TUNISIA AND THE IMF: LOANS WITH AMERICAN STRINGS ATTACHED?

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Worry over Tunisia’s long-term prospects grew this week, after the International Monetary Fund (IMF) announced on 02 December 2013, that the country would continue to suffer from loan delays, unless it ameliorates both its budget deficit problems and its security situation. The announcement, which came in the form of a statement made by mission chief Amine Mati, also reiterated the concerns of foreign investors, noting that there remains a “wait-and-see” approach to interest in Tunisia.

The IMF has arguably exacerbated the North African nation’s Catch-22 scenario. With dwindling investments, comes a declining economy. As the economy spirals, so too do the jobs numbers. The lack of occupational opportunities, particularly those for young men, has led to a greater attraction toward extremist groups among individuals who feel marginalised and without purpose. This has led to an apparent surge in applicants interested in Ansar al Sharia, an organisation which, aside from being blamed on the 2012 attack on the US mission in Libya, has also been accused of planting hundreds of homemade explosive devices near Mount Chaambi.

This has not stopped the IMF from trying. As recently as 07 June 2013, the international organisation approved a grant of US$1.74 billion, US$150.2 million of which had already been dispersed to Tunisia that same month. The IMF even promised further instalments – security permitting – over the next two years at the enviably low interest rate of 1.08%. Two sweeten the deal, in June 2013 it announced that Tunisia would not have to start paying back the loans until 2018. So why amid this cycle of violence-turned-investor retreat, does the IMF seem so adamant about supporting Tunisia? The answer may be found within the halls of Washington, DC.

Behind the Scenes: Big Business ‘Wheeling and Dealing’

Amid a backdrop of IMF negotiations, came reports of two major US interests looking to plant their feet in the post-revolutionary state – the first being that of American Big Business. Indeed, The Inkerman Group reported that, as far back as June 2012, Robert Hormats, the US Under Secretary of State for Economic, Business, and Agricultural Affairs, visited Tunisia, calling for then-Prime Minister Hamadi Jebali to push through legislation which would encourage franchising. Upon agreement, the US reportedly managed to convince the IMF – headquartered in Washington, DC – to lend up to billions to Tunisia.

The agreement reportedly reached by Hormats and the Tunisian Government underscored the power of the American lobby system; and, unsurprisingly, the move was supported by McDonald’s, the world’s largest restaurant chain. Franchising is largely a new concept for Tunisia, and it was not until August 2009 that the government legally defined franchising and allowed such businesses to exist, provided they were authorised on a case-by-case basis. In 2010, the Tunisian Government revised the legislation, and allowed international companies within certain sectors to operate in Tunisia without having to be approved first by the government. Interestingly, the sector list as of 2012 did not include fast food chains. Under Zine El Abidine Ben Ali’s regime, McDonald’s had attempted to gain access to the country before pulling out after the company failed to give control of the country’s would-be only franchise to family and friends of the former president. However, as of 2013, McDonald’s has yet to establish its first Tunisian franchise. Whilst the a concrete link between the fast-food chain’s interest, and the potential distribution of the IMF loan has not been proven, both the timing and the circumstances surrounding the developments perhaps illustrate the might of US ‘wheeling and dealing’. Nowhere can this behind-the-scenes American influence be more made clearer, than in the US security establishment.

The US Military ‘Pivot’

Whilst in June 2013, the IMF maintained its interest in Tunisia, on the security front, came rumours that the US was still trying to lobby the Tunisian Government to lay the foundations for a new United States Africa Command (AFRICOM) headquarters. On 12 June 2013, a Tunisian editorial posited what, exactly, a future with AFRICOM would look like, particularly amid concerns that establishing such a base might encourage more attacks. Whilst at present, the relocation of AFRICOM from Germany to Tunisia looks unlikely, the reports perhaps illustrate the increasing economic and security relationship between Washington and Tunis. For the US, a Tunisian forward-operating base would prove beneficial. It would provide easier access, and a more rapid response, for some 1,300 American personnel, currently stationed in Germany, to the African subcontinent. The advantages are not just found in Tunisia’s southern land border region with the Maghreb and wider Sahel. Indeed, Tunisia boasts 1,148 kilometres of Mediterranean coastline. Unlike Germany, the North African state would be able to receive quick deployments of forces from the American Sixth Fleet, stationed a mere 573 kilometres north in the Naval Support Activity centre in Naples, Italy.

