Democracy Lab

Put Tunisians Back to Work

Post-revolutionary Tunisia has made great strides toward democracy. Now it needs to deliver on promises of economic growth. The second in our series of Lab Reports on Tunisia.

In January, Tunisia's National Constituent Assembly approved a new, democratic constitution for the country. Months earlier, the former government leaders from the Islamist party Ennahda, agreed to step down and transfer power, peacefully, to a new prime minister and caretaker government and to engage in a new National Dialogue. More recently, the government approved a new electoral law and is making preparations for general elections in November. While the situation on the ground is not idyllic, most would agree that Tunisia's post-Arab Spring governments have made a concerted and commendable effort to establish democracy. But, as in other countries in the region, Tunisia's 2011 uprising was just as much about jobs and economic growth as it was about political representation. Yet three years later, successive governments have made only modest progress on the economic front.

Democracy Lab's In-Depth Reports on Tunisia

  • LAB REPORT 1: Embracing Enemies in Tunisia, by Oussama Romdhani
  • LAB REPORT 2: Put Tunisians Back to Work, by Emmanuel Martin and Dalibor Rohac
  • LAB REPORT 3: A Tale of Two Decrees, by Fadil Aliriza

The challenges Tunisia's leaders face aren't quite as daunting as those that plague other countries in the region, such as Egypt or Algeria. State ownership of the economy, for example, is much smaller in Tunisia than elsewhere: Only 15 percent of total fixed capital investment spending comes from the government, compared to over 60 percent in Algeria, and 40 percent in Egypt and Yemen. Yet the legacy of Arab socialism, which has plagued the region since the late 1950s, is still very much alive. Since 1959, the government has financed nearly all of Tunisia's industrial sectors either through equity participation or bank lending. In the late 1980s, Tunisia turned over the bulk of its manufacturing and service sectors to private owners, and in the 1990s and 2000s, it partially privatized Tunisie Télécom (its telecom operator), large parts of the banking sector, as well as its large cement companies, such as Société Les Ciments de Jbel Oust and Société Les Ciments d'Enfidha. But privatization itself was not enough to generate new economic opportunities. Unless Tunisia embraces bold economic reforms, the recent political achievements may be reversed.

As in other North African countries, unemployment is a major problem in Tunisia, with the official unemployment rate at 17 percent. The situation is even worse among young university graduates, 30 percent of whom are unemployed. The Tunisian economy offers few opportunities for skilled young workers, and many bright Tunisians with college degrees compete for a small number of public sector jobs -- and very often end up disappointed. In February, unsuccessful job candidates in the Gafsa region, in the country's south, set the local police station on fire to protest the results of recruitment in a government company. Earlier in the year, in Menzel Bouzayene, in the central region of Sidi Bouzid, young unemployed graduates were symbolically auctioning away their university diplomas -- not necessarily to make money but rather to attract the attention of authorities to their plight.

Strikes continue to cripple Tunisia's fragile economy and contribute to the image problem deterring foreign investors. Tunisia saw 399 strikes in 2013 by customs officers, magistrates, airport workers, doctors, and many others. Many of these were violent strikes, intended to pressure state-owned companies to hire people. In early January, the whole city of Kasserine was shut down by a general strike protesting against poverty and underdevelopment in central Tunisia. The strike took a violent turn when protesters started throwing rocks at a local police posts and the police responded with tear gas. (The photo above shows protesters in front of Ennahda's offices during the Kasserine protests.) Local outposts of the Tunisian labor union the Union Générale Tunisienne du Travail (UGTT) typically pursue a more ruthless strategy and are more inclined to organize local strikes than its central office in Tunis, which is amenable to political dialogue.

If the status quo makes Tunisians unhappy, attempts at reform are met with even greater resistance. Under pressure from international lenders to balance the budget and put its financial house in order, the 2014 budget introduced tax increases, especially on motor vehicles, raising the vehicle tax by 25 percent and imposing a new tax on larger vehicles. This led to angry demonstrations and road blockades, resulting in a suspension of the transportation tax increase. The former government was also planning cuts to price subsidies on basic foodstuff and energy. There is a strong case for reforming the byzantine and hugely inefficient system of price controls and subsidies, yet reform attempts are likely to generate popular discontent in the short term because of concerns over the cost of living.

