Tunisia's economic problems - English

Wrong turn

By Joseph Hammond23.10.2014Economics

Tunsia is often cited as an Arab Spring success story. That is right from a political perspective – but not from an economic one.

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From a distance it looked like the Toyota truck was overloaded with balloons, but as we drew closer the yellow and blue shapes turned into jerry cans. The vehicle was unmistakably a gasoline smuggler taking back roads in southern Tunisia to avoid attracting authorities, my driver explained. A motorized Molotov cocktail, it turned down a side road and out of sight.

Gasoline smuggling in Tunisia is a serious problem for the government. In 2013, the volume of cash in circulation outside the banking system added up to 600 million Tunisian dinars (roughly 400 million U.S. dollars). A report released by the government in 2013 suggested that the informal economy constitutes roughly 30 to 40 percent of the economy as a whole. A World Bank report released that same year estimated that 25 percent of the fuel consumed in Tunisia was smuggled into the country. While fuel smuggling is also a function of subsidized fuel in neighboring countries, it is symptomatic of the problems in the Tunisian economy and the need for economic formalization.

Fresh bread for the faithful

“Some four years after the toppling”:http://www.theeuropean-magazine.com/amira-yahyaoui–2/6658-tunisias-young-democracy, Tunisia is increasingly cited as an Arab Spring success story. Indeed, from a political perspective the country “is doing far better than its Arab Spring peers”:http://www.theeuropean-magazine.com/lina-ben-mhenni–2/6030-tunisia-after-the-revolution. New parliamentary elections later this month are likely to proceed smoothly. However, from an economic perspective Tunisia’s economic system is even worse than in the closing days of the Ben Ali regime, when the country was attracting a larger number of foreign investments. The economy is moving in the wrong direction. The Fraser Institute’s annual survey “Economic Freedom of the World” has recorded this disturbing trend: while the Tunisian economy was ranked 81st in 2001, it fell to 100th in 2012. In a June IRI poll, 70 percent of Tunisians polled said politicians in Tunis do not care about local problems such as fuel.

Ennahda, an Islamic party also known as Renaissance Party, appears likely to win the elections at the end of October. This is due in no small part to its social work and appeal to conservative voters. During my time in Tunisia, I noticed a group of worshipers filing out of a mosque after Friday prayers. Suddenly, bearded men in prayer caps appeared to hand out fresh baguettes to the faithful. Rewarding the faithful simply for their prayers is unheard of elsewhere in the Muslim world.

Greater economic rights

What made the scene further surreal was that it took place not in Ennahda strongholds, but in Hammat – a seaside resort that has been the destination of European package tourists for decades. The picturesque town is where Erwin Rommel once headquartered, Winston Churchill wrote his memoirs, and Socialist Italian Prime Minister Bettino Craxi spent years in self-imposed exile to avoid corruption charges. If the state fails to provide for the needs of the Tunisian voters, other groups are prepared to fill that void.

Whoever wins Tunisia’s upcoming elections (the parliamentary in October followed by the presidential in November), the new government must work harder to expand the economic rights of the Tunisian people. We should recall the example of Tarek al-Tayeb Mohamed Bouazizi, the Tunisian street vendor who doused himself in fuel before lighting himself on fire on December 17th, 2010 and whose immolation was emulated around the world. Bouazizi was protesting for greater economic rights, in his case the right to sell oranges and make a living. Easing labor market restrictions as well as the process to start a business would go a long way to formalizing the informal economy – and perhaps, as a side benefit, undercut the appeal of “extremist ideologies”:http://www.theeuropean-magazine.com/afef-abrougui–2/6173-islamists-in-tunisia.

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