Democratic downgrade: Why 2023 could upend Tunisia’s revolution and North African geopolitics

Twelve years after the Arab Spring, which emanated from Tunisia, the revolution has run out of money and steam. Eleven elections in eleven years and expensive subsidies for increasingly unaffordable wheat from Russia and Ukraine, along with other inefficiencies, have bankrupted the country politically and economically. While President Kais Saied is curtailing the powers of the parliament, business representatives dismiss the dominant Western perception of the 2011 revolution as starry-eyed. Many claim that Tunisia’s democratic dividend has not only not materialised but that the decade of democratic dangling has incurred high political, economic, and even cultural costs. 

2023 could become a fateful year for Tunisia and the region – without external support, the country will almost certainly default. But how can Western governments, companies and investors engage with a country that is returning to presidential autocracy? And if Tunisia’s revolution has failed, what are the ramifications for the region’s delicate geopolitical fabric?

Tunisia’s business opportunities are surprisingly large for such a small state. Hardly any car would roll in Europe without Tunisian cable harnesses. And with sufficient investments in seawater desalination, Tunisia’s annual 4000 hours of sunshine and its connection to the Trans-Mediterranean pipeline could even make it a formidable supplier of green hydrogen to meet Europe’s future energy demand. Furthermore, Tunisia’s IT sector is burgeoning. InstaDeep, a tech unicorn with Tunisian roots, designed an early-warning mechanism to predict future variants of the coronavirus. After relocating to the UK, it was bought by leading coronavirus vaccine developer BioNTech for almost $700m, in January 2023. However, InstaDeep’s success story also symbolises Tunisia’s failure to retain talent and grow leading tech firms at home, as capital and investment restrictions force many promising projects to move their headquarters to Europe.

This economic downward slope is exacerbated by a political set-up that stifles competition. Behind closed doors, international advisers complain that “since the days of the beys,” Tunisia’s political economy is akin to an oligopoly comprised of influential families and unprofitable state-owned enterprises. Salary costs of the inflated public sector amount to around 15% of GDP, even more than in Lebanon (11%) or Egypt (5%). Consequently, Tunisia’s credit ratings have plummeted, and the government now needs a $4bn IMF loan for its 2023 budget. Originally scheduled for January, the decision about the loan has been postponed due to a lack of necessary reforms.

Tunisia’s revolution has failed to produce a democratic dividend

The IMF loan also matters as a door opener for other lenders. Without it, financial support for Tunisia is not in sight, not even from its resource-rich neighbours. In the Arab world, Tunisia’s closest geopolitical partners are Algeria and Egypt, but neither Algiers nor Cairo has an appetite or the means to bail Tunisia out. Long-time development sponsor Libya could, perhaps, afford to assist Tunis, but this would require Libya’s two central banks and belligerent parties to set domestic infightings aside. Fellow Maghreb country Morocco has in recent years surpassed Tunisia as tourist destination and the two entertain rivalrous, step-brotherly relations. Turkey and Qatar used to be strong supporters of the Islamic Ennahda party, but Ennahda is far from driving Tunisian politics and must “put a lot of wine in its water” to appeal to the average voter. Finally, for the rest of the Gulf, Tunisia is not too big to fail, in contrast to Egypt which grabs most of their attention. 

Ultimately, Saied’s government may have no choice but to agree to the reforms demanded by the IMF, which will likely result in higher unemployment. Tunisia’s powerful labour unions want it to regain competitiveness with other markets but oppose the painful economic reforms, which they fear could damage Tunisia’s already delicate social cohesion. Looming privatisations in education and health are particularly unpopular. Meanwhile, Tunisian fertiliser prices, crucial for its agriculture, are nearing the pre-revolutionary levels of 2008 and 2009 when they helped to spark the uprising.

One geopolitical player suspiciously absent is China. As seen from Beijing, Tunisia is a small export market, located far from the New Silk Road, and the Communist Party has no particular interest in supporting Tunisia’s democratic transition. However, China could develop an interest in Tunisia in the future, to connect its growing commercial centres in Sub-Saharan Africa with Europe. Indeed, there are signs that China could be playing the long game. For example, a new, Chinese-made diplomatic academy will soon open its doors in Tunis and could be a useful tool for Beijing to influence Tunisia’s foreign policy in the long term.

For the time being, it is still far-fetched to assume that Tunisia could inadvertently become China’s hub in the EU’s southern neighbourhood. But it seems increasingly clear that Tunisia has lost its function as a role model in the region. The next months could decide whether Tunisia will manage to save its revolution, most likely with financial support from abroad, or if the country will turn into an example how not to develop – neither economically nor democratically.