Tunisia Is at Loggerheads About How to Reform the System

The decision by Tunisia’s President Kais Said to dissolve the Superior Council of the Judiciary has prompted widespread condemnation both in the country but also from international allies. However, the groups that protested the move in turn are strongly opposed to each other, which weakens their position vis-à-vis the government, says our correspondent in Tunis.

It was arguably his most significant decision since the freezing of parliament last July. Two weeks ago, President Kais Said told the nation that he had dissolved the Superior Council of the Judiciary, the body overseeing the judicial system of Tunisia.

The decision was condemned – not least by a concerned international community. The West has long-established and deep relations with Tunisia and sees the country as the torchbearer of democracy in Northern Africa. The country’s youth were widely credited with having booted out the former dictator Ben Ali in what proofed to be the first democratic revolution leading to the so-called Arab Spring.

International Condemnation

Michelle Bachelet, the High Commissioner for Human Rights at the United Nations, told Kais Said that the decision violated the country’s human rights obligations under international law and warned that the step would seriously undermine the rule of law.

“It is clear that more vigorous efforts must be made to bring the legislation, procedures and practices of the justice sector into line with established international standards, but the dissolution of the Supreme Council of the Judiciary has constituted a significant deterioration in the wrong direction,” Bachelet said.

The Need for Reform

The statement by the UN-expert shows the ambiguity that exists in dealing with the current situation in Tunisia. On the one hand, the allies of Tunisia are concerned that the country is going quickly in an authoritarian direction, while on the other acknowledging that all is not well. The anecdotal evidence about the difficulties businesses faced in Tunisia due to a slow and at times corrupt system underlined the importance of changing a system that seemed incapable of reforming itself. But, and that’s where the worries begin, the question is whether the actions are signaling a return to an undemocratic past.

Not all political actors protested the move and indeed some even welcomed the decision, echoing the concern about the absence of any progress under the former governments. The Alliance for Tunisia party for instance welcomed the dissolution of a body that it said was closely linked to the old regime of Ennahda and its allies and even called on the president to dissolve the Islamist Ennahda Party.

Independent or Not

Leila Haddad, leader of the People’s Movement, echoed this position when she spoke to the PoliticsBlog. The decision was right because it would help the government uncover the many cases of corruption that hampered the development of Tunisia in the recent past.

“We support the approach of President Kais Said to the purge of the judiciary and the dissolution of the Supreme Council, especially since the Ennahda Party had appointed a number of its followers to the head of the council, which led to the failure to open many cases in which it was itself involved.” The charge leveled at the council is clear: despite the protestations to the contrary, the supreme council was in the hands of the previous government.

The Culprits Identified

Most parties however seemed to object to the decision. The protests involved not only the Ennahda Party, but also elements of the political and economic elite in the country. Their objections however have nothing in common with those of Ennahda. While the Islamists have become openly hostile to the government after the freezing of parliament and see the latest decision as one step towards dictatorship, the elite is biding its time.

Many see Ennahda is prime culprit and want it removed from the political scene. And yet, they support a democratic system that they believe has come under pressure from the decrees of President Said.

The Elite Is Biding Its Time

Hanan Zbiss, a journalist and media professor, says that the president has set in motion a process of dissolving all structures of power, which will lead to a radically different society. While some claim that the new set-up would be similar to Egypt’s, Zbiss is certain that the situation of Tunisia is different. In Tunisia, historically, the army has kept away from politics and let the government do its business. She believes that there is a strong political elite that has not sided either with the president nor with Ennahda but is looking for a leader with a more balanced and moderate position.

In her opinion, the president doesn’t seem to have a clear vision and strategy for the country, and she emphasized that the economy was in a critical condition. She warned that in the absence of a solution, the government would be faced with a social explosion.

Egypt: How the World’s Driest Country Seeks to Safeguard Water Supply

Faced with a growing population, the threat from global warming as well as regional tensions over the distribution of Nile water, Egypt’s government has dedicated itself to a four-pronged strategy to safeguard water supply for coming decades, our correspondent in Cairo writes.

It is safe to say that the biggest challenge that the government of Abdel Fattah El-Sisi is facing is how to supply the population of 105 million and the economy of this vast nation with fresh water. The president therefore personally addressed the Cairo Water Week in October, the fourth such annual conference held in a row.

The conference, which ran under the headline of ‘Water, Population and Global Changes, Challenges and Opportunities’ attracted an audience of ministers, academics, company executives and civil society experts, all looking to exchange their insights on how to find sustainable solutions for managing water resources to face the population increase and the changes, including a shift in land use and climate, as well as hydrological systems.

In his speech to participants in the fourth session of Cairo Water Week, El-Sisi said, “the choice of the theme for Cairo Water Week, which is ‘Water, Population and Global Changes: Opportunities and Challenges’ comes at a time when the world is witnessing rapid changes affecting water resources and making their optimal management practical very complicated.”

A Huge Challenge for Arid Nations

There is no doubt that the water crisis is one of the most pressing international challenges due to the increase in the population. Governments across the world grapple with the stability of fresh water sources, as well as environmental degradation and climate change.

All of these factors contribute to the exacerbation of the crisis and affect the ability of countries to meet the water needs of their people, which turns the issue of managing water resources into a challenge that affects the security and safety of countries and peoples, and may affect the stability of entire regions.

Working With the International Community

In light of this international crisis, and based on Egypt’s belief in international cooperation and multilateral action, with the United Nations system at the heart, Egypt has engaged in the “UN Water Decade 2018-2028”. Egypt actively participated in its various stages and coordinated with a number of friendly countries to launch the statement of the course of the Water Decade and the upcoming UN conference to review of the Water Decade in March 2023.

Egypt welcomed placing the Cairo Water Week of October 2022 on the path of the International Water Decade, to open a comprehensive discussion among stakeholders from governments, civil society, experts, academics, women and youth. The aim of this is to advance international efforts to confront water challenges, especially with regard to water scarcity, securing human access to it, and strengthening cross-border cooperation in order to build complementary frameworks that consolidate regional stability based on mutual benefit and common interests.

