Tunisia's Democratic Future: Political and Economic Freedoms

Last week I participated in a conference on Tunisia’s democratic future. The conference was attended by the heads of major political parties, including Rachis Ghannoushi of Ennahda and Nejib Chebbi of the Progressive Democratic Party. Below are my remarks.

Tunisians’ expectations today are higher than they ever have been. They want and deserve the freedom to participate in elections and policymaking, the right to access information, meaningful work, the ability to provide for their families, and more. How can Tunisians work to meet such expectations?

We’ve been talking over the past two days about elections and political parties, the role of religion in society, labor, and democratic experiences from around the world. Now, I want to reinforce three ideas that I think can help us understand the linkages between Tunisian citizens’ economic and democratic expectations: First, economic growth is only sustainable and broad-based when paired with democracy. Second, democracy is only sustainable when underpinned by democratic institutions. And third, the same institutions that support democracy, support a market economy. And I would love to discuss the concrete role the private sector can play in Tunisia’s democratic future.

So first, the quality of growth is crucial, and growth is only sustainable and broad-based when paired with democracy. This is evident to us by considering the revolutions in Tunisia and Egypt. On the surface, both economies seemed far from desperate. For Egypt, GDP was growing at 7.2% before the international financial crisis and at a little over 5% in 2010. Tunisia’s economy has grown by an average of almost 5% over the past decade, though it had been in decline recently. Doing Business Indicators were improving – Out of 183 countries ranked, in the last year alone Egypt climbed from position 99 to 94, and Tunisia from 58 to 55. FDI was impressive by regional standards, and Tunisia was particularly lauded in this respect.

But what did citizens feel? Their salaries were not increasing. Their job prospects were not improving. Life was not fulfilling for most people. To make matters worse, citizens witnessed crony capitalists and regime favorites exploiting the limited privatization that authoritarian rulers embarked upon, benefiting from corrupt institutions. What it comes down to is that Tunisia and Egypt did not have competitive market economies because ruling regimes would not allow the values of democracy to curb corruption, allow the free flow of ideas, and support the rights of individuals.

This leads me to point number two, if growth is only sustainable when paired with democracy, democracy is only sustainable when underpinned by strong institutions. We see many countries around the world that claim to be democracies. Yet for true democratic consolidation to occur, institutions must ensure that society operates on the basis of transparency, accountability, fairness, and responsibility. Without the institutions that ensure these core values, democracy is subject to the whims of individuals. Citizens may be able to select a set of leaders through elections, but without institutions, democracy will not deliver between elections.

In addition, many times leaders, once elected, rely on weak institutions so that they can make unilateral decisions. And in fact, many use populist rhetoric to appear as though they are acting in the interests of the people. A turn to populism has proven fateful for nascent democracies and post-revolutionary countries. Poster children of populism such as Venezuela, Bolivia, and Iran have seen their economic freedom scores drop in the past decade so that they now find their states lingering at the bottom of rankings on ease of doing business and perception of corruption. Their anti-market policies have squandered natural resources, exacerbated income inequality, and undermined the development of civil society. Government handouts have kept the people dependent on the state, taking away the independence that is so necessary to hold the government accountable in a democratic system. No one wants to see Tunisians vote in elections this fall, only to be plagued by economic stagnation, unemployment, popular frustration between polls, and newly entrenched, unilateral decision-makers.

The connection between economic and political reform is clear – my third point is that the same institutions that support democracy support a market economy; they are inextricably linked. The best democracies flourish in market economies because of those shared foundational principles of transparency, accountability, fairness, and responsibility. If any of you here today are businesspeople, you can see, for instance, the parallels between the values and principles of corporate governance and democratic governance. Let’s consider concrete examples. It is impossible to have civil liberties without economic freedoms. The court that ensures one’s civil suit is settled fairly is the same court that upholds one’s property rights – essential for conducting business. The pluralism that allows the formation of political parties also fosters associational life, important for the business community. The institutions that support fair and transparent political contests also support fair and transparent economic competition. And the same system of governance that includes the public in decision-making, by definition, includes business among this diverse constituency. It is clear that in places where democracy and the economy are thriving, there are underlying conditions that support the both.

Tunisia knows from experience that GDP is not an indicator of broad-based economic prosperity and societal happiness. So what are citizens’ expectations and how can the private sector help Tunisia to meet them? To make a meaningful difference, democracy must deliver in three ways: government must produce outputs: social services, security, justice, and so on; government must facilitate economic growth to improve standards of living; and government must be responsive to public needs and demands. As a key component of civil society, business has resources, human capital, and problem-solving capabilities that can benefit society as a whole and help democracy to deliver. A politically engaged private sector can improve policymaking, represent legitimate economic interests, and defend democratic rights and institutions.

