Gloom and Graffiti Cast Shadow as Tunisia Courts InvestorsBy and
Conference attended by bankers, executives, prime ministers
Terrorism has gutted nation’s critical tourism industry
The billboards and banners hoisted across Tunisia’s capital to promote this week’s major investment conference conjure up a brighter future. The graffiti scrawled on walls near the meeting’s venue tells a gloomier story.
“I won’t accept austerity,” reads one slogan, combining the defiance and pessimism many Tunisians harbor six years after the first of the Arab Spring uprisings was supposed to usher in a new beginning. Today, after terrorist attacks emptied Mediterranean tourist resorts and with conflict stalking parts of the Middle East, the mood is increasingly glum amid warnings of spending cuts and new taxes unless there’s a quick turnaround.
Starting Tuesday, the government will gather prime ministers, officials from the World Bank and European Bank for Reconstruction and Development, and finance executives in central Tunis to discuss aid, loans and investment. While the future of Tunisia’s 11 million people is primarily at stake, there’s concern overseas that an unraveling could add to the exodus of poor migrants trying to reach Europe, and potentially provide Islamist extremists with a new foothold just as they are on the retreat in strongholds like Iraq and Syria.
“It would be another problem in addition to Libya,” said Riccardo Fabiani, senior North Africa analyst at Eurasia Group. “Chaos, basically.”
Tunisia needs help to deliver on the demands of protesters whose 2010 revolt ended the rule of Zine El Abidine Ben Ali, including jobs, better pay and less inequality. Strikes and protests over slow progress have sapped investor confidence, leading Prime Minister Youssef El-Shahed to warn that austerity measures -- recommended by the International Monetary Fund, which is lending Tunisia $2.9 billion --- may be inevitable next year.
“Any investment is a bet,” Chadli Ayari, central bank governor, said in an interview on Monday. “Tunisia is a good, if a difficult, bet.”
The North African country, almost alone among the Arab states swept by revolt, has made real political progress. It held successful elections, wrote a constitution backed by broad consensus, and transferred power peacefully between Islamist and secular parties. But it’s nowhere near solving the economic problems that gave rise to all that rage.
Shahed has said growth this year won’t exceed 1.5 percent. Overall unemployment stands at 16 percent with youth joblessness around double that. Tunisia lacks the major oil and gas industries of neighbors Algeria and Libya, and can only look on in envy as more stable Morocco lands major investments from global firms such as Renault SA and Bombardier Inc.
In a sign of the importance he’s attaching to the Tunisia 2020 conference, the premier visited the Palais de Congres on Sunday to check on preparations.
The government hopes to use the conference to secure investment for a variety of projects -- including roads, airport expansion plans and new water plants valued at 17.7 billion euros -- as well as additional funding from donor governments and international institutions. Officials have laid out a development plan through 2020 that calls for boosting private-sector investment, creating more than 400,000 jobs and enacting structural reforms -- economists’ code for cutting spending.
The nation’s biggest trade union, which in 2015 shared a Nobel peace prize for its efforts in stabilizing the country’s transition to democracy, has called for a general strike on Dec. 8 if the government moves ahead with a plan to freeze wages.
“The street is very tense; we only drew attention to it,” Sami Tahri, the secretary-general of the General Union of Tunisian Workers, said in an interview. The government “provoked a conflict that could have been avoided,” he said.
Tarak Cherif, who heads one of Tunisia’s top business federations, the Confederation of Tunisian Citizen Enterprises, said he believes that investor confidence is returning, and called on officials to do more to explain the necessity of austerity measures.
“There is no room for the government to backtrack,” he said. “There shouldn’t be a confrontation because even if it happens, the government has no money to make payments.”
But ahead of the conference, many Tunis residents are already fed up.
“2017 will be very difficult,” said Rouaida Zaafouri. “My husband and I are trying to cut a lot of expenditure,” said the 29-year-old. “But by the end of the month, we haven’t saved a single dinar. We don’t want a second revolution, nor an increase in taxes or wage freezes, but solutions that take into account the ordinary citizen.”
“Whatever the results of the conference, they will remain promises on paper,” said Wael Trabelsi, 31. Tunisia under former leader Ben Ali “was better.”
— With assistance by Caroline Alexander, and Tarek El-Tablawy
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.