Francis Ghilès is an associate fellow at the Barcelona Centre for International Affairs.

  • Libya’s crisis continues to affect Tunisian economy, On: Sun, 08 Oct 2017

  • Barcelona three weeks later, On: Sun, 10 Sep 2017

  • Algeria’s ‘human dust’ proves extraordinarily resilient, On: Sun, 20 Aug 2017

  • Turkey’s ‘new sultan’ who wants to fill Ataturk’s shoes, On: Sun, 06 Aug 2017

  • Trump’s attitude at G20 symbolises US disengagement, On: Sun, 16 Jul 2017

  • Turkey loses out in the Middle East, On: Sun, 02 Jul 2017

  • Britain cannot have its cake and eat it, too, On: Sun, 25 Jun 2017

  • Domestic reform agenda is Macron’s priority, On: Sun, 25 Jun 2017

  • This British election based on deceit, On: Sun, 11 Jun 2017

  • East and South Mediterranean will get little attention at G7 and G20, On: Sun, 21 May 2017

  • Centrist tops French vote but far right still matter of concern, On: Sun, 30 Apr 2017

  • The Muslim world’s ‘struggle between faith and reason’, On: Sun, 23 Apr 2017

  • EU should get used to Erdogan’s Islamic minded autocracy, On: Sun, 16 Apr 2017

  • What lessons for Europe from the Dutch vote?, On: Sun, 26 Mar 2017

  • Turkey’s relations with Europe sink, On: Sun, 19 Mar 2017

  • Trump administration’s schizophrenia about Islam, On: Sun, 05 Mar 2017

  • Trump’s battle to save civilisation, On: Sun, 26 Feb 2017

  • Much at stake in Dutch, French elections, On: Sun, 19 Feb 2017

  • Danger of lies and manipulation under Trump, On: Sun, 29 Jan 2017

  • With a more enterprising Russia, cards are reshuffled in the Arab world , On: Sun, 22 Jan 2017

  • Strong doubts about reopening Algeria-Morocco border, On: Sun, 25 Dec 2016

  • Will Europe accommodate Russia’s rise?, On: Sun, 11 Dec 2016

  • François Fillon’s likely Middle East policy, On: Sun, 04 Dec 2016

  • Anti-Islam rhetoric and contradictory aims, On: Sun, 27 Nov 2016

  • Erdogan hollows out Turkish institutions, On: Sun, 13 Nov 2016

  • Why Morocco attracts foreign investment, On: Sun, 16 Oct 2016

  • The consequences of a world awash with oil, On: Sun, 25 Sep 2016

  • Libya veers towards Somalia on the Mediterranean, On: Sun, 18 Sep 2016

  • Why the burqini debate in France is ridiculous, On: Sun, 11 Sep 2016

  • Libya’s recovery is tantalising for Tunisia , On: Sun, 07 Aug 2016

  • Why France is the target of jihad , On: Sun, 31 Jul 2016

  • The devastating verdict of Britain’s Iraq inquiry, On: Sun, 17 Jul 2016

  • Globalisation claims another victim, On: Sun, 03 Jul 2016

  • Why the war on terrorism has failed, On: Sun, 26 Jun 2016

  • Brexit would affect the Middle East and the rest of the world negatively , On: Sun, 19 Jun 2016

  • Printing money will not cure Algeria’s ills, On: Sun, 12 Jun 2016

  • Wishful thinking has destroyed French foreign policy, On: Fri, 08 Apr 2016

  • The broader context of terrorism in Europe, On: Fri, 01 Apr 2016

  • The three facets of Tunisia’s security challenge, On: Fri, 18 Mar 2016

  • Libya’s crisis continues to affect Tunisian economy

    The value of Tunisian subsidised goods exported illegally to Libya and seized by Tunisian customs doubled from 2013-15, reaching $449 million.


    2017/10/08 Issue: 126 Page: 19



    Since the death of Libyan leader Muammar Qaddafi and the collapse of his 42-year regime in 2011, Libya’s neighbours have been troubled by spillover effects from its instability.

