Friday, 28 January 2011

Butterflies & Hurricanes

Of all the twists and turns this recession has taken, the collapse of a government in sub-Saharan Africa is surely a twist no-one saw coming.  Ireland, and the house of cards that is the Cowen regime, that one was coming.  But the collapse of the Ben Ali regime in Tunisia?

Sousse Medina in 2006
Tunisia is an interesting and curious country.  An Islamic country which has retained a lot of the French influence, Tunisia can’t be easily described as one thing or another.  Street vendors sell crepes & Sharma's. Yet the image of Ben Ali is, if not everywhere then is seen in most places.  I suppose an element of dictatorship is a requirement, especially as Tunisia was the least troubled by hard-line Islamasists of the Arab countries. Possibly as a result of this, it, alongside Morocco and Egypt, Tunisia was a popular destination for holiday makers looking for something a wee bit different.  I visited in 2006 and certainly would have recommended a visit.

The unrest in Tunisia came out of the blue, sparked by a young unemployed man who set fire to himself after being deprived by town officials from selling vegetables.  Initially the protests were limited to Sidi Bouzid – a town who’s economy is based on agriculture – but these then spread before reaching their logical conclusion last week.  Similar unrest has occurred in Cairo over the past couple of days, as Egyptian protesters have similarly looked to topple their dictatorship.  The reason for these outbursts has been pinned on the frustration at a lack of freedom, and the excesses of the ruling classes.  I suspect that there is another reason.  It’s the economy stupid.

Greece, Portugal and Spain all found themselves in difficulty last year, with Greece forced into a bale-out from the European Central Bank.  All three were popular destinations for British people to go on holiday, and to put money into their economies.  Assuming that each couple spends £300 when they go abroad, then each plane would bring £60,000 for the local economy.  Being another popular holiday destination, Tunisia was always going to struggle with the lack of visitors to it’s country, and a diminishing flow of money into the country.  Hotels have to cater for people, so less people means less food to buy which brings us back to our unfortunate vegetable seller.
It’s now becoming clear that the lack of liquidity in the British economy is now having an effect on the countries that sees an influx of visitors from these shores. Glasgow Airport reported a drop in passenger numbers of 30,000 for July last year, the lowest figure in four years.  The lack of liquidity is already having an effect on the UK economy, with poor growth figures showing that the Britain is tottering on the brink of a second technical recession when the hangover from the first technical recession has not abated.  The problems with the British economy have shown that Boy George’s scorched earth policy is simply a non starter, and that’s before the cuts really bite.

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