Corruption and Reform in Tunisia: The Dangers of an Elitist Analysis

On May 24th, a wave of high-profile arrests rocked Tunisia. A range of prominent businessmen, entrepreneurs in the parallel economy, as well as high-ranking officials in the customs services were arrested in what the Head of the Government Youssef Chahed described as the beginning of a new crack-down on corruption in the country. While Chahed received much public applause for this announcement, analysts have begun framing the sudden crackdown as a power move in a political system in which both anti-corruption policy and economic development are increasingly framed as the results of intra-elite struggles.[1] This has become an increasingly popular narrative in Tunisia, and a popular analytical basis to propose policies that can move the country out of its current crisis, as protests and sit-ins in Southern Tunisia have increased the pressure on national politics. This article argues that this “elite conflict” perspective is an inaccurate framing of the developments in Tunisia, and a highly dangerous foundation for proposals advocating reform. This article studies a recent report by the International Crisis Group, which has been a particularly influential and widely cited contributor to this narrative of elite conflict. Based on intensive fieldwork in Southern Tunisia, and extensive experience researching national-level corruption, we argue that ICG’s report presents a simplistic, elitist, and grossly misleading account of the current situation in the country. Furthermore, we illustrate how some of the key policies that have been proposed by ICG, as well as the World Bank and the country’s Presidency, are largely based on this analysis. In conclusion, we propose an alternative approach to fighting corruption and addressing the ongoing protests in the country.

An Elite Conflict Perspective on Corruption and Regionalism in Tunisia

On May 10th, the International Crisis Group published a new country report on the socio-political challenges in Tunisia, titled: “Blocked Transition: Corruption and Regionalism in Tunisia”.[2] It argues that the country’s current crisis, the national debate about corruption as well as the waves of protests in its Southern and Interior regions are the result of a confrontation between the traditional economic elites of Northern Tunisia and the emergent elites of the country’s South, who are fueled by the large contraband economy. Hence, to address the crisis, the report calls for a new form of national economic dialogue, and the integration of the Southern economic elite into the country’s economic framework. In a way, it is unsurprising that that the ICG tends to see political crisis as the result of a confrontation between different competing groups. After all, their stated goal is to “prevent, resolve or better manage deadly conflict”[3]. Nevertheless, this is not without consequences for the political discourse on Tunisia. As the ICG has become a highly influential voice in Tunisian politics, the ‘elite conflict perspective’ has become increasingly commonplace in political discussions. 

The ICG’s analysis of Tunisia’s current socio-political problems is highly simplistic and fundamentally elitist. The report argues that the current unrest in Southern Tunisia is largely due to the exclusion of Southern economic elites from the grand bargain of Tunisian politics. It takes the complex issue of regional inequality and reduces it to an issue of elite competition: the businessmen of the North, and the businessmen of the South are fighting, and the result is greater suffering for Tunisia. In order for this argument to be convincing, it would need to show that the new economic elites of Tunisia’s South, and smugglers in particular, are directly connected to the current unrest. A crucial claim of the report is that the large protests that are currently gaining momentum in the South and Interior are primarily the result of ‘sponsors’ from the ‘underground economy’. This is an incredibly bold claim, based on one single anonymous activist interviewed in Tunis. But the ICG support this view, as it is crucial evidence for their overall argument. To present an elite bargain as a solution to a large social problem, the elites need to be able to stoke and suppress social protests through their influence. The report seeks to prove that the problem of the South - and any potential solution - lie with its elites. Here lies the mistake, and the danger of ICG’s approach: social and economic networks in Southern Tunisia cannot be reduced to ambitious smugglers and paid rioters. Its Northern elites cannot be reduced to a single economic mafia that is hell-bent on protecting their privileges. And most crucially: bringing these groups together will do nothing to solve Tunisia’s socio-political problems. It will do nothing to calm the protests, because the people protesting would still be entirely shut out. Elite inclusion is not the same as real inclusion.

