An Economic Analysis for Tunisia after Ben Ali

When examining Tunisia and its development after the 2011 Arab Spring revolutions, many observers have fallen into the age-old misconception of “democratic teleology”, supposing democracy to be the singular cure for a nation’s woes and internal struggles. In fact, Tunisia has been heralded by many as a “success” in an Arab world despite being defined by despotic monarchies and single-party republics. Many within the Tunisian government have embraced this notion, and a recent speech by Tunisian president Beji Caid Essebsi declared that:

Comments and blanket assertions, such as those made by Essebsi and other pundits, imply that success for the Tunisian state is solely dependent on its democratic institutions. Such lines of thinking would mean that the Jasmine Revolution of 2011 was solely due to Tunisia’s lack of democratic participation.

However, democracy is never the sole answer to more endemic issues like economic stagnation, inequality, and corruption. While the development of democratic institutions is often helpful in curbing some of these issues by holding more individuals accountable and by giving constituents greater political participation, these problems are not completely eradicated.2. Any government, regardless of its model, must be capable of resolving these problems. If a democracy cannot deal with its socioeconomic issues, then political legitimacy will be severely damaged. Historical cases such as, South Korea and Thailand help illustrate this fact, with both examples having the same economic themes that plague Tunisia today. This has resulted in democratic destabilisation in each of these countries.

As such, this focus on a robust democracy fails to underline the importance of economic factors in Tunisia from its pre-revolutionary period to its present circumstances. One must remember that the self-immolation of Mohamed Bouazizi was a protest against the state’s interference in Bouazizi’s employment, not necessarily against the regime’s anti-democratic policies. With this lens established, a more holistic portrait of the revolution and its aftermath can be developed. Indeed, recent economic trends have highlighted substantial changes in Tunisia’s demography and potential stability despite the development of democratic institutions. More importantly, an examination of Tunisia’s economic status provides a more nuanced portrait of the extent to which Tunisia can be called a revolutionary success and may signify future trends that should be considered.

The Economy Under Ben Ali

Under the regime of Ben Ali, Tunisia was seen by many researchers as a rising economy that outperformed its neighbors. The African Bank Development Group noted that in the decades before the Arab Spring revolution, “Tunisia [was] considered one of the success stories on the African continent.”4. Indeed, this was backed by macroeconomic indicators such as a strong recovery following the 2008 global recession and a 3.7% GDP growth in 2010. Researchers at the Carnegie Endowment elaborated on these conditions further, noting that state-supported policies like family planning helped raise per capita income from $2,713 USD in 2005 to $3,720 by 2010.5. These researchers also noted that Tunisia’s economy was relatively diversified and its transition from agrarian to service-based industry saw significant success, with the latter representing 62% of the Tunisian economy by 2010.

These points are also supported by an International Monetary Fund (IMF) analysis. In April 2007, an IMF delegation headed by Deputy Managing Director Murilo Portugal noted that:

Tunisia’s skillful macroeconomic management and commitment to reforms during the past decade resulted in improved economic growth and social conditions.6.

He also highlighted Tunisia’s average of 5% GDP growth throughout the previous decade and its GDP per capita being higher than any of its contemporary African neighbors. This was followed by statements from a June 2007 IMF meeting that acknowledged the fact that Ben Ali’s “efficient management of the economy has helped ensure relatively strong growth while preserving macroeconomic stability, thereby positioning Tunisia among the leading economic performers in the region.”7.

From a macroeconomic perspective, these elements highlighted a sense of strength and robustness in the Tunisian economy. When examined more closely, it becomes evident that more minute conditions were crucial in hampering Tunisia’s economic progress and would lead to the onset of the Jasmine Revolution. Factors like high youth unemployment, slow economic liberalisation, and a distinct lack of private investment foreshadowed coming conflict. These issues were a direct result of economic domination of Ben Ali and his key circles. Central to this was the relationship Ben Ali maintained with two key groups.

One was the “Palace” faction, which consisted of political advisors and close friends, and the second was the “Entourage” which was made up of Ben Ali’s family and the clan of his second wife, the Trabelsis. Although Ben Ali’s early days of rule saw political maneuvering as a way of securing his authority, the Tunisian president began to assert executive authority in order to gain economic control. Indeed, the Ben Ali-Trabelsi alliance resulted in major stakes in domestic sectors like banking, tourism, manufacturing, and oil.8. Businesses not affiliated with Ben Ali or his family were either forced into direct partnerships with the regime or were otherwise bogged down in governmental bureaucracy.

