CHAPTER As popular protests spread j ross ‘Tunisia in January 2011, a narrative devel oped which attributed the profound and widespread discontent to the economic failures of the Ben Ali regime, Far from being the regional success story which had made the country a pin-up for the international financial institutions (FIs), Tunisia was wracked by mass unemployment, deepening poverty, endemic corruption, and economic créce-, For many, the IFIs were co-conspirators with Western governments (parti rly the USA and France), the EU, and the Western-controlled media, all of whom were considered to have largely ignored the human rights abuses of the Ben Ali regime, its brutal authoritarianism, and its rampant self-enrichment in the interests of securing an important ally in the War on Terror, containing Islamic fundamentalism and securing their own borders from illegal immigration.! ‘Tunisian compliance with the neoliberal economic agenda was applauded, while rising unemployment and poverty were barely noted.? More than that, the economic reforms pushed by the IFls actu- ally created the opportunities for ruling families and their cronies in Tunisia, Egypt and across the region to divert resources into their own pockets and to structure whole economies to their own private interests. ‘The financial institu- tions were complicit then: they did not just endorse regimes, they helped to make them what they were. There is room to dispute the proposition that the protests—in Tunisia or elsewhere in the Arab world—were specifically manifestations of resistance to neoliberal policies or their international instigators. The growing incidence of workers’ strikes and food price protests in North Africa over recent years is indisputable, but the December-January protests were notable not least for the emphasis on less material demands such as dignity and freedom, Indeed, Mustapha Kamel Nabli, the now former Governor of the Tunisian Central Bank, cautioned against seeing what he termed “pocket-book factors” as overly deterministic.? But whatever the motivations of ‘protesters, it is clear that the IFIs had failed to fully comprehend what was going on within the Tunisian economy and had instead endorsed a regime which was failing its people’s economic needs. ‘This chapter seeks to understand the specific ways in which the International Monetary Fund (IMF) and World Bank (WB}—and hy ascariation nthartive assessments of Tunisia’s reform process, and wo noted the evidl Iwill vat all was not well. Second, 1 will discuss what may he considered the three key pressures upon ability and distributive efficiency of the eauntry’s econo! (particularly of fond and fuel), unemployment, and car pressures contributed to the two major “missed stories The ing and increasingly widespread. poverty; the second was the growth of'a deviant hybrid private sector, clustered around th i extended family, which drew on political: identify when and how ategy of the IFls, which was premais private sector as the engine for growth and employment id le the story is the IFly’ misplaced faith in sophisticate lection and prosentation, which allowed the Tunisian regime to hide the evidence thal reform outcomes \ with the IMF’ own (limited) admission of mistakes made, asking whether the learned have been sufficient given postuprising Tunisia’s continuing ip with these institutions, A regional success story Until recently, Tunisia under Bea w: Aliidely acknowledge a regional development success story, not least—it hes to be a ryself in previous publications,” The accolade was always relative: Tunisia seen to do well given ils very limited hydrocarbon resources and despite sig- nificant handicaps. The coum ‘postindependence era had abandoned by his pragmatic predecessor, Habib Bourguiba, but, successes, the economy had beconu: bogged down by excessive stat ma, declining and inefficient agricultural produetion, unconpetit in the face of an ongoing political eommitmint to the state as Use principal owner of capital, employer of labor, and distributor r, trade, and financial refirens, solidlate these measures, introduce tment (PDN, accelerate privatiza- fact, and moslly duc to the determination of Ben Alto push reforms chrough with top-down management and with only marginal tolerance of resistance, much was achieved during the period. During the period of the eighth development plan, and by 1996, the economy was stabilized, public finances were balanced—with the budget deficit being held below 3 precent of gross ational product (GNP!