Tunisia: Gulf’s Loss Could be China’s Gain

Table of Contents

Gulf countries have fewer financial interests in Tunisia than in other countries in the region, but the recent collapse of oil prices will likely have important first- and second-order effects there. In the short term, Tunisia, whose economy is expected to contract by 4.3 percent in 2020 due to the impact of the coronavirus, will lose one small but important pot of foreign assistance. In 2016, Qatar helped organize the “Tunisia 2020” donor conference, which netted significant pledges from the Gulf, many of which are still being paid out. Qatar made one of the largest pledges—$1.25 billion (second only to Germany’s $1.35 billion), Saudi Arabia pledged $750 million, and Kuwait pledged $500 million. More recently, in January 2019, Saudi Arabia granted Tunisia a $500 million loan following a visit by Crown Prince Mohammed bin Salman the previous month. Thus, the potential withdrawal of Gulf money could leave Tunisia with a crucial budget gap.

In the long term, the financing gap could push Tunisia closer to China. Europe and the United States will continue to be the country’s primary economic partners, but China, which has been steadily increasing its investment in Tunisia, could seize the opportunity to take on some of the large, showy projects that Saudi Arabia, Kuwait, and Qatar have funded in the past: stadiums, ports, and healthcare facilities, as well as tourism projects such as the Tunis Economic City and Tunis Lake district. Even in a booming economy, the Gulf states have often failed to make good on their investment pledges. A pause of Gulf investment is therefore likely, leaving China the room it needs to grow its footprint in a country with great geostrategic importance due to its position between Europe, Africa, and the Middle East.

Finally, Qatar’s diminishing economic role in Tunisia could affect the political scene. Ennahda, the dominant party in parliament, has long been criticized for its close ties to Qatar and Turkey. If Qatar is no longer a financial player in Tunis, its real or perceived ability to buy political influence will decrease.