For poor Tunisians, price inflation is a serious problem. Although the official inflation rate is 6 percent, poorer Tunisians are skeptical and feel that the prices of their own consumption baskets have been growing more rapidly. In fact, a new "kafteji index" was introduced to capture the changes in purchasing power of the dinar, named after the famous fried vegetable and egg dish, the ubiquitous street food found throughout Tunisia. The index captures changes in prices of kafteji ingredients such as potatoes, tomatoes, capsicums, squash, eggs, vegetable oil, and bread. Between January 2013 and January 2014, the index grew by 23.6 percent, suggesting a substantial growth in the cost of living, particularly for poorer households.

What's more, the falling value of the dinar is contributing to high import prices, adding to costs for business. According to Habib Sayah, the director of the Kheireddine Institute, a pro-market think tank in Tunis, the ongoing depreciation is a burden on entrepreneurs who tend to buy their capital abroad -- usually without access to financial instruments that could help them mitigate foreign exchange risks.

Tunisia needs broad economic reforms, beyond cuts to subsidies, price liberalization, and more prudent monetary policy. It also needs a better environment for its businesses, especially for small and very small companies. Close to 95 percent of the country's economic landscape consists of micro-enterprises, and these face formidable barriers to entry and growth. According to the World Bank's Doing Business report, starting a business has become more difficult compared to previous years. Obtaining a simple construction permit requires 94 days and costs close to 256 percent of average annual income in the country. Tunisia also ranks 109th in the world in terms of the ability of its entrepreneurs to access credit.

It is no coincidence Mohamed Bouazizi, whose self-immolation set off the Tunisian revolution, was a street vendor who was harassed by local authorities. Bouazizi, who could find no other job opportunities, was trying to make a living by selling fruits and vegetables on streets. The lack of economic freedom was a major cause of its revolts, but successive Tunisian governments have not seriously addressed that fundamental problem, focusing instead on political issues.

Under the presidency of Zine el-Abidine Ben Ali, Tunisia was characterized by a system of cronyism and clientelism, benefitting only his personal circle of friends and family. In 2008, Robert F. Godec, U.S. Ambassador to Tunisia, cabled that "President Ben Ali's extended family is often cited as the nexus of Tunisian corruption. Often referred to as a quasi-mafia, an oblique mention of ‘the Family' is enough to indicate which family you mean." In the eyes of the general public, the president was often given a pass, but the stories of corruption of his wife, Leila Ben Ali -- and her extended family -- have become legendary and culminated in the rumor the she escaped to Saudi Arabia after the revolution, taking some $60 million in gold bullion with her.

The high-level corruption of the Ben Ali family and its cronies was simply an offshoot of the widespread corrupt practices of the public administration, driven by excessive red tape and discretion among government officials. On that front, the revolution has not changed things dramatically. While there have not been high-profile corruption scandals, some argue that petty corruption may have increased. On Transparency International's Corruption Perception Index, Tunisia now ranks 77th out of 177 countries, compared to 65th in 2009. Many Tunisians say that the people in charge may be different today, but the underlying logic of an elite living at the expense of the general public remains unchanged.

Many of these issues were raised when the National Constituent Assembly discussed Article 48 of the new Tunisian constitution, which deals with individual rights and freedoms. An amendment proposed by the former Ennahda member Fattoum Attia, and supported by members of the assembly from various political backgrounds, stated that "the State shall guarantee the freedom to work and the freedom of economic initiative." This would embed the protection of economic freedom in the constitution and prevent instances of arbitrary harassment -- which motivated Bouazizi's desperate act -- while also curbing rampant overregulation, which in turn fuels unchecked corruption by government officials.

As Habib Bribech, a member of the Constituent Assembly from the Ennahda party, noted, the proposed amendment "could have been the most revolutionary article of the constitution." Abdel Monem Krir, of the Nida Tounes party, added that "the government cannot do more.... Businessmen are the ones creating wealth." This amendment would have indeed given constitutional protection to the very freedom that Bouazizi was fighting for, with potentially far-reaching consequences for the country's economic development.

Alas, the amendment was rejected in a vote held in January, winning just 93 of the 109 needed "yea" votes. For its opponents, such as the member of the assembly Samia Abou of the Democratic Movement, this amendment would have "impose[d] an economic orientation of savage neoliberalism" on the country. Mourad Amdouni, another assembly member, warned that "if you pass this article, it would be the greatest betrayal made to the Tunisian people and the revolution." The rhetoric is indicative of the extent to which the political left in Tunisia is still drawing on the "class struggle" mentality and has not grasped the economic roots of the revolution.

Of course, this setback is not fatal. With the constitution in place, and facing pressure from foreign investors, the government can act to unleash the potential of the country's small and medium-sized enterprises. After all, the adoption of the new constitution on Jan. 26 has already enabled the country to access $506 million in loans from the IMF and over $347 million from the European Union. By themselves, these injections of cash do not mean much, but one hopes that they could be followed by larger inflows of private capital if the government pursues a course of bold economic reforms.