—infiat was brought down to around 5 percent por , and the international profile was rehabilitated. Nonctheless, structural change was slower than antici- pated. The public sector continued to account for 40 percent of total added value, 54 percent of gross fixed investment, and 60 percent of bank assets. State-owned enterprises still accounted or 29 percent of gross donnestie prod (GDP, unemployment hovered at a depressing percent, the trade profile remained unsteady and full convertibility of the dinar was delayed. ‘The mixed rth of underpertiorming loans. Add is ihe complexities of a new partnership agreement with primary trading in Europe which held out om the one hand the long-term promise of oiher the short-term devastation af uncompetitive i agricultural markets), The progratn enth (2002-6), and eleventh to deepen structural reforms, more fully liberalize the economy, and integrate it more profoundly with global markets, A key component of this was the prvgvamme de mise a ticws, oF industeial upgrading program, which, provided financial and teithe supp 98.cas focused on pect of the removal of impor countries as'a global multifiber ology and innovation, wards deepening and widen- ch that higher-added value, technology: ional Bank for Reconstruction “Caauntry: Parmer Strategy for the Republic of 2009, to see how IPIs were finding reasons to appland government, Tapping the list of achievements was an amum growth rate over the } twenty yeury, with an accompanying steady growth in per capita incomes above those of mid-range depp stars such as Taiwan, Turkey, Pe amounting to a 87.6 percent increase from 2000 to 2005, Offi levels had declined same period from 4.2 percent of the populat rent, although ch as elecarical and mechanical engineering, although the domestic market lagged significantly behind the growth in| all, Tunisia was considered to ‘owth, fighting poverty, and cored to be on track to achieve its millennium development goals in ment aicnas such taccession, health, life expectancy, reduced infin and 1a key sot i potable water resources, increasing water efficiency—particular agricultural sector—and in investing early and effectively in energy efficiency rogram, Also notable ¥ imb up the rankings fin the form of legal and assessments were echoed by the IMP which proclaimed in 2007 that “Effective economic management has helped achieve relatively strong growih while preserving macroeconnrni among the leading economic perform was not entirely blind to a number of seriously prot Tunisian economy. ‘The 2007 report specifically stated that, despite the rela- tively impressive economic performanci is was i to absorb she large number of new e weak eae governance, and lack of | y centralized decision-making proces lferating cronyiam and repressive polities were couched in overly diplomatic terms, the rewsen was also clear: the repor’s auth their howted inuch of the ‘Tunisian regime’s success in reforming the economy to having maintainedneighboring comntrics was threatening to spill over. In other words, they had na desire to rock the boat at that point in time. The next WB Country Assistance Strategy (CAS) in 2004 reiterated the axeas for concern, including an erosion of economic performance: while pro- gress had been made in poverty reduction overail, a significant praportion of the population was clustered abeve, bur close to, the poverty lines, with poverty in rural areas sitting at twice the national average, Unemployment was rising, not only because of demographic growth but also as the economy was restructured away from labor-intensive activities like agriculture and textiles towards moe competitive sectors, Moreover, a structural p gap existed with investors deterred by-strong government interference sn the economy, diserctionary interventions, weak economic governance, public accounability, and the constant ste in the absence of strong competitive forces." Far the WB, private-sector growth ‘was ceucial, not only to absorb at least some of dhe new entrants on the labor market, but also to generate a stronger tax base so that social assinance could be maintained at the sare tite as international debt was serviced or reduced and health and education spending was set to grow. The report included a shot across the Tunisian regime’s bows—“The full CAS envelope of $1.0 billion is unlikely to be committed unless there is an acceleration of reforms, including those addressing constraints to private investment”—leading the goverment +o insist on its own sixteen-page rebuttal of the allegations being appended to the report, Yet despite these concerns, the [Fls continued to express theit support for he Tunisian regime's economic reform program. Their view of Tanisi dependent on first, a reliance on selected macroeconomic indicators painted a resy national picture but which (as we: shall see) obscured the imbal- and distortions that were evoiving below the smfice, 's performance was considered relative to its regional context, ions, In their direct dealings with the country, santly measured Tunisia’s achievements against its regional competitars ax & comparator group (most of which saffered ftom similarly authoritarian regimes and weak domestic economies). In 2007, the IMF concluded that: ““ilective economic management has helped achieve relatively strong growth while