We’re young and need the money!
The ambitious campaign to root out corruption in Tunisia, begun after the revolution, is coming unstuck. With proceedings against key business people pending, investors are losing their nerve. The government is shifting its priority to reinvigorating the economy.
The Mediterranean is a beautiful, glistening blue. The hills tumble gently down to the Bay of Tunis. The coastline is fringed with green pine trees. And on the terrace of a luxury hotel in Carthage, which was the capital city in antiquity, a former Minister in the Cabinet of the now-overthrown President tells us about life under the regime. His stories include one about a colleague who one day received a note from the nearby Presidential palace, personally signed by Zine el-Abidine Ben Ali, instructing the Minister of Education to admit a certain student to university.
»Ben Ali was involved right down to that level. We have rules for admission to university; Unesco singled our system out for praise,« says the Minister, who does
not want to be named, »but Ben Ali got around anything and everything.«
Even on the coast, a few kilometres further north, living conditions look just as miserable as those in the interior, where unemployment rates are high and where the Arab Spring began at the end of 2010. Outside their little shops stocking groceries or construction materials, shopkeepers wait for customers. The economy is fragmented, limited to the confines of the village. Houses are put on the market before they are finished.
Here, in unprepossessing Raoued, with a population of 10,000, Tunisia was to become the financial centre for North Africa. Gulf Finance House (GFH), a Bahraini investment bank, was set to build a banking centre on several hundred hectares of land at the water’s edge and make Tunisia the region’s number one address for foreign finance companies. GFH promised to attract investment amounting to USD 3 billion.
Sheep still graze on the plot of land where all this was to happen; the wind tosses empty plastic bags around over the puddles and out to sea. Has the government claimed the land back? How much money did they actually get for it? Was GFH in cahoots with local partners who had connections to the regime? Why did the project never go ahead? Ask whichever top officials you like, from the present government or the former one, you will not get any answers. Officials simply affirm repeatedly that the project will be realised. Meanwhile, GFH has long since ceased to exist, brought down by the property crash in the Gulf and the shady deals it was doing with governments in almost a dozen countries.
After the revolution, Tunisia set about tackling the favouritism and corruption under Ben Ali with vigour, and established a Committee Against Corruption and Misappropriation of Funds that published a report on corruption in all areas of the economy. But the new broom has not yet reached as far as the project in Raoued. Perhaps it never will.
The headlines on the fight against corruption have drawn attention to the confiscated houses and bank accounts in France and Switzerland, where Ben Ali is alleged to have hidden his fortune. The new government is making every effort to get the money, thought to amount to billions of euros, back to Tunisia. The Central Bank of Tunisia has commissioned Swiss lawyer Enrico Monfrini, who tracked down the funds that somehow went astray under Nigerian dictator Sani Abacha, to retrieve Tunisia’s money. In France, Transparency International confiscated assets despite protests from prosecuting authorities clearly under political influence.
The government has seized shares in Tunisian companies too, but the lack of legal certainty as to their status is becoming an increasing problem for the weakening economy. By means of forced shareholdings, Ben Ali, together with his wife Leila Trabelsi’s family, had tighter control of his country’s economy than almost any other Arab dictator.
»Do you have a contact in the Presidential palace?« was the first question potential foreign business partners asked Tunisian business people. Ben Ali bypassed Ministerial bureaucracy and wangled direct access to contracts and projects via
bodies set up within the palace, such as the »High Commission for Major Projects« and the »High Commission for Public Contracts«. More than 100 people from within the orbit of the former regime have since been convicted of corruption.
A further 400 people accused of similar wrongdoing are subject to a ban on travel and their assets and shares have been frozen. Their foreign business contacts are anxious. »It’s hampering the economy, because some of the accused are Tunisia’s leading business people«, says Minister of Finance Houcine Dimassi.
The government now sees its main tasks as reinvigorating the economy, which contracted by 1.8 per cent in 2011, and dealing with unemployment. Non-stop protests by young unemployed people are putting a damper on the political fresh start. »I think it’s time to make a decision,« says Dimassi, referring to the proceedings against those accused of corruption, which are still before the courts. »Either they should be sentenced on the basis of evidence, or there should be some kind of amicable settlement. For example, they could contribute to Tunisia’s budget – it surely needs it.«
The government is administering the frozen shares, which include a majority shareholding in telco Orange Tunisie and entire banks, on a fiduciary basis. Simply selling the shares whose seizure has been legally confirmed would, according to Dimassi, put one to two billion euros into the public purse. But Ben Ali’s economy of favouritism wove a tangled web: where do legitimate business relationships end and benefits from links to the Presidential palace begin?