Tax auditing, licensing control, and government inspections became some of the many tools used against independent ventures. This heavy-handed control scheme resulted in substantial chaos in Tunisia’s domestic economics that were not readily apparent in IMF or World Bank analyses. Ben Ali’s policies meant that most former business owners or investors were effectively forced out of Tunisian private sector investment, with many moving their funds abroad.

 These practices of crony capitalism greatly hampered Tunisian prospects, resulting in few job opportunities and forcing many others to work abroad. These issues had a significant impact on Tunisia’s educated youth. Many jobs provided by the Tunisian state for these individuals were relatively low-waged opportunities that inevitably fostered an economic system built on inequality.

Other jobs that had more appeal to university graduates were tightly controlled by the Ben Ali regime’s paternalistic system and were distributed to those who curried favor with Ben Ali. Such a system meant that university graduates were spending time and wealth in pursuing higher degrees for minimal-to-no returns, creating a restless and resentful populace.

The Post-Revolutionary Democratic Experiment

Shortly after Mohamed Bouazizi’s self-immolation, mass protests erupted throughout Tunisia and particularly in the capital city of Tunis. On January 14, Ben Ali fled Tunisia and sought refuge at various countries before ending up in Saudi Arabia. Shortly after, an interim government was established and fervent optimism pervaded the country, though more troubling times were to come.

Democratic dreams were realized on October 23, 2011, when elections for Tunisia’s Constituent Assembly were held. The Islamist Ennahda took a plurality of seats in the Assembly but, in a deal focused on supporting Tunisian stability, decided to not put a candidate forth for the Tunisian presidency.

 In 2014, Tunisia held its second set of elections and saw its first peaceful transfer of power. Ennahda had fallen to second in terms of secured seats, with the secularist front of Nidaa Tounes winning the majority. Ennahda and Nidaa Tounes entered into a unity government with one another and has maintained the country since.

 Once again, Ennahda did not field a presidential candidate, confiding to journalists that the party sought unity within the government and did not wish to dominate every political institution.

The Economic Lens of the Revolution

Although Tunisia has successfully achieved a peaceful transfer of power, there still remains factors that have dampened future prospects. In the immediate upheaval of the Jasmine Revolution, key industries and sectors either fell sharply or collapsed completely.

Tourism, which once represented nearly 6.5% of Tunisia’s GDP, plummeted as a result of the unrest and notable terrorist incidents like the 2015 Sousse attacks.

 The immediate aftermath of the revolution also saw many foreign investors pull funds out of the country, with foreign direct investment (FDI) dropping by nearly 20%.

 While the Tunisian government may have maintained its democratic principles, the government itself finds difficulty in uniting on key economic issues. As of May 2018, Tunisia has seen nine separate political cabinets fail in addressing issues like rapid inflation and high unemployment.

 Nidaa Tounes, the leading party, has found itself sundered, with many officials and party members defecting to other groups or acting divisively over certain topics. A report from 3 March 2018 demonstrates this infighting, revealing that 30 Nidaa Tounes deputies had left the party to other groups. This political stagnation is only increasingly indicative of the dires straits Tunisia finds itself in.

In recent years, some sense of recovery has come, but this process has been slow and painful for a majority of the country. Tourism has yet to achieve its pre-revolution figures. For example, in 2017, Tunisia saw 6.731 million tourists, compared to the 7 million figure espoused in 2010 under Ben Ali.

 This has resulted in a difference of thousands of jobs. Furthermore, FDIs have slowly increased their presence in Tunisia, with 3,350 foreign companies operating in Tunisia as of July 2017.21.However, innovation and investment is consistently hampered by Tunisian currency policy. It is currently deemed illegal by the Tunisian government to transfer or move Tunisian currency out of the country.

This has led to many sectors, particularly that of the small but emerging Tunisian tech industry, to jump through various legal hoops.23. For instance, one seemingly trivial but detrimental issue that emerges in this context is that fact that most Tunisians who place such products out into foreign markets must go through a dozen steps to ensure that their revenue is able to reenter Tunisia.

Tunisian growth rate from Ben Ali to just after the revolution.

From a holistic vantage point, Tunisia’s economic progress seems precarious. Its GDP growth has shrunk to around 2.4%, while inflation is at a relatively high pace of 7%.Its foreign debts, which were decreasing by the tail end of the Ben Ali regime, have ballooned from $19.6 billion in 2010 to $31.05 in 2018. More pressing is the fact that unemployment remains high, at around 15.5%, and youth unemployment has reached 35.9%.

