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Tunisia, aid, economic reforms

Economic Reform Lessons from Tunisia

Tunisia’s political woes provide important lessons for international aid agencies who want to support young and fragile democracies.

Words: Harry Clennon
Pictures: Juan Ordonez

When Americans remember the Arab Spring, our strongest recollections tend to be of protests in Egypt, airstrikes in Libya, and the onset of the Syrian civil war. Much less attention — either from policymakers or the general public — is afforded to Tunisia, where the Arab Spring uprisings were initiated by the self-immolation of a street vendor in response to the seizure of his wares by a police officer. The event sparked a revolution that led to the overthrow of longtime Tunisian autocrat Zine El Abidine Ben Ali, and the establishment of the only democracy to emerge from the Arab Spring. Indeed, Tunisia was one of the few new democracies to emerge around the world in the past decade or so, a considerable and inspiring achievement by its people in a time of global democratic recession.

After a National Dialogue Conference established Tunisia’s democracy in 2014, the country enjoyed a delicate balance of power between Tunisia’s best-organized political party, Ennahda, and its first freely elected president, Beji Caid Essebsi. But in their restraint, Essebsi, Ennahda’s leader Rachid Ghannouchi, and other political notables, failed to confront endemic corruption and sky high unemployment (which at one point sat at nearly 16% among the general population and a staggering 30% among younger citizens). Dissatisfied with the parties, the Tunisian people elected the unaffiliated Kais Saied.

Yet, Tunisia’s infant democracy is on the precipice of collapse now. In June 2021, in the midst of protests brought on by dissatisfaction with the country’s parliament, Tunisian president Saied dissolved the Tunisian parliament, relying on a dubious interpretation of the country’s constitution. Since then, he has appointed officials empowered merely to rubber stamp his rule by decree and has curbed an already-weak judiciary. Despite some attempts to form a popular-front opposition, there is no immediate indication that the deterioration of Tunisia’s young democracy will be reversed.  

Democratic theory suggests that governments must both appear capable of executing their duties and facilitating some level of well-being if they are to succeed where overthrown autocracies have failed. And while some of Tunisia’s political paralysis in the years leading up to Saied’s seizure of power is attributable to flaws in institutional design (such as the extraordinarily low threshold for parties to secure seats in parliament) and the studied inaction of political leadership, that’s not the entire story.


Despite cynicism — that is justified in the wake of the catastrophic wars in Afghanistan and Iraq — about the role that the US and the international community can play in promoting democracy around the world, Tunisia offers profound lessons about the potential for a new kind of pro-democratic foreign policy. Rather than assuming that military intervention can facilitate successful democratic consolidation — as in the cases of Iraq and Afghanistan — or that we should simply leave each nation to its own devices, there is room for a pro-democratic economic policy. Rather than relying on an outdated consensus, aid agencies in the US and abroad need to become more cognizant of on-the-ground political constraints in aid-recipient countries, and altogether more generous in providing aid for building state capacity.  

Rather than relying on an outdated consensus, aid agencies need to become more cognizant of on-the-ground political constraints in aid-recipient countries, and altogether more generous in providing aid for building state capacity. 

The lessons from Tunisia are negative ones, indications of how international bodies and prosperous democracies failed to shore up confidence in a fledgling democracy in the face of legitimate domestic discontent. Despite a recognition in the international development community of the importance of governance and democracy, the Tunisian case suggests that principle and practice are far from being united. This is perhaps most obvious when it comes to the political-economic dynamics of the Tunisian labor market. According to the US Agency for International Development (USAID) a quarter of Tunisian workers are employed in the public sector. Many economic sectors are publicly managed. Arguing that government spending is mismanaged and crowding out private investment, international aid organizations like USAID and the World Bank have devoted significant attention to the government to trim down its budget. For its part, the International Monetary Fund (IMF), has gone beyond encouragement, offering loans on the condition that the Tunisian government impose austerity measures.

To be sure, it shouldn’t be controversial to assert that, at least in the long run, a prosperous economy will have a robust private sector. But in the short term, donor organizations asked for something politically infeasible and undermined Tunisian democracy in the process. Expansive public sector employment is a political reality in Tunisia, and powerful domestic actors like the Tunisian General Labor Union are firmly opposed to employment cuts in the civil service, not to mention the elimination of price subsidies, another IMF ask. Indeed, the country’s repeated failure to meet the IMF’s conditions has forced it into an increasingly serious debt crisis. If aid organizations were genuinely committed to the consolidation of democracy in Tunisia, their socioeconomic recommendations shouldn’t have begun with a political impossibility, and one that has managed to worsen the North African nation’s economic position.

For its part, the US has failed to step in despite its legacy of concern for democracy abroad. According to the US Department of State’s and USAID’s own data, Tunisia receives the eighth highest dollar amount of foreign aid from the US in the Middle East-North Africa region, out of 13 countries total. Of the top three countries, only one — Israel — is more democratic, with the other two — Jordan and Egypt — considerably less so. Among peer income countries, it ranks tenth out of 31 countries, just a hair above the average. Of what USAID does contribute, the largest aid category is security assistance, while the second largest is “Business Reform and Competition.” Given Tunisia’s tenuous security environment, spending on security assistance is hardly unjustified (although it’s certainly a knock-on effect of the US’ destabilizing intervention in neighboring Libya). But given that both of these categories dwarf, for example, aid designed to build state capacity, it’s not clear that USAID is demonstrating a prioritization of freedom and self-government abroad.


Of course, President Joe Biden, with his framing of geopolitics as a struggle between democracy and authoritarianism, probably stepped into office too late to pursue policies that could have meaningfully altered the direction Tunisia’s politics was already taking. But it is disheartening to realize that preceding presidential administrations have failed to approach the situation in Tunisia with humility or flexibility, relying on old models and failing to prioritize Tunisia’s inspiring democratic transition in their foreign policy agendas. It’s doubly depressing to watch the current administration do little more than tentatively chide Saied to relax his grip.

As upsetting as the deterioration of Tunisian democracy may be, it offers important lessons. First of all, pushing the Tunisian government to pursue unpopular economic reforms that fit the western economic model — with barely any discussion of compensating the inevitable losers from reforms — was a mistake. Instead of seeking some kind of workaround, conditional IMF loans drove Tunisia further and further into debt. Following from that, capacity-building aid that enhances the Tunisian government’s ability to raise revenue and provide services — which might have facilitated increased accountability between tax-paying citizens and improved the government’s image — should have been a higher priority. It goes without saying that providing that kind of aid unconditionally could have prevented the debt crisis in which the country now finds itself.  

Some might argue that because of Tunisia’s high level of corruption, conditional loans are an important tool for pressuring powerful political actors to follow through on reforms. It’s certainly true that corruption has played a major part in dissatisfaction with Tunisia’s democratic trajectory, but the evidence that aid worsens corruption is slim. Aid should focus on measures that empower citizens to hold their governments accountable rather than external attempts to uproot entrenched corruption. 

While international economic interventions might have helped to shore up Tunisia’s democracy, there’s no guarantee that they would have overcome the local factors that led to its decline. The capacity of aid agencies to move the needle is highly constrained. But it’s clear that avoidable errors hindered Tunisia’s democratic transition. If future and current policymakers genuinely care about promoting democracy around the world, they should start by learning from the Tunisian case. 

Harry Clennon is the co-editor in chief of Spectacles, a digital publication focused on stories about the health of democracy in the US around the world.

Harry Clennon

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