Southern Tunisia’s protests are not controlled by smugglers

From the start, pundits have tried to discredit the recent wave of protests in Tunisia by framing them as the paid goons of the elite political boogeyman of their choosing. By connecting them to the smuggling barons of Southern Tunisia, ICG follows this regrettable discourse. It is surely not entirely mistaken that there are certain economic entrepreneurs in Sfax, Ben Guerdane or Tataouine, who are feeling left out of the national economic bargain, and have been marginalized by the state. However, this group is incredibly diverse. In other words, it is impossible to talk about the Southern elite as a singular entity since the formal (and informal) economic system of the South includes old and new elites and encompasses rural and urban divides. It draws on some large-scale smugglers with strong connections to Tunis, and others with strong connections to Tripoli, or to Beijing. In between, there is a sizeable ‘Middle Class’ of contrebandiers, who do not work for any of the bosses, and do not necessarily share their visions or interests.

It is thus unclear how one could envision the inclusion of these ‘Southern Elites’, and the extent to which they are currently ‘shut out’, as the report claims. The idea of regional inclusion has been commonly used since the revolution. Social movements and protests have frequently been framed as calls for an “inclusion”, and many solutions were suggested to open the existing system to marginalized groups. Similar to the rhetoric about "inclusive growth", presented as an answer to the discrepancy between the interior regions and the coastal regions, the inclusion of the “Southern elite” is presented as a way to keep the competition between groups located in different regions over the control of the State from turning into a violent conflict. However, the term “inclusion” (in Arabic إدماج - Idmaj) is almost absent from the language used by the social movements. Apart from those who find themselves in a critical situation and ask for immediate employment because they cannot wait for long-term reforms, people are asking for a systemic change that allows a vertical integration of both unemployed and low-income groups. This is true whether these individuals are in the South or in the North.

A more detailed look at how informal trade in Southern Tunisia is structured shows that rather than speak of a North-South divide, it would be more appropriate to speak of a national market that is segmented - between product types, qualities, and distribution areas. Similarly, speculations about the alliances between smugglers and certain political parties should also be taken with a grain of salt. They have become a trademark element of political smear campaigns, usually unsubstantiated by evidence. Ennahda, Tunisia’s conservative party has borne the brunt of these allegations after they won the vast majority of the votes in Tunisia’s Southern borderlands. The ICG report also features an example of this, when it quotes a former official of Ben Ali’s party RCD, speculating that Ennahda encourages smuggling in order to “create its own capitalists”[4]. The quote is then left entirely unchallenged by the author.

It is certainly true that Ennahda is not eager to compromise its position by taking a hostile stance towards the region’s dominant economic sector.[5] However, a tacit tolerance of informal trade in Southern Tunisia is not Ennahda policy - it is the policy of the Tunisian state, and has been, with few interruptions, for the past decades. This policy has been maintained and finely calibrated with the help of governors and ministers from a variety of parties, including the RCD and Nidaa Tounes. It is a policy field that is dominated by concerns about security, social unrest, purchasing power, and the management of the current situation in Libya rather than by the struggles of party politics.

It is not unlikely that some smugglers are supportive of the current protests in Kef, Tataouine, or Kairouan. However, claiming that they are financially supporting these protests without presenting any evidence is a dangerous brush with conspiracy theory.  Furthermore, the notion that these protests would end without the support of local smugglers is a gross misrepresentation of the nature of the source of discontent. Protesters are decrying social marginalization and an unequal distribution of resources and opportunities. They are thus unlikely to stop just because their local elites are getting a piece of the pie. The informal economy in Tunisia’s South has created vast accumulations of wealth, but it has also created patterns of exploitation and dispossession. The so-called middle class of smugglers is shrinking, and the issue of economic exclusion and the role that local ‘big fish’ are playing in this process is hotly contested locally. Indeed, many young traders view the wealth of their neighbors with great suspicion. They may cooperate at times around common demands - as they did in 2016, when informal trade actors supported the protest camp in Ben Guerdane. However, to use temporary alliances to assume the existence of a coherent block with similar interests, or even worse, to assume that the co-optation or arrest of a local economic elite would end these protests, is a gross simplification of the situation in the South.