$50 Billion for an Ambitious National Water Program

The Egyptian government believes that advancing development efforts is a prerequisite for strengthening international peace and security and establishing a stable world order. That is why the nation has adopted its vision ‘Egypt 2030’, an ambitious national program that addresses all walks of life. Egypt has developed a strategic plan for managing water resources until 2037, at an estimated cost of $50 billion. This may double over time and the plan revolves around four main axes:

– Improving water quality, including the establishment of dual and triple treatment plants.

– Developing new water resources, such as through the application of desalination technology.

–  Rationalizing the use of water resources and raising the efficiency of the Egyptian irrigation system. The state has adopted a national project to line canals and switch to modern irrigation systems in order to achieve the maximum possible benefit from its limited water resources.

– Creating the appropriate environment in line with work programs and water projects. This is achieved through legislative and institutional development and raising citizens’ awareness of the importance of rationalizing water and preserving it from all forms of waste and pollution.

Considering that funding Egypt’s strategic plan for managing water resources represents a major challenge, Minister of Irrigation Abdel Aty stated that the Egyptian government has already developed programs to finance and procure the necessary funds to implement this plan. He indicated that financing programs would be announced soon, as well as the companies participating in the implementation of the plan and benefiting from it.

A Model of What Is in Store for the World

The national plan is addressing a number of key issues, such as water poverty levels. Egypt’s per capita share of water is 560 cubic meters annually, compared with the UN’s water poverty definition of 1,000 cubic meters. Egypt is the driest country in the world with the lowest level of rainfall. The country is almost exclusively dependent on the waters of the Nile River, which originates outside its borders. Egypt easily qualifies as an early example of what the situation in many countries may look like in the near future.

It comes as no surprise that the Egyptian people are closely following the developments of the Grand Ethiopian Renaissance Dam. Egypt hopes to reach a balanced and legally binding agreement in this regard in line with the statement issued by the Security Council in September 2021. It will help Ethiopia achieve its development goals, while limiting the impact on the water supply and the environment, as well as social and economic damages in Egypt and Sudan.

In this context, Mohamed Abdel-Aty, Minister of Water Resources and Irrigation, revealed the magnitude of the challenges facing Egypt:

“Egypt is one of the most water-scarce countries in the world, with water resources estimated at 55.5 billion cubic meters annually, most of which comes from the Nile River, in addition to very limited amounts of rainwater and deep groundwater in deserts. In contrast, the total water needs in Egypt amounts to about 114 billion cubic meters of water annually. This gap is compensated by the reuse of agricultural wastewater and surface groundwater in the valley and the delta.”

Eman Sayed, head of the planning sector at the Ministry of Irrigation, emphasized the importance of the water management plan for the country’s economy: “This plan pays special attention to the middle years of 2020 to 2030, for several reasons, including that Egypt has prepared a sustainable development strategy for the country until 2030, with the aim of placing Egypt among the top 30 countries in the world economically and socially by 2030. This year also corresponds with the method of the five-year plans for financial planning that Egypt will turn to again starting from the year 2020, which is why it was called the National Water Resources Plan 2037.”

The plan aims to achieve Egyptian water security

Egypt developed the strategy faced with a growing deficit in water resources, and the dependence on the Nile River as a main source of water (93% of the total traditional resources and 97% of fresh surface water).

Over the past decades, Egypt has pursued different approaches in managing its water resources, starting with a development approach, where the focus was on the relative abundance of water resources, to an inter-sectoral allocation approach, and finally, an integrated water resources management approach.

Previous Policies in Water Resources Management

In 1929, an agreement was signed between Egypt and the U.K. on behalf of Sudan to ratify the rights of each country to the waters of the Nile. Under this agreement, Egypt implemented in 1933 a water policy that relied on taking advantage of storing excess water in front of the old Aswan reservoir after its second ramp.

From 1959 to 1970, Egypt built the High Dam, and this included the signing of the agreement to divide the Nile waters between Egypt and Sudan in 1959, according to which Egypt’s share became 55.5 billion cubic meters per year. In 1975, the Ministry of Irrigation prepared a policy based on rationalization due to the increasing water needs. In 1980, the Ministry of Irrigation prepared a plan for the next twenty years, i.e. through the year 2000.

The period from 1980 to 2000 saw the implementation of a plan for reusing agricultural drainage water and expanding the use of groundwater. In 1977, the Ministry began preparing a master plan for water management. In 1994, the Ministry of Irrigation and the Land Reclamation Authority prepared a plan for agricultural expansion.

In the years from 2000 to 2005, the Ministry of Irrigation, in cooperation with the United Nations Development Program, prepared a plan for managing water resources at the national level to meet the needs during that period, in addition to expanding reliance on the reuse of agricultural drainage water.

Starting in 2005 and through 2017, the government decided on The National Water Resources Plan. In 2021, Egypt launched a strategy for managing water resources until 2050, within the axes of the National Water Resources Plan (2017/2037).

The Challenges Facing Egypt

-Population increase: This increase represents a major challenge to water resources. It is expected that the total population in Egypt will reach 188.5 million people by 2050. Already a nation suffering from water scarcity according the World Bank measures, the projected increase in population will further aggravate the situation.

Establishment of the Renaissance Dam in Ethiopia: The dam impacts the water level of the Nile as a main source of water in Egypt.

Climate change: The rise in temperature is increasing the problem for the country. Extreme and unprecedented weather phenomena such as intense rain in specific areas of the country and the rise of the sea level and its negative impact on cities and coastal area add to the woes.

Traditional farming methods: The method of using field irrigation consumes a large amount of water, so the country has started to turn to modern irrigation methods.

Pollution of waterways: Increased agricultural pollution in Damietta and Rashid branches as a result of sanitation and agricultural sewage. As a result, the Ministry of Water Resources and Irrigation suspended the implementation of a number of agricultural wastewater reuse projects.

