Tunisia in economic doldrums, again

Tahar Bayahi, who runs Tunisia's largest grocery store chain, spent the days right after the revolution toting up his losses: one-quarter of his 60 stores nationwide incinerated and another quarter pillaged.

Yet his company, Magasins General, turned right around to rebuild, pouring $40 million and nine months into the effort.

Nearly two years after riots that began over economic frustration and unemployment toppled the Tunisian government and started the Arab Spring, the frustration that people are not better off is starting to overflow again. The gross domestic product is down, unemployment is up, debt and inflation are growing, and social unrest is simmering.

Last week, the government sent troops into Siliana after four days of violent protests, mainly over demands for jobs. President Moncef Marzouki, acknowledged Friday that the government had not "met the expectations of the people". "Tunisia today is at a crossroads," he said. "Tunisia today has an opportunity that it must not miss to be a model because the world is watching us."

Unemployment remains the biggest economic problem and catalyst for unrest. A vicious circle imperils all the Arab nations with unfinished revolutions: political unrest scares off the investors needed to create jobs.

Since President Zine El Abidine Ben Ali was ousted in January 2011, the unemployment rate has risen to 18 percent from 13 per cent—that's 1.8 million people out of work.

A third of the unemployed are college graduates, according to Said Aidi, minister of the economy for much of 2011. "Ben Ali ignored the blinking red lights on the economy, and that is what got him thrown out," said Karim Ben Smail, the owner of a modest publishing company. "The unemployed are an army in a country the size of Tunisia."

The economy contracted by 1.8 per cent in 2011, beset by problems like a 30 per cent drop in the number of tourists, according to the World Bank. But a new constitution has yet to be written, and elections have been postponed until at least next June. Periodic riots have left investors sitting on their wallets and kept tourists at home. A State Department travel advisory warned Americans against visiting Tunisia.

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