Summary:

This week, an Algerian politician who is part of the country’s governing coalition alleged that the United Arab Emirates (UAE) is pressuring Tunisia to normalize relations with Israel.

The head of Algeria’s National Construction Movement, Abdelkader Bengrina, described the UAE as “sowing discord” in the region.

Bengrina, a former minister for tourism, cited recent visits by the UAE’s foreign minister to Tunis, which came following a series of other visits and phone calls between the countries’ leaders.

Following Bengrina’s comments, Tunisian Foreign Minister Nabil Ammar departed for working meetings in Algiers. During the visit he delivered a letter to Algerian President Abdelmadjid Tebboune that was rumored to contain an explanation of President Kais Saied’s stance on the issue of Israel and normalization.

Algeria has raised the issue of normalization amidst Tunisia’s increased engagement with the Gulf states following Saudi Arabia’s announcement that $500 million in financial assistance would be provided to Tunisia.

Outlook:  

As Tunisia faces growing budget pressures due to a $2 billion shortfall once expected to be filled by an International Monetary Fund (IMF) loan, the pressure to identify other sources of funding is growing. A promise of $500 million in financial assistance from Saudi Arabia revived long-circulating rumors that the Gulf could serve as Tunisia’s alternative financing source.

As rumors that Saudi Arabia could normalize relations with Israel under pressure from the US, Tunisia has found itself thrust into a regional debate over the risks and merits normalization. Algeria’s economic stability due to oil and gas production allows Tunisia’s neighbor to take a much firmer stance on Israel, while Tunisia is under extreme pressure to identify partners willing to bail out the economy.

If the Gulf states make funding for Tunisia contingent upon normalization with Israel, Tunisia will face a difficult choice between long-held positions and agreement with regional allies – including Algeria – and the pragmatism of receiving essential funding.

Many Tunisians remember the 1985 bombing of the Palestinian Liberation Organization’s (PLO) headquarters in the suburbs of Tunis by Israeli jets. Any change in the country’s stance on Israel would likely be met with resistance and anger. However, the extent of such pushback remains difficult to gauge.

Our team is continuing to monitor the regional discussions around normalization and the potential impact on the risk environment in Tunisia.

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