NO. 14 MARCH 2020 Introduction Put the Ball in Tunisia’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, Elyes Fakhfakh, 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 Tahya Tounes of former the young democracy. They demand trans- prime minister Youssef Chahed, 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 Nidaa Tounes 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). Tunis 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