Much has been made of the winter that followed the Arab Spring, but Tunisia seems to have finally found the path to stability. Finbarr Bermingham reports.
When Mohamed Bouazizi set himself alight in December 2010, his match set flames roaring through the Middle East and North Africa. He alleged to have been slighted by a municipal officer, who slapped him in the face when he protested against the confiscation of his vending truck in the small Tunisian town of Sidi Bouzid. His actions brought about the second Jasmine Revolution, in which Tunisians took to the streets to demonstrate against government corruption, lack of opportunity, high inflation and political repression. Within weeks, the protests had spread throughout the region and continue to resonate in some shape or form in most of the countries affected.
While Tunisians succeeded in overthrowing their government in January 2011, the three years since have been rocky, to say the least. GDP growth dived into the red in the year that followed the revolution and has recovered slowly ever since. Pre-2010 it was growing at around 4.5% a year and while the figure recovered to around 3% last year, the country is up to its neck in debt, with the Tunisian dinar flailing in the international currency markets too. Inflation, which sat at 4.4% as the revolution kicked off, had risen to 10% by December 2013. The country agreed to a US$1.7bn funding package from the IMF last June, only to be told later that year that it would be withheld pending political and budgetary reform.
Tunisia’s borders with Libya and Algeria have always been relatively porous, with the smuggling of goods long being a thorn in the side of the economy. But with the lack of a functioning government, weapons, guns and militia spilled through its boundaries like water through a sieve. The violence and civil in-fighting which had plagued many other post-Arab Spring nations started taking root in Tunisia in earnest over the past two years. Al-Qaida is said to have a growing influence. Two prominent left-wing politicians were assassinated last year, with 20 members of the Tunisian security forces also losing their lives to Islamist militia in the same period.
In mid-February, two days after jihadists claimed the lives of four more Tunisians, more than a thousand citizens took to the streets to protest against the rising political violence. For ordinary Tunisians, the struggle between the need for stability and the desire for freedom is stark. But a union of the two may be closer to their grasp than that of their Arab neighbours.
A new era
On January 27, the Tunisian government ratified a national constitution which establishes the state as a democracy. Most Arab constitutions are based on Islamic law; Tunisia’s, though, is based on civil law and safeguards the rights of all religions and sexes.
It seems appropriate that the country that started the Arab Spring should be the first to show real signs of coming out the other side as an improved and functioning state. “We have lost a very long time in Tunisia,” one businessman told GTR in Paris recently. “But I think that for the last few weeks, things are improving a lot. We have signals for a new stability, a political one.”
Since the ratification, the international community has wasted little time in displaying its approval. The money and the kudos have been flying in. The IMF finally released the US$1.7bn it had been stalling on for months, disbursing it to the Tunisian parliament at the end of January. A trade agreement established between Algeria and Tunisia in 2008 is set to come into effect in March. “Algerian security is Tunisian security, and vice-versa,” the Tunisian acting-prime minister Mehdi Jomaa said at the time.
In February, the EU agreed to lend Tunisia €300mn to “aid economic stability and support economic reforms”. While leading a delegation to Tunis in the same month, Turkey’s foreign minister Ahmet Davutoglu praised his host for delivering a successful model of democracy, while commentators in the west were openly hoping that the visit would prove educational to the minister on his return to Ankara. “As Turkey attempts to construct a post-revolutionary order,” wrote one in the New York Times, “it would do well to follow the example of one Arab country that has managed to avoid political gridlock: Tunisia.”
The US has also been keen to sidle up to the transforming Maghreb country. Shortly after the constitution had been ratified, President Obama called Jomaa – the technocrat who replaced an Islamist in the hot seat, pending democratic elections – to invite him to the White House. John Kerry has already visited Tunis, and the pair’s navies have conducted a joint-training exercise. The message from the west is clear: if you want to get in our good books, then Tunisia’s is the model to follow.
