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Structural Adjustment: Former President Ben Ali's Gift to Tunisia (Part One)

April 15, 2013 ·

Tunisia and the International Monetary Fund.

Tunisia and the International Monetary Fund.

Cross-posted from the Colorado Progressive Jewish News.

Tunisia's Baguette Revolution, January 2011Faced with a deepening socio-economic crisis that has only intensified since the collapse of the Ben Ali government in January, 2011, it appears more than likely that Tunisia is about to enter into a major agreement with the International Monetary Fund (IMF) for a $1.7 billion loan. As is almost always the case, the loan is conditionally based upon Tunisia fulfilling what the IMF calls structural adjustment criteria, a part of which has already been implemented – eliminating the subsidies on fuel which has increased their cost.

All this is being done in the classic IMF fashion with as little public discussion as possible either with the Tunisian government – its Constituent Assembly – or with civil society, which have had no input whatsoever into the process. For an international organization that talks the talk about 'transparency'. its long held traditions of secrecy, especially where it concerns granting sizable loans to semi-peripheral and peripheral countries, is much more the norm.

That said, in this new post-Ben Ali era, confused and directionless as it is economically and politically, one thing that the Tunisian people have won is their freedom of speech. As a result, alas (for IMF, Tunisian Central Bank and Finance Ministry bureacrats), it has been more difficult to hide the details and conditions for this loan than in the past. A growing number of Tunisia's talented political and economic researchers have been able to break through the traditional wall of silence to unearth the details of the loan and press the Tunisian government to do what it really seems to want to avoid – engage in a public, wide-ranging discussion on the loan itself, and more basically, on the direction of the economy itself.

Many of the revelations about the loans have appeared in Arabic, French and English at the Tunisian alternative media website, Nawaat.org, which has broken key elements of the story to the Tunisian public, enough so that government has been pressed to publicly respond. It is precisely this kind of discussion which has been missing from the Tunisian public since the Ennahda-led government came to power in the October, 2011 elections.

During the Ben Ali years in power (1987-2011), Tunisia was often cited as an IMF poster-child, i.e., IMF structural adjustment might have caused 'problems' elsewhere – but in Tunisia, at least according to IMF publicity, it seemed to be working. This particular illusion was blown to bits so to speak by the emergence of the massive social movement that brought down the Ben Ali government. When the mask was ripped off, it turns out that not only had IMF structural adjustment policies not helped Tunisia, they were a major contributor to the country's socio-economic crisis. IMF statistics on Tunisia were, if not entirely fabricated, way off.

The rosy picture the IMF painted of the Tunisian economy was more hype than truth. In fact the policies failed. How interesting and typical that within the IMF there has virtually been no self-criticism for how it contributed to Tunisia's economic crisis, as if structural adjustment had nothing to do with Ben Ali's collapse. Worse – the policies continue. The proposed loan follows closely in the footsteps of those that came before. There is no change in the country's post-Ben Ali economic policies from those that existed prior to his downfall.

If this hypothesis is accurate and, from everything I can tell, it is, there are consequences. As the last uprising was essentially caused by Tunisia's embracing of neoliberal economic policies and nothing, or precisely little, has changed. Another major crisis cannot be that far off.  History strongly suggests the relationship between neoliberal economic policies and political repression 'go together like a horse and carriage' as the lines from an old song go.

Nor has Ben Ali's extensive repressive apparatus been dismantled; it remains largely intact, for awhile in cryonic suspension, but now coming back to life again. Having tasted the wine of freedom and empowerment – the fruit of unprecedented peaceful mass protest – it is unlikely that the Tunisian people will wait this time another quarter century before taking measures into their own hands once again. I do not write these words as some kind of 'threat', simply from my reading of history.

In any case, what follows is the first part of a three- (or maybe four-) part series. This first part looks at the Tunisia's initial uneasy relationship with the IMF in the 1980s, Bourguiba's resistance to the policies, and Ben Ali's embrace of structural adjustment. Part Two will examine the results of Ben Ali's neoliberal policies on Tunisia (1987-2011) and Part Three will take a peek at the current proposal, well on its way to being implemented. RJP)

Tunisia's Baguette Revolution

For 'outsiders' the photo seems admittedly a little odd: a man armed with a 'baguette,' [i] as if it were a machine gun and not simply baked flour, pointing it at a Tunisian security force down the street on Ave. Habib Bourguiba. But Tunisians of any age understand it. The photo is from early January 2011, just before a million person march on Tunis forced the five-star kleptomaniacs, Tunisian President Zine Ben Ali and his wife Leila Trabelsi, from power.

