NO. 14 MARCH 2020 Introduction

Put the Ball in ’s Court New Government and Urgency of Reform Require Modified EU Approach Isabelle Werenfels

Despite a hostile environment, Tunisia’s democratisation process since 2011 has survived and progressed. Yet crucial structural reforms to ensure effective govern- ance, economic growth and resilient democracy have yet to be implemented. Elec- tions in 2019 indicated a popular desire for a strong push for reforms. A new govern- ment took office at the end of February, but it remains to be seen how functional it will be. It encompasses parties whose views on certain questions are fundamentally opposed. This creates a dilemma for Tunisia’s external partners: they would like to accelerate the pace of reforms but have little to show for their attempts to prod Tunisia into action. One option for spurring Tunisian initiative would be more tar- geted incentives for reforms and clearer conditionalities for financial assistance. Germany’s reform partnerships are already a move in that direction, and Germany could use its EU Council Presidency in the second half of 2020 to persuade external donors to take a common line.

The death of President Béji Caïd Essebsi in nomic focus. After the election the public July 2019 and the subsequent presidential showed effervescent optimism. Opinion and parliamentary elections have reshaped polling in October 2019 found 78 percent Tunisia’s political landscape. The new presi- confident that the next five years will be dent, Kaïs Saïed, is a constitutional lawyer better than the past five; only 6 percent who received more than 70 percent of the feared the opposite. votes. He is regarded as modest and sincere The protracted process of forming a gov- but politically inexperienced. Apart from ernment put a damper on those high expec- Ennahda, which remains the largest party, tations. In early 2020 parliament rejected the other main parties were almost wiped the cabinet put forward by Ennahda’s out. In their place anti-establishment forces nominee for prime minister. In a second from left to right did well, often employing round the president’s personal choice of populist rhetoric. Ultimately the election prime minister, , succeeded result – nine years after the end of the in forming a government. Fakhfakh had dictatorship – reflects the wish of many already served as a minister from 2011 to Tunisians to see a fresh attempt at reform, 2014. As the candidate of the tiny social this time with a stronger social and eco- democratic Ettakatol he received just 0.34

percent of the votes in the 2019 presidential purchasing power, better services (especially election. in the state health and education systems), Half the new ministers are independent a reduction in social inequality and not least technocrats, the other half politicians from more determined action against corruption. very different parties: the moderate Islamist Fourthly, civil society activists in particu- and economically liberal-leaning Ennahda, lar press for reforms designed to consolidate the secular liberal of former the young democracy. They demand trans- prime minister , the social parency and accountability in the security democratic Attayar and the left-wing, pan- sector, greater powers for parliament and Arabist Echaâb. local elected representatives, the end of in- The opposition is also extremely diverse fluence on the judiciary by powerful politi- ideologically. The largest opposition party cal and business interests, and full realisa- is the secular liberal Qalb Tounes. Other tion of the terms of the constitution. To relevant currents include the conservative this day there is still no constitutional court Al-Karama and the anti-Islamist Parti Destou- because most appointments have been rien Libre. The latter seeks to restore aspects blocked in parliament by party-political of authoritarian rule, which it regards as squabbling. having been positive. Obstacles to reform

Reforms Necessary, Various reasons can be identified for the Circumstances Difficult failure of the outgoing coalition of Ennahda and to implement important The Fakhfakh government stands under structural reforms: great pressure to show results. Firstly, public Veto actors and entrenched practices. The cen- finances are extremely tight. Debt servicing tral veto actors include the highly influen- alone consumes about one-fifth of the 2020 tial trade union confederation, the UGTT, state budget, and tourism revenues can be which has repeatedly succeeded in delaying expected to collapse entirely as the effects or watering down budget cuts demanded by of the corona virus ripple out. In order to the IMF and mobilised sections of the popu- maintain liquidity the government needs lation against liberalisation initiatives in to negotiate rapidly with the International trade and other sectors. Monetary Fund to release loans totalling Networks in business, administration more than $1.2 billion that have been held and politics that work to preserve privileges back pending completion of promised acquired under the old regime are at least reforms. as influential. They fear competition, trans- Secondly: In order to overcome the on- parency and accountability and resist fiscal going economic crisis without accumulat- reforms, new regulatory regimes and moves ing even more debt, the Tunisian economy to bolster the independence of the judiciary. needs to be dynamised, integration in the The interests of these networks of patronage global economy stepped up and new jobs are also reflected in repeated attempts by created. Alongside fundamental reforms Nidaa Tounes to torpedo the transitional jus- of the fiscal, financial and credit systems tice process, in resistance from police unions this also requires efficiency improvements against greater accountability, and in the in the administration, faster approval pro- rejection (also widespread in the employers’ cesses and education reforms orientated organisation UTICA) of trade liberalisations on the needs of the labour market. that could endanger existing monopolies. Thirdly, the government must respond to To date political will to stand up to these high public expectations: As confirmed by powerful networks has been lacking. Here surveys in 2018 and 2019, what Tunisians Ennahda’s much lauded policy of consensus want most is economic recovery, greater was likely a factor: Although Ennahda had