Here are just a few examples. Private sector advocacy, via business associations, can help reduce barriers to business, which in turn encourages entrepreneurship and the development of SMEs – essential for job creation. Public-private dialogue can help to injecting the values of entrepreneurship and civic education as well as provide a feedback mechanism on labor market needs for national education curriculum. Private sector collective action can be a strong force in combating corruption, through voluntary ethics codes. And by adopting internal corporate governance principles, companies can become models of good governance. It will take many years for former state-controlled economies to be transformed into market economies. But short-term international loans and debt relief are not enough to set Tunisia’s economy on a path of economic growth. Market-oriented reform will require much more, including a serious effort to bolster democratic institutions.

Women's Political and Economic Freedoms are Interlinked

I participated in a conference on women's entrepreneurship in Ramallah, Palestine. The onference was attended by Dr. Salam Fayadh, the Palestinian Prime Minister, and some of teh most influential political and economic leaders in Palestine. Below are my remarks.

Women comprise half of the world’s population, perform 66 percent of the world’s work, produce 50 percent of the food, and constitute between 60 and 80 percent of the manufacturing workforce in developing countries. In addition, women business owners make up the majority of entrepreneurs in the informal sector and a large share of the micro-enterprise sector. Yet, despite their extraordinary contributions to socio-economic development, women continue to be marginalized in many countries around the world.

The challenge of building democracy that delivers is one of ensuring fair and open economic, political, and civic participation for women in society. Today, we hear about developments in the Middle East that are lauded for advancing women’s rights – parliamentary quotas for women; an increased number of female university graduates. But my enthusiasm is tempered by the realization that such political and educational advances will be hollow if women are not empowered economically. What use is a university degree if you are unable to find a job, create your own business, or if you feel pressured not to even pursue a professional career? World Bank statistics from 2007 show that in the West Bank and Gaza women with tertiary education account for 82% of unemployed women compared to only 12% for men. Similarly, of what value is a seat in parliament if you do not have credibility behind you because you are not awarded equal economic rights in society?

My organization, CIPE, views women’s empowerment through the prism of building linkages between educational, political, civic, and economic empowerment. The question of how to support women’s entrepreneurship is central to this effort. CIPE has found through its experience that many traditional approaches to promoting entrepreneurship focus too much on building the skills of a few individuals. Whereas on the other hand, institutional reform can help to remove barriers to entrepreneurship, such as problems enforcing contracts; struggling to overcome corruption; complex licensing procedures; difficulty accessing credit; finding reliable employees; and lack of transparency, trust, rule of law. In fact, though these issues affect all would-be entrepreneurs in the Middle East, studies show that they have a disproportionately negative impact on women. The World Bank has found that high capital requirements and drawn out and expensive procedures for starting and closing a business are likely to present a larger barrier to women because women require “greater flexibility to scale down or abandon business aspirations to meet family needs.” In other words, when the costs of doing business and exiting the market are high, women have incentives to remain in the informal sector or not even pursue business. Labor codes that govern permissible hours of work, perceptions of gender roles, and other legal and social concepts also present added challenges for women becoming entrepreneurs.

Despite these obstacles, remarkably women tend not to view themselves as victims but rather seek to understand how they can be drivers of change. And that’s what I want to talk about today, how the private sector, and especially women’s business associations and civil society organizations, can play a vital role in removing barriers to entrepreneurship through public policy advocacy and community engagement. The recipe for building entrepreneurial economies is pretty simple, but the ability to implement necessary reforms is much more complex. The “recipe” involves building market institutions; removing barriers to starting, operating, and growing a business; reforming educational systems; creating a broader awareness and understanding of what entrepreneurship means; and deepening appreciation for entrepreneurs’ contributions to the development of societies. The ingredients of this recipe will not come together by preparing individuals to become entrepreneurs. A key component of success in supporting entrepreneurship has to be association-level work to advocate for the institutional changes that will foster a culture of entrepreneurship. Associations have been a vital part of America’s democratic history, and examples from CIPE partners around the world show the usefulness of the association model in advancing democracy and economic growth.

In terms of fostering entrepreneurship, business associations and chambers of commerce can play a leading role in removing barriers to doing business through policy advocacy. CIPE’s partner the Bangladesh Women Chamber of Commerce and Industry has successfully advocated for a number of local and national level policy changes, as outlined in its Women’s National Business Agenda. In particular, the Chamber has eased access to credit for women entrepreneurs, both through the issuance of Central Bank rules providing women with low-cost loans with no collateral requirements, as well as by monitoring implementation of these new rules by commercial banks. To date, nearly $23 million has been provided to more than 3,000 women entrepreneurs, helping to create around 20,000 new jobs. The Chamber, which has had explosive membership growth since it began working with CIPE, has also developed into a stronger organization through better governance mechanisms and improved budgeting and strategic planning.

