The Evolution of Neoliberalism in Tunisia, 1980-2017 / by Edna Bonhomme

In light of the recent protests in anti-austerity protests in Tunisia, I wanted to post a talk I gave at Historical Materialism (London) in November 2017.

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In October 2017, the Tunisian Parliament proposed a bill that would cut funding for public schools and hospitals. Shortly after, the Tunisian General Labour Union, with a membership of 900,000, responded:

 

“We express our condemnation of the inability of the government to intervene to stop the deterioration and the power of workers… We reject the adoption of the provisions of the General Budget Law 2018 at the expense of the workers and the general public. We call on the government to allocate funds to social programs and to control a fair fiscal policy that reduces the tax burden on workers which has been rising since 2011.”[1]

 

During most of its sixty-year history, the UGTT had been state controlled and did not make direct claims about to directly challenge the government and austerity by the state. This condemnation by the UGTT is a direct product of their newly emergent confidence as an independent trade union movement that recognizes that austerity will further weaken their position and the working class as a whole.

 

Neoliberialism has traditionally been understood within the dimensions of liberalization and the contours of austerity but it can also be understood within the framework of resistance. I argue that while neoliberalism has been a recent phenomenon in Tunisia (late 1980s), that neoliberal policies have been met with resistance and that labour movements and unions have been integral to that struggle. Concerning neoliberalism, I want to preface that the ascension and evolution of neoliberalism did not happen overnight but was part of a process that has been repackaged over time, emerging from early twentieth century free market ideologues such as Karl Polanyi, Friedrich von Hayek, and John Maynard Keynes to the 1960s Chicago School neoliberal architects such as Milton Friedman and Gary Becker. While these policies have shaped British context under Margaret Thatcher and in the United States under Ronald Reagan, many of us continue to inherit these legacies insofar as we bear witness to NHS defunding in the British context and the evisceration of public spending for education in the United States.

At the same time, countries in the Middle East and North Africa were subject to neoliberalism which was tied to a Euro-American international financial elite that reshuffled the economic and political frameworks of society. Relatedly, neoliberalism has been packaged as an intellectual authority, rooted in a devoutly apolitical worldview by centrists and liberals, on the other hand, it has produced ultra-reactionary politics grounded around two principles, namely liberalization and austerity. While liberaliation has long featured as an integral part of increased competition, austerity has also meant the erosion of state facilities.

 

Liberalization and austerity are not merely abstract concepts that exist in a vacuum but they are part of continuation of crisis or what Naomi Klein has called the shock doctrine. It bears noting this to show how the tentacles of this ideology permeates as a major node of crisis but also becomes the very seed that ignites protest.

 

The particularity of neoliberalism in the Middle East and North Africa is that it not only functioned as a set of economic policies but that it has influenced political and social life. As Adam Hanieh has written in Lineages of Revolt, he noted that neoliberalism in the Middle East was: [quote]

 

“Trapped in a cycle of debt and the conditionalities that accompanied loan packages, they saw patterns of social reproduction shift dramatically—the ways in which people met their basic needs, the kinds of work they did, and their relationship to the market and the state broke sharply with the forms of accumulation that had earlier characterized the Arab world.”

 

As such, liberalization was a central feature of neoliberalism but this was achieved through several means that international financial firms developed structural adjustment program and Public-Private Partnerships (otherwise known as PPPs).

 

By the 1980s, International financial institutions such as the International Monetary Fund and the World Bank in the Middle East and North Africa began to implant themselves throughout the region including but not limited to Sudan in 1979, Morocco in 1983, Egypt and Tunisia in 1987 and Jordan in 1989. Algeria, Lebanon, and Yemen followed suit in the 1990s. These international financial organizations—in their interest to protect a capitalist hierarchy, for the global ruling class, have used international law and multinational corporations to increase privatization, lower wages, and sway politics in the Middle East and North Africa. Yet, they were able to do so with the Arab ruling class.