pres , thereby positioning Tunisia among the leading economic performers in the region.” Ip 2009, the WB began its Gounery Partnership Strategy document thus: “Since independence, Tunisia has performed bette ing 4 for-reaching an ingness and capacity tn ivmplement economic reforms, in its macroccosomi Srmamierirtmmia i oad and the Global Competitiveness Index. Even its economic growtb rate looked good. But had it heen comparcd w countries with comparable GDP and GNP per capita (PI e Peru and ‘Thailand, which witnessed growth of up to 9 percent in some years, che distortions might have become clear and the picture more complex, “Che other side of the coin of its regional context was that the discourse of Tunisia’s development process was sccuritized, The IFls and partners accepted. desirable components of a reform process, specifically those that decentralized power or introduced real accountability and wanspacency, were eflectively stcrificed in the short to medium term 90 that ust: cconomic policies that were reports of the WB and the IMF show that they were not unaware s that the Tunisian economy was facing, but they were come placent in their acceptance of government narratives of policies that sought to address them, hardly surprising given that the Tunisian regime was eager to demonstrate its conformity with the IFIs’ own Washington. consensus agenda, Moreaver, by focusing on national pictures and macroeconomic data, they mnissed. the detail of how those challenges were translating in the everyday lives of Tunisians themselves, Poverty rernaps te single: biggest “missed story” was poverty, In fact, the reduction der Ben Ali was touted as one of the key successes of ‘tween economic reform and targeted social assistance. However, in April 2 World Food Programme (WFP) conducted a rapid assessment of food security in # and concluded that the avail- able statistics provided by the Tunisian regime—had seriously understated. the breacith and scale of poverty in the eauntry. Ils had been reliant in theie own assessments on figures provided by the Tunisian government which had used dubious criteria as to what constituted a reasonable poverty line. thereby ‘keoping the poverty rate unrealistically low. When set at‘I'D400 per person per year, only 3.8 percent of the population counted as poor. A mote realistic rate of T1585 per person per year raised th be spending up to Prices in ‘Tunisia have spiked ary 2008 as global food demand hasre ae NS ONE ADE Fe ious decade, bi fae government's efforts to get consumers to self-target when it.comes lo food steep inflationary pr subsidies. By maintaining subsidies and price controle only on chose foods that ‘unemployment, tuple oi &s for the poor, such as semolina, #t is hoped to discourage their focus on macroeconomic indicators, and with a poor undesstand- althier Tunisians from drawing on the subsidies, However, this leaves the ‘the nature and scale of poverty across the caus juse i Population vulnerable to fluctuations in global food prives, The Food Ts ‘culture Organization price index shows that between 2000 und 201 1 ices of oils anc faus quadrupled, cereals and sugars prices tripled, daicy and ineat prices doubled."As those prices rose dramlivally, and with Tunisia dependent oa imports for over hall'its cereal needs, the impact on Tunisians was Fish and red meat became too expensive for most Tunisians, forcing i “ ® Moreover, the Tunisian govern- to tun to lower-calorie foods and particularly those products chat are sub. ment was wnged to embark on submanntive reform of the social security sytem, sidized, in tun vaising the food and domestic fuel subsidy bill in ‘Tunisia from inchiding adjusting retirement ages and pension contribution rates, in order to erceat of current goverament expenditures in 2002 th 11.6 percent in 2009 Prevent government expenditures escalating in line with demographic changes (or 08 percent of GDP}. Tunisia is also a net importer of energy and suffered and to ensure it eauld 8 obligations for the coming two decades. As one badly From rising plod cx TMP was recommending cuts in fel and foad sub- left households jy) prepared to face the uces, a problem compounded by the decp-rooted crisis ing pockets), ii budgetary implica- constantly reasserting the importance of they were cqually adarwant that the Tunisian sure, including subsidies, to make awubsidy regime, but to introduce a price adjust the social secu for a middle-class popula ment mechanisin which meaat i 8 rose repeatedly from lion which was nonethch edge, hardly able to make 2008. Even amounted (a 1.6 percent of GDP, having from day to day." W in for floating into poverty sa «mall, the TFs been negligible only five years before, Not surprisingly, and with the govern, ‘unwittingly became complicit in the midile classes’ demise, fnaulus into the economy to offset the difficulties vaused ment injecting a fis . 