Tunisia - Part 2: Protests (Causes)

Note: blog written up on January 12th.

As might be recalled, the Arab Spring started in Tunisia when a fruit vendor named Tarek al-Tayeb Mohamed Bouazizi set himself on fire on December 17, 2010. A month later, the country's president stepped down. To a large extent, Tunisia stands out as a success story of the Arab Spring due to democratic rule.

In Part 1 of my posts on Tunisia, I went over what was happening. This post tries to dig into the reasons why the protests are happening -- beyond the high level reason for the protests such as an increase in taxes and a reduction in subsidies.



Tunisia is being forced into these tax/subsidy measures due to high debt levels. What caused these problems? Per The Economist, one can partially pin Tunisia's economic problems on the union -- Tunisian General Labour Union (UGTT). Here are some issues:

First, the UGTT has demanded, and the state acquiesced, the hiring of more state employees. This has resulted in 20% of the workforce working for the government.

Second, the unions have demanded more hiring by the oil, gas and phosphate industries. Yet, production in these industries is dropping. Even when the phosphate industry agreed to hire more workers, that didn't placate the union and the result was:

But the strikes continued and production fell from 8m tonnes in 2010 to just 3.3m in 2013. The industry has yet to recover.

I find the second point interesting. I have to believe that the oil, gas and phosphate industries were trying to run as efficiently as possible. In prior decades, more workers were probably needed to run these industries. I suspect that technological advances are reducing the need for workers. Having more workers than needed either makes products from Tunisia more expensive or reduces profits that can be used to keep production levels and improve productivity.

This makes me think back to my research into Libya's oil where various political factions are keeping the oil fields running, but are attempting to siphon off profits. Though profits are being shared across groups, it unfortunately reduces investments that help keep production levels up. (Oil fields do deplete and so investments are needed to drill new wells.)

There is also an interesting note in the article that is a world wide concern: pensions.

One of Tunisia’s biggest fiscal problems is the pension system, which has a deficit of 1.1bn dinars ($440m) 65% higher than just two years ago.

Yeah, if you're hiring more government workers, your pension requirements will increase.

A Reuters article digs into a few other reasons.

First, Islamist terrorist attacks damaged the tourist industry.

Second, belief that corruption is siphoning off money that could be used to improve infrastructure. There's an interesting quote from the article:

Eight officials have been jailed so far but parliament passed an amnesty last year for old, Ben Ali regime figures accused of graft, which upset many ordinary people.

That seems to me like an attempt keep the political peace amount power brokers. Though that might be the reason, the average Tunisian sees the amnesty through a different perspective.

Third, many Tunisians worked in Libya when Gaddafi was in power and would send money back to family, but now that isn't a safe option.

The article also points to two conflicting issues:

Creditors want the government to stop spending almost two-thirds of the budget on public salaries and focus on education and infrastructure to create jobs over the long term.

The Tunisian government is in a rock and a hard place situation. Tunisia has heave debt so they have to pick between the short-term and the long-term. The creditors are correct, Tunisia should focus on education and infrastructure. In fact, even the people want infrastructure spending. However, to do this, it either needs to increase revenue (which it is doing now) or reduce spending (which would mean reducing government workers). These short-term pains are something that Tunisians aren't willing to accept. They are currently in the streets protesting revenue adjustments and the UGTT will definitely not accept job cuts. If the Tunisian government focuses too much on the long-term, they might find themselves being removed from office. And if they're removed from office, who knows if the Tunisian Revolution will remain democratic. Tunisia has a fine line to walk.