 

The particularities of neoliberalism in Tunisia is that it rested on the tightening of wealth in the hands of the ruling elite. Economic restructuring in Tunisia during the 1980s was not entirely new and began during the anticolonial period under President Habib Bourguiba. Bourguiba laid out a set of reforms that were a continuation of French colonial policies yet, they were more concentrated within the confines of Tunisian nationalists. After the passage of Law 87-47 in August 1987, the Tunisia state transferred parts of the public sector into the private industry which laid the groundwork for the public-private partnership through such bodies as the CAREPP (Commission d’Assainissement et de Restructuration des Entreprises à Participation Publique). By 1989, the World Bank granted Tunisia a loan of $130 million to carry out the structural adjustment programs through CAREPP.

 

These policies were blossomed during the Ben Ali regime which included the privatization of public assets, the weakening of welfare policies, and the restructuring of tax and investment codes. Between 1988 and 1999, Tunisia had $0.59 billion in privatization deals. Most of these investments were directed towards manufacturing, transportation, and agriculture. With 90% of Tunisia’s textile production going to European countries. What is more telling about these policies is how they were gendered depending on the industry. For example, women’s employment in the textile and garment industry grew by 65% in Tunisia. At the same time, this was also met with a deterioration in job security and labour rights. Subsequently, the International Labour Organization report that there were 2,100 corporations that employed more than 200,000 workers in Tunisia in 2008, with an estimated 68% of the contracts in the textile industry were temporary and 19% were nonstandard.

 

In 1995, the European Union signed a treaty with Tunisia solidifying its financial relationship and free trade between Tunisia and European countries.[2] Thus, the reduction of levies further strengthened capitalists because their currencies could transcend borders. Capital, under neoliberalism, was flooded with debt. Under former dictator Ben Ali, foreign debt in Tunisia went from $6.8 billion to $21.7 billion which amounted to a little under 50% of the country’s GDP; today, Tunisia’s public debt is currently at 52%.[3] Debt and crisis also begets resistance.

 

One space where these policies was challenged was through labour and the trade union movement especially in the absence of a broader Left coalition to challenge neoliberal policies that are being enacted across the board.

 

It must be noted that under former dictator Ben Ali, the acceleration of privatization in the 2000s was an attack on labour and the conditions of work more generally. Labour has become more precarious and neoliberalism has sought to weaken labour’s power for higher wages and job security. By 2001, 15% of the Tunisian employed labour force held temporary contracts and by 2010, more than half of all employees were on temporary contract, and they earned 25% to 40% less than their permanent-contract co-workers.[4] Yet, this did not happen overnight. Rather, as early as 1996 Tunisian labour laws were subsequently removed protections for workers which resulted in the lax laws in hiring and firing. Moreover, the rise in temporary contracts meant that employers could more easily terminate employees without justification. Overall, this resulted in less job security and a diminishment of worker’s ability to organize, collectively bargain, and strike.

 

The economic crisis of 2008 that began in financial centers of North America spread globally resulting in mass turmoil, dissatisfaction, and protest. That same year, workers at the Compagnie des Phosphates de Gafsa (CPG) went on strike in the interior town of Gafsa after the company laid off 10,000 people. Gafsa, a small mining town in the interior of Tunisia challenging local corruption, environmental degradation and layoffs.[5] What made this set of protests remarkable is that civil servants, teachers, and the unemployed collected united to challenge the dire conditions with economic, political, and social sphere. They brought CPG—a company that was established in 1896 during the French protectorate—to heel.[6] Unfortunately, the largest organized labour group did very little to offer an alternative. Despite the resilience of mineworkers to conduct a strike, l’Union générale tunisienne du travail (UGTT) leadership did not support the miners’ strike in Gafsa, yet, the unemployed youth occupied the headquarters of the UGTT set up tents on site at CPG while also collectively directing their anger towards state police and the erstwhile president Zine El Abidine Ben Ali. After six-months of protests hundreds were imprisoned and dozens of people were injured or killed. Gafsa was a dress rehearsal for what was to come.