Geographical Oppositions

In order to explain the rise of political tensions, the report relies heavily on a new simplistic divide between the North and the South replacing the older Islamic/secular simplistic divide. According to the ICG, a confrontation between the new emerging business elite based in the South and the old traditional business elite based in the economically developed regions of the North-East lies at the heart of the current unrest. The undeniable discrepancy between the coast and the interior regions is certainly a source of grievances for protesters. However, it cannot explain the high number of protests in the two main coastal governorates of Tunis and Sfax that we have seen during the last few months. In other words, the recent rise of political tensions cannot be described as a mobilization of the “people of the interior regions” who are opposed to the coastal elite regions. The existence of social instability in a “North” commonly perceived as a homogeneous prosperous region in opposition with the historically forgotten “South” shows that the crisis is generalized. In order to understand the real causes of the socio-political unrest, we should look beyond the very simplistic regional divide use by ICG and see the so-called “North” as a much more complex geographical unit. It contains at the same time rich neighborhoods, business districts, industrial zones, touristic areas, commuter towns, crowded suburbs, remote villages, and rural areas.

If we take into consideration the struggle of the new Northern “start-up” entrepreneurs to enter the market, it is difficult to say that the purpose of oligopolistic behavior of the Northern Nidaa-supported economic elite is to protect itself from the new class of entrepreneurs. These latter actors generally come from interior regions which are thriving from the growth of illegal transborder traffic. It’s impossible to assume that smuggling is an activity monopolized by Southern businessmen unless we ignore the strong ties between transborder traffic and the Northern established businessman who benefit directly or indirectly from it. There is a clear symbiosis between formal and informal sectors. Given that financial institutions, owned by business families, provide smugglers with logistic support like leased vehicles, and that branches of banks based in the border regions benefit from the liquidity provided by border traffickers, we can only conclude that the relation between Northern and Southern business groups are not in direct confrontational competition. Similarly, one might also note that the informal procedures between smugglers and border agents have always targeted specific products in order to avoid competition with important formal importers. In conclusion, the relationship between the formal and informal sectors of the Tunisian economy is much less conflictual than the image portrayed by the ICG report.

Having seen the limits of the analysis of the current situation in Tunisia as its presented in the ICG report, the second half of the article presents a critique to the policy recommendations proposed as a solution to Tunisia’s socio-political challenges. As we argue here, the approaches suggested in the report are unlikely to bring development, social justice, or stability to Tunisia’s interior regions.

Corruption and “National Dialogue”

The ICG report fits within the increasingly popular debate on corruption. Similar to its previous reports, the ICG advocates for an extensive economic and financial reconciliation law that would benefit not only the public officials and business actors who have been implicated in a wide range of financial crimes, but also cross-border traffickers. One of the main differences between the new report on “Blocked Transition: Corruption and Regionalism in Tunisia” and the last report on “Transitional Justice and the Fight Against Corruption” published one year ago, is the recommended strategy for combating corruption. Apart from the recommendations already adopted in the national law or suggested by numerous political actors - such as the strengthening of the National Anti-Corruption Commission or the submission of the financial reports of political parties to the Audit Court - the report suggests two additional measures: The adoption a law regulating economic lobbying and the removal of repressive legal provisions from the Penal Code. The third difference with the previous report is the introduction of the idea of a “national economic dialogue”.

The main function of this dialogue is to start a process of reconciliation between the old and emerging economic elite. The report does not give any reasons why this dialogue should prove successful - many have not been – and there is also no clear idea about what kind of economic policies should be discussed in order to benefit Tunisia. In 2014, the government of Mehdi Jomaa tried to start a national debate about economic policies in order to build a consensus around the economic reforms, but this initiative did not come close to reaching this goal. Why would a new process, which includes more actors with widely diverging political and economic visions, be any more successful than Jomaa’s initiative? 