The Coalition of Women Business Associations in Romania is an informal coalition launched in January 2004, with CIPE support, by nine Romanian women’s business associations eager to play a larger role in the formulation of government policies related to the private sector. The coalition does not replace the activities of association members; it gets involved in major initiatives and events that require grassroots support such as public hearings, debates, legislative proposals, and amendments. By 2007, the coalition had become an influential, self-sustaining entity with 19 association members representing more than 2,000 businesswomen. It is another example of a framework for driving national-level debate on issues such as entrepreneurship.

The business community is also leading the fight against corruption to empower entrepreneurs. In Russia, business associations are equipping small businesses with tools to resist extortion by public officials. In addition, CIPE studies have shown that a major barrier to entering the market and operating a business is individuals’ confusion over complicated licensing procedures and conflicting laws and regulations. Business associations can work to change laws and regulations to ensure that they are more consistent and fair; this has the added benefit of decreasing instances of corruption because local officials cannot rely on their discretionary powers to selectively implement different laws.

In Kyrgyzstan, members of the business community are engaging in the national educational system to help ensure that university curricula are more geared towards the real business world. Public-private dialogue can also lead to incorporating entrepreneurship and civic education concepts into educational curricula. All of these activities represent practical, concrete examples of how the private sector can advocate and work to foster an entrepreneurial culture.

As one author put it simply, “By being able to exercise their economic freedom, entrepreneurs reinforce political and personal freedoms and are an important force in establishing and maintaining an open democracy.” In non-democracies or democratizing societies, entrepreneurs face heavy barriers. But those who find a way to operate, by virtue of their very existence, are advancing economic, political, and civic freedoms. And once societies transition into democracies, entrepreneurs are the drivers of economic growth, which adds to the stability and well-being of the country and its citizens. Women are stepping into their natural role as entrepreneurs, and are therefore key drivers of change particularly in the Middle East.

To Vote Like an Egyptian

http://www.cipe.org/blog/?p=7971



Fifty three days after the youth ignited a revolution in Cairo’s Tahrir Square that irrevocably changed the country’s and the region’s future, millions of Egyptians are lining up at thousands of polling stations all over the country to cast ballots for a YES or NO vote on a referendum on amendments to the 1971 constitution. By all accounts, turnout is of historic proportions and Egyptians are freely taking their first democratic steps along a long path towards democracy. Significantly, no one knows what the result will be. A poll conducted by young Egyptians over the past week declared the referendum “too close to call.”

The debate leading up to the referendum has been animated and the accusations and counter-accusations furious. Most Egyptians are deciding on the YES or NO today based on fears of the other alternative.

On the one hand, those who have advocated for a YES vote felt that the most important thing today is to move away from the provisional rule of the military, elect a new president and legislature, and then develop a new constitution that would be put forth for a new national referendum. They insisted that a new constitution needs the legitimacy of en elected body to develop it, either a parliament or a constituent assembly appointed by an elected parliament. They also intimate that the people are not ready for the compromises necessary to develop a lasting constitution. Developing a permanent constitution now, they claim, would break the nation apart and throw it to the hands of the military.

On the other hand, those advocating for a NO vote felt that the country, and especially the secular political parties, are not ready for elections. They insist that the fast-paced process of amending a void constitution is undemocratic and that what the country needs now is a broad-based constituent assembly to write a real constitution that should be the one to put forth for a referendum, not the “patchwork” of amendments that are put forth now.

Basically, one camp is stoking fears that a NO vote will keep the military in power (akin to what happened after the 1952 revolution), and the other is stoking fears that a YES vote will usurp the nascent democracy and throw control to undemocratic forces that were able to organize during the Mubarak regime.

In this writer’s humble opinion, both positions are exaggerated, but not so unexpected given the decades of mistrust among the political forces in the country. However, what is lost to most are questions such as “what are Egyptians voting for or against today?” i.e. what are the amendments and what will their effect be? And, what will happen if the referendum fails?

Starting with the latter, a YES vote sends Egypt along a route for quick elections for the executive and legislature, followed quickly by a process to develop a new constitution. However, no one seems to be certain of what happens if the NOs beat the YESes. It seems that the ball will be kicked back to the military council to decide on the next steps. There are no shortage of suggestions by pundits who’ve found a strong voice after the revolution, but most seem to point towards a longer process, overseen by the military, to develop a “legitimate” constitution. Meanwhile, the political parties –of the old traditional variety and the new youth-led ones—would have a “fair chance” to “level the playing field”, and compete for elections. Some are requesting a six-month period for the process to allow for the development of a “road map” to democracy and the development of a democratic constitution.

But, again, what are Egyptians voting for? The battle is over nine amendments that, according to the military, will allow the country to hold “free and fair” elections and to move the country to civilian rule. The military had voided the 1971 constitution and disbanded the parliament. Its provisional rule was thus rendered unconstitutional and, as a friend in the know told me, it felt it needed a precipitous process to give the country legitimacy, especially given how the world is watching Egypt with a microscope.