 

The material conditions that ignited the six-month protests in 2008 in Gafsa were not merely a product of local governance but the exploitation carried out by neoliberalism and the global financial crisis. Neoliberalism can be a chokehold for the masses but the motivation that causes people to resist. Yet, tied to worker’s ability to resist shows the potential of Tunisian worker’s to confront neoliberalism directly.

 

Another feature of the evolution of neoliberalism in Tunisia was austerity which was achieved through the reduction in government spending and employment. Neoliberal reform policies instated during the Ben Ali regime included the privatization of public assets, the weakening of welfare policies, and the restructuring of tax and investment codes.[7] The growth of jobs in the private sector in Tunisia did not necessarily lead to meaningful work that was evenly divided in the country. Instead, most of the jobs created during the late 1990s and 2000s were low-technology, low skilled, and low paying.[8]

 

While there have been gains to address political sovereignty and transparency, unemployment has been on the rise with the rate in Tunisia going from 12.8% in 2010 up to 15.5% in 2016. [It must be noted that these “official” statistics are far less than reality.] Unemployment in Tunisia remains uneven with respect to geography resulting in unemployment rates of 10% in Tunis and up to 50% in interior and southern provinces. Ancillary to this, the Organization for Economic Cooperation and Development (OECD) estimates that 40% of youth are unemployed.

 

Moreover, the implementation of austerity under neoliberalism meant that shrinking government expenditures became law. For example, the public-sector wage bill decreased government salaries by 65% in 2003 and 55% in 2008. In addition to wages, government subsidies, such for gas and electricity, were also reduced. In 2013, 23.8% of Tunisians lived below their poverty level, compared to 40% in Egypt.

 

The economic crisis of 2008 that began on Wall Street and spread globally, sparking mass turmoil, dissatisfaction, and protest sparked resistance in Tunisia because of the measures to diminish the quality of life. Nasfi Fkili Wahiba and Malek El Weriemmi have argued that the neoliberal process between the mid 1980s and the early 2000s meant that while the Tunisian economy grew so did economic inequality.[9] At the core of this was uneven development whereby a minority was able to profit while the majority became less rich.

 

The Arab Spring

While the Arab uprisings of 2011 have been in a lull, the tentacles of capitalism continue to mutate in Tunisia thus perpetuating mass unemployment in Tunisia’s interior. The Arab Spring was a mass movement to topple a dictator but it was strengthened by the self-activity of labour. Not only did they directly challenge capital but they helped to convert the decades of lethargy and state domination of the UGTT into a more active union. Concerning investments and structural adjustment programs, they have not only continued since 2011 but they have metamorphized into even larger loans from Euro-American and international financial institutions

 

The flow of goods between Europe and Tunisia has impacted the local context. More recently, the Deep and Comprehensive Free Trade Agreement, part of the Privileged Partnership signed in November 2012 between the EU and Tunisia, also reshaped the economic landscape causing further ventures by foreign companies in Tunisia. Newly developed financial relationships such as Partners for a New Beginning North Africa Partnership for Economic Opportunity and a free trade agreement with resulted in Tunisia becoming a non-NATO ally (MNNA) has meant that corporations such as Chilli’s, Johnny Rockets, and Papa John’s Pizza have begun to establish branches in Tunisia since 2011. Yet, these industries are not the only mechanism that foreign investments are incurring. International financial institutions continue to have a grip on these capitalist ventures.

 

Within the past five years, reforms have also been structured around international loans. In 2016 the IMF approved a $2.9 billion loan to Tunisia and in 2014, the World bank approved a $1.2 billion loan.[10] Yet, this has not only happened by international organizations but also through individual states. For example, the U.S. Secretary of Commerce wrote a letter of support for Tunisia's democratic process which then materialized into a $1 billion loan to Tunisia.[11] Some claim that these loans will help to stabilize the economy yet these economic programs further entrench Tunisia into a debt structure whereby they are indebted to the West.

 

What is to be done?