2ecession, inflation asa whole rose in'Tunisia from 2.7 percent per 3 1999 ta 4.5 percent per annum in 2010, even as Tunisians” capacity Youth unemployment and its remedy as Tris perhaps unfair to Tabel inemployment a missed story: IMF and texy reports consistently highlighted the scale of the problem, reliance: on generated by the Tunisian nes in education, Tunisia does have dh largest middle class in Africa, that they still underestimated it, In 2609, the creatioa of high-skilled ¢ African Developanent Bank suggests that a whopping 29.3 percent jol cited as a priority hy dhe WB since the export-oriented model thus fans can be categorized as middie class, ving on aiore than §2pppd" far had generated largely k cd jobs for the textile, manufacturing, and However, 45.6 percent of Tunisian are classed as “oating middle clas agricultural sectors, whilst the ‘unisian labor force was relative is living on between $2 and #4 per day, aad an i the ey read. poverry in Tunisia is ac odds with ¢ middle class. Due to carly postindependence job opporeunit officially recognized as having reached 14.2 percent in 2008, with the greatest burden falling on young people aad amongst them on new graduates.2 In 2000, profoundly important to underpin an ability to aflict exogenous shocks in the the WR cetimated that the Tunisian econtomy would nced to grow by an annual This is even more true when houscholds have low access to savings average of 8.6 percent between 2005 and 2025, just to absorb new entrants on Tunisian riddle clases had litde or no access w savings. Ta‘ eros the labor markei,— ad sinc university degrees, ed by the national Consumer Protection Agency stated that 65 ele ent of Tunisians were alealy in debt, with che Central Bank estimating that wehold debt averaged $2,000. Much of this was the result of'a credit card added-value knowieducational qualification and higher levels of unemployment, the labor force suffered a deficit of suitable technical, engincering or business stalled labor, indicating profound weaknesses in the educational systera despite the achieve- menis towards meeting the Millenninm Development Goals (which focused on literacy rates and free universal and compulsory primary school education). Again, these deficiencies were well known aud documented is, for example, che Arab Human Development Reports’ and the WB"s own MENA Development Report, The Road Not Travelled: Etucatimal Refonm in the Middle East and Affiea.® Ifthe IFls recognized some of the structural determinants of unemployment, their remedy was premised on matching human resources development policies to private-sector growth, But by 2009, it was clear that Tunisia’s private-sector growth like that of its regional neighbors—was in wouble. Another MENA. Development Report produced in 2009 argued that, while it has come to contri en 70 and 90 percent of GDP in most MENA counties—representing in their economi a resull of the economic reform pro i f transforming MENA countries forms and this was due not to dilatory ref failings in the state-business-sociely relationships. identified the primary causes of low private-sector growth as b nepotiam, bribery, lobbying, tax avoidance, and non-transparent governance, ‘The tuck of transperoncy, discretionary capacities, and cent-sccking activi of zeginse elites and public officials had eroded the relationship between public and private sectors such that it was described as a story of mutual mnistrust.2? The business environment, as it was termed, was inadequate. ‘The report made its way into the WB's 2009 Cinuniry Partnership Strategy, which noted that there exists « business eavironment in most MENA countzies, including Tunisia, that is perceived co be haved on privilege and unequal application of the rules of the game and fas resulted is less competition. In Tunisia, this environment ‘has constrained the creation of jobs and isthe likely reason why private domestic investment has remained tnrractabty low.” eetenipiiviinesentnmennlieiiel tnhiamatenusiedl sscsmummascmmeeel rm processes depended—on the deeply entrenck jj mal ce and regime elites, the country strategy thereafic>...akes the need for any kind of cloan-up program. wnder “Areas for future reform” which indica ty become more selective and much lighter wi a smoother and more equal implementation of policies"; acknowledges “CSOs would like to see the Government encourage a more effective parti ory dialogue and implicate it in aspects of the de ion process”; and rocommends the introduction of financial suppozt for broad reforms in quality of service of the public administration, Nowhere in the strategy document does the bank identify any kind of program, project or conditionality that would address this most fundamental cause of insufficient economic growth and conse- quent structural unemployztient. A full third of the economy Even the WB report on MENA privagectors_ did not fully uncover the scale of the cronyism and corruption in