Tunisia’s Belt-Tightening Policies Put Democracy at Risk
Posted May 3, 2018 6:45 p.m. EDT
Updated May 3, 2018 6:49 p.m. EDT
TUNIS, Tunisia — When Tunisians rose up against their longtime ruler seven years ago, a pair of idealistic young teachers joined in, hoping the protests would usher their North African nation of 10 million into the ranks of the world’s democracies.
But today Adel and Marwa Jaafri are struggling financially as the country’s economy sputters, its currency falters and the government imposes fresh belt-tightening measures.
Adel Jaafri, 35, a high school computer science teacher, recently took a second job installing satellite dishes and moonlights fixing computers. “I still can’t afford my life,” he said. “We are just making it, but we have taken out a lot of loans. Everything is more expensive — food, schoolbooks for the children.”
Marwa Jaafri, 34, a university professor of computer programming, finished his lament: “Clothes, shoes for the kids. Of course we’re worried. We’re struggling.”
Tunisia, often hailed as the sole success story of the 2011 Arab Spring uprisings, is in danger of being crippled by budget-cutting economic policies that critics say are imperiling the country’s democratic experiment.
Scholars and economists have warned for years that Tunisia’s economic problems could thwart its political progress. But now a raft of critics are blaming financial measures promoted by international lenders and advisers, and taken up by inexperienced Tunisian politicians, for making them worse and setting off an economic and political crisis.
“When you impoverish the poor and middle class you undermine democracy,” said Jihen Chandoul, an economist and co-founder of the Tunisian Observatory of Economy, a research institute. “What’s hurting the democratic process are austerity measures we’ve been asked to implement to access loans. Tunisian democracy is in danger.”
It is a pattern that has played out around the world, in Latin America, Asia and recently Greece, as the International Monetary Fund and other Western lenders demand that governments balance their budgets and open their economies. Those policies often produce jarring hardship and political upheaval that can undermine support for the very kind of democratic and capitalist systems the West is trying to build.
In Tunisia, where the Arab Spring began, those measures are doubly biting for a people who had harbored such great hopes for a fairer society in one of the Arab world’s few democracies.
Protests against higher taxes and rising prices broke out across the country in January after new economic policies advocated by the IMF and Tunisia’s Western sponsors took effect. Following their guidance, Tunisia slashed the budget deficit at the expense of popular demands for jobs, adopted free trade policies that may hurt Tunisian producers and allowed a devaluation of the currency that has raised food and fuel prices.
Tunisian economists, activists, and politicians cited a dozen more examples of what they described as free-market-style economic prescriptions that have worsened people’s lives and damaged faith in the nascent democracy. One test of that faith may come Sunday, when Tunisians head to the polls for the first municipal elections since the 2010 uprising.
Tunisia is in poor economic shape. Its gross domestic product is growing at a tepid 2 percent, while unemployment remains at 15.5 percent, and about 30 percent among the young, many of whom while away their days smoking water pipes at cafes with little hope of being able to move out of their parents’ homes. The Tunisian dinar has fallen about 40 percent compared to the euro and the dollar since 2011, increasing prices for fuel and almost all consumer goods. International ratings agencies have repeatedly lowered Tunisia’s creditworthiness, straining the government’s ability to borrow to invest in jobs or public works programs.
According to a poll conducted late last year by the International Republican Institute, a Washington democracy advocacy organization, 83 percent of Tunisians say the country is going in the wrong direction, with 64 percent citing the economy or unemployment as their biggest worry.
Tunisian political leaders say they had few options but to submit to demands by international lenders, including the European Union and the IMF, to whom they owed $31 billion, equivalent to 60 percent of the GDP.
“We have no choice,” Naoufel Jammali, a lawmaker of the Islamist-leaning Ennahda Party and a former Cabinet minister. “We have to strengthen our ties with the international institutions which advise us to take these steps. Everyone keeps talking about a new economic model, but we have no idea how to create a new model.”
Politicians attribute the economic hardships to the lingering aftereffects of the global financial meltdown a decade ago as well as troubles in neighboring Libya, an oil-rich behemoth that once provided jobs, businesses and remittances but is now a source of security threats, including terrorist attacks that have damaged Tunisia’s tourism industry. They also blame political infighting in Parliament and the street protests, factors that would have been easier to suppress under the dictatorship.
