Watch List 2020; Tunisia Looks to Reset with the West

In the September-October 2019 elections, Tunisian voters chose to punish the ruling government coalition and reward a fresh crop of political actors. The new president, Kaïs Saïed, and his supporters have declared that their top priority is tackling deteriorating socio-economic conditions, which could entail renegotiating Tunisia’s relationship with key international partners, notably the EU. Three scenarios could heighten tensions and foment instability: a clash between the president and the new parliament, which emerged from the elections without a clear majority; paralysis due to competition among parties that form the next government; or a divisive round of early elections in the next few months. Tunisia can avoid these outcomes if political leaders coalesce around a pragmatic agenda to boost economic activity, reduce unemployment and strengthen Tunisia’s hand in negotiations with Western financial institutions – in keeping with President Saïed’s political outlook.

As Tunisia’s main trading partner, and in line with its European Neighbourhood Policy through which it provides important financial support, the EU should:

• View the new president’s concern for greater economic self-determination as an opportunity to reset its relationship with Tunisia by adjusting its assistance programme to new political realities. Accordingly, it should focus on areas where it is already providing support and that the new president and government may find less controversial (eg, public administration reform, anti-trust efforts, boosting domestic competition and investment opportunities, and developing Tunisia’s peripheral regions);

• Quietly engage with the government to support the development of a Tunisian-owned macro-economic plan that focuses on stimulating investment, employment and growth, and which international financial institutions and creditors can in turn support;

• Work with President Saïed and the government to establish what Tunisians refer to as a National Economic Intelligence Agency, which would harmonise efforts by local and international actors to support economic investment and development;

• Reopen negotiations on the Deep and Comprehensive Free Trade Area (DCFTA) to explore areas of convergence and, in the event of fundamental disagreement, shelve the DCFTA proposal and focus diplomatic and political efforts on dialogue with the president and government on the abovementioned areas;

• Support, through political dialogue and technical assistance, the new parliament in its efforts to fully implement the constitution, putting special emphasis on the need to elect the new constitutional court.

The Rise of a New Elite

The September-October 2019 legislative and presidential elections produced a political earthquake in Tunisia. The polls empowered new personalities and movements that pledged to strengthen state institutions, reduce the country’s dependence on international financial institutions and protect its “Arab-Muslim identity” – by which they mean defending Tunisia’s political, economic and cultural sovereignty. In doing so, these new actors are responding to demands for radical change and greater protection of the country’s interests after years of worsening economic conditions and institutional paralysis.

The electoral results arose out of the perceived failure of Tunisia’s difficult post-2011 democratic transition. By punishing the ruling coalition at the ballot box, Tunisians expressed their rejection of the country’s political stalemate, corruption, patronage networks, rising unemployment and stagnant economic activity. In addition, many voters blame the EU and International Monetary Fund (IMF) for eroding Tunisia’s sovereignty by imposing fiscal austerity measures and other conditions on loans, while failing to help revive a struggling economy.

This rejection of the ruling class and the role of Tunisia’s international partners has been long in the making. The dismal results of Tunisia’s post-2014 consensus politics sparked several conversations within the ruling coalition, political opposition and civil society about the need to strengthen state institutions and protect the country’s economic self-determination and Arab-Muslim identity. Indeed, conservative and religious Tunisians, as well as some opposition parties, share a sense that several of the last president’s initiatives – such as reforming inheritance laws to protect women’s rights – reflected Western pressure and constituted an attack on Tunisian culture. The convergence of these parallel debates on political, economic and cultural sovereignty fuelled widespread desire for change and new personalities who could represent these demands, particularly on behalf of disillusioned youth.

Saïed offered a vision that seems to meet these emerging demands, which largely explains his 73 per cent landslide in the second round of voting. Running as an independent contributed to his electoral success, but this also means he will struggle to get his agenda through parliament. The new president is an academic and political outsider who aspires to complete the process that began in 2011 by upending the country’s institutions and replacing them with a form of direct democracy based on local assemblies which, in his view, would re-legitimise and strengthen the state. His personal frugality and social conservatism helped him present himself as the candidate most capable of representing these demands.

In turn, the legislative elections produced a significantly different parliament. They reduced the secularist Nida Tounes (the assembly’s largest party, which gained 86 of 217 seats in 2014) to a handful of representatives and the Islamist An-Nahda from 69 to 52 seats – with both parties weakened and unable to form a majority coalition in the new parliament. They also brought to the fore a host of new parties. The secularist Heart of Tunisia, led by media mogul Nabil Karoui, gained 38 seats, followed by the Democratic Current, which jumped from three to 22 seats, thanks to its anti-elite platform harking back to the spirit of the 2011 uprising. The Dignity Coalition, a merger of Islamist, conservative and revolutionary groups, secured 21 seats. Finally, the Free Destourian Party (fuelled by nostalgia for the Ben Ali era) secured seventeen representatives; the Arab nationalist People’s Movement grew from three to fifteen seats; and a smaller conservative movement, Ar-Rahma, made its entry into the new parliament, gaining four seats.