The new prime minister, Mehdi Jomaa, faces enormous challenges. Young and with experience in the private sector, he recognized in his first speech as prime minister at the assembly that structural reforms were needed. He noted that the new public sector jobs and populist spending of the past three years had worsened the financial situation of the country while doing little to improve productivity or standards of living. It is high time, he said, for Tunisians to stop the "financial hemorrhage," take a "break from social conflicts," and, finally, go to work. Indeed, there would be no better way to honor the memory of Mohamed Bouazizi than if this young prime minister, untainted by the country's authoritarian past, were successful in "letting Tunisians go to work" creating and running their own businesses.

Top Image: ABDERRAZEK KHLIFI/AFP/Getty Images

Graphic Designer: Chloe Chik

Background images: FETHI BELAID/AFP/Getty Images

Democracy Lab

Embracing Enemies in Tunisia

Tunisia's main political forces have agreed on a deal to shore up the political middle and undermine extremists. That could be a crucial milestone on the path to democracy. The first in our series of Lab Reports on Tunisia.

On May 1, Tunisia's National Constituent Assembly approved a measure that could well prove to be one of the key milestones of the country's transition to democracy. In the course of their deliberations over a new electoral law, the members of the assembly voted down a bill that would have barred former senior members of the government and ruling party of ex-President Ben Ali from running in future elections. Had it passed, the exclusion law would not have necessarily changed the balance of power, since few former senior officials are actually expected to run for seats in next elections. But by depriving them of their full civil rights, the law would have transformed veterans of the old regime into political martyrs, discrediting the two leading parties' claims of commitment to an inclusive transition.

Democracy Lab's In-Depth Reports on Tunisia

  • LAB REPORT 1: Embracing Enemies in Tunisia, by Oussama Romdhani
  • LAB REPORT 2: Put Tunisians Back to Work, by Emmanuel Martin and Dalibor Rohac
  • LAB REPORT 3: A Tale of Two Decrees, by Fadil Aliriza

Such a development would have also rekindled particularly painful memories for the leaders of the two main parties. Beji Caid Essebsi, the head of the secularist Nida Tounes Party (the "Call of Tunisia"), confesses to being still "traumatized" by the experience of violent strife in the mid-1950s, when sympathizers of then-President Habib Bourguiba and his rival Salah Ben Youssef engaged in bloody strife across Tunisian towns and villages. Rached Ghannouchi, the leader of the Islamist Ennahda Party, says that he is unwilling to inflict the pain of exclusion on any group of Tunisians the way previous regimes inflicted it on Islamists after independence.

In the end, the majority of legislators voted against the exclusion law, giving a much-needed push to Tunisia's halting process of political reconciliation -- a process that has been aptly described by Kamel Morjane, a centrist politician, as the sine qua non for a successful transition. That boost is much needed. The transitional justice law hurriedly approved last December is legally flawed and does not provide a sound path toward reconciliation. Unless amended, it could spell trouble for the transition, believes Essebsi.

For the past three years, since the start of the uprising that toppled Zine el-Abidine Ben Ali's dictatorship, Tunisia has been struggling to overcome the divide between proponents of the Islamist-led government and their secularist opponents. The two long years following the 2011 elections, which produced a coalition government led by Islamists, were marked by escalating hostilities between the rival camps. It took a number of serious incidents, including an attack on the U.S. embassy in Tunis in September 2012, the assassination of two leftist politicians, bloody attacks on the army and National Guard troops, and other terrorist acts, for the contending parties to realize the country was sliding toward civil war.

At first, the Ennahda-led coalition tried to cling to its electoral legitimacy. The Islamists did not need long, however, to realize that the political landscape had changed since their accession to power in 2011. Ennahda found itself facing two new opposing blocs: the "Union for Tunisia," with Essebsi's Nida Tounes at its core, and the leftist "Popular Front," around Hamma Hammami's Workers' Party. The risk of civil strife as a result of mounting domestic tensions, compounded by the negative example of the Muslim Brotherhood's attempts at hegemonic rule in Egypt, eventually convinced Ennahda to concede that it should leave power.

In the last few months, zero-sum politics have given way to consensus-based politics, especially between Ennahda and Nida Tounes. In October 2013, face-to-face negotiations between Essebsi and Ghannouchi smoothed the way for the resumption of a national dialogue between all political parties. The dialogue took place under the aegis of the country's powerful trade unions as well as the business federation, the country's main human rights advocacy group, and the lawyers' union. Compromises allowed for the adoption of the constitution and the replacement of the ruling coalition by a technocratic government. For the majority of the politically exhausted population it meant the end of partisan squabbling, largely perceived as the main obstacle to stability and economic recovery.

