Rivalry between French and Italian interests in Tunisia culminated in a French invasion in 1881 and the creation of a protectorate. Agitation for independence in the decades following World War I was finally successful in getting the French to recognize Tunisia as an independent state in 1956. The country's first president, Habib BOURGUIBA, established a strict one-party state. He dominated the country for 31 years, repressing Islamic fundamentalism and establishing rights for women unmatched by any other Arab nation. Tunisia has long taken a moderate, non-aligned stance in its foreign relations. Domestically, it has sought to defuse rising pressure for a more open political society.

GOVERNMENT AND POLITICAL CONDITIONS

Tunisia is a republic with a strong presidential system dominated by a single political party. President Zine El Abidine Ben Ali has been in office since 1987, when he deposed Habib Bourguiba, president since Tunisia's independence from France in 1956. The ruling party, the Democratic Constitutional Rally (RCD), was the sole legal party for 25 years--including when it was known as the Socialist Destourian Party (PSD)--and still dominates political life. The president is elected to 5-year terms--with virtually no opposition--and appoints a prime minister and cabinet, who play a strong role in the execution of policy. Regional governors and local administrators are also appointed by the central government; largely consultative mayors and municipal councils are elected. There is a bicameral legislative body. The Chamber of Deputies has 189 seats, 20% of which are reserved for the opposition. It plays a limited role as an arena for debate on national policy but never originates legislation and virtually always passes bills presented by the executive with only minor changes. A referendum in 2002 created a second chamber, the Chamber of Advisors. First-time elections for the Chamber of Advisors were held in July 2005. The judiciary is nominally independent, but responds to executive direction, especially in politically sensitive cases. The military is professional and does not play a role in politics.


Tunisia's independence from France in 1956 ended a protectorate established in 1881. President Bourguiba, who had been the leader of the independence movement, declared Tunisia a republic in 1957, ending the nominal rule of the Ottoman Beys. In June 1959, Tunisia adopted a constitution modeled on the French system, which established the basic outline of the highly centralized presidential system that continues today. The military was given a defined defensive role, which excluded participation in politics. Starting from independence, President Bourguiba placed strong emphasis on economic and social development, especially education, the status of women, and the creation of jobs, policies that continued under the Ben Ali administration. The result was strong social progress--high literacy and school attendance rates, low population growth rates, and relatively low poverty rates--and generally steady economic growth. These pragmatic policies have contributed to social and political stability.


Progress toward full democracy has been slow. Over the years, President Bourguiba stood unopposed for re-election several times and was named 'President for Life' in 1974 by a constitutional amendment. At the time of independence, the Neo-Destourian Party (later the PSD)--enjoying broad support because of its role at the forefront of the independence movement--became the sole legal party. Opposition parties were banned until 1981.


When President Ben Ali came to power in 1987, he promised greater democratic openness and respect for human rights, signing a 'national pact' with opposition parties. He oversaw constitutional and legal changes, including abolishing the concept of President for life, the establishment of presidential term limits, and provision for greater opposition party participation in political life. But the ruling party, renamed the Democratic Constitutional Rally (RCD), continued to dominate the political scene because of its historic popularity and the advantage it enjoyed as the ruling party. Ben Ali ran for re-election unopposed in 1989 and 1994. In the multiparty era, he won 99.44% of the vote in 1999 and 94.49% of the vote in 2004. In both elections he faced weak opponents. The RCD won all seats in the Chamber of Deputies in 1989, and won all of the directly elected seats in the 1994, 1999, and 2004 elections. However, constitutional amendments provided for the distribution of additional seats to the opposition parties by 1999 and 2004. Currently, five opposition parties share 37 of the 189 seats in the Chamber of Deputies. A May 2002 referendum approved constitutional changes proposed by Ben Ali that allowed him to run for a fourth term in 2004 (and a fifth, his final, because of age limits on presidential candidates, in 2009), and provided judicial immunity during and after his presidency. The referendum also created a second parliamentary chamber, the Chamber of Advisors, and provided for other changes.


There are currently eight legal opposition parties, the Social Democratic Movement (MDS), the Popular Unity Party (PUP), the Union of Democratic Unionists (UDU), Et-Tajdid (also called the Renewal Movement), the Liberal Social Party (PSL), and the Green Party for Progress (PVP), plus the Democratic Progressive Party (PDP) and the Democratic Forum for Labor and Liberties (FDTL), the only two not represented in the Chamber of Deputies. The parties are generally weak and divided and face considerable restrictions on their ability to organize. The Islamist opposition party, An-Nahdha, was allowed to operate openly in the late 1980s and early 1990s despite a ban on religiously based parties. The government outlawed An-Nahdha as a terrorist organization in 1991 and arrested its leaders and thousands of party members and sympathizers, accusing them of plotting to overthrow the president. The party is no longer openly active in Tunisia, and its leaders operate from exile in London. Several pro-democracy activists have been denied permission to establish other opposition political parties.


