Tunisia's new premier faces first challenge with austerity plan

By , Special to The Christian Science Monitor

Tunisia has taken its first step in implementing an economic austerity program -- a move that will mean more belt-tightening for a country that is already economically depressed. Prime Minister Rashid Sfar announced yesterday an immediate 10 percent devaluation of the Tunisian currency. The action will effectively freeze a standard of living which for most Tunisians has not improved since early 1984. Selling the austerity measures to his fellow countrymen will present the new prime minister -- in office only since last month -- with his first major policy challenge.

Last month, President Habib Bourguiba sacked Prime Minister Mohammed Mzali, who had long been his closest aide and who was expected to succeed the elderly ruler. Despite President Bourguiba's earlier words of confidence in Mr. Mzali's ability to run the country one day, the sacking showed that the former prime minister had lost his credibility, analysts say. It also helped the President distance himself from failed policies he once supported.

In the wake of riots in January 1984, resulting from a decision by the President and backed by Mr. Mzali to double the price of bread, Mzali's powers were reduced by two factors:

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The appointment last spring of Gen. Zine El Abidine Ben Ali to run the Ministry of the Interior -- a portfolio that Mzali had held since the bread riots.

The prime minister's loss of ground on economic policy. Ever since the bread riots, Minister of Planning Ismail Khelil had been urging a package of austerity and reforms, only to be rebuffed by Mzali.

However, Tunisia's plunging oil income (40 percent of all foreign receipts), declining tourism dollars, and lack of rain leading to a disastrous crop aided Mr. Khelil in his bid to convince Bourguiba that strong economic measures were needed.

Tunisia's economic management, once held up as a model of development, has recently been the subject of adverse comment from the World Bank. The criticism is that oil-rich Tunisia has funded too many capital-intensive projects; that wage increases in the early 1980s were not matched by any productivity gains; that the rise of imported consumer goods has swelled the current account deficit; that the government has not done enough to encourage export; and that the Tunisian currency, the dinar, is overvalued.

Some top-level officials are now urging a greater selectivity of capital-intensive projects, a cutback in subsidies, and limits to the number of state employees.

Although the ruling class supports Bourguiba's strong pro-Western stance, many other of his countrymen do not. Bourguiba was deeply insulted by the Israeli bombing of the Palestine Liberation Organization's headquarters outside Tunis last October, and the initial endorsement of that raid by White House spokesman Larry Speakes. Although last April's United States air raid on Libya met with the tacit approval of many Tunisians, it also provoked some fiercely repressed anti-US student demonstrations.

The need for a greater measure of democracy has never been more urgent than it now is if Tunisia's progress in education and living standards is to continue, analysts say. The same people have held power here since independence from France in 1956, and the public is growing disdainful of government policies. Increasingly, it feels the President has outstayed his welcome.

But even though opposition parties will no doubt be allowed to field candidates in elections scheduled for later this year, as was true in November 1981, the ruling party is unlikely to concede a single seat.

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