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G8 called upon to support transition in Tunisia through $34 billion plan

Economists from all over the world called on the G8 to adopt a road-map supporting democratic transition in Tunisia and an economic plan of 20 to 30 billion dollars (between 27 to 40 billion dinars), to open up the country’s internal regions and create a specific North African financial institution.

Three of these economists—namely 2001 Economy Nobel Prize laureate Joseph Stiglitz, Jean-Louis Reiffers and Olivier Pastré, economy professors at French “Université de Sud “and “Université de Paris 8,” respectively—said, in a news conference held on Tuesday in Tunis, that “success of democratic transition in Tunisia is a huge challenge for the whole international community.”

The 21 economists endorsing the call represent, in particular, the universities of Harvard, Tokyo, Frankfurt, Paris Dauphine, London, Bonn and New-York.

They believe that international assistance is absolutely necessary during this stage, given the current loss of growth, recommending “an immediate assistance to support food and energy subsidies in Tunisia.”

The group of economists said Tunisia’s economic growth for 2011 is expected to fall below 1% and demonstrations have already cost $ 2 billion (1.4 billion Euros) to the economy, equivalent to 4% of GDP. Tourism is very affected and could lead to an increase in unemployment. The instability has prompted international rating agencies to downgrade Tunisia.

As regards the road-map proposed, it will be devised by Tunisia and should identify clearly stakeholders involved and the amounts to be mobilized to support democratic transition.

As to the economic plan to emanate from the G8, it should have a budget of 20 to 30 billion dollars (about 27 to 40 billion dinars) over 5 to 10 years. It will be designed to open up inland regions of the country where development of transport and building of technological and industrial poles are top priorities.

The point is, according to the text of the call distributed one week before the Deauville G8 summit due on May 26-27, 2011, is to restore the confidence needed for the revival of the economy.

A failure of democratic transition, would be, according to the signees “a victory of all dictatorships of the region and a severe defeat for democracy.”

The point, said Mr. Pastré, is to prompt the transition from “autocratic capitalism to democratic capitalism.”

In this regard, Mr. Stiglitz said the revival plan by the Tunisian government is “interesting” but it needs 25 billion dollars (34 billion dinars) for the next five years, which soul be provided by the international community. He emphasized the role that should be played by the civil society and private sector in democratic transition, calling upon the United States and the European Union to give free and quick access to Tunisian products.

The economists call for granting Tunisia the status of associate partner to the European Union with full access to European structural funds.

The G8 is also called to adopt a clear position on modes of mobilizing funds and ensuring co-ordination between different financial institutions (IMF, World Bank, European Investment Bank, African Development Bank, Islamic Development Bank…) so that they could contribute in an optimum way to the restructuring and growth of the Tunisian economy.

The economists also called for the “creation of a financial institution specific to the region “because Tunisia and Egypt will be likely followed by other countries.” This institution would be a “strong political symbol for the region and a guarantee of optimum co-ordination of the international community’s efforts.”

According to the economists, the cost of the proposed plan represents only 2% to 3% of the cost of the reunification of Germany” and less than “the cost of one or two months of the war in Iraq.”

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