Tunisia. Indeed, Tunisia was often cited as having relatively low coxruption compared to other developing counties. Transparency International's Corruption Perception Index, which ranked countries on a scale of 0-10 rom highly corrupt to very clean) saw Tunisia fall from thinty-third place to sixty-fifth out of 180 countries between 1998 and 2009, but in 2010 Tunisia still ranked well above a number of European cou tries (including Italy and Greece) and the faster developing BRIC countri Ac ke WB's Govemnanee Indicators, T the period 1998 to 2009 in the 5Uth—75th percent of corruption, and consis Ease of Doing Business Index ciso appeared (o show Tunisia climbing the ranks, from seventy-third in 20U8 to fitty-fifth So what were all these indexes missing given the high profile of cozrup! the list of protesters’ grievances being aired in the January 2011 uprising? Once again, by coucentrating on the macroeconomic picture and failing to drill dows into the reality beneath, the IFls failed to see beyond the emmpercr’s new clothes. The picture they missed was of a third sector, a relatively sinall, close-knit, femily-connected group of individuals who amassed vast amounts of paivate wealth in the form of business empires on the basis that they pulled the political strings of the state itself. Technically this was indeed a growing private , but it was not capital independent of the state and subject only to the cd regulation, Rather, it uly a concentration of capital which was able to circumvent the regulations ol the state, to privilege itself at the of the genuine private sector and to ultimately transfersubsequently timming th costs, In 1994, under pressure from the TFTs fand with Ben Al’s avaricious new wife installed in the palace at Carthage), the program was expanded to include larger and more profitable firms and was accompanied by a reform of the stock exchange s0 that sales of blocks of shares could be initiated (rather t outtight sale of firms), From dhe lave 1990s, the progswn appeared (o accelerate with a growing number of whole or partial sales of SOEs, even in strategic vecwore such as tele por, and banking, and with more inmavative mechani and Build-Own and observers, including such was the “success” of the program, which ha for the government over a twenty-year period that by 2011 the process was running ont of steam simply because the state was running out of assets to sell! The income from sales was not as high as might have been expected, but the firms sold in the atest spree seemed reassuringly secure and profitable Dig a bit deeper and it bovoines clear why the program had been avcclerated but also why the reeripts to the treasury were not as high as anticipated. State assets were sold outright to members of the president’s extended family*® and their close friends at discounted prices, and usually without genuine competitive bidding. Tn other instances, holding companies owned by Family individuals partnered international investors in buying block shures in state-owned com- panies, and in other cases Family individuals “facilitated” privileged purchases and concessions for international parmers in renum for either cash or a stake in the business, Wikileaks famously percent stake in Banque du Sud ev Mabrouk, a stake who was martied to Ben company, La Société Le Me i’s daughter, Gyri again at a discounted price, which gave him een eee eee ee ee eee ee eee eee Family “purchases inchucie La Céramique and the National Society for Raising Ghickens by Ben Al’s son-in law, Slim Zarrouls the transfer of significant parts of Tunisair to brother-in-law Belhassim Trabelsi; and even the sale of \ ‘abelsi also bought the usibution of Ford, Rover, land agency sold s Anges) to the ral purposes and therefore at permits to alter the usage Vy in-law Slim Chiboub parmered the French hypermarket chain Carrefour in building a branch bought from the state at only a nominal pri Jaw even leased such land back to the Ministry of Transport at Sakhr El Maieri was also provided with land from the Ti ny, SONEDE, to build palatial accommodation in Si such as the housing fund, and from che hijacking of the management orpars of the banking sect as the Banque de ‘Tunisie by Belhassan Trabelsi in 2008, For example, Trabelsi managed to secure cheap dinar loans to included running down the passenger transport side of state-owned Monastir i WB's Inusrnati 1 Finance ificant financial support for the very banks that were making the dubious loans ta the Family, many of which were never paid back or were unsecured, - Sakbr E] Materi used an. unguaranteed loan co buy Ennalil Automobiles, which owned a concesion to impurt Vollawagen, Audi, Pors , and Kia cars, for, it was rumored, just one third of the concessinn’s real price, He also purchased the national shipping company and soon afer was granted land, without having to go through any consultation or bidding process, around the port of La Goulette