The foreign media, including here in the USA, suggested that Tunisia's January 2011 uprising was a 'Twitter' or 'Facebook' Revolution, but it was much more basic than that – it was about bread and roses ­– about pervasive economic stagnation, high unemployment, low wages and seething repression. At the time, no one was talking about whether women should wear veils or bare their tits, or thought the uprising was about trashing marabouts and trade union headquarters, or desecrating Jewish cemeteries.

Taking their cue from the poor man[ii] facing down Ben Ali's security apparatus, hundreds of Tunisians picked up their baguettes and took to the streets. Symbolizing the failure of the Ben Ali years, the baguette was also reminder of the Bread Riots of 1984 which shook the country to its foundations, leading to a full scale national revolt that very nearly brought down what was then the 18-year rule of the country's first president, Habib Bourguiba.

Tunisia Caught in the Global Crisis of the 1980s

True, the 1984 Tunisian economy was in the doldrums, although the current fashion – to blame the slowdown on the Tunisian economic model of state capitalism, with its strong social contract – misses the point.[iii] The global economy had been in the doldrums for a decade hitting the commodity, low-end manufacturing sector in the semi-periphery and periphery with a special vengeance in the early 1980s. Tunisia was caught up in the storm. In particular, the European economy, had gone through a decade of recession and high unemployment which, in turn, had a profound impact on Tunisia, as so much of the Tunisian economy was geared towards exporting to Europe (France and Italy in particular) and welcoming European tourists.

In the early 1980s, Tunisia's economic situation deteriorated, the state's tax base shrank. With some hesitation, the Bourguiba government was pressured to do what so many other Third World countries had to do at the same time: go begging to the IMF or World Bank for a loan. This Bourguiba did, and the IMF, being accommodating, agreed to offer Tunisia a substantial loan. But there were conditions: the usual structural adjustment conditions which have done so much over the years to widen the gap between poor and rich countries, to undermine and destroy the economic potential of many of the Asian, African and Latin American countries that accepted the deal.

Bourguiba Agrees to End Bread Subsidies; the Nation Rises in Protest; Bourguiba Withdraws the Proposal

These conditions included cutting government spending, reducing or eliminating capital controls and protective tariffs, depreciating the dinar (Tunisia's currency). Part of the deal necessitated the Tunisian government ending its subsidies on wheat and semolina (ingredients in bread). Caught in the vice, Bourguiba agreed.

The price of bread doubled overnight. The price increase triggered two weeks of angry nation-wide protest demonstrations. As they had done once before in 1981, the security forces and military – led by then Interior Minister, Zine Ben Ali – crushed the bread riots. When it was all over, more than 80 Tunisians lay dead, hundreds wounded. Having not yet slipped into approaching senility, Bourguiba had the presence of mind to reinstate the subsidies and fired the ministers responsible for encouraging the loan. The political situation stabilized, but the economic downward spiralm, caught in the global structural crisis, continued.

Such bread riots were not unique to Tunisia. They took place all over the Third World in the 1980s as the world's poorer countries were forced to lift subsidies on food, medicine, and education, to freeze public sector wages and benefits in exchange for World Bank/IMF loans.

For the next three years, until he was overthrown by his interior minister, Bourguiba resisted lifting subsidies. But in 1986, Tunisia ran short on foreign exchange. The crisis was triggered by plunging oil revenues (down 40%), declining tourism receipts, and a serious drought which badly affected the agricultural sector. Bourguiba grudgingly agreed to an IMF loan that required lifting subsidies on bread. With the 1984 bread riots (and a 1978 union initiated national strike) in the back of his mind, Bourguiba permitted wages to simultaneously rise to compensate some for the higher bread prices. Again people took to the streets in protest, but not with the intensity of 1984. [iv]

Enter Zine Ben Ali: 'Our Man In Tunis'; Start of the Tunisian-IMF Love Affair

The government survived the crisis, although it was the beginning of the end of Bourguiba. Bourguiba's successes were based upon a strong state participation in the economy, free public education, democratization of the role of women, and subsidies for basic food stuffs and fuel. As the tax base of the state eroded and the state fiscal crisis deepened, the social contract that Bourguiba had committed to for thirty years weakened and with it, the social base of his government narrowed.