SWP Comment 14 March 2020

2 been persecuted during the dictatorship was reflected in Tunisia’s indignation when and is regarded as rather reform-orientated, the European Union put it on its money- it decided in 2013 to cooperate with the laundering blacklist in 2018 following a elites from the old system. Concern for recommendation by the international national stability and avoiding a return to Financial Action Task Force (FATF). illegality likely played a role too. The out- had ignored European warnings that action come saw an important potential driver would have to be taken. The expectation of reform mutate into a status quo actor. that the EU would come to Tunisia’s rescue Capacity deficits and silo mentality. The ob- resurfaced in the communication over the stacles to reform also included the poorly negotiations over the free trade agreement, resourced parliament, which has been over- which is controversial in Tunisia. Because whelmed by new legislation in the course the government plainly lacked the political of the transition. Above all there is a lack will, the EU took charge of the communica- of cooperation within the government and tion with Tunisian civil society. Examples between ministries, while the bureaucracy like that suggest that European overactivity also remains inefficient and susceptible to is not necessarily productive for Tunisian corruption. Like the World initiative. Bank, European trade and develop- ment actors complain about enormous New constellations – delays and cashflow problems, partly as a new opportunities? result of a silo mentality in the ministries, a lack of flexibility in the administration, and Pronouncements by the new prime minis- cumbersome approval processes. A survey ter and the terms of the coalition agree- of small and medium-sized enterprises in ment suggest that the new government is 2019 found more than 70 percent of fully aware of the need for reforms and the respondents reporting that the public obstacles to their implementation. Its prior- administration was a major obstacle to ities include improving coordination be- development; 28.8 percent said there were tween ministries, a clampdown on corrup- “incentives” to bribe the administration for tion and following the recommendations of a service. In the 2019 Global Competitive- the so-called Truth and Dignity Commission ness Ranking from the World Economic for transitional justice. In addition, both Forum Tunisia occupied 87th place out of President Kaïs Saïed and the coalition mem- 141. bers Echaâb and Attayar place great weight Effect of the “democratisation bonus”. Since on Tunisian sovereignty. This would imply 2011 the European Union and member that they will want greater influence over states like Germany have given Tunisia and “ownership” of reform processes. At greater diplomatic and financial support the same time the implementation of eco- than any other Arab country. The grounds to nomic reforms is likely to test the political do so included Tunisia’s role as a depend- elites’ ability to compromise: Tensions be- able counter-terrorism and migration man- tween advocates of statist and free-market agement partner and the repercussions agendas within the government are inevi- of the Libyan civil war. But the most impor- table; the government’s majority in parlia- tant reason for such massive support was ment is small, and power struggles loom and remains Tunisia’s position as the only between the parliamentary speaker – En- country in the region to have successfully nahda leader Rached Ghannouchi – and democratised. the popular President Kaïs Saïed. After almost a decade, Tunisia’s govern- ment appears to think it can take this “democratisation bonus” for granted, espe- cially as it continues to flow despite the absence of structural reforms. That attitude

SWP Comment 14 March 2020

3 Lessons for the European Union experts. European actors could make more and better-targeted use of Tunisian exper- Tunisia’s partners in the EU would be well tise, including from the Tunisian diaspora. advised to leave the initiative to Tunis. The Tunis has already begun to implement a will to reform cannot be imposed from out- dual education system – with apprentice- side. But messaging, incentives and action ships parallel to purely academic educa- can be configured to strengthen pro-reform tion – with German assistance, and this actors and increase the pressure on Tuni- needs to be expanded. Despite there being sian partners to cooperate. Germany has around 600,000 unemployed in 2019, Ger- an important role to play, as Tunisia’s most man enterprises had difficulties finding © Stiftung Wissenschaft important bilateral partner in terms of skilled applicants for thousands of vacan- und Politik, 2020 financial volume alongside . The Ger- cies. All rights reserved man EU Council Presidency from July 2020 Improve European coordination. Since 2011 would offer an opportunity for a reset to about €10 billion have flowed to Tunis in This Comment reflects seek the following measures: official European development aid alone, the author’s views. Demand and promote Tunisian initiative. In without heed to synergies and coordina- The online version of all forms of cooperation, the initiative needs tion. Agreements are possible, as demon- this publication contains to come from Tunis, as has long been the strated by the security cooperation since functioning links to other case with civil society actors. From that 2015: In response to terrorist attacks, Euro- SWP texts and other relevant perspective the EU should certainly avoid pean and US actors coordinate with Tunisia sources. insisting on reviving the contested free and share tasks. In order to strengthen SWP Comments are subject trade talks, and instead wait for Tunisian transparency and coordination, Germany to internal peer review, fact- initiatives and proposals. could publish a full list of German-funded checking and copy-editing. Ex-post funding mechanisms for cooperation cooperation projects on a digital platform, For further information on with the government. Experience with the in the hope of encouraging other European our quality control pro- reform partnerships initiated by Germany and external actors. cedures, please visit the SWP website: https://www.swp- in 2017, for example in finance and bank- The aforementioned measures offer berlin.org/en/about-swp/ ing, suggests that the impetus for reforms Tunisia an opportunity to realise changes quality-management-for- increases and their pace accelerates if funds that are desired by important actors within swp-publications/ are not released until jointly agreed steps and outside the new government – to pro- have actually been accomplished. Inter- gress from being the object of well-meaning SWP departmental projects also encourage co- external development ambitions to become Stiftung Wissenschaft und Politik operation between ministries. The principle the active subject and shaper of its own German Institute for of “cash on delivery” should be expanded future. International and to all direct state aid from external actors, Security Affairs specifically taking into consideration goals that are both proposed by Tunis and am- Ludwigkirchplatz 3–4 10719 Berlin bitious. Telephone +49 30 880 07-0 Strengthen incentives for reform. The gov- Fax +49 30 880 07-100 ernment has stronger incentives to carry www.swp-berlin.org through sensitive reforms if it can demon- [email protected] strate progress to the population, such as

ISSN 1861-1761 the conversion of external debt into project doi: 10.18449/2020C14 funds, expanded quotas for work visas for European states experiencing skilled labour Translation by Meredith Dale shortages, or specific concessions on agri- cultural trade. (English version of Promote local expertise and skilling. Tunisia SWP-Aktuell 16/2020) is crawling with international development

Dr Isabelle Werenfels is Senior Fellow in the Middle East and Africa Division at SWP.

SWP Comment 14 March 2020

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