One of the controversial amendments was that of Article 75, where language for the eligibility to be a candidate for president was added to limit it to those who, and who’s parents, have not been citizens of other countries, and to those who are not married to a non-Egyptian. (Of note – the Arabic language used to write the amendments is gender specific and assumed the candidate is a man and the spouse is a woman.)

On other fronts, most agreed with the amendment to Article 77 that limits the presidency to two terms of four years each, as well as the amendment Article 88 providing for full supervision over the elections to an independent judiciary, instead of the ministry of interior.

Most were also happy about the amendments to article 148, limiting emergency rule to no more than six months, unless a referendum approves an extension, and with the approval of a majority of parliament, as well as the removal of Article 179, known as the anti-terrorism article.

Other amendments affect article 189, articulating processes to establish a constituent assembly appointed by both chambers of parliament, mandate the development of a new constitution within six months, and a referendum to approve the new constitution within 15 days after that.

Regardless of what the result of the referendum will be and whether the YES or NO wins, the real winners are the Egyptian people. As a Yemeni-American in Cairo on this historic day, I have to confess that I felt envious and wanted to have my finger dipped in the pink indelible ink. I’ve been following the comments of Egyptians on television, radio, Twitter, Facebook, and through talking to Egyptians everywhere. Below is a sampling of quotes that reflect how Egyptians felt today. Please excuse the colloquialism.

» So Exciting. First time to vote in my life. Real vote. We are a very lucky generation.
» I voted in AlManial ElE3dadeya things are very positive, police officers are helpful. Things are great.
» About a thousand people in front me now to vote. Still happy despite the fact that will take me an hour to vote
» The evolution of the revolution: About a 1km of people waiting in a line to vote.
» Today is a response to Husni Mubarak, Omar Suleiman, Ahmed Nazif & anyone who claimed that Egyptians are not ready for democracy
» Good morning the whole world. The picture shows me, my 2 daughters and my grandson at the polling station very early this morning. For the first time in my life I feel thrilled to go and vote. Congratulations our amazing Egypt for the well deserved freedom. Have a great day all wherever you are on planet earth and the outer space , share our happiness and celebration. Hold your head up high. You are Egyptian.
» Our PM Essam Sharaf refused to cut in line, & stood with us and waited to vote.
» Wow, even Amr Moussa refused to cut in line. Symbolic things, but they mean that so much has changed.
» Cairo Governor kicked out of polling station for refusing to wait his turn http://ow.ly/4hM0A
» First time [I tried to vote] was in May 2005 &they wouldn’t let me in & I vowed I would not let up until I saw this day!
» My finger is pink and my head held high.
» I was also at this polling station, and everyone allowed anyone 60+ to cut line. Including my uncle.
» Just got into a heated debate with a [political opponent] and told him I’m against the const. cuz I don’t want people like him to be thrown behind bars.
» Finally a real country, not a personal farm.
» Aunt just called me, said I voted no because of you – I remembered what you told me when I argued that the people should leave Tahrir.
» My dad above 70 never voted before. He said “for the 1st time in my life I felt that my voice counts and is heard”.

END Quote:
“Man is free at the moment he wishes to be.” -- Voltaire

Tunisia: The Perfect Storm for Reform?

Populism and centralized authority threaten to undermine Tunisia’s democratic transition. Rather than again turning to the government for unilateral decision-making and to the public sector for job creation, reforms should be undertaken to remove legal barriers that limit business development and investment, and to promote transparency in government and business operations. At the same time, this transition must encourage participation from a broad range of society, including business associations, other civil society organizations, and political parties. Such a course will support Tunisia’s nascent democracy while allowing the private sector to be the engine for desperately needed job creation.

By Abdulwahab Alkebsi*

Against all odds, the Tunisian and Egyptian people have stood up and, at a breakneck pace, toppled long-standing regimes. In an amazing display of peaceful revolution, citizens persevered and withstood an onslaught of state apparatuses that have kept them in fear for decades. The new face of the Arab – young, vibrant, proud, educated, organized, connected, and hungry for democracy, liberty, and freedom – has replaced stale stereotypes of a people mired in political decay. And the claims of Arab exceptionalism to democracy can finally be put to rest.

The Egyptian and Tunisian calls for reform have echoed all over the world and have reverberated across the Middle East – from Morocco to Bahrain, and from Yemen to Lebanon. In addition to “where next?”, today, the pertinent questions are whether and how the success of revolution can be converted into real political and economic gains. Now that the calls for democracy have been heeded, and transformations are taking shape, “what’s next?” Egyptians and Tunisians recognize the importance of consolidating their nascent democracies and harnessing the unleashed energy into real reforms.

Tunisia, however, is now in a race against time. In the midst of a revolution, economic, free market-oriented discourse is on the verge of being considered anti-revolutionary. Talk on the street, in the media, and among the emergent political forces is dangerously close to populist rhetoric that can be potentially ruinous for the Tunisian economy. If populist reforms take the lead in Tunisia, they will limit the private sector’s ability to generate critically needed high-value jobs for Tunisian youth. If they do not find the jobs they need and the dignity that comes with them, the youth who ignited the revolution will be increasingly disillusioned with it.

