Sousse attack to impact Tunisia's political transition

30 June 2015

Sousse attack threatens entire economy, while the international community stands by

Tunisia’s tourism sector and related services, which contributed as much as 14.9 per cent of GDP in 2014 according to US-based North Africa Risk Consulting (Narco), is widely expected to collapse following the attack on hotels near Sousse, which killed 38 tourists and Tunisians.

The attack, coming hard on the heels of the Bardo attack in March which killed 22, will have a much wider impact on Tunisia’s political transition and economic recovery.

“The government is cracking down on mosques and civil society groups,” says William Lawrence, former North Africa project director at the Belgium-headquartered International Crisis Group. “They are responding to the attacks and they want to be perceived internationally and domestically to be taking measures.”

But despite popular support for repressive measures, closing mosques and heavy-handed security tactics may just push jihadist sympathisers underground and radicalise them. The government also needs to walk a fine line between ensuring security and turning its back on the hard-won rights of the 2011 revolution. Human Rights Watch and local civil society groups have heavily criticised a proposed law that would criminalise criticism of the armed forces.

The security services are also woefully underfunded and many doubt their ability to prevent future attacks. The government has put its resources into securing the Libyan border and preventing outside attacks, to the detriment of its domestic efforts.

“The security forces in Tunisia haven’t fully recovered from the revolution,” says Lawrence. “They have done a lot, but more is needed and there are not a lot of resources for reforms and improvements. There has also been an overreliance on technology to the detriment of human intelligence.”

The government also extends limited control over remote rural areas along the western border with Algeria, as the long-running guerrilla warfare around Jabal Chaambi continues without resolution.

Hundreds of foreign fighters have returned from civil wars in Libya, Syria and Iraq, and find little change in the circumstances that originally pushed them towards jihad. Sympathies with radical Islamist groups including Islamic State have entered the mainstream and are now openly expressed in deprived urban areas.

“The attack shows that the potential for radicalisation is high in a context like Tunisia where people are feeling increasingly resentful at the increasingly challenging socio-economic conditions and dismayed by the sense that their uprising has not brought about the kind of changes and improvements they were hoping for,” says Maha Yahya, senior associate at the Carnegie Middle East Centre. “The problem is the security response will not do it. To tackle the increasing risk of militancy, the government needs to engage with the root causes driving people to look for alternatives in the first place.”

Tunis remains calm, and expatriates are worried but not yet leaving the country as happened in 2011.

But this could change if another attack succeeds in the next year.

Despite promises of international support, Tunisia is not receiving enough security cooperation from the international community.

“The US has the tools in its toolkit, but they are not spending,” says Lawrence. “The increase is paltry compared to Tunisia’s needs, and during Essebsi’s much touted visit to the US recently not much aid was actually given.”

Tunisia’s upgrade to major non-Nato ally was symbolic rather than material, and actual military aid, which is measured in millions of dollars rather than billions, does not compare to what has been extended to Egypt, both from the West and the Gulf.

“On the international community, they will probably increase further security cooperation with Tunisia, but again this is not sufficient,” says Yahya. “They need to support reform of Tunisia’s economy to make it more inclusive.”

Donor support for the economic transition has also fallen short. It is not seen as a priority, partly due to the success of its political transition, and other more pressing crises.

Tunisia needs billions of dollars in loans and grants just to keep its government running, and more will be needed to undertake the necessary reform programmes to revive its flagging economy.

However, the US is providing less than $200m a year, along with loan guarantees, while European countries contribute along the same lines. The World Bank has promised $4bn, but this will be delivered gradually through various programmes.

The International Monetary Fund has delayed disbursement of the next $600m tranche of Tunisia’s $1.7bn stand-by agreement by seven months. It is making subsidy and banking reform a condition. High inflation and a depreciating Tunisian dinar are already eroding Tunisian’s purchasing power and standard of living, according to Narco. Subsidy reform  would increase the pressure at this point, pushing more into poverty and towards radicalisation.

The attacks will also affect the wider economy, not merely as a knock-on effect from the expected decrease from 6.8 per cent of total employment in the tourism industry, according to Narco.

“Investors are just as wary of terrorist attacks as tourists,” says Lawrence. “It was already hard to convince foreign investors to come, and some, such as the telecoms industry, are willing to work in high-risk areas, but after this others won’t take the risk.”

Tunisia’s economy is highly interlinked with European economies. If European investors and buyers begin to pull out, it will affect all sectors of the economy, such as services and industry. Foreign investment had already fallen 24.5 per cent between May 2014 and 2015.

Extractive industries are also suffering from a different type of unrest; labour action. Strikes and sit-ins from the unemployed have shut down oil and gas fields as well as phosphate production, with a major impact on productivity. Phosphate production fell 39 per cent in the first quarter of 2015, according to figures from the local Gafsa Phosphates Company.

As the economy deteriorates, it will feed back on both political and security situation as the population loses its already stretched patience.

Tunisia’s democratic transition is more at risk than ever.

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