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2. The Buildup to a Crisis: Current Tensions and Future Scenarios for Tunisia
- Author:
- Ishac Diwan, Hachemi Alaya, and Hamza Meddeb
- Publication Date:
- 01-2024
- Content Type:
- Working Paper
- Institution:
- Carnegie Endowment for International Peace
- Abstract:
- Tunisia has been living beyond its means since 2011. External support and credit flowed into the country after the 2010–2011 uprising to support its nascent democracy, but this funding ended up largely financing a consumption boom that is unsustainable. To make matters worse, macroeconomic and political instability have begun to deeply harm the country’s productive capacity. The risk of a serious financial crisis has risen and corrective action is needed to ward it off. Tunisia’s political system should be able to avoid such catastrophic outcomes. Most reasonable people agree that the risks are rising and that something needs to be done. However, the disagreement is over magnitude, timing, and the type of program required to address the country’s problems. A hard economic adjustment risks unleashing a sociopolitical crisis. Not engaging in a correction, however, may well engender a future economic meltdown. Buying time is easiest politically, but it often means only postponing the crisis, leading to an even larger explosion. The challenge is to find the narrow path to escape a crisis by generating confidence in a national program that is politically acceptable and that can lead to a brighter future. Faced with these negative dynamics—the lack of sustainability and economic regression—economic agents might not merely adjust to the new normal. Instead, they might try to push the burden elsewhere in the economy and by so doing unleash more destructive forces. Think of society, with its networked organizations, as a hydraulic system. As pressure mounts, weaker parts of the network are at risk. Pushing pressure out from one part, instead of addressing the root cause of the problem, only leads to more pressure on other parts. Ultimately, the system will burst at its most vulnerable point. Typically, deterioration is not linear. Pressure builds up in invisible ways until the system explodes in a generalized crisis. There are several ways in which this can happen: foreign exchange reserves are used up slowly until a run takes place and the currency collapses; financing the state’s losses drains the private sector, reducing investment, until there is a collapse in growth; taxes are raised or services reduced, or both, leading to a social explosion; fiscal losses are financed with new loans (or arrears) until creditors dry up, and printing money remains the only solution, leading to hyperinflation; or banks keep lending to the state until depositors lose confidence in the banking sector and there is a bank run. What is destroyed will have to be rebuilt from scratch at great cost. It is in this context that Carnegie’s new Tunisia Sustainability Lab is beginning its work. The objective is twofold. First, the lab will monitor the risks ahead and alert the public about developments. It will do so by preparing a regular scorecard of Tunisia’s economic, financial, fiscal, external, and sociopolitical domains. Second, the lab will track proposals advanced by national and international parties on possible pathways to progress, reporting on and analyzing initiatives to avoid the worst of them. So far, several International Monetary Fund (IMF) proposals have been rejected by the Tunisian authorities. There are alternative proposals, some outlined by civil society actors, but they have not materialized. To support social dialogue, we will highlight the various initiatives and try to evaluate their impact. We will also develop scenarios to assess macroeconomic trends, which we will update over time.
- Topic:
- Crisis Management, Macroeconomics, IMF, and Economic Crisis
- Political Geography:
- North Africa and Tunisia
3. Tunisia’s Economy in the Eye of the Storm
- Author:
- Ishac Diwan, Hachemi Alaya, and Hamza Meddeb
- Publication Date:
- 10-2024
- Content Type:
- Working Paper
- Institution:
- Carnegie Endowment for International Peace
- Abstract:
- Tunisia’s vulnerability to financial crisis is clear from its economic performance in 2023. How can the country pull itself back from the edge?
- Topic:
- Financial Crisis, Elections, Economy, and Domestic Politics
- Political Geography:
- North Africa and Tunisia
4. Leveraging Lives: Serbia and Illegal Tunisian Migration to Europe
- Author:
- Hamza Meddeb
- Publication Date:
- 03-2023
- Content Type:
- Working Paper
- Institution:
- Carnegie Endowment for International Peace
- Abstract:
- In 2020–2022, Tunisian illegal migrants traveled through Serbia to reach Western Europe, as an alternative to the hazardous, more monitored Mediterranean route. This was driven by push factors in Tunisia, including deteriorating economic conditions and government acquiescence, and pull factors in Europe, namely smuggling networks and Serbian authorities looking the other way. While the route was sealed for Tunisians in November 2022, as long as transit states can use illegal migration to secure geopolitical leverage, such actions will continue.
- Topic:
- Migration, European Union, Economy, and Smuggling
- Political Geography:
- Europe, Serbia, North Africa, and Tunisia
5. Reckless Abandon: Why Tunisia Can No Longer Delay a Border Free Trade Zone
- Author:
- Hamza Meddeb
- Publication Date:
- 09-2022
- Content Type:
- Working Paper
- Institution:
- Carnegie Endowment for International Peace
- Abstract:
- In 2012, Tunisia announced the establishment of a free trade and logistics zone (FTZ) in Ben Guerdane, near the Libyan border. The aim is to develop marginalized southeastern border regions and formalize informal economic actors. However, the plan has stalled due to institutional resistance, political divisions, and an incapacity to exploit international geopolitical rivalries. If this persists, the project may become irrelevant because of emerging FTZs in Libya, denying Tunisia revenues its ailing economy needs.
