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Tunisia’s president must strike balance between unions and IMF

Distrust in the Tunisian government and its commitment to reform has hampered negotiations with the IMF over the size of the requested loan

Demonstrators in Tunisia protest against President Kais Saied in May Reuters/Zoubeir Souissi
Demonstrators in Tunisia protest against President Kais Saied in May

The International Monetary Fund (IMF) announced in October that a preliminary agreement had been reached with the Tunisian authorities over an extension of a fund facility worth $1.9 billion.

Tunisia has struggled to tackle rising prices of basic goods which has fuelled domestic instability. 

Last year Tunisia’s President Kais Saied seized on the outbreak of protests to declare emergency rule and suspend Parliament.

He then proceeded to suspend the constitution a few months later and declared that he would rule by decree.

When President Saied embarked on these measures there was a prevailing expectation that there would be an influx of investment from the UAE and Saudi Arabia in the same manner that they had invested in Egypt’s President Sisi after he had toppled President Morsi. 

However, such financial assistance did not materialise as Washington made its displeasure at Saied’s measures clear.

Even as Saied sent his newly-appointed prime minister Najla Boudan to Riyadh to attend a summit and insist on financial aid, she returned empty-handed despite Saudi Crown Prince Bin Salman granting billions in aid to Egypt and Pakistan at the same summit.

Meanwhile, Tunisia’s economy has continued to spiral. Long queues have begun to form outside bakeries and petrol stations.

Public sector salaries have not been paid on time over the past year. Inflation has soared and basic goods such as sugar and vegetable oil are increasingly scarce.

It is in this context that the negotiations with the IMF have taken on a greater importance.

Yet distrust in the Tunisian government and its commitment to reform remains a matter of concern.

The state’s troubled relationship with the trade unions (UGTT) has hampered negotiations over the size of the requested loan.

Since 2011, the UGTT has successfully strong-armed the Tunisian government into three salary increases for its bloated public sector even as the state struggles for funds to keep its institutions functioning.

Following the fall of the “troika” government in 2013 and the subsequent national dialogue, the UGTT has found itself in a position whereby it has been able to appoint certain ministers and veto appointments.

Where the IMF seeks a commitment from the Tunisian government to rein in public spending, the UGTT is seeking more public spending in favour of its membership.

Even if Tunisia’s government agrees to reduce public spending, the UGTT remains a powerful organisation with the capacity to force the government to bend any commitment.

It is for this reason that the IMF has sought to include the UGTT in negotiations over the loan facility.

But the problems between the Tunisian government and the UGTT go far beyond the IMF negotiations.

Although the UGTT supports Saied’s declaration of emergency rule and his suspension of parliament, there are deep differences over power-sharing.

The UGTT is seeking a repeat of 2014 when they brokered a government of their own choosing via a national dialogue following the toppling of the troika government led by Ennahda.

Saied appears intent on leading the process himself with his emergency powers and has pressed ahead with a unilaterally written constitution, new election law, and controversial election roadmap.

Instead of seeking to win over the UGTT, Saied has sought to force a change in its leadership and subjugate it.

The secretary general of the UGTT Noureddine Tabboubi lambasted “attempts to infiltrate the UGTT” in June this year as Saied’s loyalists successfully installed themselves at the helm of the influential farmer’s union.

Saied’s loyalists capitalised on their momentum by bringing a case before the courts challenging Tabboubi’s re-election as UGTT head at an extraordinary conference in November last year.

The court ruled in favour of Saied’s allies that there had been procedural impropriety and therefore Tabboubi’s re-election was invalid.

The UGTT responded by appealing the decision and then declaring a general strike. 

However, Saied’s economic woes are only getting worse. He agreed in September to cede to UGTT demands for a public sector salary hike in exchange for greater cooperation on economic initiatives.

Although the UGTT continue to lambast the IMF publicly, the announcement of a preliminary agreement this week suggests that a framework of understanding is at least in place. 

While the UGTT have their problems with Saied, their absolute aversion to a scenario that sees the return of parliament and its political parties means that they remain cautious in the extent to which they pressure Saied.

Although they seek concessions, they are keen to ensure they do not compromise the process he has instigated.

Saied will be underwhelmed by the limited size of the $1.9 billion loan facility. If anything, the size indicates the enduring lack of trust in the Tunisian government internationally which failed to implement the last two agreements with the IMF, and is reflective of wider mistrust of Saied who was made to cede to Washington’s demands that their $60 million of aid assigned to Tunisia’s local economy be given directly to UNICEF rather than pass through the Tunisian authorities.

Saied will hope that an agreement with the IMF will restore some confidence in other international donors and encourage them to offer their own loans.

Sami Hamdi is managing director of International Interest

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