Sinking into a plush armchair, Mounir Khélifa glances around the lobby of a luxury Tunis hotel and chuckles at the transformation he has seen in his lifetime. "Imagine: I come from a small village," says Khélifa, whose father raised 15 children on the proceeds of his olive grove, and sent all 10 sons to school. Khélifa went on to earn a Ph.D. in literature at Yale, and at 55, teaches the poetry of Wordsworth and Milton at Manouba University in Tunis. Khélifa may sound extraordinary. But in Tunisia, he says, "mine is a common story. I am by no means unique."
Khélifa may not be unique, but Tunisia itself comes close to it. Fifty-one years after gaining independence from France, this spit of land with just 10.2 million people has largely triumphed over the grinding problems of poverty and illiteracy that have beset Arab neighbors like Morocco and Algeria, and left parts of Africa close to economic collapse. In the process, Tunisia offers other developing nations a tantalizing example of how to overhaul their economies by pushing education, business-friendly policies and trade with the West. Much as Singapore has done in Southeast Asia, Tunisia has succeeded by galvanizing the raw potential of its people. It's an impressive instance of a country farsightedly making a virtue out of necessity: despite being wedged between energy giants Libya and Algeria, Tunisia has few natural resources; no vein of gems or minerals runs under its desert flatlands.
Yet that hardly matters. In Tunis, there are now entire new districts of office buildings, with signs announcing the recent arrival of multinationals like Pfizer, Ericsson and Siemens; in October Microsoft CEO Steve Ballmer flew in to weigh new ventures in the country. Amid the pizza parlors, cappuccino bars and bowling alleys, realtors advertise million-dollar villas with pools and saunas, while shopping malls are jammed with Tunisians buying food and furniture imported from Europe. With the embrace of Western-style capitalism has come social change, too: the biggest TV hit this year was Star Academy Maghreb, a homegrown version of the French original, in which performers in skintight outfits gyrated to modern remixes of North African music. "This is a new age here," says Ghazi Karoui, who co-launched the independent Nessma TV earlier this year, with the hit show.
On Oct. 31, in a Global Competitiveness Report that compares 125 countries, the World Bank and the World Economic Forum ranked Tunisia as having by far the best prospects for growth in Africa, and it ranked third in the Arab world after energy-rich Kuwait and Qatar. The report cited Tunisia's low corruption, stable government and educated, French-speaking population. Lying close to Europe's huge markets, and with an enticingly low-cost, well-trained workforce, Tunisia is increasingly seen by European and U.S. companies as a near-perfect base. French carmaker Peugeot recognized these advantages when it recently opted to move its customer-service call center from Lyons to Tunis.
"We have plenty of skilled people here," says Moez Bakir, an engineering manager at Eurocast, a Tunisian subsidiary of Arizona-based firm Paradigm Precision Holdings. Eurocast, which is based outside Tunis, builds aircraft parts for GE Aviation and Rolls-Royce, paying its machine operators about $280 a month a fraction of what equivalent workers would earn in Europe. Over 80% of Tunisia's exports head to Europe, where they will soon be exempt from customs duties, thanks to a free-trade agreement that takes effect in January. Meanwhile, tens of thousands of Europeans soak up the sun on Tunisia's beaches every year. "All that is very interesting for foreign investors," says Margareta Drzeniek Hanouz, senior economist at the World Economic Forum. "The differences are very visible in our data compared to other African and Middle Eastern countries."
On government-controlled TV and radio, that message has been hammered home in recent weeks, as Tunisians mark a historic date: the 20th anniversary of the coup that brought President Zine el-Abidine Ben Ali to power on Nov. 7, 1987. Educated in France and the U.S., Ben Ali was Prime Minister when he ousted Habib Bourguiba, the founder of modern Tunisia. Today, celebratory billboards around Tunis hail the 71-year-old Ben Ali, often pictured wearing his ceremonial sash and medals.
Ben Ali did not respond to TIME's interview requests, but his officials gladly rattle off lists of figures to show Tunisia's progress under his regime. The numbers are striking: while Egypt and Algeria suffer from chronic shortages, Tunisia has a 15% surplus of housing, thanks to massive government construction programs. And about 80% of Tunisians own their homes ahead of much of Europe. While African countries struggle to educate their children, school is compulsory and free in Tunisia up to age 16. About 34% of Tunisian high school graduates go to university, more than five times the rate when Ben Ali took power. This creates an ample supply of skilled graduates. "The President has totally changed this society and economy," says Minister of Development and International Cooperation Mohamed Nouri Jouini, who lived in Oregon in the 1980s when Tunisia was "on the edge of total bankruptcy," but raced home in 1987 to work for Ben Ali. He says most Tunisians see that their leader has improved their lives: "People are conscious of the achievements and want to keep them."
But success has come at a price: freedom. Tunisia's critics say that beneath the gloss of modernity, the ruling party has snuffed out dissent, leaving Ben Ali unchallenged. Some Tunisians, along with Western diplomats, have begun to wonder whether repression and economic growth can continue to coexist, or whether tight government control might ultimately provoke a backlash as middle-class Tunisians demand more civil liberties, and as jobless youth seek outlets to vent their frustration not least by joining radical Islamic organizations. "Tunisia is the one Arab country which could afford real political openness, but the system is completely closed," says a former World Bank economist with long experience of Tunisia. "They do not open up, because people like to stay in power."
In 1998, under pressure from his Western allies, Ben Ali set aside 20% of seats in parliament for opposition parties. The multiparty system is "the government's décor, to show the world it tolerates opposition parties," says Eric Goldstein, Middle East and North Africa research director for Human Rights Watch. "But it does its utmost to silence and marginalize them."