As mentioned earlier, the report views the current situation through the prism of an elite conflict. Yet even seen through the lens of conflict prevention and elite politics, the proposal of the national dialogue is optimistic. If conflictual/competing political actors were able to gather around the same table to talk about politics in 2013, this was mainly because of the context of the crisis that emerged after the assassination of the pan-Arabist MP Mohamed Brahmi a few months after the assassination of the leftist leader Chokri Belaid. The situation in 2017 is markedly different. Today, the political actors contesting the economic reconciliation law, protesting unemployment or even asking for a better sovereign management and redistribution of national wealth are informal activists groups with a horizontal organization or social movements with nonhierarchical network structures who are not competing with the ruling elite on formal political positions and who are not interested in classical consensus building.

Economically speaking, the authors of the report claim that national economic dialogue will “make the national economic competition more open and transparent”[6] to the newcomers from the interior region. In an open and competitive economy, the two elites would be able to synchronize their efforts and invest in funds dedicated to the development of interior regions. By presenting this recommendation, the report seems to ignore the fact that this formally coordinated decision to invest made by a collection of businesses is by definition the creation of a cartel. These collusive practices are made illegal by antitrust laws because they are anti-competitive. Moreover, the creation of cartels causes the malfunction of market economy mechanisms and is detrimental to consumers, increasing economic inequalities.[7] In addition, it is extremely to predict the behavior of investors, and the impact of the reconciliation, on the Tunisian economy, which is characterized by a large and growing underground sector. In short, the economic outputs of this national economic dialogue are incoherent, uncertain, and unpredictable.

The main problem of the ICG’s approach, however, is the banalization and normalization of corruption and financial criminality. It reduces corruption to its legal and political dimensions and ignores its moral and economic aspects. Seen as a moral issue by a large number of Tunisian, the corruption of the dominant political and economic elites has led to a pervasive loss of confidence in the system. The dangers of delegitimizing the post-revolutionary state in the eyes of many of its citizens should not be underestimated, especially if it tries to engage in economic reform. Creating a legal framework for “economic lobbying”[8] will give a legal cover for political corruption and prevent the construction of a trustable political system. The experiences of United States and the Europe Union in term of transparency of in public life and publication of information about the money invested by lobbyists has not solved the problem of corruption.

Moreover, if the existence of punitive measures for corrupt public officials has not deterred them from engaging in corruption, it is unclear how the removal of strong sanctions (suggested in the page 21 of the report) will change their behavior. And even if we limit ourselves to a legal dimension of corruption, the ICG recommendations are incompatible with the legal international order of which Tunisia is a part. By suggesting amnesty as a possible solution to the deadlock, the report overlooks the fact that this approach has already been tried (see for example the 2016 Financial Law) with little results.  A pardon for crimes committed in the past will not prevent the big bosses of transborder traffic to go back to the old illegal practices. Instead of following inefficient incentivizing approaches, the government should understand the many reasons that lead “parallel traders” to use different channels from traditional traders. Building new channels to facilitate the legal importation of goods should be seriously considered. One should also point out that any change in the regulatory structures around illegal trade will have to go hand in hand with the creation of economic alternatives for the people in the border regions.

It is true that many “parallel traders” in Tunisia’s borderlands use the crossborder traffic to earn dozens of dinars per day. Others are simple tradespeople who have no choice but to buy and sell goods on the “Souk Libya.” Thus, to throw these minor actors into the same category as bosses and barons would be a big strategic mistake. One group needs help, the other needs regulation. The real threat is coming from structured networks built by billionaires who are not even necessarily from the border regions. When Tunisians use the word “mafia,” it should not be understood as a metaphor but as a synonym for “organized criminal group”.

However, when Tunisians talk about the control of “the levers of the administration” by corrupt private economic actors, or describe the State as “eaten by mites,” they are referring to the illegality of the practices used by these organized crime groups to control State institutions in order gain power and make a profit. In a situation where organized crime networks infiltrate all state institutions (Ministry of Interior, customs duties, the judiciary system, etc.) and inhibit their capacity to regulate the economy and to impose the rule of law, corruption can no longer be tolerated. Indeed, it will have to be fought by other means than dialogue and forgiveness. We are not in the situation of traditional “State capture” for economic purposes where private economic actors manage to influence State action to maximize their economic profit. In the context of State re-formation and democracy building, the respect for the rule of law is crucial to limit “the action of legal and illegal organizations, which through illegitimate practices seek to systematically modify from within the political regime and influence the formation, modification, interpretation, and application of the rules of the game and public policies.”[9] Allowing billionaires who have accumulated wealth on the basis of organized criminality to formalize their competitive advantages and strengthen their control of political institutions echoes back to the practices of Tunisia`s old business elite. It thus repeats past mistakes. The result is the creation of legal challenges with respect to national and international laws on organized crime and the undermining of democracy building.