The Perfect Storm that No One Predicted

The pre-revolution Tunisian economic model was dependent on maximizing foreign direct investment (FDI) in two major sectors: tourism and manufacturing for products (such as auto parts), mainly to be exported to Europe. This model means, positively, that there is significant European investment in Tunisia. The economy needed to provide a competitive labor market to attract the foreign companies, and jobs were created in Tunis and other coastal cities.

However, investments in Tunisia’s infrastructure were concentrated on the coastal areas. Roads and commercial transportation infrastructure did not encourage manufacturers to establish businesses in the interior, as transportation costs were prohibitive. This resulted in a significant disparity in growth rates between the coast and the interior over the past two decades (5-10% on the coast, 0% or less in the interior), and consequently a significant disparity in income, education, and affluence in the two. The economic model that needed to keep labor costs artificially low and the neglect of the interior exacerbated poverty in towns and villages such as Sidi Bouzid and Kaf and led to the spark that ignited the revolution.

On the other hand, the educated young population of Tunis and the coastal cities found employment in the manufacturing plants, tourism industry, and especially in the banking sector and service outlets that mushroomed to facilitate these industries. The emergent “bourgeoisie” increasingly saw itself as part of the West, and in particular, part of France. This was a class with a hungry appetite for the modern “needs” of the latest cell phone technology, video games, and other luxury items of a modern society. It needed to express itself openly and yearned for the democratic freedoms that friends, colleagues, and fellow Facebook netizens who lived in the West had. The regime’s economic model, which prioritized a competitive labor market and ensured low salaries to maintain the country’s FDI and bring in more investors, began to test the status quo – that Tunisians could tolerate curbs to their freedoms in return for job opportunities and stability.

Another major crack in the Ben Ali regime was his decaying power base. First, after Ben Ali took power from an aging and ailing Habib Bourguiba in 1987, a new class of crony capitalists gelled around him and took advantage of close ties with the presidential palace to build wealth and influence. However, many of the opportunists were displaced when Ben Ali married Layla Trabulsi in 1992 and she and her family members took over the role of crony capitalists. The old guard of capitalists, which had presented a deeper and broader support base for Ben Ali, lost the incentive to risk its wealth and wellbeing to defend him when he became threatened.

The new generation of cronies surrounding the ruling family and their in-laws rubbed both average citizens and the broader business community the wrong way. The Tunisian people have been historically modest so that even the rich did not flaunt their wealth in the faces of the poor. Yet the new cronies began driving expensive European cars and rubbing shoulders with the elite of Europe and the Gulf. Vulgar displays of wealth such as owning pet tigers offended the sensibility of a modest people and created unprecedented anger and disgust.

The new “ruling family,” as Tunisians refer to it, also expanded its influence to encroach on other businesses and dominate the private sector, through corruption, extortion, and intimidation. In the process, it suffocated what was once an innovative private sector that would have been the main source of job and wealth generation. The combination of a covetous crony capitalist class, invasive and permeating corruption and intimidation, and an economic model that skewed the labor market needs to serve foreign investors alone, turned the real private sector sharply against the regime.

Critically, Ben Ali’s military support began to deteriorate as well. Bourguiba had ruled Tunisia putting into practice what he had preached: “keep the imams in the mosques and the army in the barracks.” The Tunisian model of secularism (Laicite) had always kept any Islamism out of the Tunisian political sphere, and was combined with keeping the military at arm’s length from state affairs. This was even more pronounced during Ben Ali’s rule as he further limited the army’s size and influence. This had the unintended consequence of keeping the army from jumping to the defense of the Ben Ali regime – most attribute the success of the Tunisian revolution to the neutral position of its military and its leaders’ refusal to put down the revolution.

The ubiquitous security services became demoralized as Ben Ali neglected the forces that fell under the Ministry of Interior, in favor of a much smaller special security force of privileged and well-trained agents connected directly to the presidential palace.

The ruling Constitutional Democratic Rally (known by its French acronym, RCD) had been an important apparatus for patronage and state allegiance and influence for Ben Ali’s predecessor. However, Ben Ali gutted the party institution and replaced it with direct relationships with the leadership. He also left it as a bloated behemoth of 80,000 public sector-salaried employees, with no real allegiance to Ben Ali or the state. Ben Ali lacked the charisma and paternal respect that party activists had for the founder of the Republic, Bourguiba. Once the regime fell, the “rank-and-file” of the ruling party left their positions in the RCD and returned to their public sector jobs. They were not indoctrinated to defend the regime.

The private sector’s voice was supposed to be represented by its employers’ union (known for its French acronym, UTICA). However, most businessmen and women felt that UTICA had ceased to serve as an advocate for improving the economic environment of the country, and instead, some accused its leadership of becoming too associated with the Ben Ali regime. In the process, Tunisian public policy development lost an important voice and the real private sector withheld from investing aggressively in the economy. Most kept their dinars in safe liquid investments, instead of in productive industries that would generate the healthy jobs that Tunisians needed.

