Why has Saudi Arabia established a mission to Palestine in Jerusalem?
Why is the EU trying to save Tunisia’s economy?
Tunisia’s economic struggles
At the end of 2022, Tunisia’s debt stood at approximately $37 billion, which accounted for 79.9 percent of its gross domestic product (GDP), as reported by the ministry during the session.
The most vulnerable segments of the population have been disproportionately affected by the steep rise in inflation and the global increase in food prices.
The financial agency of the United Nations has urged the enactment of legislation to restructure over 100 state-owned companies, many of which hold monopolies in various sectors of the economy and are burdened with significant debts. Tunisia is currently grappling with a financial crisis characterized by chronic shortages of essential food items, alongside heightened political tensions since Saied’s extensive power consolidation in July 2021.
Official figures indicate that in May, inflation reached around 10.01 percent, while unemployment rose to 16.1 percent in the first quarter of this year, compared to 15.2 percent in the fourth quarter of 2022.
Tunisians have endured a decade of economic stagnation following the uprising that toppled long-time ruler Zine El Abidine Ben Ali in early 2011.
Previous loan agreements with the International Monetary Fund (IMF) in 2013 and 2016, totaling $1.7 billion and $2.8 billion respectively, have yielded limited success in addressing the country’s public finances. President Kais Saied of Tunisia has proposed implementing a tax on the country’s wealthiest individuals as an alternative to adhering to the “foreign dictates” of the IMF.
Despite reaching a preliminary agreement in October of last year for a nearly $2 billion bailout package, negotiations with the IMF have stalled for several months due to demands for public entity restructuring and the removal of subsidies on essential goods. Tunisian Finance Minister Siham Nemsieh has cautioned that failure to repay the loans would result in the “bankruptcy of the state.”
Meanwhile, Tunisia’s parliament announced on Thursday that it had approved an agreement to secure a loan worth $500 million from the African Export-Import Bank.
The EU’s offer to Tunisia
European Commission President Ursula von der Leyen says the European Union may loan Tunisia more than 1 billion euros ($1.07 billion) with the lion’s share positioned as “macro-financial assistance” designed to save Tunisia’s faltering economy. The potential package, which was announced on Sunday during von der Leyen’s visit to Tunisia with Italian and Dutch Prime Ministers Giorgia Meloni and Mark Rutte, is part of a larger effort by the EU to stem the flow of refugees mainly from sub-Saharan African countries trying to reach the Italian coast. The EU was also ready to provide Tunisia with 100 million euros for border management, search and rescue, anti-smuggling measures and returns to address the migration issue, she saidduring a visit to Tunisia. The entire package includes 900 million euros ($967m) in “macro-financial assistance” designed to rescue Tunisia’s state finances as well as an immediate 150 million euros ($161m) to support a reform agenda set by the International Monetary Fund (IMF). The EU and in particular Italy has been looking to reduce the growing number of people fleeing conflict and poverty in Africa and the Middle East in the hopes of finding safety and a future in Europe. The EU border agency, Frontex, has said it has observed a significant shift in migration patterns in 2023 with 292 percent growth in attempted crossings from Tunisia compared with last year. Italy is the destination for most of the departures from Tunisia, and blocking this route has been a priority for Italy’s far-right leader. On Thursday, Meloni voiced concerns that social unrest in Tunisia would lead to more attempted crossings: “Destabilisation in Tunisia would have serious repercussions on the stability of all Northern Africa, and those repercussions inevitably arrive here.”
Von der Leyen has announced that the European Union (EU) is considering providing Tunisia with a loan exceeding 1 billion euros ($1.07 billion), primarily as “macro-financial assistance” to rescue the struggling Tunisian economy.
The proposed financial package was disclosed during von der Leyen’s visit to Tunisia, accompanied by Italian Prime Minister Giorgia Meloni and Dutch Prime Minister Mark Rutte. The EU’s objective is to address the issue of refugees, particularly from sub-Saharan African countries, attempting to reach the Italian coastline. In addition to the potential loan, the EU has also pledged 100 million euros for border management, search and rescue operations, anti-smuggling measures, and migration returns in order to tackle the migration challenge.
The comprehensive assistance package includes 900 million euros ($967 million) earmarked for “macro-financial assistance” to stabilize Tunisia’s public finances, along with an immediate 150 million euros ($161 million) to support reforms outlined by the International Monetary Fund (IMF).
The EU, particularly Italy, has been striving to decrease the number of individuals fleeing conflict and poverty in Africa and the Middle East, seeking safety and prospects in Europe.
Italy is the primary destination for departures from Tunisia, and blocking this route has been a top priority for Italy’s far-right leader. Giorgia Meloni expressed concerns on Thursday that social unrest in Tunisia could lead to further attempts at crossing the Mediterranean, stating, “Destabilization in Tunisia would have serious repercussions on the stability of all Northern Africa, and those repercussions inevitably arrive here.”
Questions about political situation
Meanwhile, there are many concerns as to whether the EU’s loan will be counter-productive, ending up in the wrong hands, and further aiding Kais Saied at a time when the Tunisian leader is tightening his grip on the country and clamping down on opposition.
In 2021, President Kais Saied, who was elected in 2019, consolidated most of the powers by dissolving the elected parliament, dismissing the government, and assuming rule by decree while rewriting the constitution.
Critics argue that Saied’s actions have dismantled the democratic achievements and freedoms gained through the 2011 revolution that sparked the Arab Spring.
Saied, on the other hand, claims that he is rescuing Tunisia from chaos.
In recent weeks, the police have begun cracking down on opposition groups that accuse Saied of carrying out a coup. Several politicians, labor union figures, judges, a prominent businessman, and the head of an independent radio station have been detained.
Saied denies orchestrating a coup and insists that his actions are legal and necessary to save Tunisia from prolonged turmoil. He has labeled his opponents as traitors, criminals, and terrorists.
When the United States and the European Parliament expressed concerns over his actions, Saied criticized them as foreign interference and assaults on Tunisia’s sovereignty. Last month, he made widely criticized remarks, condemned by rights groups and the African Union, suggesting that undocumented sub-Saharan African immigration was a conspiracy to alter Tunisia’s demographic makeup. He instructed security forces to expel any migrants residing in Tunisia illegally.
This policy has prompted people to flee the country, even if they previously had no intentions of making the perilous journey to Europe, according to a senior United Nations official.
Among the migrants arriving in Italy this year, the largest number originates from Ivory Coast (3,223), followed by Guinea (2,906). The U.N. official stated that they had predominantly departed from Tunisia. By comparison, only 1,535 Tunisians have arrived in Italy so far this year.
A group of experts, activists, and relatives of those detained have cautioned that Tunisia’s escalating crackdown on opposition leaders and critics jeopardizes society and risks the revival of autocracy, years after the country’s demonstrations played a significant role in sparking revolutionary movements throughout the region.
In response to concerns from European leaders about the number of migrants crossing the Mediterranean, President Saied asserted on Saturday that Tunisia would not accept being used as a border guard for other countries. This stance raises doubts about the effectiveness of the EU’s planned deal, as Saied does not appear willing to comply with its conditions.
