Bottom Line: Pressure on the pace of national dialogue talks for a new caretaker government in Tunisia, for the resignation of the Ennahda-led government will reach a climax with a suicide bombing at a tourist resort on 30 October.
Analysis: In the first such incident targeting Tunisia’s tourism sector since 2002, a suicide bomber blew himself up at a resort in Sousse. The attacker had first attempted to enter the Riadh Palms Hotel, but blew himself up on the beach nearby when he was refused entry. There were no other casualties. A second attack in the resort town of Monastir was thwarted by police. Security forces say that both attackers were radical Islamists and Tunisians who had recently returned home from other unspecified countries. This comes after seven Tunisian policemen were killed in clashes with Islamic militants on 23 Wednesday.
Talks on the formation of a new caretaker government in Tunisia began on Friday, 25 October, and are now scheduled to be concluded in three weeks—after some delays--while the Constituent Assembly is scheduled to finish its tasks in four weeks. The Ennahda-led government has agreed to resign in three weeks, with the formation of a caretaker government.
Recommendation: These incidents continue to cause short delays in the national dialogue progress and the suicide bombing at a resort will add immense pressure on Ennahda, which is viewed as incapable, or lacking the political will to deal with the threat of Islamic militancy. We expect further postponements in the talks, but we do not expect them to be derailed. There is greater likelihood that the tourist center bombing will lend greater impetus to the opposition’s leverage in these talks. A list of candidates for Prime Minister has already been submitted and is presently being discussed by the national dialogue team. However, the situation in neighboring Libya is untenable and investors should be concerned with the increasing potential for cross-border violence in the coming weeks and months.