One of the oldest and most powerful institutions in Tunisia had been the Tunisian General Union of Labor (known for its French acronym, UGTT). Throughout Bourguiba’s rule and most of Ben Ali’s, the UGTT was an integral ally of the state that, while able to effectively bargain for workers’ rights, was a stalwart ally against the Islamist threat. This relationship, which had permeated the Union from its top-level leadership through its rank and file, radically changed over the past decade. Ben Ali strengthened his relationship with UGTT leaders through a patronage and power-peddling system. In the process, a chasm grew between the leadership and the rest of the Union, with leaders losing the loyalty of middle management and the rank-and-file.

Finally, although France had been seen as the protector of the Tunisian regime, the perception of France and its stature as a world power had deteriorated in the eyes of Tunisians. They felt that France would not be able to keep Ben Ali in power, despite the role French companies played in the Tunisian economy. This perception emboldened many Tunisians and strengthened their hope that the Ben Ali regime would be allowed to fall. Psychologically, France was not in the political calculus of the revolution, although it remained in the economic formula.

The Fall of a Regime

All these factors contributed to the precipitous and unexpected fall of the Ben Ali regime. Once the revolution was ignited by the poverty-ridden interior regions, the educated middle class of Tunis and the coastal cities quickly joined and gave the revolution a freedom flavor, demanding the liberty and dignity that they had been dreaming of for years.

The old rich class of crony capitalists that felt betrayed by Ben Ali and his family turned against its erstwhile partners in the patronage system. They were happy to be rid of the new cronies who had displaced them, and enjoyed stepping aside to watch the new crony class of the first lady’s family be humiliated.

The mid-level management and rank-and-file of the UGTT revolted against its leadership and joined the revolution, framing the discourse as one demanding rights for workers and citizens. The UGTT brass had no choice but to join its membership in opposition to the regime. In the process, the UGTT gave the movement national structure, with offices across Tunisia’s 24 governorates (welayat) and the manpower and discourse that sustained the revolution.

The bloated RCD was in no position to defend the regime and quickly disintegrated, its rank-and-file fleeing to their old positions in the government, leaving the RCD carcass to be easily frozen by the new Minister of Interior.

The security apparatus initially cracked down hard on the demonstrators, but it quickly became apparent that morale was very low among the police.

And perhaps most importantly, the military refused to use force against the protestors. The military’s decision not to be involved directly led to the departure of Ben Ali and his family and to the success of the revolution.

Meeting the Revolution’s Expectations

Although it is probably too early to predict how the Tunisian revolution will affect the lives of the Tunisian people, let alone the rest of the Arab World, January 14, 2011, will go down in history as a day that gave the Arab people, after decades of complacency, a voice in running their affairs and choosing their leaders. There are many reasons to be optimistic, yet cautious, at this important juncture.

The perfect storm of revolution must be met with a perfect storm of steps leading to democratic consolidation. What has emerged in Tunisia since January 14, although euphoric and exciting, has been worrisome. Ironically, the dire economic conditions that were the impetus for the Tunisian revolution are in danger of becoming exacerbated by the emergent revolutionary discourse. The perilous populist policies that are being demanded, considered, and adopted in the current revolutionary fervor, will result in capital flight, loss of more jobs, and economic disaster for Tunisia.

The current transitional government, led by Prime Minister Mohammed Ghannouchi, stumbled out of the gates – initially keeping sovereign ministry portfolios in the hands of politicians associated with the former regime and later appointing new governors for Tunisia’s 24 governorates without consultations with the political forces in the country.

In the process, the government has lost crucial political capital and leverage and has had to respond to the demands of the street – of subsidies, higher salaries, higher pensions, and a bigger public sector. These populist calls for reform are being voiced by a new opposition of political party and labor leadership. Such leaders know very well what they are against, but due to years of an oppressive political environment, they are ambivalent to the need to articulate solutions to Tunisia’s economic ills. In a country that is resource poor, any government programs, including the popularly demanded subsidies, will have to be supported by tax receipts that are becoming scarcer due to the drop in tourism and other business activities in the country. Needless to say, this is a perilous course for the new country to take and obviously untenable.

The picture does not have to be so dire. If the necessary reforms are applied properly, the recent political changes in Tunisia may foster a better business climate for the domestic private sector and bring in foreign investors that will view a democratic Tunisia as an opportunity to do business relying on the rule of law, instead of on the whims of an autocratic government and its corrupt crony capitalists.