The immediate economic effect was promising, but too premature to make for meaningful analysis. Tunisia posted an increase in exports of 3.6% in January. Even more heartening was that exports to Russia, China and the US rose by 30.3%, 12.3% and 8.6% respectively. In a country that depends so heavily on the economic well-being of the EU, which accounts for 74.8% of total exports, analysts were heard to prescribe “more of the same”.
And despite returning positive growth, it’s likely that Tunisia’s economy is at a turning point. On one hand, it is on the road to establishing itself as a modern Arabic democracy. But on the other, it suffers from the same economic failings as many of its neighbours. Unemployment is still running at higher than 15% – three years on from the revolution, there aren’t enough opportunities for its young, educated workforce.
“For the last three years we’ve spoken a lot about politics, identity and constitution,” Radhi Meddeb, the chairman of Tunisian company Comete Engineering tells GTR. “But that was not the requirement of people behind the revolution. The region lacks job and investment opportunities. In many cases, as with our neighbours, Tunisia’s business sector hasn’t changed for 20 or 30 years because of the proximity to power of privilege. These kinds of things don’t change immediately after the revolution. We haven’t faced the requirements of young people, middle-class people and people from the interior regions of Tunisia. We need to lead away from privilege, rents and corruption.”
The feeling is that Tunisia’s private sector industry has always been strong and that it is further up the value-add chain than some of its North African neighbours. But the sector has been stifled by decades of cronyism and plutocracy. While its traditional export sectors of textiles and agricultural produce remain strong, there is much optimism about Tunisia’s high-value exports in the areas of capital equipment and machinery, construction and engineering services and consultancy.
“The sector that’s promising is mainly where it’s part of the knowledge economy, up the value chain,” says Marie-Alexandra Veilleux, the head of the EBRD’s office in Tunisia, which opened in June 2013. “Electrical machinery, components for the auto industry, pharmaceutical and semi-finished goods, these are all promising. The human capital is very important. It’s high-quality and it’s one of the main reasons why Tunisia is far above all its regional peers on the World Bank’s Ease of Doing Business Index.”
Tunisia is 51st on the list, just before Spain (52) and Italy (65), and light years ahead of its neighbours Morocco (87), Algeria (153) and Libya (187). The education system, while deteriorating over the past decade, still produces graduates of the calibre required to export finished pharmaceutical and automotive products to Europe and beyond.
The new technocratic government has made restructuring the economy to allow more free enterprise a priority. For instance, 40% of banking assets are in the government’s hands. The government aims to increase its stability, to make it more transparent and to implement effective regulation. More than 12% of Tunisia’s bank loans were non-performing in 2010, something which the government should address.
The EBRD, for its part, established its first SME line in Tunisia in November of last year, lending €5mn to Vermeg Solutions, a software provider.
Morocco has been praised for its initiative to establish itself as a regional financial hub – providing banking services for businesses looking to take advantage of the trade route linking Europe to Sub-Saharan Africa. Tunisia could well take inspiration from the scheme. As well as groaning under the weight of a revolution and years of mismanagement, the country’s exports are too often packed off on a northbound trajectory. “The country has to look east, west and south, no longer north,” says Veilleux.
In the Middle East, a construction boom continues in Saudi Arabia and Qatar, while it shows signs of returning to Dubai. Morocco (again) has taken advantage of growing consumerism in Sub-Saharan Africa, with its automotive industry providing cars to West African nations. There are more than 50 automotive assembly plants in Tunisia, suggesting that it should be in a position to do something similar and take advantage of non-European opportunities.
Four months ago, Tunisia was spoken about gravely. With the level of political infighting, people feared that it would follow the same route as Egypt or Libya into everlasting stalemate (or worse, turmoil). Instead, it set a blueprint for the post-Arab Spring era. The country has come a long way in 2014 and optimism abounds that it can continue to lead the way for a region that desperately needs a pacemaker.