 This has resulted in a large migratory wave, with many Tunisians, typically young, male, and unemployed, emigrating from Tunisia to countries like Italy. Education, which has often been touted as being a vehicle in moving individuals out of poverty, can actually be seen as a detriment to many in the Tunisian context. Those with university education, especially women, often face higher levels of unemployment.

 From 2011-2012, nearly 51,000 Tunisians (of which 61.6% were Tunisian males of the ages 15-29) emigrated out of Tunisia.27. Although this particular migratory period can be explained with the unrest Tunisia faced during the revolution and its immediate aftermath, youth emigration continues to be a pressing issue. As of August 2018, nearly 3,000 Tunisians have attempted to make the journey from Tunisia to Europe.

Foreign efforts have attempted to assist Tunisia in its economic endeavors. According to the U.S. Department of State, the U.S. has sent Tunisia $1.4 billion USD since 2011 in conjunction with bilateral agreements like the Science and Technology Agreement in 2014 and a Joint Economic Commission in 2016.

 As one should expect, this aid has often been aimed at vague, democratic ideals like “internal and external security, promoting democratic practices and good governance,” rather than at any specific goal.

 The EU has also offered aid funds to Tunisia amounting to around 2 billion Euros, with the EU explicitly “reaffirming the European Union’s commitment to accompany Tunisia in its democratic and economic transition.” Once again, one finds strong mention of democratic promotion and vague ideas of economic restructuring, but the extent to which more specific problems are identified and addressed is not discussed.

The Economic Implications

These conditions, when taken as a whole, highlight severe problems that have weakened the legitimacy of Tunisia’s democratic institutions. Protests and rioting reminiscent of the 2011 Revolution can be seen in major Tunisian cities.

 This has been exacerbated by popular views of political corruption and infighting that have only furthered Tunisian dissatisfaction with the government.

More pressing is the fact that the levels of individuals classified as “not in employment, education, or training” (NEET) have reached critical highs. Analysis by the World Bank has noted that:

NEET affects more than one-quarter in the coastal region (23.6 percent urban, 37.3 percent rural), more than one-third in the south (35.9 percent urban, 47.9 percent rural), and about one-third of youth in the interior region (31.4 percent urban, 42.4 percent rural, see annex 3, figure A3.3).

A high youth unemployment rate that affects both educated and non-educated groups has the potential for civil unrest and volatility and provides wider implications in terms of security risks and internal threats.

Researchers have noted the link between high unemployment and high rates of extremist recruitment. Seminal studies by individuals such as Sheri Berman have pointed this crucial fact. In her article “Islamism, Revolution, and Civil Society,” Professor Berman addresses the power many Islamists gain when addressing societal problems through social services and civil society.32. This phenomenon can be clearly seen in the Tunisian context. Groups like ISIS-affiliate Ansar al-Sharia (AST) have been well-known for their targeted recruiting of Tunisian youth. Between April 2011 to January 2014,  AST claimed to have recruited nearly 70,000 members. Officials of AST, such as youth wing leader Youssef Mazouz, have credited the organization’s “charity work, proselytizing campaign, and aid distribution to poor areas” as being the main factors in encouraging recruitment.

 Dilapidated towns such as Ben Guerdane have become backwaters of poverty, unemployment, and social chaos in wake of the 2011 Revolution. A growing feeling of being abandoned by the central government has forced such towns to look elsewhere for assistance, often becoming centers of extremist recruitment as a result.

 Many have left Tunisia to fight abroad, often finding themselves within the banners of the Islamic State in Iraq and Syria. Studies have revealed that many Tunisians have expressed non-religious factors as being motivators for their abroad participation.35. Lacking future prospects, many young, vulnerable males decided to find meaning in groups that offered paths for money, stability, and purpose.

Rising unemployment and low prospects for many have led to disillusionment and a substantial decline in political legitimacy for the central government. This has resulted in a sharp increase in extremist recruitment and organizations like AST, who are more than happy to abuse Tunisia’s unemployment for their benefit.

More significant is to consider the rising amount of Tunisians returning home from Syria and Iraq.36. Many of these individuals will be returning to Tunisia with weapons training and Islamist connections.

A point of consideration with this is this return of ex-militants is in conjunction with Tunisia’s current economic problems. With little prospects in terms of employment and socioeconomic progress, these returning Tunisians may find themselves in the same circumstances that forced them to leave in the first place. When examined in this light, it becomes clear that if Tunisia cannot address its economic faults, then the country’s security and identity as a successful, democratic nation may fall under jeopardy. The very conditions Tunisia once fought against may very well be its current downfall.