Funds roll in as Tunisia taps investors for economic revival

Gulf Arab states, France and international institutions stepped in with billions of dollars in aid for Tunisia, as the birthplace of the Arab Spring tapped investors to revive a stalling economy yet to recover from major terrorist attacks.

Qatari Sheikh Tamim bin Hamad Al Thani set the tone on the first day of a two-day investment conference in the capital, Tunis, pledging $1.25 billion. President Beji Caid Essebsi told the world leaders, international financial institutions and company chiefs assembled there that his North African nation faced an “exceptional situation and needed exceptional support.”

Al Thani hailed the conference as “an example of what the international community should do to help promising experiences, instead of holding discussions after disasters happen.” Tunisia’s democracy is based on respect for diversity and human rights, he said.

Help came from other quarters, as well, with French Prime Minister Manuel Valls announcing that the French development agency would channel 250 million euros annually for five years into Tunisia. The European Investment Bank’s chief, Werner Hoyer, said the EIB “will aim to reach total new commitments of up to 2.5 billion euros between now and 2020.”

The funding is critical for Tunisia, a country of 11 million people whose economy has barely rallied six years after the uprising that ousted President Zine El Abidine Ben Ali and touched off similar revolts elsewhere in the Arab world. The government has cut its economic growth forecast for 2016 to 1.5 percent while overall unemployment is about 16 percent.

Economy Stumbling

Strikes and protests over slow progress have sapped investor confidence, leading Prime Minister Youssef El-Shahed to warn that austerity measures — recommended by the International Monetary Fund, which is lending Tunisia $2.9 billion — may be inevitable next year.

Tunisia fared better with its political transition than other Arab countries such as Egypt, Syria, Libya or Yemen. But the economic malaise presents significant risks, including potentially triggering unrest that could provide Islamist extremists with a new foothold as they face pressure in strongholds Syria and Iraq.

Kuwait’s deputy prime minister said his oil-rich nation would offer soft loans of $500 million over the next five years, while the Saudi Fund for Development pledged $800 million to finance projects and to help pay for Saudi exports. The Arab Fund for Economic and Social Development said it would provide loans worth $1.5 billion through 2020. Turkey’s deputy prime minister, Nurettin Canikli, pledged $100 million in exempt bank credits.

Strike Threat

The European Bank for Reconstruction and Development’s vice president for banking, Alain Pilloux, said in an e-mailed statement that the EBRD had invested 350 million euros in Tunisia since 2012 and has “the ambition to invest at least” a further 650 million euros, including in the private sector, infrastructure and the energy sector.

The government has said it hopes donors at the conference would pledge 17.7 billion euros through 2020 for projects that would create more than 400,000 new jobs, primarily through the private sector.

Officials are hoping the conference will be a major step toward enabling sustained growth in an economy where the tourism sector had been shattered by a series of terrorist attacks.

The shadow of protest hovers over the conference with a potential general public-sector strike called for next month by the country’s biggest trade union, which in 2015 shared a Nobel peace price for its role in stabilizing the country’s transition to democracy.

Sami Tahri, assistant secretary-general of the General Union of Tunisian Workers, said before leaders gathered in Tunis that the “street is very tense. We only drew attention to it” with the strike call.