Getting out of Limbo in Tunisia

Tunisians are exhausted. The past four years of upheaval, uncertainty, and political jockeying have sapped many people’s energy and spirits. Worn out from a roller coaster ride of optimism and disappointment, many are distrustful of those in power and the promises they make. Whether the new government has the will, legitimacy, and the political space to navigate the tension between this distrust and the need for bold action to address the country’s economic challenges will determine the course of Tunisia’s future.

Tunisia has an opportunity to fix an economy that grew around structures that maintained an authoritarian system. To move forward, the government will need to articulate and communicate a clear and ambitious vision for Tunisia’s economic model. Most of the major political actors share a basic view of what kind of economic structure Tunisia should have: more open to the world, more dynamic, and more equitable, with the state as a strategic regulator. But they disagree on how to get there. With such great opportunity ahead, now is the time to ask big questions about how Tunisia might be transformed: What will its cities, universities, industries, and rural areas look like in ten or twenty years? What will be Tunisia’s economic strengths? How could it transition from a middle-income country to a wealthy one? The government will need that vision both to accompany urgent short-term fixes that address economic grievances and to overcome the most likely obstacles to reform: a weak coalition government that could fall prey to timidity, opponents of reforms who could cause policy paralysis, and a public that has grown disillusioned with politics. 

Tunisia spent its first four years after the fall of Zine el-Abidine Ben Ali in economic limbo. Since 2011, the country’s politics have moved forward: Tunisians have a new parliament, president, prime minister, and cabinet. Despite ongoing security challenges, things seem largely on track politically. At the same time, while economic issues were at the forefront of public concerns, they were not the focus of political activity. Economic policy remained limited to stop-gap measures to increase some salaries, to try to rein in inflation, to stop the hemorrhaging of tourism and investment to Tunisia, and to plug budget gaps. Stuck in crisis management mode, the country's succession of transitional governments had neither the capacity, legitimacy, nor inclination to tackle larger changes. At the same time, different political actors—including newly formed political parties but also existing institutions like the major unions and federations Union Générale Tunisienne du Travail (UGTT) and Union Tunisienne de l'Industrie, du Commerce et de l'Artisanat (UTICA), business elites, the media, and the army—were spending this time figuring out their policy priorities, how to relate to one another in a newly democratic society, and how to manage their internal debates and competing agendas.

Economic troubles mounted. Official unemployment, which does not account for those in the informal sector, is above 15 percent. Inflation has fluctuated around 5 to 6 percent for the past few years. Most importantly for many Tunisians, with salaries largely stagnant, purchasing power has been declining. Many perceive that politicians have punted on bringing meaningful reforms to the country, and that has hurt the legitimacy of the political class as a whole.

Economic reform is ostensibly the new government’s top priority. In December 2014, President Béji Caïd Essebsi wrote that under his presidency “We must invest in youth employment, particularly through training for new jobs in the digital economy and service sector…[and] integrate the regions of the interior by upgrading their transportation systems, improving health care and creating jobs in solar energy and agricultural industries suited for these arid lands.” New Prime Minister Habib Essid has made similar remarks about the priorities for his new government.

Most of the major political parties espouse commitment to economic reform too, and the basic measures they propose tend to differ in details rather than ideologically. There is general agreement, except with the leftist Front Populaire (FP), that Tunisia needs a more open and dynamic free market economy with the state playing a strategic and regulatory role. Most call for simplifying and reforming laws on foreign investment, trade, tariffs and import duties, banking, insurance, and real estate; reforming the fiscal system and taxation; bringing more of Tunisia’s economic activity from the informal to the formal sector; and modernizing Tunisia’s social policies to provide a more reliable and equitable safety net. Other reforms touch more directly on the challenge of youth unemployment and barriers to entrepreneurship. Politicians discuss reforming education at all levels, including aligning educational paths and outcomes better with the labor market.

Major civil society actors are also broadly on board with many of the reforms being discussed. In 2012 and 2013, key members of the national dialogue process, which facilitated the transition to a technocratic government and new elections, also came together to write a document called the Social Contract. UTICA, the UGTT, and the government agreed on a common framework that should guide economic and administrative reform efforts. The Social Contract called for combining structural reforms with efforts to raise investment in disadvantaged areas and bolster social protection measures, for example by introducing unemployment insurance. Essid’s new government recently launched a series of “social negotiations” with the UGTT to prioritize commonly accepted reform efforts and negotiate on areas of disagreement, including civil servant salaries. Whether the parties can actually agree on a new social contract will have a major impact on prospects for economic reform.

While the disparate parties in the new unity government could potentially work together productively on reforms, the coalition’s fragility could also lead to paralysis. Disagreement and competition within parties is as likely to stall progress as disagreements among parties. Over the past four years and in the 2014 elections, economics were not the primary cleavage in Tunisian politics, so having parties that were economic “big tents” was feasible. Because both Nidaa Tounes and Ennahda are based first around a social identity rather than an economic vision, each represents a coalition of individuals with economic views ranging from more traditionally statist to more liberal. Now that a transition of power has occurred and political institutions are in place, divisions in economic preferences within parties may come to the fore.

While it does not seem likely that any one political actor will be able to counter a general political trend toward generally pro-market reforms, they could increase the political costs of passing specific reforms, contributing to policy paralysis. The FP, which advocates that the state be the central actor in the Tunisian economy, will seek to challenge liberalizing economic reforms, but with only 15 seats in the parliament, the assembly will not be where its opposition counts. Instead, it could focus on making any negative effects of reforms politically damaging for leading parties. In addition, if the UGTT (or factions within it, especially the regional leaders who often take their own initiatives) feel that reform efforts are not sufficiently addressing matters which they prioritize—in particular raising salaries to meet rising costs of living—the union could also deploy its organizational and political power to turn public opinion against the government by campaigning against new policies or encouraging new strikes and protests.

That would not be hard to do. A Pew poll conducted in mid-2014, for example, found that 70 percent of Tunisians were dissatisfied with politics in their country, among the highest percentages worldwide, although this may have declined since last fall’s elections. Fully 77 percent felt that the wealthy had too much power in their country. Today, ongoing strikes and protests, violence against political party offices in the south and southwest of Tunisia, low youth voter turnout in last fall’s elections, and other phenomena point to the major challenge the government faces: building the Tunisian people’s faith that their new government can bring them a new future. For that to happen, the government must first show them what that new future might look like.

In order to overcome potential obstacles for reform, the government has a tricky task: moving forward ambitiously while simultaneously acknowledging and addressing the exhaustion and distrust that permeate the country’s politics. The government needs to be able to rally people around a positive goal rather than merely a set of proposed tweaks to broken systems. Without that vision, the new government will struggle to garner the public trust required to successfully pass and implement reforms that will inevitably challenge established interests and elites. In order to steer out of limbo, the new government will need to take bold steps in the short term and set a clear course for the future. It shouldn’t be afraid to think big.

Carolyn Barnett is a fellow in the Middle East Program at the Center for Strategic and International Studies in Washington D.C.

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Carolyn Barnett