In light of these challenges, the government of Egypt is keen to place the water issue on top of its political agenda and the Strategic Plan 2050 serves as a roadmap to secure the water needs of the Egyptian citizen.

Turkey Sticks to Its Guns and Keeps the Dialogue With Russia Going

For some, it may be ironic to see Turkish President Recep Tayyip Erdogan taking the role of mediator between Russia and Ukraine at a time when NATO is struggling to speak with one voice – given the past tension within the military alliance. But then it isn’t, because Turkey has always done its fair share of the work, as an expert of the country’s military stresses.

In the dispute between NATO and Russia and the military buildup along the boarders of Ukraine, much has been made of the implications for the two Nordic countries Sweden and Finland, as well as the security implications for the Baltics and other Eastern European states, including Poland. Turkey, which covers the Southern flank of the alliance, hasn’t featured strongly, at least in the major Western European press.

Until now, when President Recep Tayyip Erdogan spoke up and offered to mediate between Russian and Ukraine (see an article in “Frankfurter Allgemeine Zeitung” on Thursday). For Turkey, the dispute is much closer than for many other NATO states, as the Ukraine and Russian-occupied Crimea as well as Russia proper sit directly across the Black Sea. Turkey is also the guardian of the Bosporus, the natural and only connection between the Black Sea and the outside world.

Putin and Erdogan: A Complicated Relationship

Erdogan has been steadfast in his support of Ukrainian territorial integrity and has been clear in his opposition to Russia’s power grab of the Crimean peninsula. Turkey has also come to the aid of the Ukraine military by providing drones and other military equipment, much to the anger of Russian President Vladimir Putin.

Turkey, Russia and the Ukraine all have a sizeable share of the Black Sea and any dispute threatens to pull all the three sides in, whatever their outside alliances might be. But of course, there is much more to the relationship between Putin and Erdogan than meets the eye. While their troops directly or through proxies have and still are pitched against each other in several theaters of war (Libya, Syria to name but two), Erdogan has also used the Russian side in his conflict over the procurement of defensive missiles with the U.S.

When the Americans failed to provide the Turkish armed forces with its Patriot missile system, Erdogan instead bought the Russian-made S-400 missiles – and Putin was obviously more than keen to help deepen the rift between Turkey and the U.S. Turkey and Russia, Erdogan and Putin clearly are two sides with a highly complex relationship.

 NATO Membership Is in the National Interest

“The Ukraine isn’t a major obstacle for Turkey and Russia,” said Professor Haldun Yalcinkaya. “They can have different positions on the field and still meet around the negotiating table.”

Yalcinkaya, who is head of the Department of Political Science and International Relations at TOBB University in Ankara, has served more than a decade at the Turkish Military Academy and knows more than most how the Turkish security forces think.

He is particularly adamant to dispel any suggestions that the military would somehow fail to live up to the duties of a NATO member state, despite the occasional public outcry over the alliance in the country.

“At an operational level, Turkey has always been doing whatever it was required to do,” Yalkinkaya said. “Also, being a member of NATO is very much in the national interest of Turkey.”

Kurdish Question in Syria a Tough Nut to Crack

The recent flare-up of public debate about Turkish membership in NATO is not something new and the political parties have also been known to raise that question from time to time. However, making political statements during election times and taking political decisions isn’t the same, as the professor is keen to stress.

“NATO membership has become a political issue, but it hasn’t been an issue at the level of decision makers,” Yalcinkaya said.

In his opinion, it was the U.S. support for the Kurdish fighters (Syrian Democratic Forces), associated with PKK, in Northern Syrian and the U.S. reaction to the procurement of the S-400 missile system by Turkey which mostly angered the Turkish government and general public.

Better Within Than Outside – for All Sides

The Turkish position over the links between the PKK and YPG is well known and a source of continued disagreement between Turkey and the U.S. and European allies. Turkey says the U.S. is providing support to a terrorist organization, even though it is a strategic ally of the country, while the U.S. has seen the Kurdish troops as the group with which it could do business in the ravaged stretch of land between Iraq, Turkey and Syria.

Yalkinkaya also mentioned that the Turkish public perceived as exaggerated the reaction to the S-400 purchase and the sanctions imposed on procurement officers, the so-called CAATSA sanctions.

While those two issues won’t go away quickly, the conflict with Russia over its demands for written security guarantees by NATO is ongoing. And it’s where the realism begins to sink in about the importance of having countries such as Turkey onboard.

Turkish Government Pursues Step by Step an Unorthodox Economic Path

Business leaders in Turkey not only face uncertainties over the growth of the economy, with the pandemic far from over. They also hope that the central bank is right in claiming that the lira will not drop much further this year after last year’s fairly dramatic plunge.

When the Turkish government at the start of the year introduced a new requirement whereby exporters have to sell 25 percent of any foreign currency income to the central bank, it upset Turkish companies. Businesses worry that this rule will increase their operational costs because they will be exposed to a currency that is fluctuating fairly wildly. The lira has lost some 44 percent in 2021 and it is anybody’s guess where the new year will take the Turkish currency.

Economic orthodoxy suggests that the troubles are at least partially linked to the monetary policy of Turkey. It is well known that President Recep Tayyip Erdogan doesn’t believe that higher inflation ought to be contained by raising interest rates, essentially because this hurts economic growth and employment in the short term. For a government, this is bad news and for Erdogan, whose AK Party faces elections in 2023, employment is a key aspect.

The Replacing of Central Bank Governors

After a period of repeated changes to the country’s monetary policy, the president and his party roughly a year ago seem to have decided that enough was enough and sacked the then central bank governor, Naci Agbal. He was replaced by Sahap Kavcioglu, a man more in tune with the policies of the government and clearly more than happy to oblige with the governing party’s economic direction.

However, faced with soaring inflation, the new crew at the top of the central bank initially held back on interest rates cuts. Then, towards the autumn of 2021, the TCMB started with a series of cuts, shaving altogether 5 percentage points of the key lending rate to the current 14 percent. This opened the spread to the country’s inflation rate to roughly 5 percentage points.