Along the way, both of the leading parties have moved toward the center. The Islamists of Ennahda have distanced themselves from the Salafists while reigning in their own hard-liners. Nida Tounes has been successful in moderating the stands of its leftist allies. (Rejecting exclusion was a natural decision for Essebsi's party, considering the predominance of former members of the Constitutional Democratic Rally, RCD, the ruling party of Ben Ali, in its rank-and-file.)

The transition's chances dramatically improved when the two main camps, the "Islamists" and the "modernists," agreed to end their "identity wars." The two groups managed to reach agreement over the constitution last January only when they moved away from their previously irreconcilable positions over the role of sharia law and the status of women. Once Islamists stopped supporting the demands of their ultraconservative fringe, compromise became possible on both issues. The approved version of the constitution thus ultimately accommodated both a commitment to Arab-Islamic heritage and openness to foreign cultures. The final text upheld the status of Islam in the country as stipulated by the 1959 Constitution. But it also affirmed the notions of the "civil state" and gender equality. Secularists and liberals overcame their recurring nightmares about an Islamist takeover of society. Ever since leaving government, Islamist figures have been at pains to further reassure urban, middle-class Tunisians. Ennahda "has adopted a Tunisian instead of an Islamist lexicon," says Rafaa Ben Achour, a constitutional law expert and leading member of Nida Tounes. Veteran Tunisia expert Francis Ghiles asserts that Ghannouchi has, since last fall, "behaved like he was being coached by an American consultant to sound like a European Christian Democrat."

Zitoun defends the change in his party as a normal evolution. "We are not a static movement or a Sufi sect," he says. But many of the "modernists" see that change as only tactical and believe Ennahda has yet to abandon its ambitions to "Islamize" society. Columnist Ziyed Krichen sees Ennahda in a stage between being a seventies' type "Muslim Brotherhood movement" and " a civil democratic formation akin to Christian democratic parties" that is still to take shape.

The May 1 vote demonstrates the extent to which the main political parties have fundamentally reassessed their priorities. Having stared into the abyss last summer, both Ennahda and Nida Tounes leaders now seem to consider stability and civic peace as crucial for the remainder of the transition. Had the proponents of the "exclusionist" position carried the vote, the likelihood of turbulence during the next stage of the transition would have been much greater.

Long-term stability will elude Tunisia unless its people and leaders can find their way to a new concept of authority that balances functional state institutions with respect for fundamental rights and freedoms. The country's citizens have been ready for a freer environment for decades. As a former government official, I can say that it took Ben Ali barely a week after the self-immolation of Mohamed Bouazizi to admit -- at least privately -- that restrictive policies were untenable. Ironically, it was the hyper-concentration of power before the revolution that convinced Ben Ali's supporters of the irreversibility of revolutionary change as soon as the former president left the scene. It was this awareness, some observers believe, that spared Tunisia the violence that beset other Arab Spring countries. According to a recent scholarly study on the fall of autocratic regimes, the less violence that occurs during the collapse of such a regime, the better the chances of democratization.

Adjustment to the abrupt shift from hyper-centralized government to unstructured freedom will still need time. The majority preference for "a democratic even if unstable government" has slightly increased since last year (from 52 percent to 53 percent), but no less than 40 percent of those surveyed still said they favored "an authoritarian regime."

Nostalgia for the predictability of authoritarian rule is explainable. Tunisia has yet to embark on anything resembling a South African-style truth and reconciliation process, and as a result Tunisians have experienced only a systematic demonization of the old regime. The public has never truly understood how the Ben Ali political system functioned and malfunctioned in the past. As the deteriorating security situation and falling standards of living discredited Tunisia's new governments, it was hardly surprising that some people on the fringes of society sought solutions to their predicaments in previous eras. The desire to seek comfort in the past will dissipate, presumably, as the transition advances. But comparing nostalgia for authoritarian times in "Arab Spring" countries to the mood in Eastern European nations after the fall of the Berlin Wall is misleading. Former communist nations in Europe never suffered from the shallowness of democratic culture, the exacerbation of regional and tribal conflicts, or the specific socio-economic difficulties that face post-authoritarian Arab societies today.