Dimassi admits that the courts will need time to unravel it all. But political upheaval happens on a different time scale and cannot wait. Unemployed young people are still holding almost daily demonstrations in the poorer regions in the country’s interior. In the mining area around Gafsa, they frequently block the roads and railways that the vital phosphate and chemicals industries use to transport their products to the coast. In these economically underdeveloped regions, half the younger generation is out of work. And with the collapse of tourism last year – there were 40 per cent fewer tourists from Germany, for example – the economic crisis is taking its toll even on the better-developed coastal regions.
Tunisia needs not just new tourists, but also new investors. But things are still too »up in the air« for them. »There is still a lot of uncertainty, politically and socially,« says Slim Feriani, the Tunisian CEO of Advance Emerging Capital, an asset management company worth EUR 750 million. His company reduced its investments in Tunisia from five to one per cent of its portfolio during the revolution and is still waiting to see how things pan out.
»There is vigorous debate about the future direction of the country«, says Feriani. »The top priority now has to be finally getting the constitution sorted out as quickly and pragmatically as possible, and not getting lost in ideological questions.« He sees the ideas of the Islamic Ennahda Party – currently the strongest political force in the country – as anything but auspicious and says they could have a particularly harmful effect on tourism, the source of almost half of all jobs in Tunisia.
Yet many Tunisians do not want to switch back to business as usual just like that, despite the economic problems. On Facebook, activists have attacked the governor of the Central Bank, saying that he is not taking action against the financiers of the old regime because he too has been around since the Ben Ali era.
»Nothing has changed,« agrees Sofiane Reguigui from the Tunisian Association for Transparency in Energy and Mines. »Now that there is freedom of the press, instances of corruption are a permanent topic of conversation, but it is still business as usual for many from the Ben Ali era.« Reguigui fears that the Islamists want to cut short the process of dealing with corruption for fear of alienating the country’s economic elite, who are as powerful as ever.
Like many other Tunisians, Reguigui feels uneasy that, although the money has come from other sources since the revolution, there is just as much obfuscation. As an example, he points out the government wanting to contract a state-owned company from Qatar to build a USD 2 million refinery project, without calling for tenders. During the Arab Spring, Qatar supported the uprisings in the region and is now pumping money into numerous projects in Tunisia to consolidate its newly won status as a regional power.
»We need money urgently«, says Reguigui, »but that doesn’t mean we have to sacrifice good governance entirely.« His Association for Transparency is calling for Tunisia to join more than 30 other countries in an initiative for greater transparency with regard to commodities.
The civil service, which, with the exception of customs, was essentially transferred from the former regime, denies every allegation of corruption. On the hotel terrace in Carthage, zenith also asked the former Minister about his role in the nepotistic economy. »It involved allocations of land – not very much of it. But the Ministers acted on written instructions from Ben Ali. They didn’t have a choice,« he says.
As well as the interwoven links with the Presidential palace, Dimassi, an economist who stood as an independent candidate in the parliamentary elections, is particularly concerned about a further legacy of the former regime, the high price of oil. Like other Arab autocrats, Ben Ali bought favour with his subjects through massive subsidies on petrol and food. But Tunisia is becoming less and less able to afford such subsidies now that it does not even have enough foreign exchange in reserve to pay for four months’ worth of the imports it needs.
»From the purely financial and economic standpoint, the most important thing is to correct petrol prices«, says Dimassi from his palatial quarters in the government quarter of Tunis. However, reducing subsidies would create even more social unrest and further restrict the government’s scope for dealing with the past instead of the future.
While saluting such pragmatism, Feriani, the fund manager, warns against neglecting dealing with corruption. Despite the end of the Ben Ali regime, corruption is still rife, especially in the public sector. »Growth should be the priority, but that doesn’t mean focussing exclusively on growth and forgetting about corruption for the next two years«, he emphasises. »The two go together. Combatting corruption will create growth, because corruption is costing the economy a lot of money.«