Drop in Lira Makes Energy Price Surge Worse

As the market had expected, this prompted a massive drop of the lira, a decline that led to manifest concern among consumers and companies alike. For both, the drop in the currency exacerbated the surge in energy prices this winter. Therefore, the government was forced to step in and raised the minimum wage for people.

At the same time though, the problems of the central bank increased because it had previously intervened in the market to stop the fall of the currency. But, crucially, the bank already had drained its foreign currency reserves with no obvious way to replenish the coffers. Turkey is running a current account deficit of as much as $15 billion, to which the pandemic-induced drop in tourism contributed greatly.

Forex for Central Bank

Therefore, the decision by the AK Party this year to require companies to sell part of their forex to the central bank made sense. In a meeting with business leaders, the bank governor promised that the decision wouldn’t hurt them much. According to “Reuters” news agency, Kavcioglu told them that the lira would stabilize and they shouldn’t therefore worry.

Companies in Turkey on average pay more in advance for their imports than they receive in proceedings for their exports. The gap, which is evident from the trade statistics from the TUIK, means that the companies need a stock of working capital and that they are exposed to currency fluctuations, according to economists based in the country.

Given that Turkey has a negative trade balance, this imbalance between cash in advance and open account between exports and imports is a true concern and is the reason why the company owners were so concerned about the recent change.

Stock Market Wobbles

How difficult the situation will become this year depends on several factors. Some of these elements hold true for all economies and can’t be controlled by any government. For instance, the rate of economic growth seems relatively open at a time when countries across the world are battling to contain the Omikron strain of the Covid-19 virus. At the same time, inflation is soaring in most advanced countries and in particular in the U.S. and Western Europe, bringing an end to the ultra-cheap money that central banks have poured into the markets. How much this will affect growth appears unclear so far, but the wobbles in stock markets are a sign of greater uncertainty.

It is almost impossible to predict how the tourist season will shape up in this traditional holiday hotspot, even though the low lira will likely help the industry lure foreign travelers back – once they dare to travel again. Still, with the complications that follow the unorthodox economic path of the government and central bank, market participants might be tempted to shun the country or, more precisely, place a higher price tag on investments, which may put off risktakers.

Boost Growth With Fiscal Measures

Economists such as Özgür Orhangazi at Kadir Has University expect the government to do everything it can to boost growth while the effects of the currency shock will slowly sink in. The government is likely to use fiscal stimulus measures and credit growth in its attempt to maintain growth. But the problem seems that any attempt by the government to increase growth using low interest rates and credit growth results in a further weakening of the lira, Orhangazi warned.

“The main issue will be the re-financing of the external debt,” said Orhangazi. “The government has been able to increase its foreign borrowing, albeit at higher interest rates and the non-financial corporates have been decreasing their foreign currency debt.” The financial services industry meanwhile has not so far had any problem in re-financing.

Going to the Polls in 2023

Obviously, the government relies on growth for its chances at the polls, while it is well aware that the spread between interest rates and inflation is leading to a sharp fall in real incomes and increased poverty.

Most economists have been saying that the monetary policy wouldn’t hold in the long run, even with the measures taken by the government to offset the difficulties. But whether, how and to what extent such a change of course might occur is a tough one to predict.

World Bank Report on Algeria: The Truth Behind the Controversy

The latest monitoring report on the economic situation in Algeria by the World Bank proved controversial. Government representatives and media outlets objected to the findings published on December 22, writes our correspondent.

In the report, the World Bank depicts a gloomy situation of the economy in Algeria, which not only was hit by the pandemic but also seems held back by a lack of reforms. In addition, the revenues from the oil and gas industries are levelling off and the government is facing political and social tensions. Not to mention inflation, which accelerated sharply in 2021, affecting households disproportionately. Compared with Morocco and Tunisia, its neighbors in the Maghreb, Algeria is called upon to diversify its economy, which is heavily dependent on the oil and gas sector.

Hard hit by the Covid-19 pandemic, Algeria will need to urgently boost its economic growth. Due to the fall in oil prices, Algeria has been plunged into a permanent economic crisis since 2014, as oil revenues account for nearly a third of its GDP, 97% of export revenues and 70% of tax revenues. This dependence on the a segment that has remained intact for some thirty years has known its limits with the sharp decline of nearly 50% of oil prices in the second half of 2014, which saw the barrel of the black gold valued at between 60 and 70 U.S. dollars.

Economic and Political Crisis

To revitalize the sector and mitigate this decline in prices, the minister of energy at the time had announced a five-year investment program (2015-2019) worth 90 billion U.S. dollars for Sonatrach, the national company for research, production, transport, processing and marketing of hydrocarbons. But these provisions have not had the hoped for effect because the country is very dependent on its hydrocarbons and needs to sell the oil at around 110 to 120 U.S. dollars per barrel to ensure a macroeconomic and macro-prudential balance.

This economic crisis against the backdrop of falling oil prices is exacerbated by political and social tensions. In particular with the Hirak movement, which in 2019 managed to foment enough popular dissent to force the departure of President Addelaziz Bouteflika. His successor Abdelmadjid Tebboune hasn’t the full support either, with the Hirak movement demanding the creation of the second republic and the departure of dignitaries of the former regime.

Historically High Inflation Rate

Despite the controversy surrounding the publication of the report monitoring the economic situation in Algeria, the truth is that the country has reached a historic level of inflation, recorded in the first ten months of the year 2021. According to data provided by the governor of the Bank of Algeria (BA), Rostom Fadhli, the country’s inflation rate has risen to 9.2%. A record that corresponds to an increase of 6 percentage points compared with the year 2020 (3%). The surge in inflation corroborates the World Bank’s report. In its statement issued on January 7, the Bretton Woods institution suggested that the conclusions of its controversial report were consistent with the official data available in the note de conjuncture of the Bank of Algeria, published on December 22, 2021.

