The Tunisian economy after the Arab Spring: Lagging responses to lagging regions

A blog in these pages in October 2015 drew attention not only to the Nobel Peace Prize to the Tunisian National Dialogue Quartet, but also to a much more tragic event, the death of a young man by self-immolation in Sfax on the very day of the award. He had set fire to himself when police seized his contraband cigarettes. That death passed largely unnoticed, especially in the international media. Inevitably, it reminds all of Mohamed Bouazizi, the desperate Tunisian vendor who also died in a self-immolation in protest against police brutality and economic hopelessness in 2010—and set off the “Arab Spring.” Last week another young man, Ridha Yahyaoui, protesting at having his name arbitrarily removed by government officials from a list of potential public sector jobs, climbed an electric pole and was electrocuted in the poor town of Kasserine.

This death would not go unnoticed. The tragedy underlined the fact that for Tunisia’s lagging regions and poor neighborhoods, the gap with the rest of the country has widened since 2010. Regional disparities are quite stark, with average poverty rates three times as high in the interior of the country than in richer coastal “offshore” areas and, at 25 percent, unemployment rates in the interior regions are double those of coastal areas while only 13 percent of foreign firms are created in the interior regions. Gender imbalances are also pronounced: While 28 percent of urban coastal women are in the neither education, employment, or training (NEET) category, that number is 37 percent in the interior regions and nearly 50 percent in the south. The respective numbers for men in urban areas is 18 percent, 25 percent, and around 50 percent. In the country as a whole, youth unemployment, which was around 12 percent in 2010, now stands at above 15 percent. And while 38 percent of youth are unemployed and nearly 60 percent of university graduates remain unemployed, chances are that by age 35 half will still be jobless.

Two weeks ago, we saw the worst bout of social unrest in Tunisia since 2011. In many ways, Kasserine stands for much of what has gone wrong in Tunisia: poor infrastructure, a weak private sector, a bloated public sector that is the main job provider, while smuggling and other illegal venues are the few alternatives except for illegal migration. The disturbances spread to other towns in Tunisia’s lagging regions as well as to outer neighborhoods in the capital. A curfew was declared in the country and over 1,000 arrests came amidst instances of attacks on police stations and looting, as well as deaths among police and protesters.

The riots underlined that Tunisia faces a multi-faceted crisis. Terrorist attacks this year crippled the country’s tourism industry, which has seen the number of visitors shrink by 35 percent and threatens jobs in a sector employing 400,000. The continuing turmoil in Libya adds to security concerns as does a persistent Islamist armed insurgency in the western part of the country. All of this feeds into and is fed by the radicalization of Tunisian youth: Tunisians constitute the largest foreign contingent fighting with ISIS in Syria and Iraq. 

National politics remain challenging and the ruling Nida Tounes party, a mix of divergent, and often contradictory, political elements has now come apart, losing its parliamentary majority. The moderately Islamist Ennahda party now has the largest parliamentary grouping. Among other issues, Nida Tounes broke up over an apparent battle for succession between the party’s secretary-general Mohsen Marzouk and the president’s son, Hafedh Caid Essebsi. Clearly the optics of potential dynastic succession are less than helpful as is the fact that the party’s weighty group of businessmen and seasoned officials from the Ben Ali regime have not been able to meet the expectations of stability and economic growth promised during the elections.

This is not a perfect storm but a gathering one. The protesters demands have not been for revolution but for jobs and economic dignity. However, it was also for an end to corruption, whether petty as in names arbitrarily removed from employment applications, or against the much larger corrupt practices and cronyism that cost Tunisia so much in terms of economic growth and competitiveness and an economy able to produce the jobs that youth desperately need.

Making Tunisia an economic success

The reality is that the basic contours of Tunisia’s economy have not changed much since the 2011 revolution. Tunisia, like many countries in the region, grapples with legacy issues including a bloated public sector encroaching on much of the economy, a weak business environment unable to secure a level playing field, and an education system that fails its young. The private sector is not nearly as competitive or innovative as it should be and is often part of the problem rather than the solution as rent-seekers outmaneuver entrepreneurs and stymie jobs, competitiveness, and a true opening to the global economy.

Yet, Tunisia remains the freest and most evolved democracy ever seen in the Arab world, with a raucous press and a vibrant intellectual life as well as free-wheeling politics with demonstrations, including last week by the police. But it desperately needs economic support that goes beyond the business-as-usual approach that has come from the outside world. Yes, the French government announced a billion euro program over five years that would target lagging regions, but something more comprehensive than that is needed.

Five years ago, no one would have thought that the Jasmine revolution would resonate throughout the Arab world and lead to the Arab Spring. Making Tunisia a success politically and economically will send a much needed message on inclusive politics and economics to the region at a time when much of the West provides billions in trade deals and aid to autocrats of various stripes. A comprehensive, multi-donor support program for Tunisia is sorely needed to give it breathing room to engage in substantive reforms. There are serious multilateral efforts to put together funding approaches to rebuild the Middle East. It might be smart to help Tunisia now before it does break. Last month showed us what business as usual leads to. Another year or two of doing a little here and a little there may extinguish the Tunisian experiment. Einstein defined insanity as doing the same things over and over again and expecting different outcomes.