IMF’s noose of austerity challenges Arab world’s only democracy

While Tunisia has been seen as the sole success of the Arab Spring, the country has experienced no shortage of setbacks, particularly in terms of its economy.

Riot police clash with protesters during demonstrations against rising prices and tax increases, in Tunis, Tunisia, January 10, 2018 (photo credit: REUTERS/ZOUBEIR SOUISSI)
Riot police clash with protesters during demonstrations against rising prices and tax increases, in Tunis, Tunisia, January 10, 2018
Economic protests in Tunisia that have been under way for more than a week are reflecting escalating hardships and tarnishing the luster of the only country to successfully transition to democracy in the Arab Spring.
Since the ouster of despotic president Zine el-Abidine Ben Ali in January 2011, Tunisia has been something of a success story in political terms, holding regular elections, framing a constitution and achieving a high degree of political stability with the participation of Islamist parties.
But in economic terms many Tunisians feel there has been no improvement and some even say it was better under the Ben Ali regime. Hinterland cities like Kasserine and Sidi Bouzid that have been focal points of the current unrest are the same places that were centers of the revolution seven years ago, their grievances, such as soaring unemployment and neglected infrastructure, still unaddressed.
And now, things are getting much worse with the 2018 budget the government recently announced. “It includes austerity measures that will cause significant pain for the average Tunisian, who is already smarting under the pressures of rising prices, stagnant wages and high unemployment,” says Khaled Diab, a Tunis-based blogger and the author of Islam for the Politically Incorrect. “Judging by the Tunisians I meet, economic discontent is extremely high.”
According to the austerity plan, the government will hike the prices of gasoline and some other basic goods and increase taxes on cars, phone calls and the Internet.
“It’s a lot for a family to accommodate especially when there’s no increase in income,” says Dina Mansour-Ille, an analyst at the UK-based Overseas Development Institute. “I don’t know if families will be able to manage and that’s why people are out in the street.
I don’t know if they’ll have any solution to this proposal.”
ACCORDING TO Daniel Zisenwine, a research fellow at the Hebrew University’s Research Institute for the Advancement of Peace, the post-revolutionary government inherited an ailing economy.
Two deadly terrorist attacks in 2015 crippled tourism, which had been an economic mainstay.
And a sense of political uncertainty dampened foreign investment.
These factors impelled the government to apply for a $2.9 billion loan from the International Monetary Fund in 2016. But the IMF has frozen disbursement of the second installment of the loan until Tunisia shows it is committed to austerity.
“They are between a rock and a hard place,” Zisenwine says.
“They need the IMF plan to stabilize the economy and attract foreign investors, but implementing it will cause additional pain to Tunisians who are already frustrated with their economic situation.
The government will have to balance their way out of this and frankly, I’m not sure how they are going to do that.”
Zisenwine does not envision the current unrest – in which one protester has been killed and more than 800 arrested – developing into a new revolution. “The frustration is there but no one wants to undermine the system people worked so hard to create.” None of the protests has seriously challenged the legitimacy of the government or the political system, he said.
In Mansour-Ille’s view, the government will have to significantly scale down its austerity plan.
On Saturday, in a concession to the protesters, the government promised to increase monthly welfare payments and improve access to medical care and housing for needy families. “I don’t think these protests will rise to something bigger, but I think there will be continued unrest until measurements are put down that will be realistic for the average family. The measures right now are not realistic. They are just accommodating IMF requirements in order to pay back the debt. People will continue to be on the street until somebody listens,” says Mansour-Ille.
Analysts differ over how much blame for the economic crisis should be laid on the doorstep of the Ben Ali regime or the post-revolutionary governments.
Max Gallien, a researcher of North African political economy at the London School of Economics, told the France 24 website that since the revolution, “there has been very little thinking about the effects of state neglect where the state previously fell short, for example in improving infrastructure in interior regions or creating access to a labor market that goes beyond public sector hiring.”
Gallien says, “There are people who have been shut out of the labor market entirely, living in regions of poor infrastructure where no private investment will go without incentives. Meanwhile, the education system in some areas appears to have been purposefully allowed to deteriorate.”
In Gallien’s view, Tunisia needs to be given some “breathing space” by the IMF. “The first thing would be to think of the social impact of the reforms we are seeing now. It should have disqualified these reforms before they happened,” he says. “If you push reforms to the point where people are so destitute they believe the only way to engage is to protest, then your reforms are not sustainable.”