an which his holding company built tourist facilities and commercial shops, which gradually squeezed the state-owned Office des Ports Aériens de la ‘Tunisie out of the market. One of the most recent Materi scandals was the purchase, as a parmer with Watania-Q-tel, of the Orascom holding in mobile telephone company Tunisiana, ()-tel sought to increase its own existing stake and to obtain a 3G license: the price was to share the deal with Matec (Orascom’s initial purchase bad been controversial enough—it was funded with a dinar loan provided by Tunisian banks at the president's bidding despiteoverseas private company. ‘The regime made much of its liberalization of the banking sector, claiming us plans to turn the country into Africa’s financial services bub. Foreign investment was encouraged and private banks prolifermed, In reality, however, capital remained concentrated, with the three state-owned banks dominating over half the market and continuing to be burdened with substantial under- performing loans, The remainder of the sector was highly fragmented. heavily »y Family interests and given little incentive by the regime to invest, miro ar small enverprises, or business start-ups. The scotur served to finan- cially lubricate a system of capital concentration as much as to f private-sector growth, Other areas in which profitable licenses were distrihueed were the media, the airline sector, and telecommumicarjons. Ticenses for private radio stations were sold first to Belhassan Trabelsi’s majority-owned Radio Mosaique and then to Sakhr Bl Mater (for Zitonna FM) and the Mabrouk family (Zor Shems BM). ‘Lrubelsi was later a parmer in Express FM and then in Carthage TV. El Materi mncanwhile purchased a 70 percent stake in Dar Assabah, one af Tunisia’s largest printing, publishing, distributing, and advertising compa- nies. In doing s0, he assumed virtual ownership of the last two even remotely dependent newspapers (Le Lanes and Al-Sabal}, to the airline sector, tie two new private companies were Belhassan ‘Lrabelsi's Kurthago Airlines, and Slim Chiboub’s Nouvelair Qalcr merged under Trabels’s control), The concession for the third telephone operator, after Materi’s capture of Tunisiana, was sold to Orange, who partnered the presi- dent's daughter, Cyrine Ben Ali, in Planet Tunisia, the largest internet service provider in Tunisia, Once privatized, what were now Family firms were often ‘allocated profit able . For example, Mourad Trabelsi, one of Leila's brothers, was ‘opoly on tuna exports (to complement his monopoly on fishing Thus what looked ke an opening of state-controlled SERRE. AeeSeN Ems the very regulatory systems that the state had officially introduced and which the IFls had so favorably endorsed. Favored import companies were unofficially exempted fram paying customs duties, creating unfair competition with the legiimate private sector. Public procuren individuals and firms sccking to purchase licenses gad the superstores Géant and Monoprix were able ro obtained by the Mabrouk fami a last resort, the Fannly simply foreed a purchase upon a firm against its owner" airplar.288¢ts, to carry Le nate whole economic geograpities. The economy of the Greater Tunis area was dominated by the extended business dealings of the Trabelsi clan, while B Ali's siblings and children spread their empires souti along the coastal plain: i often their participation in . Estimates of the Family ‘ve will probably never Fatnily vircually controlled whole sectors such as the media, cement produc! |- construction, dealerships, telecommunications, insurance, shipping, and air wanspor, they held larye parts of the private banking sector and worked in partnerships of some form or other with most major international investors. Transparency International madc a simple calenlation that between them the Family can- trolled a full third of the national economy, between 30 and 40 percent." Not only did they disguise the scale of their holdings in a complex web of part- nerships ard front companies, but they also Inow—but there is no doubt an estimated value of €10bn* has identified 110 Family meml investigation and possible renation: commission charged with investigering corruption, including tracing back the processes by which privarizations were implemented, licenses allocated, and loans secured. cases for inves corruption it was impos- ta do anything about it, The uve state ins for enforcing anti- corruption, the National Audit Office and the Disciplinary Financi were rendered inellective by the political power of the Family, by the regime on an entensive and repressive security app: by their contrel of the media, by the weakness of the judiciary, and by ihe placing of key political allies of the Furnily within the very instruments sct up to call them tn acccumt. The impact of this highdevel corruption was profound. For a st famously Wikileaked US Embassy cable recounted how nepotism and tion