While there are thousands of official, established non-governmental organizations, civil society remains weak. The Tunisian Human Rights League (LTDH), the first human rights organization in Africa and the Arab world, operates under restrictions and suffers from internal divisions. The Tunisian Association of Democratic Women (ATFD), the Young Lawyers Association, and the Bar Association also are active. The government has denied legal status to a handful of other human rights advocacy groups who, nonetheless, attempt to organize and publicize information on the human rights situation in the country.


Despite the Government of Tunisia's stated committed to making progress toward a democratic system, citizens do not enjoy political freedom. The government imposes restrictions on freedom of association and speech and does not allow a free press. Many critics have called for clearer, effective distinctions between executive, legislative, and judicial powers. Foreign media, including foreign-based satellite television channels, have criticized the Tunisian Government for the lack of press freedom. Tunisia ranked number 148 out of 167 countries in the 2006 Reporters Without Borders list of World Press Freedom rankings. As reflected in the State Department's annual human rights report, there are frequent reports of widespread torture and abuse of prisoners, especially political prisoners.


Trade unions have played a key role in Tunisia's history since the struggle for independence, when the 1952 assassination of labor leader Farhat Hached was a catalyst for the final push against French domination. The General Union of Tunisian Workers (UGTT), the country's sole labor confederation, has generally focused on bread-and-butter issues, but at some critical moments in Tunisia's history has played a decisive role in the nation's political life. Despite a drop in union membership from 400,000 to about 250,000 as the structure of the Tunisian economy changed, the UGTT continues to hold a prominent place in Tunisia's political and social life, and negotiates with government and the umbrella employer group for higher wages and better benefits. The current leadership under Abdessalem Jerad was elected at the 21st UGTT Congress held in December 2006.


Tunisia is a leader in the Arab world in promoting the legal and social status of women. A Personal Status Code was adopted shortly after independence in 1956, which, among other things, gave women full legal status (allowing them to run and own businesses, have bank accounts, and seek passports under their own authority). It also, for the first time in the Arab world, outlawed polygamy. The government required parents to send girls to school, and today more than 50% of university students are women. Rights of women and children were further enhanced by 1993 reforms, which included a provision to allow Tunisian women to transmit citizenship even if they are married to a foreigner and living abroad. The government has supported a remarkably successful family planning program that has reduced the population growth rate to just over 1% per annum, contributing to Tunisia's economic and social stability.


Tunisia's judiciary is headed by the Court of Cassation, whose judges are appointed by the president. The country is divided administratively into 24 governorates. The president appoints all governors.


Principal Government Officials
President--Zine El Abidine Ben Ali
Prime Minister--Mohamed Ghannouchi
Minister of State--Abdelaziz Ben Dhia
Minister of Foreign Affairs--Abdelwahab Abdallah
Minister of National Defense--Kamel Morjane

 

ECONOMY

Tunisia's economy has emerged from rigid state control and is now mostly liberalized. World Bank and IMF support, coupled with prudent economic policies implemented by the Tunisian Government in the mid-eighties after a balance of payments crisis, has resulted in regular stable growth. Although this faltered after 9/11, the economy has since bounced back, thanks to healthy exports, renewed growth in tourism, and favorable climatic conditions which boosted agricultural production.

Manufacturing industries, producing largely for export, are a major source of foreign currency revenue. Industrial production represents about 28 percent of GDP and primarily consists of petroleum, mining (particularly phosphates), textiles, footwear, food processing, and electrical and mechanical manufactures. Textiles are a major source of foreign currency revenue, with more than 90% of production being exported. While the end of the Multifiber Arrangement in 2005 eroded Tunisia's competitiveness in its traditional European textile markets, to counteract this, manufacturers are successfully upgrading product lines and exporting smaller quantities of higher value items.

Tourism is a major source of foreign exchange, representing about 20 percent of hard currency receipts, as well as an important sector for employment. 6.5 million tourists visited Tunisia in 2006, hailing largely from Europe and North Africa. While the influx of tourists represents a boon to the economy. Tunisia's large expatriate population (about 1 million) also makes a positive and significant contribution. Over the past five years, remittances from abroad averaged 1.61 million dinars (approximately 1.21 million USD) a year, or roughly 5 percent of Tunisia's GDP and one fourth of the country's foreign currency earnings.

Soaring oil prices have hit the Tunisian economy hard. The country is a net importer of hydrocarbon products. Domestic crude production is approximately 112,000 barrels per day, but refining capacity is only about 30,000 barrels a day. Proven reserves are in the region of 300 million barrels. Tunisia has one oil refinery in Bizerte on the north coast and in May 2006 awarded a tender for a second at La Skhira near Gabes to Qatar Petroleum. Natural gas production is currently about 3 million tons oil equivalent Proven reserves are about 2.8 trillion cubic feet, two-thirds of which are located offshore. British Gas is the major developer of the natural gas industry, and the largest foreign investor in Tunisia.