After overcoming the initial doctrinal and organizational confusion caused by the 2011 revolution, the state still has to adapt to new security challenges. Over the past six months, the security agencies and the judiciary have taken a more vigorous attitude in the fight against terrorism, which has done much to restore the credibility of the state on this score. (The photo above shows a member of the Tunisian special forces standing guard outside the National Constituent Assembly.) But security concerns continue to pose a serious challenge to Tunisia's transition. In late May, terrorists staged a brazen attack on the minister of the interior's own home in Kasserine, deeply shocking the public. The government will need time and effort to overcome past mistakes and garner resources.

If anti-terrorism policies before the revolution did not adequately take into consideration the regional dynamics of the problem, the attitude of governments after the revolution waivered --for far too long -- between naiveté, imprudence, and outright mistakes. A glaring example was the 2011 decision to pardon hundreds of prisoners previously indicted on terrorism charges. This slippery slope led straight to the September 2012 attack on the U.S. embassy in Tunis and the assassination of leftist leaders Chokri Belaid and Mohamed Brahmi in 2013. These acts of terror, which exacerbated political divides, dealt a near-fatal blow to the transition process.

The threat still posed by Ansar al-Sharia cannot be dismissed. Dismantling the remaining outposts of its support network will be arduous. A senior official at the prime minister's office recently put the number of associations suspected of abetting extremism at 157. Fallout from Libya and Syria might haunt Tunisia for years to come. The authorities will definitely have to worry about Tunisian jihadists abroad as they start heading home. These include approximately 2,000 Tunisian fighters in Syria. Civil strife in Libya could jeopardize the stability of Tunisia even more than the already incurred loss of jobs and business opportunities there.

To no small measure, stability will depend on the ability of future governments to impulse economic growth and offset the socio-economic imbalances, which had been left to linger for decades. Ennahda's withdrawal from power enabled the formation in January of a new, non-partisan government headed by former businessman Mehdi Jomaa, a development that encouraged cautious optimism. Even so, today 48 percent of Tunisians still believe the country is "headed in the wrong direction." The majority of respondents cite economic and employment challenges as their main concern.

Most socio-economic problems will require medium- to long-term solutions and a few unpopular measures, as well. A 2013 Working Paper from the International Monetary Fund recognized that "weak transitional governments" may find it difficult to implement measures ensuring growth and stability of the economy. For this reason, politicians of various hues believe tackling the complex problems of the economy may require a broad coalition government for 5 to 10 years after elections.

Successive governments have found it difficult to put an end to illegal strikes and work stoppages, even though disruption of production has had serious economic consequences. The interruption of phosphate production in the southwest's mining basin, for instance, has caused the state to lose nearly 1.5 billion dollars in revenue, as output dropped from 8 million tons in 2010 to 3 million tons in 2013. Public spending is no longer an option when it comes to appeasing social pressures. While previous governments increased price subsidies by 270 percent between 2010 and 2013, the current government is considering cutting them. Public sector hiring has ceased being an option, even if unemployment is currently at above 15 percent. The projected GDP growth rates of 2.8 percent in 2014 and 4.2 percent in 2015 will not be sufficient to absorb youth unemployment, and even less that of university graduates (situated today at nearly 32 percent).

The issue of development imbalances between regions of the country, which was among the main catalysts of the revolution, continues to pose a challenge to stability. A source of particular concern is the worsening unemployment problem for university graduates in a number of regions. Between 2010 and 2013, the rates of graduate unemployment in the governorates of Sidi Bouzid and Kebili have respectively increased from 41 percent to 57 percent and from 42 percent to 60.8 percent.

Despite Tunisia's traditional narrative of religious and ethnic homogeneity, the problem of regional disparities might bring to the surface a latent situation of unsuspected heterogeneity. For Tunisians, it took the fraying of the security institutions and the de-inhibition of the media to discover that tribal loyalties are alive and well.

Economic prospects will eventually depend on the strength of Europe's recovery and its willingness to help, as well as on other outside sources of support, including the United States. The international conference scheduled for next September to promote foreign investment in Tunisia could be a step in the right direction provided the event produces more tangible results than flowery speeches about the "birthplace of the Arab Spring."

But despite all the daunting challenges, the odds remain in favor of Tunisia's consolidation of democracy. The country's traditions of moderation and pragmatism, its human development achievements since independence, and the international sympathy it has enjoyed since the revolution are great assets for the road ahead. More than anything else, however, the final outcome will hinge on the ability of politicians to see what they all have to gain from a true consolidation of the democratic transition.

Top Image: FETHI BELAID/AFP/Getty Images

Graphic Designer: Chloe Chik

Background images 1 & 2: FETHI BELAID/AFP/Getty Images

Background image 3: KHALIL/AFP/Getty Images