic dialect, Berber languages, French

- Currency: Tunisian Dinar (1 EUR - 3.1 DT on 27 February 2020)

- National holiday: 20 March (commemoration of independence in 1956) 

- Population: 11,722 million on 1 July 2019 (source: ins.tn)

- Literacy rate: 81.8% (2016, source: UNDP)

(*) The new Constitution provides for a semi-presidential system in which the President of the Republic has certain powers, such as the appointment of the Head of Government... Source: https://www.diplomatie.gouv.fr/es/ France Diplomatie

“Tunisia is a country that, despite having lived through cruel wars, radical confrontations, ups and downs and all manner of grief, has been able to keep its tendency to understand others and to the synthesis of ideas and civilisations; we must stress its deep feeling for peace, even if it is difficult to achieve and requires effort and even violence” (Alfonso de la Serna: Images of Tunisia/Instituto Hispano Árabe de Cultura)

Tunisia is not “only” Arabic but Carthaginian, Roman, German, Byzantine, Turkish, somewhat French and Spanish and Andalusian naturally. In thirty years of his reign, Habib Bourguiba, the founder of independent Tunisia, has made this nation the embodiment of modernity - abolition of polygamy, introduction of divorce through the courts, free consent of future spouses, adoption legislation, etc. - with an ever-liberal and open interpretation of the Koran. 

On 14 January 2011, his successor Zine El Abidine Ben Ali, the second president of the Tunisian republic, fled from Tunisia (with much insistence by his wife Leila Trabelsi, “the Queen of Carthage”, in the face of the latter's doubts, to board the plane that would take them to Saudi Arabia¹), which he had ruled with an iron fist for twenty-three years. The country had just undergone its revolution, the first act of the Arab spring. The whole world then saluted the Tunisian people's quest for “dignity”. 

The “Arab Spring”, born in Tunisia, took France, like all countries, by surprise, despite the fact that it left a country -Tunisia- with which they maintained close relations at all levels for decades. Governments, diplomats, intelligence services, journalists, researchers seemed to have been surprised and unaware. Compared to other major geographies, the Arab world seemed to be the “bad student in class” in all respects: lack of democracy, repeated violations of human rights, low economic growth, especially among young graduates, the failure of education systems, the discriminatory status of women. These reports, prepared by Arab scholars, referred to autocratic regimes whose failure was evident, but which enjoyed a certain amount of complacency in Western countries, including France. 

Tunisia was undoubtedly one of the most repressive regimes and the fraud organised by the Trabelsi family had increased on a scale that worried the business community. However, the country's economic management and real development despite the lack of significant natural resources made it a “good student”, regularly praised by the World Bank, the IMF or the European Union. No one imagined, on December 19, 2010, that an isolated event, the burning of a young vegetable trader in deep Tunisia, would lead to the hasty departure of President Ben Ali less than four weeks later. 

During his official trip in April 2008, (where I was present), President Sarkozy had not hesitated to rejoice that “the area of freedom is progressing”, even as the regime multiplied human rights abuses and carried out total police repression.

Almost 10 years have passed and many things have happened in the chronology of this country. Yes, free elections have taken place, which shows the will and commitment to what began on 17 December 2010. The country has witnessed terrorist attacks and murders of opponents, but also the adoption of a new constitution and the holding of two free presidential elections. However, Tunisia is not taking off economically and this is a blow, a disappointment and a lowering of morale in the hopes of many young Tunisians who are forced (those who can) to emigrate from the country legally and others clandestinely.

Tunisia is a country of contrasts; significant progress has been made in the political transition to an open and democratic system of government that is unique to the MENA² region, but economic and social reforms, as I have just mentioned, are not forthcoming. In 2010 and 2011, what the country was demanding was, on the one hand, greater economic opportunities, better social conditions and greater freedoms. This translated into a desire for more and better jobs, less bureaucracy which is a source of corruption, better financial conditions for entrepreneurs, better access to public services and better urban infrastructure. 

A newly elected parliament that is more fragmented than before will make policy formulation laborious, complicate efforts to address chronic economic problems, and keep political tensions high. The Government will carefully address the implementation of fiscal reforms, taking care as much as possible to ensure that there is as little public unrest as possible, but will move forward with some of them to keep the IMF on its side. Economic growth will rebound in 2020-24, but unemployment will remain high. 

