Tunisia: An economy drowning in debt

A vendor displays snails at a market in downtown Tunis, Tunisia. (Reuters)
Updated 31 January 2018
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Tunisia: An economy drowning in debt

TUNIS: Tunisia was widely hailed as the only democratic success story to emerge from the Arab Spring uprisings of 2011. Today, the country is drowning in public and personal debt, and social turmoil.
According to official figures from the Finance Ministry, the budget deficit now stands at $2.2 billion.
State debt now accounts for 71 percent of the country’s gross domestic product (GDP), up from 41 percent in 2010, when the deficit was 650 million dinars ($272.5 million).
At a time when the global economy is growing faster than it has for a decade, Tunisia’s growth languishes at 2.3 percent, well below the 5.6 percent average achieved in the Arab world 10 years ago.
The International Monetary Fund (IMF) insisted that Tunisia implement controversial reforms before receiving the next tranche of a $2.9-billion loan that was negotiated in 2016 with a view to stimulating economic growth and job creation.
The new fiscal measures raised taxes on a wide range of everyday goods, increased levies on some imported goods, and added a percentage point to the value-added tax (VAT).
With state social security funds $1 billion in the red, Parliament also approved a new 1 percent social security tax on employees and companies.
Speaking on Tuesday in Marrakech, IMF chief Christine Lagarde said the reforms are necessary.
“The IMF understands the frustrations of the Tunisian people, who have not yet felt the full economic benefits of their country’s political transformation,” she said. “This process is difficult and takes time.”
Lagarde also urged Arab governments to urgently create jobs. Unemployment in Tunisia among young people is estimated at 30 percent.
Ahmed Sassi a member of the secretariat for the UDC, the union for unemployed graduates, said Tunisia has been blighted by successive governments following a flawed economic model and “self-destructive” policies.
“The model we have for development is increasing the disparity between the rich north, and the south and interior of the country,” he told Arab News.
For example, at the height of the orange season, farmers face great problems in distributing and exporting their produce.
Sassi also pointed to “missed opportunities” to develop markets for Tunisia’s wheat cultivation and flowers for essential oils for the perfume industry, and to capitalize on the country’s strength in the olive oil market.
He also criticized the lack of “audacity and courage” regarding technologically innovative projects, such as a solar-energy farm in the south.
Meanwhile, when negotiations with PayPal fell through last May, young digital entrepreneurs were left in the lurch because they could not make international payments online.
For big donors such as the EU and the World Bank, Tunisia’s rampant corruption continues to put off investors.
Prime Minister Youssef Chahed was elected on an anti-corruption platform, but has achieved little in practice.
The head of the National Anti-Corruption Authority, Chawki Tabib, has estimated that corrupt transactions cost Tunisia $840 million a year, a sum that would almost halve the national deficit if it were put back into the economy.


Yemen’s divisions were never fully healed

Yemen has entered its third year of war between the Iran-backed Houthi militia and the national army, supported by the Saudi-led Arab coalition. (AFP)
Updated 24 May 2018
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Yemen’s divisions were never fully healed

  • 28 years after the north and south merged, the challenges of bringing the country under one govt remain as great
  • It’s unity on paper only, but not in the hearts and minds of people, says Fatima Abo Al-Asrar, a senior analyst at the Arabia Foundation in Washington.

DUBAI: When Yemen’s national army marked the anniversary of north and south becoming one country, it was a reminder of the growing danger of the country once again fragmenting.

On May 22, 1990, the Republic of Yemen was formed when the two existing countries agreed on a unity constitution.

On Tuesday, President Abed Rabbo Mansour Hadi, who leads the internationally recognized government, which is fighting Houthi militias, said the unification of north and south Yemen remained the most popular situation and one that “reflected the civilization of an ancient people.”

As it stands, the Houthis control the capital Sanaa and the north, while the government, backed by the Saudi-led Arab coalition, controls the south and much of the rest of the country. Twenty-eight years after the north and south merged, the challenges of bringing the country under the control of a single government remain as great.

“When it happened in 1990, Yemen’s unification was nearly universally viewed as a historical achievement,” Adam Baron, co-founder of the Sanaa Center For Strategic Studies, told Arab News. He said current tensions are a result of how the unification was carried out.

“Until they’re dealt with — and until serious dialogue occurs — these fissures are only likely to deepen,” Baron said.

Yemen’s divides were exacerbated by colonialism. Britain had been present in the south from 1874 in agreement with the Ottomans, while the north was part of the Ottoman Empire. After the collapse of the empire in 1918, the north became an independent state and the south became a British colony in 1937.

Following civil wars in the north and the south and weak economies, the governments of the two states agreed to renew discussions about unification.

In 1990, Ali Abdullah Saleh of North Yemen and leader of the south Ali Salim Al-Beidh agreed on a unity constitution.

However, conflicts within the coalition resulted in the self-imposed exile of Al-Beidh, who had become vice president of the transitional government, to Aden in 1993. After clashes intensified, civil war broke out in May 1994.

In the aftermath of the war, in October 1994 Saleh was elected by Parliament to a five-year term. He remained in power until he was overthrown by the 2011 uprising that forced his resignation in 2012.

Six years later and Yemen has entered its third year of war between the Iran-backed Houthi militia against the national army and the Popular Resistance supported by the Saudi-led Arab Coalition.

Yemeni political analyst Baraa Shiban said that after 2011 the people aspiring for change and building a new country strongly believed in the outcomes of the National Dialogue, a 10-month consultation process that would form the basis of a new constitution. Many believed a new federal system of government would be the best outcome. 

“The Yemeni people didn’t have the chance to vote for this new vision due to the coup led by the Houthis,” Shiban said.

“The regime that ruled after 1990 failed in meeting the dreams and hopes of the Yemeni people, who struggled for many years to reach unification.”

He added that Hadi’s administration needs to find a new form of governance that meets the demands of the people.

Amid the conflict between the Houthis and the internationally recognized government, other battles have erupted with Al-Qaeda and Daesh insurgents, as well as the Southern Transitional Council, who are calling for the south to secede.

Tensions escalated earlier this year when army forces clashed with southern separatist fighters.

Fatima Abo Al-Asrar, senior analyst at the Arabia Foundation think tank in Washington, said there is no indication that the government of Yemen is working to improve relations or solve the southern crisis.

“So far, the government of Yemen has directly clashed with southern leadership that called for secession,” she said. “The government fails to understand the pulse of the street and fails to realize that it is the only culprit standing in the face of prosperity.”

Yemen’s Prime Minister Ahmed bin Dagher accused southern separatists of attempting a coup in the interim capital of Aden after they took over the government headquarters in January.

At least 15 people were killed, among them three civilians, medical sources in four hospitals in Aden said.

The clashes led Saudi Arabia and the UAE to send envoys in a bid to end the standoff.

The Saudi and Emirati envoys “met with all concerned parties, stressing the need to abide by the cease-fire ... and refocus efforts on the front lines against the Houthis,” the UAE’s official WAM news agency reported.

However, Al-Asrar says that the country is already divided. “There is no one unified Yemen anymore. Northerners find it difficult to step foot in the south. It’s unity on paper only, but not in the hearts and minds of people.”