Europe failing Tunisia, says regional lender

TUNIS Fri May 6, 2011 4:35pm BST

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TUNIS (Reuters) - Europe should be doing more to support Tunisia to ensure swift reforms that will set an example in the rest of North Africa, the regional head of the Tunis-based African Development Bank said.

The bank is a key lender to Tunisia and the $500 million (304 million pounds) it is giving in emergency budget support matches help from the World Bank. About another $200 million is coming from Europe, nearly half of that from former colonial power France.

Jacob Kolster, responsible for Tunisia, Libya and Egypt at the AfDB, said Europe should be doing more to back the country where the spreading revolt in the Arab world began with the toppling of Tunisia's authoritarian ruler in January.

"I'm frankly a little bit disappointed with the outpour of real financial support," he told Reuters. "Here is a golden opportunity to try and help North Africa to bring itself closer to what the occidental world believes is good governance."

In addition to the emergency support, Tunisia estimates it needs about $4 billion in foreign loans to get through the turmoil after the revolution, which has knocked an economy that lacks the oil and gas resources of its neighbours.

Libya's war has been an additional blow; Tunisian workers are no longer sending remittances from there, wealthy Libyans have stopped visits for cheap medical care and tens of thousands of Libyan refugees have crossed the border.

Economic growth this year is seen at 1-1.5 percent.

Kolster said Western countries as a whole needed to do more for Tunisia, but it was especially important for Europe given Tunisia's proximity, historical ties and the tide of jobless Tunisians trying to seek work in Europe.

Tunisia's fragility was underlined on Thursday by protests which sprang up after a former minister warned that loyalists of ousted President Zine al-Abidine Ben Ali could mount a coup if Islamists won an election in July.

Kolster said Europe should extend the kind of economic benefits it does to Balkan states seen as potential EU members even if Tunisia is never considered as a possible member itself.

"I would have expected massive grant support," said Kolster, for helping to build political institutions and civil society that would "cement the gains of what came out from the blood, sweat and tears of young people taking to the streets."

Europe has pledged to step up support for North Africa.

But it also faces demands elsewhere with Libya at war and Egypt needing assistance after the fall of its authoritarian regime. Egypt is a much more important regional player than Tunisia when Western countries are considering where to spend.

"If they fail, I think Tunisia will pull through, but they may pull through in a different way," said Kolster.

"Maybe slower, more risky, maybe where there are more risks of reversals than if there were a real firm helping hand across the pond."

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