“The country is socially resilient thanks to smuggling and a parallel economy that undermines the foundations of the state but at the same time is a crucial response to the bureaucracy and endemic corruption that exists in the Tunisian nation”³.

Ministers, advisers and senior officials need to understand the economic reality of the country to realise that Tunisia cannot afford any more economic and political hesitation. Tunisia needs to be brought forward with criteria and firmness and leave aside the economic ignorance that has taken place in recent years, because it costs the country a lot of money, losing some international credibility, as it is so dependent on the outside world and on trade, tourism and foreign investment flows. It is not a question of getting the country further in debt, but of reforming it. The economy is, whether we like it or not, the fuel for all the risks that hover over the current and future success of Tunisian democracy.

In economics nothing is black and white, there is no such thing as absolute. For example, measures in Tunisia to contain the budget deficit will have an effect on consumption and public investment. Greater control of public spending or higher taxes could have an impact on households' disposable income and contract private consumption. This, however, will mitigate inflationary pressures. In line with the IMF, measures will have to be taken in the fight against tax fraud by public finances, contain the state wage bill which accounts for about 15% of GDP, and review energy subsidies downwards.

As for public debt, despite being 50% concessional, it is characterised by very long maturities and is therefore exposed to the depreciation of the Tunisian Dinar, as 75% of it is in foreign currency. At the same time, however, Tunisia still needs international lenders to somehow cover this deficit. 

The current account balance in 2020 (according to forecasts by the IMF and other international organisations) will continue to be negative, penalised by the continuing trade deficit, although this may be alleviated in terms of energy import bills, thanks to the implementation and commissioning of the Nawara gas field⁴.

Tunisia has many strengths, including geographical proximity to Europe, a skilled workforce and a diversified industrial network (aeronautics, chemicals, textiles), significant agricultural and fishing potential, and large deposits of phosphate, oil and gas. The tourism industry (coastal tourism, business tourism, mountain tourism, ecotourism, oasis tourism, thalassotherapy) was until 2011 an important engine of growth and employment and, in the mid-term, could benefit from the steady 5% annual growth in global demand for tourism services. 

The great social and regional divisions of January 2011, however, remain the same in 2019. Unemployment continued to hit higher education graduates hard, with very large differences between coastal and inland regions. Women are also twice as likely to be affected by unemployment on average as men. Public expenditure has increased significantly since 2011, favouring current expenditure (wages and subsidies) over capital expenditure. This increase was mainly financed by external loans. 

Public debt, 70% of which is external debt, increased by 95% between 2010 and 2019, exposing Tunisia to the risk of major external disruptions and reducing the liquidity available to the private sector. In this regard, the head of Government said that it had reached the very high rate of 80% and that there was no room for it to increase. He said his Government was considering measures that could increase the mobilization of the State's own resources, boost the country's economy and reduce spending.

Source: BAFD "economic prospects in Africa 2020"

Since 2011, the World Bank has mobilized $2.7 billion in budget support and an additional $1.5 billion in project funding. Unfortunately, this support has translated very little into results. Either the reforms have not been completed or have not been implemented at all. The country's sympathetic capital is being eroded. It is time to give a new discourse to Tunisia, a real discourse: the country's friends must clearly state that they need to be more enterprising, that they need to undertake reforms that are certainly painful but necessary. It is a disservice to remain silent. The place of the state in the economy must be reviewed.

State-owned enterprises are draining the budget and depriving the private sector of resources. Tunisia needs to develop PPP⁵, solve the problem of social security funds, which are time bombs, and reform subsidies for oil products, water, electricity and food - Jordan, Indonesia, Mexico and Turkey have all succeeded! On all these issues, there is a dialogue between trade unions and employers, but it is not being taken up with the government. 

“It takes political courage to move towards structural reforms: leaders have not always made good use of them. "Ferid Belhaj, vice-president of the World Bank” (Jeune Afrique 04/March/2020)

In a long interview with the newspaper Le Maghreb on Sunday 8 March 2020, the new head of the Tunisian government, Elyés Fakhfakh, said that according to initial estimates the coronavirus crisis would have a negative impact of -0.5% on growth in Tunisia. This would bring GDP growth to 1% in 2020, while under the state budget it was set under the former government at 2.7%.

