The public needs to be included for investment to produce economic, political, and social benefits.

Fadil Aliriza is Tunisia project manager at the Carnegie Endowment for International Peace. He recently was one of the co-authors, with Marwan Muasher and Marc Pierini, of a Carnegie paper titled “Capitalizing on Tunisia’s Transition: The Role of Broad-Based Reform.” He agreed to talk to Diwan about the paper shortly before the launch of Tunisia 2020, an international investment conference scheduled for November 29 and 30.

Michael Young: What is the main argument of the recent Carnegie paper on which you collaborated?

Fadil Aliriza: Our main argument is that while recent Tunisian governments have passed legislative reforms and practiced proactive economic diplomacy in a bid to boost investment, there needs to be more public buy-in, inclusion, and consultation from the bottom up in order for investment—or any policy strategy really—to achieve wide-ranging economic, political, and social benefits. Tunisia has achieved a great deal in a short amount of time, building a form of consensus politics that has distinguished Tunisia’s post-Arab uprising political development while working to shape a long-term economic policy to address continuing challenges. However, the distance between citizens and the state persists in a way that has left many Tunisians skeptical of, or even negative towards, what is seen as elite politics.

We argue that if a reform program and development strategy coordinated with Tunisia’s partners is going to be successful, there has to be more transparency and inclusion, both in the policy-making process as well as the project implementation process. So this month’s international investment conference in Tunis, Tunisia 2020, will be a key moment for linking investment and assistance commitments to brick-and-mortar projects.

At the same time we offer major recommendations we think can help with the follow-up of the conference. Those recommendations are really Tunisian solutions that already exist in the 2014 constitution but which haven’t been translated into more specific legislation because they are politically difficult. So Article 10 calls for a fair and equitable tax system and combatting tax evasion, Article 11 calls for disclosure of assets by top officials, and Article 14 commits the state to decentralization. Prioritizing these could help ensure that the benefits of investment are felt broadly as well as shore up the popular legitimacy of the Tunisian political transition.

MY: What are the specific obstacles to reform today that you are finding in Tunisia?

FA: There is a popular perception in Tunisia that some of the recent legislative reforms—particularly liberal economic reforms such as central bank independence or a new investment law—aren’t really up for debate, or at least a broad and inclusive public debate. If people don’t believe in them or understand them, or if they feel they didn’t have an adequate say in them, this is an obstacle to the success of reform.

When it comes to reforms that would see legislative changes to update Tunisia’s laws to match its progressive 2014 constitution—such as laws requiring public disclosure of assets by top government officials or decentralization—the obstacle here is all the powerful interest groups that fear losing out politically or economically in terms of the state privileges they currently enjoy. These groups include large conglomerates, moguls operating in illicit trade, other trade organizations, certain state and local officials, and so on.

MY: There has been much commentary on the fact that Tunisia’s interior continues to be a marginalized region. Can you illustrate the situation in numbers, and tell us what the consequences for stability are?

FA: So let’s look at the interior governorate of Kasserine for example—a key interior region that has seen a great deal of unrest in recent history. In January this year, online news outlet Inkyfada produced an infographicdrawing on research by the Forum Tunisien pour les Droits Economiques et Sociaux, or FTDES, showing that Kasserine has an unemployment rate at about 9 percent higher than the national average. Meanwhile, life expectancy is a full 7 years less than in the capital Tunis.

Other key numbers tell an even bleaker story. Illiteracy is higher; infant mortality is higher; water access is so bad that in some rural areas there have been shortages each summer for the last several years, with some people having no access at all for days at a time. This stands in stark contrast to coastal towns that have water-rich resorts, swimming pools, golf courses, etc. It’s no surprise then that massive, nationwide unrest—in 2008, January 2011, and most recently January 2016—began in those marginalized interior regions before spreading to slums in larger cities. The consequences for stability were most pronounced during the 2010–2011 revolution, but even in 2016 it forced the government at the time to adopt short-term populist measures. The challenge is really how to address the root causes of that unrest in a comprehensive, long-term fashion that might provide an alternative to crisis-induced policy-making.

MY: Tunisia continues to suffer from a bloated public sector. How might efforts to reduce this affect the economy, and national stability?

FA: The argument for reducing public-sector employment that the government is making, and one of the main arguments that the International Monetary Fund is making, is that it represents a drain on Tunisia’s budget, which means there is little room left for investment. It’s true we’ve seen state investment dry up, though the hope is that reform can lead to private investment as a way to fill the gap. That said, the budgetary rationale for reducing public-sector employment is inevitably colliding with several political and economic realities.

One political reality is that the previous government signed an agreementin 2015 with the major labor union, the UGTT, to raise salaries through 2018. A second reality is that the UGTT is powerful and sometimes operates as a de facto opposition to the government at a time when the formal opposition is small in number. A third reality—an economic reality— is that a lot of families in Tunisia depend on one public employee in the family to be the breadwinner. Moreover, growth is to some extent consumption driven, so cutting public employment or salaries before private-sector small and medium enterprises (SMEs) have the right environment to thrive could hurt aggregate demand. Basically it risks provoking all the negative consequences that have been observed from the imposition of austerity measures elsewhere.

MY: You underline that small and medium enterprises are suffering from a number of obstacles in Tunisia, including corruption, nepotism, and prohibitive customs and tax regimes. What is the importance of such enterprises, and are reform efforts seeking to remove such obstacles?

FA: SMEs are generally good job creators. That’s true in Tunisia too, where we see many operating in the informal sector due to legal and regulatory barriers as well as clientelism, corruption, and other barriers to market access. Comprehensive tax and customs reform, which could have a huge impact on these barriers, are on the agenda, but not a priority because they are politically difficult. As for corruption, the government that took power in August has said that fighting corruption is of major importance, but there hasn’t been a lot of follow through. Just this month the head of Tunisia’s state anti-corruption body announced that 50 high officials were under suspicion for corruption. A list had been sent to the government, but there has been no response.

MY: Finally, where do you see Tunisia in five years’ time? Will we look back on this period as one of rare success among the Arab uprisings, or do you feel it will be another case of opportunity lost?

FA: There are so many positive signals when it comes to Tunisia’s potential to continue building a political society that is fairer and more open and inclusive, as well as building a state that serves all of its citizens in terms of political rights and economic opportunities, but also health, education, and environment. There is a vibrant, well-educated civil society, resilient and resourceful citizens, especially in marginalized regions, a significant level of tolerance and even collusion between the major political parties, and a growing tradition of dialogue between opposing stakeholders.

Just recently we saw a hugely positive step with the holding of public hearings by human rights victims under the rubric of the Truth and Dignity Commission. These are all relevant factors to Tunisia’s political development. But whether we will see an even more prosperous, democratic Tunisia with a governing system that is seen as legitimate and in service of citizens will depend on whether government works assiduously to serve those who feel they have gained nothing—or even lost out—over the last several years. Real reform in service of the Tunisian people requires a government with the political will to take on tough fights with all the groups and stakeholders that benefit from politics-as-usual and the status quo.

carnegie-mec – Michael Young

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