    Italy has seen an increasing flow of African immigrants stream into the country; Algeria experienced a devastating attack on its In Amenas gas field four years ago, Mali saw its country driven to near collapse after hundreds of former pro-Qaddafi Tuareg fighters returned home and Tunisia, struggling to rebound from an economic downturn, has seen extremists threaten to cross the border and wreak havoc.

    In the absence of well-docu­mented analysis and statistics, a wide range of figures on the number of Libyans living in Tunisia and their effect on the host country’s economy have been thrown around. However, thanks to a thorough study by the World Bank, titled “Tunisia — Impact of the Libya Crisis on the Tunisian Economy,” released in February, the situation can be assessed with greater clarity.

    Before addressing these ques­tions, it is worth painting a broad picture of the human and eco­nomic toll the crisis has taken on Libya. The World Food Programme estimates the number of Libyans in need of humanitarian assistance and protection at 2.4 million — 40% of the population — more than half of whom are women and children. Half of those people are at risk of food insecurity. The report does not consider the plight of the hundreds of thousands of African refugees who survive in far worse conditions than the Liby­ans.

    The crisis’s effect on the economy has been severe. The country’s GDP contracted 24% in 2013, followed by 24% and 10% in the two following years. Produc­tion of crude oil fell to the lowest level on record in 2015 — approxi­mately 400,000 barrels today — one-quarter of potential output. This resulted in per person income dropping by two-thirds to $4,500. The fiscal deficit skyrocketed from 4% of GDP in 2013 to 75% in 2015.

    The first question to consider is how many Libyans sought residence in Tunisia after 2011. It does not come as a surprise to learn that, in 2014, 1.8 million Libyans entered Tunisia and 1.4 million exited. This suggests the number of long-term and short-term (less than six months) Libyan residents and visitors is larger than the census estimate of 12,783 individuals, 7,212 of whom were long-term residents.

    Most of them hail from the middle class, have lived in Tunisia for more than three years and enjoy significant purchasing power — $50 a day — which is two to three times higher than the average Tunisian household.

    It is worth noting that more than half of short-term residents are in the country for medical care. Their sharp decline recently has resulted in a major cash crisis for private clinics in Tunis.

    The report estimates that 60,000 of the 91,000 Tunisian workers officially registered in Libya returned home from 2010-14. Official remittance inflows declined by 32% to $15.6 million in 2014 compared to four years before.

    The poorer southern region of Tunisia has been hardest hit, which explains the huge rise in contraband and illicit trade across the border. Family links between southern Tunisia and north-west­ern Libya are long-standing. Southern Tunisia, which holds most of the country’s oil, gas and phosphate reserves, feels aggrieved as it has received less attention than the richer coastal areas since independence. The fracture between a relatively prosperous coastal area and a land of “siba” — dissidence — remains as great as it was when former President Zine el-Abidine Ben Ali fell in January 2011.

    The World Bank report consid­ered the level and dynamics of illicit informal trade and cash flows between the two countries. Libyan funds amounted to 12% of total deposits in seven Tunisian banks the report surveyed. They are funded by wages, including payroll transfers from the Central Bank of Libya.

    Informal currency exchange agents processed an estimated $332 million in 2015, a figure three times lower than in 2013 due to the sharp depreciation of the Libyan currency, the decline in the number of Libyans entering Tunisia and deterioration of the country’s economic and security situation.

    Informal trade between the two countries in 2015 was estimated at $243.8 million, driven by a large increase in fuel imports — $121.3 million compared to $27.3 million two years earlier. Cigarettes were next on the list.

    The value of Tunisian subsidised goods, such as pasta, couscous, sugar and milk, exported illegally to Libya and seized by Tunisian customs doubled from 2013-15, reaching $449 million.

    Tunisia has increased defence and security spending sharply because of the turmoil in Libya. From 2011-15 such expenditures almost doubled to $1.9 billon.

    In broader terms, the report estimates the effects of the Libyan crisis as follows:

    It contributed 24% to the overall drop in Tunisia’s growth from 2011-15.