World Bank Checklist: Credit, deregulation, red tape ... 

The section of the report that discusses the “mechanics of exclusion” mirrors many of the issues that have been commonly raised by the World Bank and other international institutions. It describes the problems many Tunisians face in accessing credit, and discusses the excessive discretionary power of key figures in the administrative apparatus. Both are legitimate concerns, and areas where, as the report rightly points out, regulation has been used to limit access to the formal economic sphere. Calls for deregulation, and, as the report calls it, to “depoliticize the economy” in order to create a level playing field, thus appear intuitive.

However, these approaches are too quick to gloss over the legacies of accumulation and overlook the uneven playing fields created over the past decades. A less regulated economic environment will present new opportunities for those who are ready to seize them. It will also present enormous risks for those who are not equipped with these skills, especially in terms of gaining access to credit. In Southern Tunisia, the widespread hesitancy of many people in the region to engage with any kind of credit system needs to be taken into consideration. But even in countries like India or Bangladesh, where this is less of an issue, development experience shows that the effects on development of access to credit by itself have been hugely overstated.

Quite simply, not everyone is an entrepreneur, and not everyone has a business plan. 

But even entrepreneurs will need more than credit and the removal of regulatory barriers to succeed. For a generation of young Tunisians who not only lack access to credit and a working bureaucracy, but also lack the know-how, the virtual and physical infrastructure, the international connections, and the social capital needed to penetrate the networks of the economic elite, merely tearing down the barriers will not be sufficient. These individuals will need a ladder, in the form of massive state investments, and an economic infrastructure that creates jobs rather than asking people to create their own employment. These measures will need to address the specific challenges of the South - it will need an educational strategy for the high rate of young people who have quit school at an early age to join the contraband trade, and a strategy to overcome the specific challenges that women face entering the local private sector labor market. It will also require an enormous infrastructure strategy - recent experience in Morocco’s northern borderlands might provide a good example of the last point. The question is this: who in the grand elite bargain will represent these demands, and who will advocate for those who are far from power? Here, the dangers of the idea of a “depoliticized economy” begin to show. Rather than stopgap measures, a large economic transformation will be needed to help marginalized actors. This will necessarily be a political undertaking.

Given its large focus on the role of elites in Tunisian economic regulation, the report appears to be very optimistic about the ability of a reformed regulatory system to spread the benefits to the non-elites. And it offers no argument whatsoever for why the inclusion of new elites, be they from the South or anywhere else, into the ‘circle of 300’ should make this group more inclined to operate in a way that benefits the other 11 million members of the population. Again, this model is sorely missing a strong, regulatory – and political -  actor.

Conclusion 

As we have argued, the problem with the recent Crisis Group report on Tunisia lies in its simplistic interpretation of the current socio-political situation in Tunisia as the confrontation between two elites - one in the South, one in the North. The problem with its policy recommendations is that it does not present compelling arguments on what will relieve this fever. Instead, it places enormous faith in the healing power of a dialogue between actors which it perceives to be competing economically. The side effects of these recommendations, however, are substantial, and include the highly unpopular economic reconciliation law, an incoherent and counterproductive approach to fighting corruption, and the obligatory nod to deregulation.

In the same way that Youssef Chahed’s “War on Corruption” focuses only on the arrest of a group of corrupt traffickers, the recommendations of the ICG report leaves many root causes of Tunisia’s current malaise unaddressed: the lack of a comprehensive development strategy for the South and the interior regions, the need for economic and educational reforms, and the lack of a regulatory system that can compel economic elites play by the rules (rather than merely include new elites in a group that stands above the law). Addressing all these issues will necessarily be a deeply political process - so perhaps we should not be so quick to depoliticize the economy just yet.