Tunisia, like many other countries, faces a potential global recession due to the pandemic. Growth forecasts are all down, let us not forget, and this is just the beginning. Will the world economy reach a state of depression? There is a whole state of affairs that literally grinds to a halt which will cause a traumatic drop in income and in turn huge difficulties in supporting operating costs in large companies (less) and SMEs (much more). Tunisia is a country that is very economically dependent on its trading partners, let us remember that the EU is its main partner and on which its balance of trade depends to a large extent. Italy is one of its three main trading partners, as are France and Germany, economies that are currently being assessed in terms of their growth. (The president of the European Commission, Ursula von der Leyen, has reiterated her promise that the EU “will do what is necessary to support Europeans and the European economy”, in the face of a situation in which the technicians in Brussels already assume that this year the entire Eurozone will have negative growth, which the experts consider “a technical recession” 12/03/2020).

Tunisia's main trading partner, as I said, is the European Union, origin of 53.2% of imports and destination of 73.4% of exports (2018 data). By volume of trade, the main trading partners during that year were: France (20,568 MDT/ EUR 6,577M), Italy (15,923 MDT/ EUR 5,000M), further away Germany (9,494 MDT/ EUR 3,000M), China, Spain, and Algeria.

Tunisia is a tourist country in essence. This sector traditionally contributes around 6% to Tunisia's GDP. The safe entry of non-residents, both Maghreb, European and Asian, will be affected.

In this pandemic, the speed of events is scary. We are talking about an economic earthquake on a Richter scale (local magnitude scale ML) of more than 8% at an exponential speed that has never been seen before, whose hypocentre or focus took place in Wuhan, China, at the end of December 2019, where the fault line rupture begins: from there the seismic waves spread to a globalised world like ours. This pandemic, from an economic point of view, could bring down more small businesses than human beings. 

At this point, it is time for prudence, common sense, support at all levels and directing the economy towards the priorities. This implies reviewing national budgets, not only in Tunisia but in all other countries⁶.

Somehow Tunisia is a prisoner of its geography

Since its revolution, Tunisia has enjoyed a special status that gives it greater international visibility. However, Tunisia has traditionally followed a foreign policy marked by discretion, the search for neutrality and consensus, the preservation of good relations with all and, in particular, with its Maghreb neighbours, and the strengthening of its Euro-Mediterranean anchorage.

Tunisia joined the Security Council on 1 January 2020 as a non-permanent member. With regard to its Arab policy, Tunisia has a very important geopolitical value due to its position between Algeria, Libya and Europe. 

The Libyan crisis is the main source of concern for the Tunisian authorities. Tunisia takes a strict position of neutrality on the Libyan issue, while supporting the National Agreement Government (NAG). The country advocates an inclusive political solution and remains hostile to any foreign military intervention. Tunisia must say no to any form of intervention, extension of the war and/or interference in Libyan affairs. And it is not just a question of words, it has to be illustrated in deeds because Tunisians have lost the link between declaring and doing since 2011. 

Algeria is Tunisia's main partner in the Maghreb. In addition to their convergence of views on the Libyan question, the two neighbours share common objectives, particularly in the fight against terrorism: confronted for several years with terrorist groups on the country's western border, the Tunisian authorities rely on solid security cooperation from Algeria. Since the beginning of the protests in Algeria in February 2019, Tunisia had expressed its desire not to interfere in the country's internal affairs. President Saied reserved his first visit abroad to Algeria, as is the tradition of Tunisian presidents. 

Moreover, Tunisian diplomacy continues to seek to strengthen the country's relations with the Arab Gulf States, whose financial assistance has traditionally contributed to the country's development.

With regard to Syria, Tunisia was in favour of a credible and lasting political solution. Committed to preserving Syria's sovereignty, the Tunisian authorities were opposed to any foreign military intervention. 