However, in order to provide an appropriate response to the aforementioned inflation, the Algerian president and his government have recently announced measures to remedy this situation. Thus, with the implementation of the new finance law of 2022, a reduction of the global income tax (IRG) for salaries and an increase in the salaries of civil servants are planned.

Need of Rapid Implementation of Reform Agenda

In its report, the World Bank pointed to the lack of a rapid implementation of a reform agenda. According to the World Bank, this will further weaken the country’s economy, which is struggling to recover from the economic consequences of the pandemic. It has aggravated the fall in the price of oil, which naturally pummeled the economy of this nation dependent on its hydrocarbons.

Significantly depreciated, the Algerian economy experienced a recession of -4.7% in 2020, after already weak growth of 0.8% in 2019. With the relaxation of containment measures and the recovery of hydrocarbon prices and production, Algeria has seen its growth recover. With a rate of 2.3% recorded in the first quarter of 2021, a new start was hoped for in this Maghreb country, especially for its hydrocarbon exports. They have increased significantly to reach 34.5 billion U.S. dollars in 2021 against 20 billion dollars in 2020, according to official figures provided by Sonatrach.

A Uniform Economy Compared With Maghreb Neighbors Morocco and Tunisia

Compared with its Maghreb neighbors, Algeria’s economy remains undiversified. It is economically fragile especially due to its heavy dependence on hydrocarbons. Algeria, the third-largest oil producer in Africa behind Nigeria and Angola, risks being hit by the Dutch disease if its economy continues its non-diversification dynamic. Indeed, oil and gas revenues carry its economy to the great detriment of other sectors that fall into oblivion and neglect and remain less competitive.

This economic structure led to an increase in the country’s imports, reaching 2,463 billion dinars (about 17 billion dollars) in the first half of 2021 against 2,130 billion dinars in 2020. One of the consequences of this increase in imports is a high inflation rate that affects the purchasing power of the population and ultimately leads to a poisonous social climate, accompanied by discontent in the streets and political and social instability, a situation that has prevailed in Algeria since 2019.

A trap avoided by its neighbors in the Maghreb like Morocco and Tunisia. Morocco has a liberal market economy diversified through the tourism sector (about 12 million tourists per year before the pandemic, generating some 7% of GDP), agricultural (12%), industrial (30%), fishing (1%) and services (50%). This diversification of the economy contributes to the control of the inflation rate, stable at about 2% in 2021, compared with the 9.2% in Algeria during the same period. Algeria has also recorded a higher inflation rate than its other Maghreb neighbor, Tunisia, which has stabilized at 6.2%. Despite its political instability since 2011, the beginning of the Arab Spring, outside the pandemic period, Tunisia has always managed to achieve positive growth rates. This is due to the diversification of its economic base, which is mainly driven by the agricultural sector (production of wheat, olives, dates, citrus fruits, etc.), mining, tourism (around 6 million tourists before the Covid-19 pandemic), and manufacturing industries.

With an economy less diversified than those of Morocco and Tunisia, Algeria’s massive dependence on hydrocarbon sales is a heavy burden. Aware of the country’s economic fragility, President Abdelmadjid Tebboune plans to undertake significant changes in the setup of the country’s economy, stressing that this almost total dependence on oil and gas rents is fatal for Algeria.

Chad Is on Track for Peace Talks One Year After the Death of Idriss Déby

Almost a year after the violent death of President Idriss Déby, Chad is set to embark on a round of comprehensive talks in February that are slated to define the steps from the current transitional period to democratic elections. It is early days yet and the situation still fraught, but Déby’s son seems intent on proceeding with the talks, writes our correspondent.

Chad is a landlocked nation of some 16 million people with still close ties to former colonial power France, from which it gained independence in 1960. It sits in an unruly region of this world, with countries such as Libya, Sudan, Central African Republic, Cameroon, Nigeria and Niger as neighbors, conflict and violence being a constant threat. When Idriss Déby was killed in an ambush in Northern Chad last year, the nation was taken by surprise, given that the ruler had been in charge for more than 30 years. So, what has happened to the country since April, a country that many see as one of the most corrupt in this world?

After the initial chaos that ensued following the death of Idriss Déby, his son General Mohamed Idriss Déby took over and with him a military council. Déby jun. named a prime minister (Albert Bahimi Padacké) and, five months after installing himself as head of state, an interim parliament – the National Transitional Council. It took months to get the council up and running because the political consultations took such a long time and it is important to note that not only Bahimi, but also the majority of the members of parliament are insiders of the Patriotic Salvation Movement MPS, the party of the late president. So far, not much has changed, one might say.

Popular Army Reforms

Still, at the same time, Déby also got active inside the armed forces and pushed through a number of reforms that were well received by the population. He stopped the forced recruitment (especially of children), dismissed a large number of troops following a census in the army for various crimes, increased pay for those who remained and suspended weapon permit in a bid to reduce the murder rate in the country. Furthermore, Déby strengthened the equipment of the army by adding armored vehicles and other weaponry to fend off a potential attack – one must keep in mind that the country has seen numerous violent battles between rebel groups and the army.

The main group that opposed the regime is called FACT, short for Front for Change and Concord in Chad. It is thought to have killed Idriss Déby during a major battle in the north of Chad in April. FACT is close to General Haftar’s forces in Libya and has its stronghold in the south of the neighboring country. As it went, FACT wasn’t strong enough to topple the government and was recently subject to aerial bombardments in Libya, according to sources.

Other groups include the Military Council for the Salvation of the Republic (CCMSR), the Union of Resistance Forces (which was supported by the former regime of Omar Al-Bashir in Sudan), the Union of Forces for Democracy and Development (UFDD) and the Military Alliance. The latter was established shortly before the April 2021 elections and aims to remove the regime and to build a democratic state.

Amnesty List of November

Credit to the younger Déby goes for allowing and indeed promoting preparatory talks with the opposition over the past months to create enough common ground to launch proper peace negotiations. In the talks hosted by Paris, Qatar and Togo, the different groups specified the conditions under which they would consider to join the negotiating table, and these included an amnesty and guarantees that the regime would honor the results of the talks.

