Tunisia’s Economy Takes Second Place as Its Top Leaders Fight

TUNIS (Capital Markets in Africa) – Tunisia’s economic reforms are at risk of being sidelined by a feud between top leaders.

President Beji Caid Essebsi has for weeks been calling on the nation’s prime minister, Youssef Chahed, to either improve his handling of the struggling economy or quit. The turmoil within the governing coalition escalated late Monday when in a televised speech Essebsi said a key Islamist party had openly sided with the embattled premier.

The Ennahda party “preferred to forge another relationship,” Essebsi said, adding it had “washed its hands” of him.

Tunisia avoided the worst of the violence and political upheaval that gripped the region since the 2011 Arab Spring uprisings. Yet nine governing cabinets have failed to revive the economy. The key tourism sector is showing signs of recovering from terrorist attacks in 2015, but the scale of the challenge is daunting and not helped by bickering among the leadership.

Youth unemployment stands at about 30 percent — double the overall national level. Foreign investments have yet to materialize. Tunisia secured a $2.9 billion loan from the International Monetary Fund in 2016.

Tunisia Seeks $500 Million World Bank Loan, Plans Bond Sale by End-2018
Chahed has attempted to strike a balance between cutting costs — including the public-sector wage bill — and avoiding moving too far and triggering protests.

Even so, protests have mounted. So too have calls from within the premier’s own Nidaa Tounes party for his resignation. That push has been led by Essebsi’s son, a top official within the party that has effectively fractured into two entities.

“Chahed knows he cannot control Nidaa Tounes,” which is now dominated by Essebsi’s son, said Riccardo Fabiani, a political analyst with London-based consultancy Energy Aspects. “The end result is that political maneuvering ahead of the next elections is going to take priority over anything else. Any hope for meaningful reforms or measures is going to be crushed.”

Ennahda says a change in government ahead of the 2019 elections would stoke further turmoil.

“Ennahda is obviously benefiting from this because it means there won’t be any secularist bloc against them in the next election, when they’ll probably come out on top,” said Fabiani. Competing parties are now, at the expense of the economy, “positioning themselves to stab each other,” he said.

President Essebsi now has few allies beyond the nation’s powerful labor unions, said Ibrahim Oueslati, a political analyst and editor-in-chief of the Africa Manager news website. The unions are likely to enter into open conflict with Ennahda, which wants to reduce their influence, he said.

Source: Bloomberg Business News