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Oil, sugar, butter, flour, coffee, and even bottled water have largely vanished from Tunisian supermarkets. The cash-strapped country is not the first to suffer food shortages in the MENA region, yet its government remains unresponsive.
Tunisia‘s summer has been eventful. On July 25, Tunisians voted in a national referendum to approve President Kais Saied’s new constitution that expanded his influence and centralized executive and legislative powers within his grip.
Next on Saied’s agenda was the electoral system established in 2011 that he fiercely opposes. It was clear from the beginning that the Tunisian president was keen on revamping the governing system while neglecting the dwindling economic situation, whose responsibility he delegated to ministers.
Meanwhile, essential goods continue to disappear from store shelves as sporadic queues at petrol stations appear in different parts of the country.
Experts say that the situation could be mitigated if the government moves forward with a bailout provided by the International Monetary Fund, which Tunisia hopes to secure by October. However, skeptics question the country’s ability to abide by the IMF’s terms and warn of worsening political instability in the months to come.
A long-time coming
Tunisia’s economic challenges have long taxed its society. During President Zine Al Abidine Ben Ali’s authoritarian rule in 2011, the dire economic situation sent the population to the streets to demand large-scale reforms.
Although this sparked the Arab spring uprising across many countries in the MENA region, the Tunisian unrest failed to generate the desired economic reforms needed and left many disappointed. As a result, foreign investors pulled out of the market, economic development was on constant delay and national debt reached new heights.
“The Tunisian authorities were increasingly stuck in a cycle of borrowing money to pay off their previous debts and developing accumulated debt that would lead up to a situation where a crisis became imminent,” Intissar Fakir, Senior Fellow and Director of the Middle East Institute’s North Africa and Sahel Program told Fanack.
“Everyone was focused on the political transition during the uprising so the economy was not at the center. The state, therefore, offered short-term solutions to stabilize the country, neglecting people’s demands and needs for the long run,” she added.
Lockdowns and war
The coronavirus added to the blow by forcing businesses whose activity requires direct contact with clients to shut down. A World Bank report showed that the tourism sector and International Trade were the most affected by the pandemic. The country’s GDP would therefore contract by 9.9 percent in 2020 after a short growth of 0.9 percent in 2019.
For a quick round of damage control, the government implemented several measures to support its vulnerable sectors, address the protection of jobs and suspend taxes on firms, while providing monetary assistance to companies and workers, just to name a few listed by the report.
This, however, did not impact skyrocketing unemployment levels that remain high compared to pre-2011 days. Export growth has also slowed as the World Bank report on the Global Pandemic Shock showed; mechanic and electric supply exports went down by 2.4 percent, textile exports contracted by 6 percent, and food exports declined by 13 percent in 2019.
Then came the Russian war on Ukraine, which drove global inflation levels to an all-time high and unleashed energy and grain deficits in countries with vulnerable economies, including Tunisia.
Another Lebanese scenario?
Lebanon was hit with similar shortages at the onset of its economic collapse in 2019, creating some parallels between the North African and Levantine country.
The two nations have import-reliant economies vulnerable to external shocks, yet they differ in underlying reasons for political insecurity. Resolution to the economic crisis in Lebanon, for instance, is impeded by the inability of its leaders, hailing from different sectarian backgrounds and parties to form a government. This continues to block $3 billion in aid from the IMF.
In Lebanon, lawmakers debated the annual state budget for 2022 in a contentious parliamentary session on Friday where economic and social visions were alleged to be lacking while opposition MPs deemed the draft budget a failure. In Tunisia, the government and the Tunisian General Labour Union (UGTT) were able to reach an agreement to raise the wages of state employees by 5%.
However, the two countries suffer under monopolization. Wealth and assets are in the hands of the wealthy few who control national airlines, central banks, and food imports. Under such a scenario, the prices of commodities and services are subject to the whims of parallel markets and cartels, not to mention organized corruption.
Lebanon’s economic collapse is much further along. It remains to be seen whether Tunisia will follow a similar track. But connections are already being made and patterns are being seen.
In his piece, “Could Tunisia be heading down the same route as Lebanon,” Investment banker and member of the Council of Foreign Relations, Kurt Davis Jr. said that “recent reactions by other countries to Tunisia and a continued flow of funds into the country from the international community suggests that Tunisia is still on the right side with enough people (and countries). But then again, so was Lebanon until it was not.”
Another key distinction are the IMF negotiations. Lebanon reached a staff-level agreement with the IMF on a $3 billion loan program in April. The country, however, has been slow in implementing critical actions required to move the deal forward, leaving lawmakers pessimistic and concerned.
Tunisia, on the other hand, has already begun dabbling into the reforms required to secure the billion dollar deal with the IMF.
However, the deal could impose harsh conditions that might include cuts on state subsidies and state-owned companies, as well as a reduction in public sector employment, which could trigger strong opposition from the UGTT.
Fakir says that despite the country’s dire need of finances, the requested conditions might be painful for the population to endure in the immediate and medium term.
What happens now?
Aymen Bessalah, a nonresident Fellow at TIMEP told Fanack that food shortages differ from one city to another as some goods disappear then reappear while vendors ration their supply. Queues at petrol stations however are not a daily sighting.
“Officials are pinning the supply shortages on international circumstances coupled with consumer panic-buying. Official statements also suggest that hoarding vendors are seeking to raise prices by creating temporary shortages,” Bessaleh said.
“Circulating rumors however suggest that Tunisia’s downgrading bond rating is pushing international suppliers to request upfront payments, thus creating substantial shortages,” Bessalah added.
EU state members, which continue to provide funding to Tunisia, do not wish to perpetuate the crisis to avoid an increase in the outflow of irregular migrants, according to the expert. Almost 13,500 Tunisian migrants have crossed to Italy by lifeboat journeys since the beginning of this year.
As inflation continues to soar, Fakir says that Saied lacks economic vision and is ill-equipped to confront financial troubles. She also questions his advisors’ ability to influence his decisions.
“Instead of dealing with the problem firsthand, he attacks speculators and pressures suppliers to lower their prices. He is just playing on populist sentiment, choosing not to address the real problems firsthand,” she said.
Bessaleh doubts the outcome of the IMF deal. The money could be used to score a better grading to reach international markets, yet the expert argues that the government will not have enough funds to close the budget deficit.
“The situation will trigger unrest and protests if not now then in January once the annual budget is set in motion. We will then witness more price hikes, potential subsidy cuts, and a reduction in wages which are a major redline for Tunisians,” Bessaleh said.