Tunisian riots highlight festering economic/social problems hidden beneath placid surface

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Deadly rioting in the North African nations of Tunisia and Algeria underscore a clash between peoples’ anger over harsh economic realities and totalitarian governments’ clampdown on any dissent.

Protests over rising unemployment and higher food prices have left at least two dozen dead in Tunisia, a nation that has been ruled by President Zine El Abidine Ben Ali for over two decades.

Such public demonstrations are rare in Tunisia, a country that has been a popular tourist destination for Europeans and has long enjoyed an image of being peaceful, stable and economically sound.

Ben Ali has blamed the riots on “gangs” and “terrorists”. Meanwhile, the government has closed all schools and universities indefinitely.

Nonetheless, in response to the civil disturbances, Ben Ali has promised to create 300,000 new jobs over the next two years – a target economists find difficult, if not impossible, to achieve.

Azzam Mahjoub, a professor of economics at Tunis University, told the BBC that last year 57,000 jobs were created, and the best we could hope for would be 80,000. It is not possible to suddenly create 150,000 jobs a year for the next two years.There would need to be 8 percent growth to accomplish what the president has promised, whereas in reality the figures are showing a potential growth of only 4.5 percent.

Further, perhaps to appease some of the protesters, Ben Ali removed his interior minister and ordered police to free those detained during the riots.

Tunisia faces some difficult internal problems, including a soaring population (more than half of which is under the age of 25), entrenched corruption among the political elite and judiciary

Tourism, which accounts for about 12 percent of the economy and hundreds of thousands of employees, may be hurt by the violence. Unemployment currently stands at 15 percent, although it may be much higher, given the economy’s inability to absorb nearly 100,000 college graduates every year.

Last September, economists at the International Monetary Fund (IMF) stated that “Tunisia’s economy fared relatively well during the global crisis, but the country’s key challenge is to boost job-generating growth and lower unemployment.”

The family of the President, including his First Lady, as well some wealthy elite are believed to have excessive control and influence over key sectors of the economy.

In fact, a cable from the U.S. embassy in Tunis (released by Wikileaks), stated that “the perception of increasing corruption and the persistent rumors of shady backroom dealings has a negative impact on the economy, regardless of the veracity. Contacts tell us they are afraid to invest for fear the family will suddenly want a cut.”

However, not all is bleak in Tunisia – the country has one of the advanced educational systems in North Africa (education is free and compulsory up to the age of sixteen). The national economy is relatively broad and diverse – with significant mining, agricultural, touring and manufacturing sectors.
Since the mid-1980s, the government has partially or completely privatized about 160 formerly state-owned firms. The country also boasts an excellent infrastructure, with thirteen airports.

The country has averaged 5 percent annual GDP growth over the past 20 years (roughly during Ben Ali’s tenure). About $1.3-billion of direct foreign investment flowed in during the first the months of 2010.

“Tunisia’s growth could increase gradually and reach an average of about 5 percent over 2010-14, provided that policies and reforms planned by the authorities aimed at enhancing Tunisia’s competitiveness, developing new markets, and supporting new sources of growth in sectors with high added value bear fruit,” the IMF said.

Still, President Ben Ali faces something he has not been used to or has violently suppressed in the past – open expressions of dissent. If more civil disturbances break out in these once-tightly-controlled Islamic countries of the Maghreb, it is conceivable that the governments in the region may try to exert even more control and impose limits on freedoms, thereby further hurting economic growth.

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