The cause of an explosion that killed four tourists visiting Tunisia’s Ghriba synagogue remains unclear. While some have described the truck crash as an accident, others claim it was a targeted attack on the country’s small Jewish community. Less ambiguity surrounds the economic impact it will have on Tunisia; the country’s tourism industry, a valuable source of foreign currency, may find it more difficult to rebound from its current slump.
A powerful explosion at an ancient synagogue on Tunisia’s Djerba Island might have targeted the small Jewish community, but its repercussions will be felt much deeper in Tunisian society. 17 people were killed in the explosion, including foreign tourists who were on a bus trip to the synagogue and the driver of a truck filled with natural gas that crashed into a wall surrounding the synagogue. While the head of the local Jewish community has described the incident as an accident, speculation is rampant that it was a targeted attack amidst growing anger in the Arab world towards Israel’s military campaign in the West Bank.
Regardless of the motives behind the attack, the incident makes Tunisia’s tourism industry increasingly vulnerable. Djerba is a popular tourist destination off the southeast coast of this North African nation, offering a variety of sea sports and Roman sites. Its Ghriba synagogue, one of Africa’s oldest, is a frequent stop for foreign tourists, including thousands of Jewish pilgrims who visit each spring.
Even prior to this latest incident, Tunisia’s tourism industry has been sagging, due in part to the severe impact of September 11. Tourism receipts fell to 267.7 million Tunisian dinars ($181.6 million) in the first three months of this year, representing a 23 percent slide from proceeds of TD347.3 million ($233.1 million) in the equivalent period of 2001.
Tourism officials had been expecting the industry to rebound by the second half of the year, but the Djerba attack might scare away potential tourists. The economic ramifications of such an eventuality are significant: the tourism industry is Tunisia’s second largest employer and its main source of foreign currency.
Not only are tourists shying away from Tunisia, so is foreign portfolio investment. The flow of foreign investment into Tunisia’s stock market slumped by 71 percent in 2001, due mainly to negative sentiment on emerging markets in general. Although outside portfolio capital on the bourse accounts for a small fraction of total foreign investment in Tunisia, some companies have felt the impact. For instance, the beverage company SFBT, the largest company in terms of capitalization on the stock market, lost 34.5 percent of its value in 2001.
In spite of this bleak news, encouraging macro-economic indicators provide reason for financial optimism. Tunisia continues to experience real Gross Domestic Product (GDP) growth of more than five percent per year, despite slow growth in the European Union (EU), its main trading partner.
In addition, inflation dropped to 1.9 percent in 2001, the budget deficit has been lowered to 2.4 percent (as compared to 5.9 percent in the early 1990s), and the country’s foreign trade deficit shrank to TD 571.8 million ($383.8 million) in the first two months of the year, down 22 percent from the corresponding figure in January-February 2001.
These figures show that Tunisia’s economic fundamentals remain strong. Despite the Ghriba synagogue incident, declines in tourism and incoming portfolio investment have apparently been due largely to external shocks—i.e., September 11 and emerging market failures. Therefore, when the effects of these shocks subside, Tunisia should regain its stature as a popular destination for both tourists and foreign investment. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