Increased repression, especially against the country's growing Islamicist movement (which itself was able to take advantage of the growing economic crisis) only narrowed Bourguiba's support base that much further. On November 7, 1978, Habib Bourguiba was removed from power in a 'palace coup' on November. There was very little protest. Bourguiba was unceremoniously pushed aside with his former interior minister, the same man who had crushed the 1984 bread riots, Zine Ben Ali, took the helm.

In a matter of weeks, the new government's attitude towards the World Bank and International Monetary Fund shifted from hostility and suspicion to a warm embrace. Using an old basketball trick – faking to the left, while moving with the speed of light to the right. At the beginning of his rule, Ben Ali promised openness and democracy. He gave Tunisia a quarter of a century of IMF structural adjustment and an increasingly repressive government, much crueler and all-embracing than anything Bourguiba had constructed. He went far to deconstruct much of the social edifice that Bourguiba had tried to build and would have done more had he had the opportunity. When finally chased from power in 2011, he left a country economically and socially polarized, half of the economy in the hands of the two ruling families (the Ben Alis and the Trabelsis), a repressive apparatus of more than 200,000 in a country of ten million, and an enormous debt burden. As is virtually universally acknowledged, much of Tunisia's  economic and social decay of the Ben Ali years lays at the door step of the International Monetary Fund.

Even before consolidating his hold on power, as one of his first acts, Ben Ali gave Washington a call and opened negotiations with the IMF for exactly the kind of structural adjustment-based loan Bourguiba had resisted.

Thus wrote Canadian political scientist Michel Chossodovsky:

Barely a few months following Ben Ali's installment as the country's president, a major agreement was signed with the IMF. An agreement had also been reached with Brussels pertaining to the establishment of a free trade regime with the EU. A massive privatization program under the supervision of the IMF-World Bank was also launched. With hourly wages on the order of €.75 an hour, Tunisia had also become a cheap labor haven for the European Union.[v]

In retrospect, the implementation of Ben Ali's economic program was a classic example of what later Naomi's Klein would refer to as the 'Shock Doctrine' to the Tunisian realities. In the Ben Ali case, a political coup – that by the way included the promise of greater democracy – became the pretext for a far-reaching economic restructuring of the economy. It included classic structural adjustment themes: reducing the state sector in the economy, lifting subsidies, 'loosening' the social contract, weakening the country's education and healthcare system, keeping wages low, lifting capital controls, privatization of state resources, etc., etc. – all the policies that have made IMF structural adjustment the antithesis of Third World development over the past thirty years. It all happened quickly before the Tunisian public understood the degree to which their lives were about to be changed.

It was not only that subsidies would be ended and much of the country's state-owned economic structures be privatized, the country's entire economic model that had existed since independence was dismantled in the process. The 'old authoritarian' economic model instituted by Bourguiba that included state involvement in the economy, a social contract that included subsidies on basic needs, free quality education and a somewhat protectionist approach to foreign investment and involvement in the country's affairs, came unglued. In its place 'a new authoritarian' model based upon classic neoliberal economic principles was immediately and aggressively implemented before the Tunisian people could fathom what was going on.[vi]

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[i] A 'baguette' – a French long, thin loaf of bread; although Tunisians use the same term, they have fashioned their baguettes a little differently than the French versions.

[ii] Hard to tell, but from the picture he certainly doesn't look like a Tunisian billionaire or high-tech yuppie, just a 'pauvre type' …like so many others in Tunisia.

[iii] That model was about to be dismantled; the main work was done by Zine Ben Ali once he came to power

[iv] Anwar Alam. "Islam, Bread Riots and Democratic Reform in North Africa"

[v] Professor Michel Chossodovsky. "Tunisian and the IMF Diktats: How Micro-Economic Policy Triggers World Wide Poverty and Unemployment"

[vi] The terms 'old' and 'new' authoritarianism are taken from Stephen J. King's work The New Authoritarianism in the Middle East and North Africa, Indiana Series in Middle East Studies: 2009

Links:

Tunisian Bloggers Refuse IMF Loan

Fakhfakh Says Tunisia Sees $1.8 Billion IMF Loan