    This has amounted to a welfare loss of $3.59 billion. This loss was driven by the spillover effect on private investment and tourism, which account, respectively, for 60.1% and 36% of the slowdown in growth. One can add the reduction in remittances from Libya and the reduced purchasing power of Libyans in Tunisia. The fiscal cost to Tunisia has been $580 million over the 2011-15 period. This amounted to 6.3% of the tax take every year.

    To cover such losses through taxation would require large tax increases while financing it with debt would increase the govern­ment’s financing needs by $2.9 billion over five years (15% of the 2015 public debt-to-GDP ratio). This amount includes $111.9 million in additional interest payments and $375.8 million in more debt amortisation costs.

    The report concluded that Tunisia would be well advised to “forthwith address the regulatory and infrastructure obstacles to trade and investment in Libya.” This would allow Tunisia to make full use of “the many comparative advantages in its trade with Libya, including a shared language and proximity.”

    The reconstruction and recov­ery of Libya must not be allowed to fuel “the already large informal cross-border markets (and the security and economic challenges associated with illicit trade),” the report stated. Such a policy would have the further advantage of promoting economic develop­ment in the poorer regions of the country.

    Needless to say, the West — not least France and the United Kingdom, which, with the United States, spearheaded the operation to rid Libya of Qaddafi despite having no UN mandate to do so — might wish to support such a policy.

    Instead of constantly moaning about terrorism and illegal immigration from Libya, they could do worse than to revisit their reckless policy of 2011, continue supporting Tunisia and its nascent democracy and vigorously look at the region as a whole.

    If it comes, Libya’s reconstruc­tion — and the manner it takes — would dictate how stable the region is in the decades ahead. Weapons are not the key, even if the aforementioned countries are addicted to selling them to the Arab world. Good economic planning, clear rules of trade and investment, particularly in poorer regions, will act as a solid anchor of stability.

    Editors' Picks

    The Arab Weekly Newspaper reaches Western & Arabic audience that are influential as well as being affluent.

    From Europe to the Middle East,and North America, The Arab Weekly talks to opinion formers and influential figures, providing insight and comment on national, international and regional news through the focus of Arabic countries and community.

    Published by Al Arab Publishing House

    Publisher and Group Executive Editor: Haitham El-Zobaidi, PhD

    Editor-in-Chief: Oussama Romdhani

    Managing Editor: Iman Zayat

    Deputy Managing Editor and Online Editor: Mamoon Alabbasi

    Senior Editor: John Hendel

    Chief Copy Editor: Richard Pretorius

    Copy Editor: Stephen Quillen

    Analysis Section Editor: Ed Blanche

    East/West Section Editor: Mark Habeeb

    Gulf Section Editor: Mohammed Alkhereiji

    Society and Travel Sections Editor: Samar Kadi

    Syria and Lebanon Sections Editor: Simon Speakman Cordall

    Contributing Editor: Rashmee Roshan Lall

    Senior Correspondents: Mahmud el-Shafey (London) & Lamine Ghanmi (Tunis)

    Regular Columnists

    Claude Salhani

    Yavuz Baydar

    Correspondents

    Saad Guerraoui (Casablanca)

    Dunia El-Zobaidi (London)

    Roua Khlifi (Tunis)

    Thomas Seibert (Washington)

    Chief Designer: Marwen Hmedi

    Designers

    Ibrahim Ben Bechir

    Hanen Jebali

    Published by Al Arab Publishing House

    Contact editor at:editor@thearabweekly.com

    Subscription & Advertising: Ads@alarab.co.uk

    Tel 020 3667 7249

    Mohamed Al Mufti

    Marketing & Advertising Manager

    Tel (Main) +44 20 6702 3999

    Direct: +44 20 8742 9262

    www.alarab.co.uk

    Al Arab Publishing House

    Kensington Centre

    177-179 Hammersmith Road

    London W6 8BS , UK

    Tel: (+44) 20 7602 3999

    Fax: (+44) 20 7602 8778

    Follow Us
    © The Arab Weekly, All rights reserved