Discussions to have AFRICOM relocated to Tunisia, however, did not arise in June. As early as 2006, American officials had been discussing the matter with their Tunisian counterparts, hoping the latter would authorise the transition. The talks clearly never materialised into action, as Tunisia feared the move would not only entice militant attacks, thus leading to a decrease in tourism. They also felt the move would signal that the Maghreb nation had ‘turned its back’ on France, a country which has positioned itself as the ‘go-to’ Western nation for all African foreign policy concerns. For Paris, Tunisia is its’ backyard’, a sentiment left over from its colonial days, when, until 1956, it had controlled the North African state. The Tunisian landscape – both its political and security structure – has, of course, changed since AFRICOM discussions began in 2006, let alone the French evacuation in 1956. Aside from earning a reputation as being the ‘birthplace’ of the so-called ‘Arab Spring’ in January 2011, Tunisia has also had face a resurgence in Islamist extremist groups, who feel emboldened after suffering from years of abuse under deposed president Ben Ali.

In other words, the previous security excuse surrounding a possible AFRICOM relocation may no longer be applicable. To be sure, militants have already staged attacks against Tunisian and US assets. Most notably, on 14 September 2012, dozens of protesters, enraged by the release of an anti-Islam film, besieged the US Embassy in Tunis, before attacking the American Cooperative School and setting it ablaze. Amid the chaos, four people were killed, and more than forty others were injured, a development which forced the US Government to remove all “non-essential” personnel from the city. Whilst the attack was considered less ‘newsworthy’ than the assault on the US Consulate in Benghazi, the incident raised questions regarding the effectiveness of Tunisia’s security system. If it could not adequately provide protection for US embassy personnel, as per the 1961 Vienna Convention on Diplomatic Relations, how could the Tunisian Government protect its own people from terror attacks? The answer, for many analysts, is that it cannot. Indeed, the Tunisian military is assessed to lack enough equipment and personnel to combat the rising tide of extremism. According to reports, unlike its regional MENA neighbours, Tunisia does not have a history of lavish military spending. In the pre-revolutionary days, President Ben Ali felt extensive funding for the military was essentially worthless, in that Tunisia lacked major “external” threats. Moreover, the former leader reportedly feared that a military coup would end his more than twenty-year-reign. Thus, he resorted to slashing military expenditures – so much so, that the defence budget comprised just 1.4% of its GDP. As a result, today’s Tunisian military is reportedly composed of just “36,000” personnel. Meanwhile, members of Ansar al Sharia – Tunis’ biggest foe – reach an estimated 100,000, while fifty radical cells are also believed to be operating in country. In effect, encouraging more American security presence could benefit Tunisian leaders inhibited by a diminished defence capacity.

Toward a More US-Friendly Tunisia?

As can be understood, the US – and its affiliated in the IMF– seems adamant about supporting Tunisia, both for foreign policy and business reasons. In order for the US to achieve its aims, however, Tunisia may have to rid itself of apprehension surrounding increased American involvement. It cannot risk further loan delays, which would only worsen its security problems. Whilst the Tunisian view is understood – more US military entanglement could promote terror activities – the risk of doing nothing may be far worse. The country is already facing threats without the presence of AFRICOM. On the other hand, a Tunisian-based AFRICOM might even help thwart attacks by militants.

Tunisia is also already suffering from financial problems related to anti-privatisation legislation, despite claims that a potential McDonald’s franchise could offset the gains of the nation’s premier fast food chain, Baguette et Baguette. To be sure, some of the same factors which first led the ‘father’ of the 2011 regional uprisings, Mohamed Bouazizi, to set himself alight in December 2010, are still rampant. Taxation in Tunisia favours exporting countries, meaning that street vendors such as Bouazizi have found it difficult to compete as a result of increased regulation which inhibits the growth of small businesses. This “red tape”, argues Antonio Nucifora, the Chief Economist for the World Bank in Tunisia, has led to an economy that is only able to generate “low wage and insecure jobs”. Perhaps then, the only way for Tunisia to end its Catch-22 scenario is to – despite French qualms – pivot toward the United States.

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