Event

On 25 October, a “national dialogue” was launched to break the political stalemate Tunisia has been going through over the past three months. An agreement on a “roadmap” to transfer power had already been reached late September as part of an agreement between Laarayedh’s moderate Islamist Al-Nahda party (the largest party in Tunisia’s coalition government), opposition parties and the country’s largest trade union, UGTT. The September agreement had somewhat calmed down anti-government protests, which had increased since July, in a reaction to the second assassination of a member of parliament this year (see also Risk Monthly of September). However, after the killing of Tunisian security forces by Islamist militants two weeks ago, domestic (now also including from armed forces) and foreign pressure to push ahead with the transition increased again. According to the roadmap, PM Ali Laarayedh and his coalition government will step down and hand over power to a technocratic government. Currently, talks are being held to appoint an electoral commission and a new technocratic prime minister who will form a new caretaker cabinet. The roadmap also foresees that within the next four weeks, an agreement is reached on a new constitution, a new election law and an election date.

Impact on country risk

Tunisia is yet again going through a politically turbulent period, which will further determine the country’s democratic transition process. The start of the national dialogue should accelerate this transition, but it remains uncertain whether all parties involved will be able and willing to adhere to the schedule of the roadmap, given the numerous issues that need to be agreed on and an increasing polarization between the different participants. Over the past three years, the political transition after years of authoritarian rule has been bumpy, but so far, Tunisia has been able to adopt a more conciliatory approach of dealing with the transitional challenges compared with most other revolutionary countries in the region. In any case, if more deadly violence is witnessed, tourism, which accounts for almost 10% of Tunisia’s current account receipts, would be further hit. Moreover, the political stalemate and increased uncertainty over the past months are likely to further affect investor and consumer confidence, negatively impacting economic performance, which will remain below what is required to tackle high unemployment (currently at around 16%), poverty and regional disparities, and is in turn feeding popular discontent. Hence, any new (technocratic) government will face steep socio-economic challenges.

Analyst: The Risk Management Team, r.cecchi@credendogroup.com