Neoliberalism has effectively acted to redistribute wealth from the region’s poor to the wealthiest layers of society and the Arab Spring did not eliminate these policies from being carried out by the Tunisian government. Neoliberal programs have undermined Tunisian labor, increased economic inequality, and empowered the capitalist classes. At the same time, these economic and material impositions on working class Tunisians have also been met with fierce resilience.[12]

 

The movement has a different flavour than labour movements on the ground that have directly challenged austerity. Returning to the UGTT, in October 2016, Prime Minister Youssef Chahed proposed an austerity package to control the fiscal deficit and government revenues. This was part of the government’s deal to accept $2.78 billion in foreign loans during 2017 - nearly double its 2016 external financing needs - to help cover a 2017 fiscal deficit seen at 5.4 percent of GDP. This announcement has been met with resistance by the largest labour union in Tunisia.

 

Tunisia’s UGTT labour union threatened to hold a general strike and called protests against the government’s plans to freeze public wage increases as part of measures to control the budget deficit. On October 2016, the union proclaimed,

 

“We call for regional protests, a large national protest in Kasbah Square (near the Prime Minister office) and another in front of the parliament.”

 

Although the Tunisian Parliament has been debating the extent to which they will carry out government reduction, the condemnation of the UGTT to challenge the state’s tactic to oppose labour dovetails with a radical opposition to challenge neoliberalism. The general strike and its potential to disrupt capital and international investments is part of the continuation of the radicalization of the Arab Spring and the militancy and potential of building working class power.

 

The economic, political, and social challenges in Tunisia have not been unique. However, the country has been purported as a “success” story given the massive repression in Egypt, the disarray in Libya, and the civil wars in Syria and Yemen. At the same time, the relative economic and political stability in Tunisia means that a victory here can spread elsewhere—as it did in 2010. Given the power of international and local elites to undermine worker’s power, it is important for social and political forces on the ground to coalescence around issues that simultaneously challenge economic and political exploitation. The upending of neoliberalism will require an international resistance where the left, labour, and civil society siphon money from the rich to the masses.

 

 

[1] http://www.ugtt.org.tn/%D8%A8%D9%8A%D8%A7%D9%86-%D8%A7%D9%84%D9%87%D9%8A%D8%A6%D8%A9-%D8%A7%D9%84%D8%A5%D8%AF%D8%A7%D8%B1%D9%8A%D8%A9-%D8%A7%D9%84%D9%88%D8%B7%D9%86%D9%8A%D8%A9-2/

[2] http://eeas.europa.eu/tunisia/association_agreement/index_en.htm

[3] http://www.jadaliyya.com/pages/index/5502/shouldtunisia-

pay-ben-alis-debts and http://www.worldbank.org/en/country/tunisia/publication/economic-outlook-spring-2016

[4] Ben Jelili and Goaied 2010 and Achy 2011: 10-11

[5] http://www.monde-diplomatique.fr/2008/07/GANTIN/16061

[6] http://www.gct.com.tn/english/wcpg.htm

[7] Karen Pfeifer, “How Tunisia, Morocco and Jordan and Even Egypt became IMF ‘Success Stories’ in the 1990’s,” 210 (Spring 1999), 23–27 http://link.springer.com/chapter/10.1057%2F9781137481429_2)

[8] Chedly Ayari and Hakim Ben Hammouda, “Tunisia: Letter of Intent, Memorandum of Economic and Financial Policies, and Technical Memorandum of Understanding,” International Monetary Fund, January 28, 2014, https://www.imf.org/External/NP/LOI/2014/TUN/012814.pdf

[9] http://www.econjournals.com/index.php/ijefi/article/view/657

[10] http://www.imf.org/en/News/Articles/2015/09/28/04/53/sonew060216a and http://www.albawaba.com/business/tunisiaeconomy-

arab-spring-557981

[11] http://www.tunisialive.net/2015/03/06/uspledges-to-support-investment-andentrepreneurship-in-tunisia/

[12] https://www.cairn.info/revue-politique-africaine-2010-1-page-107.htm