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Will Tunisia’s Economy Survive The Revolution?

The Ben Ali family had its tentacles in every corner of Tunisian business life. A look at the economic fallout from the North African nation's ongoing political and social upheaval

After the downfall of the Ben Ali clan, and the end of its vice-like grip on the Tunisian economy, the country faces a number of challenges such as tackling youth unemployment and how to manage the territory.

Tunisia will have to be rebuilt "literally and figuratively", says U.N. official Karima Bounemra Ben Soltane, referring to the looting in recent days linked to the riots. But Tunisia "will not collapse economically" because the family of deposed President Zine El Abidine Ben Ali has left the country, says Ben Soltane, director of the North Africa office of the United Nations Economic Commission for Africa (ECA).

Whole sectors of the economy, from airlines and banks to car dealerships and hotels, were in the hands of the Ben Ali clan, or more precisely, the former President's wife, Leila Trabelsi, says Catherine Graciet, a journalist and author of La régente de Carthage (The Regent of Carthage) (Editions La Découverte). The departure of the Trabelsi family raises "uncertainty over the future of the companies controlled by the clan."

"The oligarchy was involved in everything from small restaurants to major banks' agrees Karim Bitar, a researcher at the Institute for International Relations and Strategic Studies (IRIS), a French think tank. "Everything was controlled by a small group which took the gains and failed to redistribute them beyond a few coastal areas."

Béatrice Hibou, a researcher at the Centre for Studies in International Relations (CERI) at Paris' Sciences Po University, puts the corruption into perspective. The clan intervened mainly by "siphoning off revenue or taking commission," she says. "Let's not exaggerate the importance of these networks. Rather than disrupting the economy, the fall of the Trabelsi could on the contrary revitalize business because their corruption will be eliminated," says Hibou. This view is shared by Bounemra Ben Soltane, who also sees the fall as an opportunity for a "breath of fresh air."

The other challenges facing the economy include unemployment. Of the 140,000 people who enter the job market each year, 70,000 are university graduates. The economy creates on average 40,000 to 45,000 jobs annually, mostly in the textile industry and call centers, activities ill-suited to an educated population. The unemployment rate currently stands at 32 percent of the population. More than 70 percent of the unemployed are under the age of 30.

The underside of the "Tunisian economic miracle"

"The hidden side of the Tunisian miracle was ignored," notes Bitar. "Tunisia built its success on economic sectors that did not require skilled labor such as tourism and agriculture." It was difficult, in these conditions, to satisfy young graduates.

With Tunisia's policy of devoting nearly eight percent of GDP to education, Ben Ali's regime dug its own grave, creating thousands of young, unemployed graduates mired in frustration. These graduates rushed into the informal economy to survive, which now represents 38 to 50 percent of GDP in Tunisia.

"The model of the Tunisian miracle worked mostly in the 1980s," says Hibou. "It continued into the 1990s, but without modification. The model of the 1970-80s is still in place, with the textile industry continuing to provide the majority of the jobs."

To appease the population, consumer credit was introduced -- perhaps too much. "There was a lot of abuse in relation to the loans granted," says Bounemra Ben Soltane. The message was: ""consume and shut up! " Graciet calls it: "Impoverishment of the middle class through debt."

Another challenge is facing the reality that the heartland of the country was not living under the same conditions as the middle class in the capital, Tunis. The riots began in the southwestern mining region of Gasfa in 2008 and the provincial city of Sidi Bouzid in 2010. "Tunisia was successful, but the country failed to deal with strong undercurrents," concludes Bitar.

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