Tunisia's tough decisions yet to come

06 January 2015

Economic malaise will challenge Tunisia’s new government

The formation of a new government, due by early February, may seem like the end of Tunisia’s transition from authoritarian rule to a bright, new era.

Ordinary Tunisians have suffered hard since they overthrew President Zine el-Abadine bin Ali in January 2011.

From the collapse of the tourism industry, which is still struggling to recover, to frequent civil unrest that has discouraged foreign investment, the revolution has made life more, not less, difficult for the majority.

The new government will confront challenging circumstances and difficult decisions.

Years of crony capitalism under Ben Ali, when his inner circle used deliberately skewed legislation to capture the most lucrative economic sectors, stifled economic development.

The transitional government lacked the legitimacy to tackle these issues, while the new ruling party, Nidaa Tounes, includes old regime figures who still benefit from the situation. Their desire to protect their interests may come into conflict with the need to open up the economy to stimulate growth.

Balancing the conflicting needs – to reduce unemployment, slow inflation, pay down public debt which has reached over 50 per cent of GDP, and invest to stimulate the economy and regional development – will be an almost impossible task.

If they fail to reintegrate Tunisia’s youth, economically, socially and politically, the protests that punctuated the transition will return.

Continuing instability on the Algerian and Libyan borders also threatens Tunisia’s recovery.

The choice of Habib Essid as prime minister, an independent, consensus figure with experience in government, is a promising start. His best hope is to create a broad consensus, but whoever he brings into the new cabinet will not stay popular for long.

Foreign creditors are demanding fiscal discipline, while Tunisia’s population is frustrated at the erosion of living standards. Deep-reaching reform is needed, but it will inevitably create losers.

The new government will have to walk a tightrope between their constituents, business elites and foreign investors.

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