In February, Parliament exploded into shouting matches over the process for naming a new central bank governor. “Before there was always one strong boss to make decisions,” said Mohamed Saidane, a lawmaker and member of the secular Nidaa Tounes party. “Now, we’re changing. There are 270 deputies and 25 parties and no one has a majority. The electoral system is slowing down the economy.”
But others pinpoint specific decisions made by the country’s leaders at the behest of the monetary fund and other Western powers that have worsened Tunisia’s problems. Last year the IMF delayed a loan disbursement because it said the government was not moving fast enough to sell off three banks and slash government jobs. It also coaxed Tunisia into adopting higher sales tax rates in an effort to reduce the 2018 budget deficit.
Tunisians were stunned when the fund’s Tunisia mission chief, Bjorn Rother, told Bloomberg last month that the dinar should fall even lower, a sentiment that baffled economists who worry that consumers are already suffering under soaring fuel and food costs and that the government is squeezed by debt payments denominated in dollars and euros. A Tunisian business website marveled: “Does Bjorn Rother want to kill the Tunisian economy?”
The monetary fund, which was roundly criticized in the 1980s and 1990s for imposing painful structural adjustments on developing countries, insists that it is not promoting austerity in Tunisia.
“We advocate well designed, well implemented, socially balanced reforms,” the fund’s spokesman, Gerry Rice, said. “Jobs and fairness will come with economic growth.”
In a question-and-answer page posted on the organization’s website in response to the criticism, the IMF said the government can reduce debt without hurting the poor, for example by reducing subsidies on products consumed mostly by the affluent and strengthening tax collection, and channeling those resources to job creation and social spending.
Allowing Tunisia’s currency to fall, the fund’s defenders say, will jump-start Tunisian industries such as textiles, which are now challenged by imports from China and Turkey.
But the monetary fund says it is ultimately the government that calls the shots on the country’s economic direction.
This year, the European Parliament dealt a further blow to Tunisia’s investment prospects, listing the country as a haven for money laundering and tax-dodging, a move considered unfair even by some Western politicians. “I can’t understand how you can put Tunisia in the same basket” as Afghanistan, Syria and Yemen, said Marie-Christine Vergiat, a French member of the European Parliament. Some politicians suggested the blacklisting was meant to press Tunisia into signing a controversial free trade agreement with Europe that Tunisians worry would further damage prospects for embattled local producers. “They’re using their weight in the EU to increase economic integration,” said Jammali, the lawmaker. “But it’s really a David-and-Goliath situation. We are negotiating with a huge power.”
Economic strains on ordinary Tunisians can be seen at any secondhand clothing market in Tunis, the capital. The sprawling flea markets known as “fripes” used to draw the poor and the young, as well as a smattering of vintage clothing aficionados. Now middle-age and middle-class families depend on them, and complain that even there prices have jumped. A jacket that used to cost the equivalent of $3 now costs more than $8. During a recent visit, buyers and sellers recalled that life was easier, costs lower and profit margins higher under the deposed strongman, Zine El Abidine Ben Ali.
“We no longer buy new things, and even the fripe has gotten more expensive,” said Tawfiq Jendoubi, a 29-year-old employee at a grocery store. “I’m realizing now that everything here is too expensive. I cannot afford any of it.”
The Jaafri family struggles to get by on a combined income of about $15,000 a year. After paying rent, school fees and debts, the family of five is left with about $13 a day for food, transportation, clothes and any extras.
“We’re not able to save anything,” Marwa Jaafri said.
In the country where the Arab Spring began, many Tunisians voice longing for a strong leader who can quickly make decisions and put the squabbling political class in its place.
Human rights advocates have voiced alarm over what they see as the country’s authoritarian drift, manifested in prosecutions of politicians, journalists and activists who criticize the police and army. The protests in January were met with mass arrests.
Analysts say they worry that the country is edging toward a model of autocracy similar to Egypt’s after a 2013 coup by the former military leader Abdel-Fattah el-Sissi.
“We’re moving close to that, very slowly,” said Fadil Aliriza, a Tunis-based analyst and journalist. “Whether we’re going to have some kind of violent rupture remains to be seen.”