Devoid of resource-dependency, Tunisia’s economy is refreshingly dependent on the productivity of its workforce and the ability and innovation of its private sector to become the engine that generates high-value jobs for this workforce. A democratic state that is dependent on revenues generated from its citizens and businesses will necessarily become accountable to its citizens – its raison d’être. This healthy dependency and a new social contract that is the basis for any democracy, is combined with Tunisia’s other advantages: valuable human capital, with an educated and hardworking youth population; connectivity to the developed world and awareness of international ethics and values; a pious yet secular middle class; a reform-minded private sector that has suffered from corruption; and a professional military that has the mindset to protect the country, but stay out of its politics.

Moreover, Tunisia is a relatively small society of about 10 million citizens of homogenous ethnic, linguistic, and religious backgrounds, and historically known for its people’s tolerance and temperance. The country has the industrial, commercial, and workforce potential and a natural market of over 100 million citizens of North Africa, from Egypt to Morocco, that share its culture and history, and will look to it as a model for their own development. In short, Tunisia has the potential to become a leader in the Middle East region.

Creating the Perfect Storm of Reforms

The question that faces all of those who want a bright future for Tunisia is what reforms will be necessary to move this nascent democracy into a 21st century economy. The country’s leaders must come together and develop their own roadmap, but it is clear that any plan would have to include some basic elements, including:

Devolution of Power – The old economic and political model will have to be altered to emphasize regional development and infrastructure needs. The new nation should adopt a decentralized model of governance to offer solutions that are more in-tune with local contexts, by allowing for local elections of governors, and building local accountability and avenues of local input by citizens.

Legal & Regulatory Reform – There is an urgent need to harmonize and simplify the laws that govern the local economy and investment, laws that were, by design, opaque so as to create confusion and allow an elaborate, corrupt patronage system. Reducing legal and regulatory burdens has a direct influence on consolidating democratic governance and improving economic growth. As legal and regulatory burdens increase, opportunities for corruption also increase; for instance, bribes may be demanded to hasten the process of registering a business, or potential entrepreneurs may be discouraged from starting a new business because of harsh rules regulating exit from the market. Such consequences undermine the growth of the private sector and the strength of the rule of law and transparency.

Onerous regulatory barriers that discourage entrance into the formal economy, weak rule of law, and weak or non-existent property rights also increase the occurrence of informal sector work. The individual that arguably sparked the Tunisian revolution – Mohammed Bouazizi – was restricted to informal sector work for these very reasons. Businesspeople such as Bouazizi perform legitimate work and provide legal goods but are confined to the informal sector because of a restrictive regulatory environment and the burden of entry into the formal sector. In countries like Tunisia with sizable informal sectors, taxes are not paid, corruption runs rampant, citizens are unable to participate in public policymaking, resources are poorly allocated, and the list of negative consequences goes on.

While Tunisia has already implemented some legal and regulatory reforms – it ranks the 55th easiest place to do business in the world – it will need to improve how it deals with construction permits, registers property, facilitates obtaining credit, protects investors, and enforces contracts if it would like to improve in that ranking.

Anti-Corruption – Global Integrity considers Tunisia to have very weak institutions, particularly identifying weaknesses in government accountability, anti-corruption, and rule of law. Perceptions of corruption lent fuel to Tunisia’s popular protest; the country ranked 59 out of 178 countries on Transparency International’s 2010 Corruption Perception Index, with a score of 4.3.

Tunisians have to make combating corruption a national priority and address it from an institutional level, including a robust respect for the rule of law. This means investigating the supply and demand sides of corruption, and putting into place an incentive structure that limits corrupt behavior. Transparency in decision-making means not only addressing opportunities for corruption in government institutions, but also supporting businesses’ understanding of corporate governance. Good corporate governance can help firms establish a transparent relationship between owners and managers, strengthen the role and capacities of boards of directors, and ensure the protection of minority owners’ rights. There are many linkages between improving private and public governance, as the core values of corporate governance – fairness, transparency, responsibility, and accountability – are also the core values of democracy.

Public Sector Reform – The public sector in Tunisia is currently bloated and inefficient after years of bad policy and the perceived need to provide government jobs to alleviate public anger. Despite the initial need to “stop the bleeding” and the knee-jerk reaction to street pressure, a reverse course has to be taken and public sector reform has to be both a national priority and a concentration of international assistance. Current levels of public sector employment, let alone its expansion, are an untenable strain on resources and a drain of the Tunisian ability to innovate and become competitive in a global market. In a new Tunisia, there is no escaping the fact that the private sector needs to be the engine of growth, competitiveness, and high-value job generation. In addition to improving the public sector through streamlining its functions, enhancing its administrative and bureaucratic capacity, and making it more transparent and accountable, improved governance of state-owned enterprises (SOEs) would increase the efficiency and effectiveness of the public sector.

Civil Society Capacity Building – There is an urgent need for capacity building on democratic governance and management for Tunisia’s civil society, as it is currently mushrooming under a culture that is deficient in these values. Moreover, these civil society organizations need capacity building on strategic planning and advocacy techniques so that citizens from different positions on the political spectrum can compete peacefully in the marketplace of ideas and enrich Tunisia’s democratic experience. Of special need is enhancing the capacity of civil society organizations that represent a diverse, reform-oriented private sector, including chambers of commerce, associations, and think tanks. This is necessary so that the private sector is able to harness its innovative, solution-oriented approach and infuse a new language into the national discourse that is currently pushing the country away from the need to generate jobs for the youth.