Déby in November signed off on a list of 300 detainees that are to be amnestied. According to sources, a large number of opposition figures in exile have now obtained their travel papers in anticipation of the talks in N’Djamena, slated to take place starting on February 15. Clearly, the international sponsors in the mentioned nations have made clear that they expect the country to proceed on its transitional path to elections. But, it is important to note that trust between the political groups is still very weak. It became evident in the slow response and implementation of the demands set by the opposition for taking part.

Doubts About the Will to Hand Over Power Persist

In conclusion, while certain steps towards a more peaceful future have been achieved, much still has to be done and the work to create a basis of trust between the various groups remains an obstacle. The observers in Doha, Paris and in the neighboring African nations will keep a keen eye on the proceedings up to and including the negotiations scheduled for February.

One particular point of concern is the willingness of Idriss Déby to stop down following the conclusion of the transition period. This may ring a bell – generals have found it difficult to hand over power once their time was up. Déby has promised to leave but signs are that this may not be cast in stone. The preparatory talks of Qatar are key to bring the many groups to join the peace negotiations of February and the talks have enjoyed the support key ally France as well.

Sudan: New Protests Ahead of UN-Sponsored Talks

It’s been a week since Prime Minister Abdalla Hamdok resigned from his post, citing a lack of consensus in the country and amid warnings that Sudan was on the brink of disaster. So far, the military rulers have failed to come up with a successor and street protests are continuing unabated.

Many names have been making the round in Khartoum over the past days for a possible successor of PM Hamdok, our correspondents in Sudan are writing. But as has become evident through the toppling and reinstating of Hamdok, the job of political representative for a military junta is full of pitfalls.

Essentially, the military removed the civilian leaders when they saw fit. The reasons for the decision in the autumn was a combination of legal, economic and political concerns. Some of the military elite clearly are worried about the prospect of being held accountable for the killings of demonstrators in the first round of the revolution in 2019. This however is a key demand of the pro-democracy protestors who haven’t forgotten about their fallen comrades and now already mourn new dead.

Where Is the Country Heading?

Also, somewhat less immediate, is the concern about losing their economic prowess. The military and allied security outfits directly and indirectly own and control a multitude of companies, including arms manufacturers and lucrative mines, according to observers. The civilian leaders of the previous power-sharing agreement wanted to gain control of these assets to generate much needed income for the central government. But this of course wasn’t too popular with those who benefit from the arrangement.

Last but not least there’s the overarching issue of deciding where the country is heading. Neighbors such as Egypt, with whom the military is said to enjoy good relations, have made their own experiences with an abrupt departure from military rule to democratic conditions. There, elections have led to the instalment of an Islamist government and a subsequent return to the status quo ante.

A Very Fragmented Setting

Of course, the case of Sudan is different from Egypt’s, because the previous regime of Omar al-Bashir itself was Islamist and many of the former elite remain in positions within the bureaucracy and army. So add to the pro-democracy citizens (supported by the West), the military and security (supported mainly by Gulf states and Egypt) the old Islamist groups (supported by Qatar and Turkey) and, last but not least, the multitude of regional and ethnic groups and you end up with a very fragmented setting.

General al-Burhan has promised to install a new prime minister after consultation with civilian groups, but whether this consultation includes the Forces for Freedom and Change, which dominated the civilian part of the previous power-sharing agreement, remains open, according to correspondents. Whether the FFC would actually want to enter into a new agreement with the military under the given conditions is also an open question.

The Death Toll Is Rising

Meanwhile, the pro-democracy movement has called unprecedented demonstrations with protests taking place across the cities of this country of 40 million people. Clearly, the activists feel betrayed by the military and mourn an already substantial amount of dead, said to have reached 62 over the weekend, according to “France 24”. The United Nations is said to work on a negotiation process and the Security Council will discuss the events in Sudan on Wednesday.

The Sudanese Professional Association, which was a prominent component of the first revolution in 2019, warned against talks and called for the overthrow of the putschists, according to “France 24”.

Tunisia: Ennahda’s Position of Power Is Eroding

The arrest of the vice chairman of Tunisia’s Ennahda Party has shown how perilous the position of the Islamists has become. Frozen out from parliament by the president, the former party of power now also faces a challenge from within. It may yet be early days, but it seems likely that a new grouping will emerge to challenge the old Islamist powerhouse.

Noureddine Bhiri was arrested on Friday by Tunisia’s security forces and faces terrorism-related charges stemming from his time as justice minister during the reign of Ennahda. The arrest is just the latest blow to the Islamist group though, which for years had been the dominant force in Tunisia’s politics after the revolution against ex-dictator Zine el-Abidine Ben Ali.

It started with what the party claims was a coup d’état in the summer: President Kais Saied sacked Prime Minister Hichem Michichi and stopped all parliamentary work, effectively barring the elected members of parliament from doing their job. Army vehicles barred the entrance to the parliament in Tunis in a sign of how derailed politics have become in the country hailed for taking the lead in the Arab Spring ten years ago. And, perhaps even much more poignant was the fairly widespread support that President Kais Saied enjoyed for his move.

It may not have come as much of a surprise that Ennahda, the Islamist grouping headed by Rachid al-Ghannouchi, the president of the parliament, was incensed about the president’s decision and took to the streets to protest. Ghannouchi called on the people to defend the revolution against what he called a coup d’état.

Ghannouchi Is the Target of Protests

But instead of being reinstalled by popular will, the ire of the street was in fact directed at the party of Ghannouchi himself. He, his party and the cabinet of prime minister Michichi had long stood accused of failing in its task to contain the spread of the corona virus and to provide economic assistance to those who suffered most from the pandemic. And the move by Saied was linked to the protests against the government supported by Ennahda.

