From: Carnegie Endowment for International Peace
KATHERINE POLLOCK, FREDERIC WEHREY
In both countries, informal activities represent a significant portion of the national economy. The Tunisian government—now a fledgling, semi-functioning democracy—has a strong incentive to capture that income by preventing cross-border smuggling and hardening the border. However, in Libya, there is less incentive and capacity due to a lack of political unity; weak institutions; and rival, often predatory, militias jockeying for power to control the border and profit from informal trade. In fact, official and semi-official security actors are sometimes complicit in the smuggling. Overall, because of the countries’ contrasting political and security landscapes, bilateral efforts to secure the border have been disjointed and piecemeal at best—with each side even deliberately resistant at times.
According to various reports, Tunisia’s informal economy accounts for between 39 and 50 percent of its GDP. And potentially more than half of the money circulating in Libya is in the informal sector. It is therefore not surprising that bilateral informal trade is significant for both countries. The World Bank estimated it to be valued around $498 million in 2015, including approximately $200 million for cigarettes, $148 million for fuel, and $150 million for other goods. While the smuggling of certain consumer goods (electronics, clothing, home appliances) decreased from 2013 to 2015, there was a dramatic increase in the smuggling of tobacco and fuel during that same period. The markets for both are estimated to be large. For example, 40 percent of the 380 million contraband cigarette packs consumed annually in Tunisia originate from Libya. Contraband fuel traded at the border accounted for 17 percent of Tunisian consumption in 2014.