Political Party Building – There is currently a healthy debate among the political parties, on the street and in the media, which is allowing a collective venting of frustrations that have been suppressed for decades. What is plainly absent from the current political conversation is discussion on economic solutions to the national ills that led to the January 14 revolution. With critical elections on the horizon, these political parties need to start building an issues-based narrative and are in need of help in developing economic platforms so that the electoral competition will move from a heated discussion of ideologies and personalities, and into a competition based on best solutions to Tunisia’s developmental needs.

Political Transformation – Insofar as the country can develop politically, government, the opposition, and civil society, with the assistance of the international community, must work hard to ensure the adoption of a democratic constitution. In addition, leaders will be preparing the groundwork for free and fair elections for the selection of a representative government that will strive to fulfill the aspirations of a new nation.

Yet the quality of a democracy also lies in allowing the voice of the people to guide the everyday decision-making of those in power. The nature of institutions that govern those in power, and mechanisms available for citizens to participate in decision-making, become a significant factor in a democracy’s ability to deliver for its citizens.

This can only be attained by making sure that the new policymaking process for the country includes input from diverse actors within Tunisian society – political parties, civil society, labor, and importantly, the voice of the private sector. Crucially, the enormous excitement generated by the revolution and a “perfect storm” of favorable conditions have to be harnessed into positive energy to realize Tunisia’s golden chance.

The private sector’s political engagement early and often is crucial to attaining the developmental goals of the nation and for Tunisia to gain its place as the economic powerhouse of the region. In Tunisia, Arab youth got its voice to demand democratic change. Tunisia can be the test case for a new development model for the entire region; a new kind of contagion, leaving behind dictatorship and economic stagnation and moving forward with healthy improvements in economic growth, high-quality jobs, and democratic, accountable governance.

END QUOTE:
It’s condescending and foolish to suggest that people dying for democracy aren’t ready for it.
~Nicholas D. Kristoff, NY Times

“I don’t want to be the mouse that freezes when it sees a snake.”

The View from Tunis

“I don’t want to be the mouse that freezes when it sees a snake.”

… Let me start at the beginning.

My Tunisian colleagues and I were huddled around a small table, sipping hot coffee in a crowded shop on Bourgeiba Street in Tunis, discussing the breathtaking developments in the country. We were interrupted several times by a few hundred young demonstrators who were making sure that their voices were heard as Tunisia’s future is being decided. Their newly found freedoms were in unmistakable display and the energy level of the youth was evidence of pent-up frustration and anger over the past fused with hope for the future.

These young men and women will need time and education to fully understand that it is not the government that will respond to their demands and provide them with jobs. Rather, it is a healthy, corruption-free environment for investment and a private sector that is willing to take the risks to invest in small and medium-sized businesses, which will in turn generate the high-value jobs that the youth covet.

In any case, it was heartwarming and encouraging to see youth able to express themselves with vociferous vigor and experience first-hand older political leaders able to openly discuss with me their political positions and ideas of how Tunisia should be reformed.

When the decibel level of the chants was low enough for us to hear each other, the Tunisians and I got back to our discussion. As many conversations among Tunisians and internationals invariably do, this one eventually turned to the subject of the Islamists’ role in Tunisia and how strong it will be in the country’s future.

Al Nahdha, the main Islamist political movement in the country, is moderate by most accounts yet had been banned by the Ben Ali regime. Its leader Rachid Ghannouchi recently returned to the country and the party has applied for official registration. Most international media have commented on the perceived danger of Al Nahdha taking over in a political competition, as it is the most organized in a field of amateur political parties.

One of the Tunisians at the table – a former Marxist and now staunchly secular and significantly left-of-center on the Tunisian political spectrum, which itself is already to the left – took a deep drag of his cigarette and said: “I don’t want to be the mouse that freezes when it sees a snake!”

My inquisitive stare prompted an explanation. “The Western media is fixated on the issue of Islamism but we’re more pragmatic! We know that they will have a role in the future of the country. In a free and fair election they will gain their natural size that represents their audience in the country. We expect that to translate into perhaps 400,000 to 500,000 votes. There will be six million voters in Tunisia and 96 percent of them will vote. They feel empowered and will want to participate in the democratic process. Our energy should be harnessed into getting most of these voters and not into worrying how many Al Nahdha will get!”

Perhaps the new political leadership in Tunisia is more mature than analysts give them credit for.

END QUOTE:
“The gift of liberty is like that of a horse, handsome, strong and high-spirited. In some it arouses a wish to ride; in many others, on the contrary, it increases the urge to walk.”
Massimo d’Azeglio