What followed the first move may have come as further surprise for Mr. Ghannouchi and instead of leading the parliament of his country, he now faces an internal struggle that threatens his very position at the head of the Islamic movement of Tunisia. Two months after the president had removed government and parliament, Ennahda was confronted with the decision of 113 of its members to leave the party. And it wasn’t merely some disgruntled grassroot members that left the party, no, this was a conscious decision by high-ranking party leaders. Some had served as ministers and others were members of the parliament dissolved by the president.

Sky-High Unemployment Prompts Young to Leave Tunisia

So, what had gone wrong? Judging from what insiders are saying, things had soured for quite a while, with uneasiness about the course of action of party father Ghannouchi growing among some of the top cadres of his party. It seems that he had failed to rejuvenate the movement after long years in government or at least supporter of the government, making the party vulnerable to criticism about all the ailments of Tunisia. Apart from the issue of the pandemic, which after all has affected most countries, Tunisia seems not to have profited as much as it could have from the conditions that were set ten years ago – with unemployment used as the main index of economic failure. With a rate close to 18.5 percent, the young have seen little in terms of a dividend from the revolution – and are still leaving the country in droves for what they see as a better life in Europe.

Some of the ailments seem closely linked to the endemic corruption and bureaucratic red tape that has driven foreign investors away. In principal, Tunisia has a number of economic and political parameters that speak in its favor, with its proximity to Europe, an educated and young workforce, relative peace and stability (even given the current turmoil, if compared to some of its neighbors), established links to especially Italy and France. All the more frustrating then that the country hasn’t been able to capitalize on the political change in 2011. And it goes to explain why the move by President Saied was initially welcomed by many.

A New Party in the Making

Ghannouchi’s Ennahda has taken much of the blame for the economic problems of Tunisia. And now it has come not only under pressure from the current government of President Saied but also from inside the Islamist movement. One of the defected members of Ennahda’s elite, Abdel Latif Makki, the former minister, said that the group was working on forming a new political party, a new formation that would seek to challenge Ennahda on a more liberal platform.

Many observers agree that Ennahda has become the epitome of a failed political landscape and therefore faces an uphill battle to survive not only the freezing of parliament but the challenge from within the movement. Bhiri, who now is said to be treated in a hospital in Bizerte, last month had personally led demonstrations against the president and called on citizens to restore democracy. He referred to Ennahda’s decades of struggle against the dictatorship of Ben Ali and emphasized his commitment to return the party back to power.

For the moment at least, the winds seem to have changed though. Ennahda is out of power, frozen out from parliament, has seen some top cadres arrested and faces a challenge from disgruntled members. A new group will likely emerge in coming months, and the future of the old Islamic movement clearly is bleaker than it used to be. The comparison with the Muslim Brotherhood in Egypt is tempting, even if of course the situation is much less clear-cut than it is in Kairo.

Turkey Is Fighting to Contain Inflation and a Drop of the Lira

While Europe is grappling with a resurgence of the corona crisis and its adequate response, the situation at its borders is deteriorating too – Belarus, Ukraine, Libya to name but a few of the countries where important crises are ongoing. A case for particular concern though is Turkey, or so it should be, because the collapse of the lira doesn’t bode well.

The developments in Turkey are quickly told: the country’s currency, the lira, has plunged to a record, inflation is surging and has now overtaken the official rate of interest by as much as five percentage points. The latter was cut in several steps to its current level of 15 percent while inflation was going up and the lira down.

The president of Turkey, Recep Tayyip Erdogan, is known to have no time for monetary orthodoxy and insists that high rates are an evil and only low interest can put the economy right. He has enforced his unorthodox policy at the central bank and removed all vestiges of the central bank independence doctrine. To nobody’s surprise, markets have now lost confidence in the central bank and its ability to manage monetary policy, which contributed further to the fall of the currency. Today, the dollar buys 13.4 lira, while a year ago, the dollar was worth only 7.85 lira. This means that companies in Turkey have to pay almost the double for the raw materials if they are purchasing abroad – the consequences would appear dire.

Central Bank Stripped of its Tools

“The current strategy doesn’t look sustainable,” said Hakan Kara, a former chief economist at the TCMB, the Turkish central bank.

Indeed, it doesn’t. But the real issue is where it will all end. There are several factors that need careful consideration, not just by Turkey, but by its partners in Europe. The first aspect concerns the effect this development has on the Turkish economy, the private sector, the central bank and on consumers. The story of the central bank would appear the easiest to tell: no longer in a situation where it can set monetary policy according to what its experts deem necessary, it has lost control and merely implements what politicians say is right. And, from a situation where currency reserves already had reached a low point, the TCMB will have no real option to shore up the currency even if it wished doing so.

For the private sector meanwhile, a fall in the currency can mean two things. On the plus side, its products become cheaper for buyers in other currency regions, such as Europe. This is partially offset by the rise in raw material prices and unfinished products needed for its end-produce. For the huge tourism industry, a lower lira is good news, because it helps attract more guests from abroad, as prices appear to be lower for buyers in other currencies. If, however, for instance because of the pandemic, demand for holidays remain subdued, the comparative advantage may not amount to much.

Party Politics and Looming Elections

For the average citizen, high inflation and a drop in the currency is hardly good news. Inflation usually means that prices for goods rise faster than wages. At the same time, the prices of foreign goods will also surge because of the fall of the lira. Erdogan obviously expects that lower interest rates will keep the economy growing fast enough to help the country emerge from the corona crisis. But the risks with this strategy are substantial. Because, and that’s where politics enter the frame, elections are due in 2023. For all it is worth, the outlook for the ruling AKP has deteriorated in recent years. Taking Istanbul from the AKP in 2019 has given the opposition a boost. While the AKP still is the biggest party according to opinion polls, its has just over 30 percent support, while its nearest rival, the CHP, is closing in on that mark. Ekrem Imamoglu, who won the mayoral elections in Istanbul, is a member of the CHP. If he plays his cards well, he might be able to put a winning coalition together.