Tunisia enjoys a strong partnership with the European Union. It is a privileged partner of the European Union, which is by far its largest trading and investment partner (80% of its trade) and was the first country in the south to conclude an association agreement in 1995. Tunisia is one of the first beneficiaries of European aid and benefits from ambitious development programmes. While France remains an important partner of Tunisia, Italy and Germany also have extensive relations with Tunisia. In 2017, Germany has become Tunisia's largest international lender.

Relations between Turkey and Tunisia are gaining momentum. President Erdogan visited Tunisia in December 2017 for a visit focusing on the main Turkish economic projects in Tunisia. The Turkish President also visited Tunisia on 25 December 2019 to discuss the Libyan issue.

A new African strategy. Tunisia is developing a new diplomatic strategy in Africa: opening embassies in Burkina Faso and Kenya, increasing air services for the national airline Tunisair (Niamey and Conakry), attracting "African customers" to training and health, increasing official travel (bilateral visits to Sudan, Burkina Faso, Mali, Niger, Cameroon, Mauritania), member of COMESA in summer 2018 and observer member of ECOWAS since 4 June 2017.

The organization by Tunisia of the next Francophonie summit in December 2020, on the occasion of the 50th anniversary of the OIF (International Organization of the Francophonie), will serve this African ambition. 

Tunisia, which is on the European list of high-risk third countries, is leading an action plan to combat money laundering and the financing of terrorism. Tunisia was released from the Financial Action Task Force list in October 2019.

In the international context, Tunisia has been a member of the United Nations since 12 November 1956 and is therefore present in its system of organizations: the Food and Agriculture Organization of the United Nations (FAO), the United Nations Population Fund (UNFPA), the International Atomic Energy Agency (IAEA), the World Health Organization (WHO), the International Labour Organization (ILO) and the World Tourism Organization (WTO), the United Nations Industrial Development Organization (UNIDO), the United Nations Development Programme (UNDP), the International Telecommunication Union (ITU), the United Nations Conference on Trade and Development (UNCTAD), the United Nations Educational, Scientific and Cultural Organization (UNESCO) and the United Nations Children's Fund (UNICEF).

Tunisia has been a full member of GATT since 29 August 1990, and of the World Trade Organization (WTO) since 29 March 1995. It is not a signatory to the WTO Agreement on Government Procurement. It is an observer in the Committee on Trade in Civil Aircraft and is a member of the following groups in the framework of the negotiations: African Group, G-90, NAMA Group 11 and sponsors of document W52.

It is also a member of the Islamic Development Bank (IsDB), the International Monetary Fund (IMF), the World Bank Group (the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA)), the International Organization for Migration (IOM), the European Bank for Reconstruction and Development (EBRD), the Arab Fund for Economic and Social Development (AFESD) and the Arab League. In 2012, Tunisia joined the OECD Declaration on International Investment and Multinational Enterprises.

Regionally, it is a shareholder of the African Development Bank (AfDB), the African Union (AU), the Arab Maghreb Union (AMU) since 1989 and the Common Market for Eastern and Southern Africa (COMESA) since March 2019 (in force since January 2020). Tunisia has signed the agreement to join the African Continental Free Trade Zone -ZALCA- in 2018, but it has not yet been ratified by the PRA. Since 2017 it has been an observer of the Economic Community of West African States - ECOWAS - pending acceptance of its application for membership.

It is also a signatory of the Agadir Free Trade Agreement, adopted on 25 February 2004 and in force since 27 March 2007, between Jordan, Egypt, Morocco and Tunisia; the agreement for the creation of the Pan Arab Free Trade Zone with 18 countries of the League of Arab States, signed on 1 January 1998.

On 18 July 2018, Tunisia's accession to the Common Market for Eastern and Southern Africa (COMESA) was implemented.
Tunisia was the first country in the southern Mediterranean to sign an Association and Free Trade Agreement with the European Union. The country enjoys the status of advanced partner of the European Union. Negotiations for a comprehensive and deepened Free Trade Agreement (FTAA) are currently underway and are at an impasse. It is also a signatory to a free trade area agreement with the countries of the European Free Trade Association - EFTA.