Economically and commercially, Tunisia is very closely linked to Europe. Tunisia signed an Association Agreement with the EU, due to go into effect in 2008, which will eliminate customs tariffs and other trade barriers on a wide range of goods and services. In advance of the 2008 implementation of this Association Agreement, the Government of Tunisia embarked on a program, 'Mise à Niveau',(industrial upgrading) to improve the competitiveness of Tunisian industry. Launched on a pilot scale in 1996, the 'Mise a Niveau' program is supported in part by EU grants. The program consists of technical assistance, training, subsidies, and infrastructure upgrades aimed at encouraging and assisting Tunisian private sector industrial restructuring.

EU member states also provide the bulk of FDI, much of which has come in under the Government of Tunisia privatization program launched in 1987. In May 2006 the Government of Tunisia announced that overall its privatization program had raised $1.9 billion, of which $1.4 billion was foreign capital. This does not include the $2.25 billion the Government of Tunisia recently received for the sale to Dubai Holding of a 35% share in the national telecommunications authority, Tunisie Telecom. Persian Gulf investments in telecommunications, real estate, and energy are also a major source of FDI.

The Ministry of Industry and Energy is responsible for a program to improve the international competitiveness of Tunisian industry in preparation for free trade with the European Union. Launched on a pilot scale in 1996, the 'Mise a Niveau' (industrial upgrading) program is supported in part by EU grants incorporated into the EU Association Agreement. The program combines government technical assistance, training, subsidies, and infrastructure upgrades aimed at encouraging and assisting Tunisian private sector industrial restructuring. More than 2,300 companies have applied to join the program, with more than half accepted.

A Trade and Investment Framework Agreement (TIFA) with the U.S. was signed in October 2002 and follow-up TIFA Councils were held in October 2003 and June 2005, but little progress has been made towards generating the necessary reforms required to engender a free trade agreement between the U.S. and Tunisia. The framework for a multilateral trade agreement with Egypt, Jordan, and Morocco, known as the Agadir Agreement, has also been signed. The Agadir Agreement creates a potential market of over 100 million people across North Africa and into the Middle East.

The government still retains control over certain 'strategic' sectors of the economy (finance, hydrocarbons, aviation, electricity and gas distribution, and water resources) but the private sector is playing an increasingly important role. Tunisia is a founding member of the World Trade Organization (WTO) and is publicly committed to a free trade regime and export-led growth. Most goods can be imported without prior licensing, although non-tariff administrative barriers sometimes delay imports of goods. Significant import duties, coupled with high consumption taxes on certain items and a value-added tax (VAT), add considerably to the local price of imported goods.

The Government of Tunisia is beginning to take a more proactive stance on intellectual property rights (IPR) enforcement and education. Tunisia's recent intellectual property rights law is designed to meet WTO TRIPS (Trade-Related Aspects of Intellectual Property) minimum standards and there is on-going collaboration between the United States and Tunisian governments to promote public awareness of these rights.

Tunisia's timely completion of its IMF program (1987-1994) and subsequent fiscal conservatism have earned it investment grade ratings from a number of international institutions, although Standard and Poor has noted that ratings on Tunisia are constrained by its highly centralized political system and the need for further structural reforms. In mid-2005 the Tunisian Central Bank issued a new Euro-denominated bond on the London financial market. The issue totaled over $450 million (400 million Euros) with a maturity of 15 years. In 2004 the Government of Tunisia sold a similar bond with a total value of nearly $550 million and seven-year maturity.

The Central Bank is moving from direct management of the financial sector towards a more traditional supervisory and regulatory role. Commercial banks are permitted to participate in the forward foreign exchange market. The dinar is convertible for current account transactions but some convertible dinar/foreign exchange account transactions still require Central Bank authorization. Total convertibility of the Tunisian dinar is probably still some years away. The dinar is traded on an intra-bank market. Trading operates around a managed float established by the Central Bank (based upon a basket of the Euro, the U.S. Dollar and the Japanese Yen). The stock exchange remains under the supervision of the state-run financial market council, and lists about 50 companies. A new phase of the Mise a Niveau program aims to double this figure.

Tunisia has a relatively well-developed infrastructure that includes six commercial seaports and six international airports. The prequalification phase for a seventh airport near the coast at Enfidha was announced in April 2004. The project, a Build-to-Own 40-year concession eventually able to handle 30 million passengers per year, was awarded in May 2007 to a Turkish group and construction is expected to begin in July 2007. A tender for a deep water port in the same region is expected also.

Average annual income per capita in Tunisia is approaching $3000. The minimum monthly legal wage for a 48-hour week was recently raised to approximately $180. Tunisia's goal of pushing per capita incomes into the middle emerging market level calls for an average 6-7% growth rate instead of 4-5%. In 2006, GDP growth was 5.2%, but inflation spiked to 4.5%, from 2% the year before. Official figures claim unemployment is around 14%, but it is generally believed to be much higher in some regions. Despite the present low rate of population growth, a demographic peak is now hitting higher education and the job market. Tunisia has invested heavily in education and the number of students enrolled at university has soared from 41,000 in 1986 to over 360,000. Providing jobs for these highly educated people represents a major challenge for the Government of Tunisia.