So, what are the options for the increasingly embattled president? A return to monetary orthodoxy is one. Kara believes that the most likely outcome of the current crisis is an increase in interest rates. But, as economists have pointed out in the past, such a return to monetary orthodoxy and central bank independence may not be such a quick and easy fix. Markets want to be convinced that the government has taken the point and that it will refrain from further meddling in the central bank’s affairs. How likely is this? It is worth looking back one year. In November 2020, Erdogan had appointed Naci Agbal as his new central bank governor after the lira had reached a record low. And, true to his credentials, Agbal set out to raise rates, adding two percentage points to the key rate in March 2021. The move earned the country a respite – and Agbal the sack. His replacement, Sahap Kavcioglu, was known to favor the unorthodox views of his political master and set about reducing the benchmark rate again. Starting at its September meeting, the TCMB cut the rate in three steps to the current 15 percent.

Return to Higher Rates Is Not on the Cards, Erdogan Says

On November 30, Erdogan made clear in a speech that he had no intentions of returning to higher rates again. Instead, he envisages even further cuts, saying that cheap cash will boost manufacturing, create jobs and slow inflation. Bloomberg cited him as saying: “Our country has now come to the point of breaking this vicious cycle, and there is no turning back from here.“

What he will do if domestic prices continue to go through the roof, is anybody’s guess. He might resort to financial repression and price controls, said economists. And then there’s the political field, an area where Erdogan has shown himself to be a master of making the most of his trump cards. The European Union will do well to keep a very close eye on the developments on the Bosporus, because in signing the refugee deal with Ankara, Erdogan has received a tool that he might be tempted to use if he feels cornered by the markets.

Turkey Has a Refugee Crisis Too

The reported figure of 5 million Syrian refugees stranded in Turkey has put a strain on the domestic situation in Turkey. With such a huge number of displaced people, few of which have options to return to their homes any time soon, Turkey might crave assistance with the enormous task of integrating them. As has been shown vividly at the border between Poland and Belarus recently, Europe has grown wary about accepting new refugees.

But Erdogan has also reached out to other neighbors. Interestingly, after years of antagonism, Turkey has started talking to Saudi Arabia, the United Arab Emirates and also envisages talking to Egypt. This is a key development in a region where two camps have made live very hard for each other. Turkey and Qatar on the one side had clashed with the Saudi, UAE and Egypt camp on the other side, notably so in Libya, where they fought a proxy war. One of the key issues was the purported support of Turkey for the Muslim Brotherhood, the sworn enemy of governments for instance, but not only, in Egypt. So, taking this step toward the Saudi camp was significant indeed. And, according to reports, the UAE has already pledged a $10 billion fund for investments in Turkey…

It is too early to say how Turkey will emerge from the current crisis, but the developments show clearly that it won’t be an easy task and that political steps might be the president’s preferred option over changing his opinion on monetary policy.

Tunisia: Opposition to President’s Decree Seems to Increase

When the President of Tunisia suspended the parliament in the summer, many outside observers expected that the population would take to the streets to protest. Turns out that he received a lot of acclaim for the move, but recently the concerns have been emerging, as our correspondent in Tunis writes.

The country wedged between Algeria and Libya was long hailed as the Switzerland of the Maghreb, stable, prosperous and safe. Ten years ago, the population, and especially the young generation, had grown tired of the long-time dictator, Ben Ali. Other countries followed – and one by one returned to the old system. Not so Tunisia. All the more surprising it was when President Kais Saied on July 25, 2021, suspended parliament and essentially took on the responsibilities of government the country of about 12 million.

In Tunisia however, unease about the progress of the country had grown steadily, and Covid-19 accelerated the process. Leila Hadded, the member of parliament of the left-leaning Mouvement du Peuple, rightly pointed out that the country last year counted one million jobless, with about a fifth of those carrying a college degree.

Popular Support for Presidential Decree

With an economic downturn at their hands and a pandemic that put Tunisia right at the top of Africa, people increasingly demanded to know how parliament conducted their business. The word corruption was voiced and the government of Hichem Mechichi was fingered as responsible for the failure to tackle the problems.

Also, and this may go to the very core of the issue, Tunisian politics is revolving around the Islamists almost as much as politics in Egypt and further afield. The Ennahda Party, which had won the elections of October 2019, didn’t manage to install a prime minister, but its leader, Rached Ghannouchi, remains one of the most influential voices in Tunisian politics. The Ennahda has been in and out of power since the revolution. It also supported the cabinet of Mechichi, when it was appointed on September 2, 2020. The Mechichi government took over at a difficult moment, as the pandemic took a firm hold of the country and caused a lot of concern among its citizenship. It resulted in widespread protests against the government and allegations of police brutality and human rights abuses.

What caused further problems for Mechichi was the increasing schism between himself and the president.

Eventually, the president decided to step in. His Decree 117 aimed to suspend the constitution and monopolize all powers in the hands of the presidency. After all the real problems of unemployment and corona-related issues, and the squabbling among the political class, normal citizens welcomed the move by Kais Saied, who ironically is a former professor of constitutional law. People still support his quest to combat corruption and improve the general situation of the country.

How Close Are the Ties With Egypt?

However, while the president enjoys the support of the liberal elite, some of those who originally were positive about his action have now grown more critical. One of the questions asked was about the role that Egypt is playing. As is well established, Egypt’s strongman Abdel Fattah el-Sisi is eager to eradicate the Islamist tendencies in the region, starting with the Muslim Brotherhood in his own country and presumably other, similar groupings in the neighbor region. Kais Saied had visited Kairo before the move to suspend parliament and observers say that this was hardly surprising.

Whether or not the Egyptian government was behind the move of Kais Saied may be decisive in respect to the future political landscape of Tunisia, and that is bothering groups including the “Citizens Against Coup”-campaign. Currently, the political elite seems undecided in how to proceed and many have closed the ranks behind the president.

But equally true is the fact that most people will judge the performance of whoever is in charge in terms of economic performance, the creation of jobs, the availability of health care services and the level of corruption among the elite. /INA