trickled down through the economy and everyday life in general. the right connections or # bribe, passports, school places, scholarships for chil- dren, and public-sector jobs could be secured, parking tickets could be made to disappear, and loans could be raised from banks. Indeed, one of the principal grievances that led the Gafia-basin mine workers to protest in 2008 was the0 SE EE EVES HOKE erocient anc sormalized economy which the government communicated to the [FIs and which was represented in legal and regulatory reforms veiled the reality of an increasingly informal and distorted economy, ‘The second major impact was on the growth of the ecomamy itself: A report by Global Financial Integrity produced in Jaquary amount of illegal money lost frown Tunisia due to corruption, bribery, kick- backs, trade mispricing, and criminal activity between 2000 and 2(008 was, on ‘average, over $1 billion a year, i Ali and rabelsi fortunes overseas, and it becomes lear that Tunisia’s economy Tost much of ils capacity to grow aud generate employment because of the cor- tuption. Not only were resources gucked out of the economy, it the teust of the private sector in the nile of law and in the integrity of state operations and seyulatory activity was profoundly eroded, deterring domestic investment in wwestigations have shown that many ms about dealing with the Family in order to capture Tunisian markets (which were made profitable by the monopaly status of their investments and by che wage repression which the state pursued of the IFls}. Hence we can explain the predominance of FDL in privatization of the $4.2 billion was FDL" This also exp he continaing failure of the domestic private sector to grow at rates compa rable with other developing countries, and the continued over-reliance of the economy on public and speculative investments aud investments in low-skilled ibverted version ofa liberal economy bore litle resemblance to the role model which the IMF and WB understood Tunisia to be. In making their own assessments, the IFls were overly reliant on, and the information provided to them by the Tunisian government, which was carefully packaged to disguise: the reality—emperor’s clothes indeed. Since 2001, Tunisia had subscribed to the IMF's Special Data Dissemination Standard which aimed to implement beat practice when it caine to economic and financial statistics, and in 2006 it was in the pilot group of countries to undergo a data module in the IMF Report on the Observance: of Standards and Cades, The subst:quent report concluded that the quality of macroeconomic statistics in ‘Tunisia. had improved over the previous decade, that it was now “largely adequate” and that che Tunistan authorities were committed to improving their quality further, The legal and instivutional frameworks were considered to be broadly effective, and the culture within dara, collection and processing ayeacies to be in tine Yernational standards. Some methodologies were outdated interestingly—some statistics relating to sensitive areas like: cruployment/ unemployment were not released in as regular, timely or consistent marmner as that data collection was often not detailed enough and that information was ne a ible as it should be. Moreover, the presentation of national-level data obscured reyional disparities of onsequence, a probiern that had actually heen identified within the 2004 United Nations Tuaisia National Report ot abillenriam Developmen! Goals These problensscan all now be seen ta have helped paper over che emerging disparities in wealth disibution and opportunity, just as the manipulation of the official poverty line had created a false understanding of the breadth and scale of vuinerability. The problem was not falsification of data (Rub Prince can cluded after much study of it that it was |, but that it was vompil and presented—albeit systematically -in ways that obscured rather than illueni nated. When inequality in unemployment or income had regional dimensi the worst figures could be hidden by aggregation at the national level. Mass inflated incomes of the few would balance out with the sqqueezing of the classes and the poor. Survey sainple groups were too small to be cally significant and definitions selective.