Whether these new leaders and parties will be able to work together or, instead, allow their disagreements to fuel a new cycle of nationwide tensions is an open question. Negotiations to form a new government have yet to produce results, stymied by numerous divisions in a fragmented parliament and following appointed Prime Minister Habib Jemli’s failed attempt to win a confidence vote in parliament on 10 January.

This delicate phase carries three major risks. Although the rise of the new elite has superseded the old cleavage between Islamists (represented by An-Nahda) and secularists (mainly Nida Tounes), a novel form of polarisation could paralyse institutions as newly-elected representatives try to outbid each other to appease widespread public anger and frustration with the status quo. Some of them could, for example, launch biased and selective anti-corruption campaigns or pursue an antagonistic, populist foreign policy toward Tunisia’s European partners and international financial institutions. This in turn could accentuate latent anti-Western sentiment and thus damage relations with the EU and IMF, jeopardising Tunisia’s ability to service its foreign debt and threatening a balance of payments crisis.

Another risk stems from possible conflict between parliament and the presidency. In November, parliament elected An-Nahda leader Rached Ghannouchi as speaker. Ghannouchi is keen to revitalise parliament with the support of his party, the largest bloc, and is more pragmatic on economic and foreign policy than the president. However, this may put him on a collision course with Saïed, who believes in a strong presidency – within constitutional limits – and enjoys a strong popular mandate. A conflict between them, or with Tunisia’s foreign creditors, could encourage Saïed to mobilise his supporters against parliament and Tunisia’s party system and in favour of amending the constitution to introduce a system based on direct democracy. Alternatively, if he proves unable to satisfy popular demands for change, his failure may rekindle popular discontent and social tensions.

Finally, should parliament and the presidency fail to agree on a government and a majority coalition to support it, Saïed could dissolve parliament and call early elections. This scenario risks producing another fragmented parliament without a majority coalition, or heightened polarisation around the figure of the president, who could be tempted to break the impasse by attacking other parties and establishing his own.

There is a potentially positive scenario as well, under which these new political forces agree on a reform agenda aimed at improving front-line public services and breaking up business monopolies and patronage networks. With the support of the largest non-governmental institutions, such as employers and labour unions, the president and new government could prioritise public administration reform, ease access to credit for local entrepreneurs and establish an investment program for Tunisia’s least developed regions. While this scenario would still involve renegotiating the economic reform agenda with the EU and IMF, tangible results would pre-empt or offset any criticism for engaging with these institutions.

A Pragmatic EU Stance Toward the New Government

The EU should view this newfound Tunisian concern for greater economic self-determination as an opportunity to reset their relationship. After years of generous funding that failed to yield the comprehensive political and economic reform European officials had expected – and for which Tunisians had hoped – the EU should now focus its cooperation on smaller projects that could coincide with the new leadership’s priorities. Such an approach in turn could guide the Tunisian government toward a more pragmatic outlook that avoids the twin pitfalls of prolonged populist sentiment and parliamentary one-upmanship. The EU could aim for significant progress in areas where it is already providing support to Tunisian efforts to reform public administration, break up business monopolies (which would open up opportunities for small and medium-sized enterprises), boost local businesses’ access to credit and increase investment in peripheral and underdeveloped areas. This approach could be even more productive if the EU stressed the importance of creating opportunities for local companies in addition to stimulating competition and foreign investment –traditional EU goals.

With a supportive diplomatic stance and by continuing to provide financial aid, the EU has the potential to help shape Tunisia’s political and economic trajectory over the next few years. Tunisians have long debated the need for their country to regain its political, economic and cultural sovereignty vis-à-vis this key partner. The rise of a new elite demanding greater autonomy could prove a turning point in Tunisia’s relationship with the EU, as the new powers-that-be are under pressure to break with the past and more assertively defend the country’s interests. For their part, EU officials have expressed doubt about the efficacy of the economic reforms and fiscal austerity they have been supporting, which have had only limited impact on socio-economic conditions.

As for macro-economic reform, the EU should try to bypass the new elites’ resistance to foreign mandates by quietly engaging with the government to back development of a Tunisian-owned plan. Tunisia’s foreign financing needs will have to be reconciled with domestic demand for an economic revival, investment and job opportunities. The EU should discreetly encourage key economic ministers to elaborate a plan for stimulating investment, employment and growth that international financial institutions and creditors can support.

The EU should also approach controversial projects, such as the DCFTA, with care and flexibility. If negotiations break down, the EU should shelve the DCFTA for the time being and prioritise cooperation in other fields (such as the reforms outlined above), where the president and government might be more receptive. Likewise, offering support for the creation of a National Economic Intelligence Agency, as suggested by Tunisian experts, would be wise as it could improve coordination among the country’s multiple economic actors, decision-making centres and international donors. President Saïed and Parliament Speaker Ghannouchi might look favourably on an EU offer of technical support. Finally, the