Source:  Ofcomes Tunisia / ICEX

Tunisia was the weak link in a chain of transmission of the Arab revolt, because the Ben Ali regime and the Trabelsi family had pushed the police and authoritarian force to the limit and turned it into a mafia in the purest Mediterranean style. Egypt, for example, within that chain, was the strong link because its state is the most powerful in the Arab world. There, the revolt was not consolidated. The army, which is the country's leading businessman, imposed its rule again. 

In Tunisia, this will not happen again. Transparency International announced in its latest report published in 2017 that the Tunisian army is leading the least corrupt armies in the North Africa and Middle East region. In fact, the Tunisian army is “an exception”. It plays a very important role in consolidating the democratic process because it is a republican army that does not intervene in the political arena. The successes achieved by the military institution in various battles illustrate its enthusiasm, its strong capacity to fight terrorism and to ensure the protection of citizens and the country.  

What conclusions and what immediate future can we bring to Tunisia at a time when the global economy is reeling from the pandemic?

For Tunisia, serious things began with Italy's surprise and the multiplication of cases in key countries for its commercial and industrial activity. Now the virus is on its doorstep⁷. This is the worst case scenario that can happen in an export-based Tunisian economy. But the biggest complication is not yet visible or known. There are already supply chain problems in some industries that could affect them directly. Concerns in the automotive, electronics and textile industries, not to mention the tourism sector. But you can learn from everything. There is a lot to think about. Reason, moderation, seriousness. This is what Bourguiba⁸ preached throughout his 30 years of independence. What is needed at this time is a sense of state, and “Baraka” (good star). 

Footnotes

1-According to the version of Sara Daniel journalist of le Nouvel Observateur and witness of that moment at the airport

2-Middle East & North Africa region

3-The revue nº86 Quelle Tunisie in 2020 ?

4-The Nawara Gas Development Project is a key strategic infrastructure project that unlocks the gas resources of southern Tunisia and, as such, has been designated a Project of National Interest. For OMV (an Austrian oil and gas company), this joint project with ETAP (L'Entreprise Tunisienne d'Activités Pétrolières, a Tunisian public company under the supervision of the Ministry of Industry) is a substantial part of its growth history in Tunisia, and of its portfolio of international projects. The Nawara Project: Created approximately 2,000 temporary jobs for skilled and unskilled labour during its construction phase. (Its contribution to the national budget will be significant, reducing Tunisia's dependence on energy imports and contributing to an increase in GDP. https://www.youtube.com/watch?v=7iDfF_6LiIY&feature=emb_title

5-PPP PUBLIC-PRIVATE-PARTNERSHIP: A public-private partnership refers to an agreement between the public sector and the private sector in which some of the services or tasks that are the responsibility of the public sector are provided by the private sector under a clear agreement of shared objectives for the provision of the public service or public infrastructure. https://africappp.com/. Historically, Africa's participation in PPPs has been limited relative to other continents. However, African governments, which are tied to resources like other public entities, now have a greater need for infrastructure development to support the continent's population growth and demand for its commodities from emerging countries. Based on these conditions, PPPs will grow in importance in Africa.

6-For more information on the measures taken in Tunisia see: https://tunis.consulfrance.org/Coronavirus-covid-19-informez-vous-sur-les-mesures-d-hygiene-et-de-prevention-a

7-Tunisia generalizes the quarantine. The country has closed its maritime borders and severely restricts air services with Europe and Egypt, forcing all foreign travelers to be isolated for 14 days upon arrival in order to curb the spread of the new coronavirus. The drastic measures were announced on Friday evening (13/03/2020) by Prime Minister Elyes Fakhfakh in a televised speech. At the time of writing, Tunisia has 394 cases and 10 deaths. All maritime services are suspended, as well as air connections with Italy. There is a daily flight to France, and only one weekly flight to Spain, Great Britain, Germany and Egypt. The measures will be in force on Saturday until 4 April. It is not yet clear what the situation will be with regard to flights to and from Libya. 

8-The end of his 30-year rule was marked by a decline in his health, a "war of succession" and the rise of patronage and Islamism in politics. His term ended with his dismissal by the then Prime Minister, Zine El Abidine Ben Ali, on 7 November 1987. The deposed president was kept under house arrest and away from politics at a residence in Monastir, where he remained until his death on 6 April 2000.