‘ ‘The TFls failed to pursue the gaps in the data, preferring in some instances to cross-check the data provided by the Tunisian regime itself engagements with a very narrow section of the population, elite. For example, in the 2006 repurt, the IMF indicated teen Tunisian data-user representatives including individuals from the banks, intemational and regional organizations, financial media, think tanks, _ ere organizations, and public administration. all of these were either themselves embrdde: “captured,” and that in an environment where Getting it right, vext time Tn April 2011, the IMI"s then :nanaging director, Dominique Strauss-Kaln, acknowledged the weakness of should have paid more a tions that specialize in above suggests tha-a more radical review partnership strategies was needed, one that but rather acknowledged that non- om to the very programs of the LFTs? approach to did uJ FIs away from polto in this chapter show cl regime governance, although they may not have fally apptcciated their e or impact, and there was no doubting the deficiencies of the authoritarian gov emment. But at no point did the LFIs” county parmership strategies include specific programs or projects to address this, and there was certainly no political conditionality. Tn the end, te IFIs swood by while their own neoliberal projects were converted into cash generators for the corrupt regime and Family elites. ‘Te be fair to the Lis, they are banks after all, not political agents. They have no mandate to act as global enforcers of liberal democracy and must ultimately. work with whatever national political structure exisis at @ given point in time, Nonetheless, as a result of their complicity in Tunisia’s authoritarian past, they have lost the confidence of large sections of the Tunisian population and are having to relaunch themselves as credible partners in the economic proj the first deputy managing director of the IME, David Lipton, explained: ‘As we engage more closely in the region, we find we have to explain the role of the IMF and how we work with govemments today, We low from experience that programs are much more likely to succeed if they are designed! aud owned by the national anthorities znd enjoy broad support within the country. We are also focusing much moze explicidy on policies thar ensure dhat che benefite of economic growth are shared much mare broadly. And now we consult widely with civil sociery, labor, aac parties across the broad political specrum.” The WR too has rec: , working closely with the interim government to support transi through tion (the Governance and Opport improving transparency and ret governments not having a mundate to parmer in mo1 ments), Following the 2011 Constituent Assembly elections, an interim strategy established three core pillars which reflected the goals of dhe uprising: sustain- able growth and job creation; social and economic inclusion; and strengthening governance. But pending more long-term political arrangements, and whilst further programs arc being developed that tackle key Tunisian concerns such as poverty and yourh unemployment, actual disbursement by the WB since has fallen dramatic The IMF also declares itself ready tn support the country’s reform program with a Precautionary Stand-by Arrangement worth 1.78 billion. Yet ultimately, while both IIs have adjusted their approach— and their language—to be more inclusive of multiple stakeholders and more sensitive to the social conditions that ;pany macroeconomic underperformance, their prescription for recovery much the same, The IMF has so far endorsed increased government spending, notably on jab creation and subsidy suppore, as necessary to offéet the ment Toan) which focuses on innnnenenneny Meeanens of greater openness to trade and FDI, targeting of subsidies. With oz with goon, ‘Tunisians are not s0 sure. Protracted political crises, labor strikes, and public prowats continue to obstruct the stability that the economy needs. The revolution has not bronght relief liom unemployment or poverty and for most the crisis is deepening, not releating. Few see the solution as iying in earefully crafted technical negotiations with the IFIs, which ultimately seem to promi more of the same. ‘Lhe country’s harrowing needs may determine its depend- ence on thes ions, not least as its commercial credit ratings continue to i TFls have taken the political Icssons of the past to heatt, Tunisians arc unlikely to love them more or blaine them less, fueled, for example, by the Wikileaked US cables. In Cable 7, 2009, the US Ambassador to Tunis usdined the corrupt and of the Tunisian regime but said: “Not withstanding the fru ‘tations of doing business here, we cannot write off Tunisia. We have too much at stake. We have an intercat ix preventing alKQaoda in the Islamic Magureh and other extremist groups Shom establishing a foothold here... Moreuver we need to ny regione challenges.” See “US Em Cables: Tunisia — a US Foreign Policy Conundrum,” The Guardian, December 2010, accessed October 7, 2011, www.guardian co.uk/workd/us-embassy-cables- docunvents/217138, posted February 23, 201 events /?f=3165. 5. This is not a discussion of he virtues or otherwise of neoliberalists per se, bu rather of its aerial. implememation in Tunisia over the course of several decades (although achmivedly one could atic that auch a separatin is artificial, See, for example, Emma Morphy; Exononic and Palizal Change in Taisia: Foo Bourguiba to Bor Ali (London: Macaillan, 199) and “The Tunisian Mise & Niveau, Programe and the Political Economy of Reforss," Azo Palitial Miorangy 11 (2006) 51-40,