- Topic:
- Geopolitics, Economy, Borders, and Free Trade
- Political Geography:
- Libya, North Africa, and Tunisia
6. The Hidden Face of Informal Cross-Border Trade in Tunisia After 2011
- Author:
- Hamza Meddeb
- Publication Date:
- 05-2021
- Content Type:
- Working Paper
- Institution:
- Carnegie Endowment for International Peace
- Abstract:
- Despite the heavy-handed approach to security that has been adopted at Tunisia’s land borders, informal cross-border trade continues to thrive. Land corridors have been shut down, but the continued dynamic activity in maritime corridors has compensated for this loss, allowing Turkish and Asian consumer goods adapted to the declining purchasing power of the Tunisian population to penetrate local markets. The dynamism of Tunisia’s maritime corridors owes much to the emergence of small entrepreneurs and underprivileged outsiders who operate informally through trade networks connecting Tunisian and Asian ports. Some well-established firms also have adopted informalization strategies to circumvent trade barriers and restrictions against bilateral trade between Turkey and Tunisia. The rise of these informal networks and approaches reflects a growing trend: the progressive shift of Tunisia’s trade away from Europe and the rise of Turkey and China as major trade partners.
- Topic:
- Borders, Trade, and Informal Economy
- Political Geography:
- China, Europe, Turkey, North Africa, and Tunisia
7. Reform from crisis: How Tunisia can use covid-19 as an opportunity
- Author:
- Thierry Brésillon and Hamza Meddeb
- Publication Date:
- 06-2020
- Content Type:
- Policy Brief
- Institution:
- European Council on Foreign Relations (ECFR)
- Abstract:
- Tunisia’s 2019 elections produced a vote against the establishment and a fragmented political landscape in which it was challenging to form a government. Parliament is deeply divided and lacks a clear foundation for stable and efficient policymaking, while the new president has neither political experience nor a party to implement his agenda. The 2019 elections may have finally ended the transactional power-sharing agreement forged by Ennahda and representatives of the old regime, which long ignored major socio-economic challenges. The government must build on its successful response to the covid-19 pandemic to create a compromise that shares the burden of economic reform between major political actors and interest groups. If it fails to do so, the resulting rise in economic and social tension could empower anti-democratic forces and destabilise Tunisia. The European Union should actively help the Tunisian government take the path of reform by launching a strategic dialogue to rethink their priorities and identify their common interests.
- Topic:
- Politics, Reform, Elections, European Union, Economy, Crisis Management, and COVID-19
- Political Geography:
- North Africa and Tunisia
8. The Volatile Tunisia-Libya Border: Between Tunisia’s Security Policy and Libya’s Militia Factions
- Author:
- Hamza Meddeb
- Publication Date:
- 09-2020
- Content Type:
- Working Paper
- Institution:
- Carnegie Endowment for International Peace
- Abstract:
- Along the border between Tunisia and Libya, informal trade agreements led to a tight-knit border economy. But political changes in both Libya and Tunisia have fundamentally altered the economic and security landscape. The 2010–2011 uprisings disrupted a long-standing informal arrangement governing border trade between Tunisia and Libya. Over the following decade, as Libya disintegrated into mutually hostile fiefdoms, Tunisia maintained its unity, transitioned from authoritarian to democratic rule, and increasingly shunned official dealings with competing Libyan power centers. As such, grassroots cross-border agreements initiated by and between nonstate actors became the norm, albeit with the acquiescence of the Tunisian state. Yet these agreements have failed to constitute a sustainable mechanism for the trade that Tunisia’s eastern borderlands need for survival.
- Topic:
- Security, Economy, Borders, Trade, and Militias
- Political Geography:
- Libya, North Africa, and Tunisia
9. Ennahda’s Uneasy Exit From Political Islam
- Author:
- Hamza Meddeb
- Publication Date:
- 09-2019
- Content Type:
- Working Paper
- Institution:
- Carnegie Endowment for International Peace
- Abstract:
- In 2016, Islamist political party Ennahda decided to abandon preaching and focus on politics, precipitating an identity crisis within the party. It faced new challenges, including rethinking the role of Islam, addressing its own neutralization as a driver of socioeconomic change, and managing its core supporters while appealing to a broader electorate. Ennahda’s shift to politics has forced it to rethink its ideological framework and rebuild its legitimacy based on arguments other than religion.
- Topic:
- Islam, Politics, Religion, Legitimacy, and Political Parties
- Political Geography:
- North Africa and Tunisia