Washington Should Press the IMF to Condition Its Support on Political Reform
By Shadi Hamid - March 28, 2023
Tunisia was once the sole success story of the Arab Spring—the one country where a revolution born in the 2010–11 uprisings yielded a democracy that survived for more than a brief moment. Of course, the hopes sparked in the first few years after the revolts were dashed long ago, and the fate of Tunisia is hardly a priority for the United States. But it should be. A reckless dictator in charge of a collapsing economy is a recipe for chaos, with potential spillover effects that would affect the entire region. It is not too late for the United States and its allies to reverse these trends and prevent the country from sliding into decades of authoritarian rule. But Washington and its partners must act immediately. Fortunately, there are a number of practical steps that the Biden administration could take to stop Tunisia’s descent into dictatorship. They are risky, but no riskier than persisting with a failed status quo.
The key lever available to outside powers is a still pending International Monetary Fund bailout of the Tunisian government that would total $1.9 billion over 48 months, which amounts to a massive infusion of cash on a per-year, per capita basis. As the fund’s largest shareholder, the United States can compel IMF officials to hit pause on a final agreement until the Tunisian government meets specific political conditions, including releasing detainees and establishing a genuinely inclusive national dialogue.
Although there is no requirement in its bylaws to do so, the IMF usually tries to steer clear of using emergency support to effect specific political (as opposed to economic) outcomes. So seeking leverage over Saied in this way would be a highly unusual and even radical move. But it is the only option remaining that is likely to have any real impact.
DRASTIC TIMES, DRASTIC MEASURES
In February, even as Tunisian authorities were rounding up prominent dissidents, IMF Managing Director Kristalina Georgieva announced that she expected “to see in the next weeks—not months—a conclusion of the remaining actions so we can go to the board.” Currently, the IMF is waiting on the Tunisian government to sign off on a final package. It is rare for the United States to intervene in a fraught IMF negotiation this late in the process. But it is also rare for a government to ramp up repression in the final stages of talks with the fund.
For its part, the IMF seems indifferent to Tunisia’s political chaos. The fund, at least in theory, tries to say neutral on political questions, and democracies and autocracies alike are eligible for support. Yet there is a certain irony in the IMF’s willingness to look the other way in Tunisia. It was not willing to do so in negotiations with Egypt during its brief democratic transition. In 2013, President Mohamed Morsi’s deeply flawed but democratically elected government was desperate for an IMF loan. But talks stalled due to a lack of political buy-in from Egyptian opposition forces. The IMF, the Obama administration, and European countries were concerned that in an environment of intensifying polarization Morsi would be unable to implement the reforms that the fund required.
Similarly, Tunisia’s current instability and the prospect of indefinite one-man rule have significant economic implications. It is unclear, for example, how the Tunisian government can follow through on controversial subsidy reforms it has proposed without the support of any major political party or the powerful Tunisian labor union known as UGTT, which has the ability to further cripple the economy through labor strikes. If he headed a fully consolidated dictatorship, Saied might be able to impose his will regardless, but Tunisia is not quite there yet. More broadly, the IMF should not tie its credibility to Saied, an erratic leader who casually refers to critics as “terrorists” and “traitors.”
The IMF seems indifferent to Tunisia’s political chaos.
As the IMF’s largest shareholder and financial contributor, the United States is the single most influential country in determining the fund’s strategic direction. It would be impossible for the IMF to ignore Washington’s position on the Tunisian loan, and so U.S. support (or lack thereof) will be critical during the fund’s final deliberations.
Until last week, U.S. officials said little publicly regarding the IMF loan. At a March 22 senate hearing, Secretary of State Antony Blinken said, “We’ve been strongly encouraging [Tunisia] to [get an IMF agreement] because the economy risks falling off the deep end.” No political conditions were mentioned. Although the vagueness of Blinken’s comment—which came in response to a question from Senator Chris Murphy—reflects Washington’s general lack of interest in Tunisia, it also preserves the Biden administration’s room for maneuver. If the administration publicly announced a shift in its position on the IMF loan and called for a pause on political rather than economic grounds, it would be essentially impossible for the fund’s executive board to proceed with a vote of final approval. Administration officials could also take the route of quiet diplomacy, first alerting European partners and then holding meetings with counterparts at the IMF.
Under this scenario, the IMF agreement would not be scrapped. Rather, it would be put on hold until the Tunisian government demonstrates a commitment to govern inclusively and return to a democratic path. The Biden administration could work to devise a clear, measurable set of benchmarks, including halting political prosecutions, ending military trials for civilians, and the establishment of a national dialogue process that would include all major opposition parties.
NO SHOES, NO SHIRT, NO SERVICE
Without a loan, Tunisia faces a potentially devastating balance-of-payments crisis, which may cause it to default on its debts. Existing shortages of essential government-subsidized goods could worsen. The benefits of a loan agreement would unlock a virtuous cycle of external support, including significant bilateral aid from donor countries that want the reassurance of an IMF reform program. Tunisia’s military and its other state institutions—whose large bureaucracies employ hundreds of thousands of Tunisians—have a strong interest in avoiding a historic default and the full-blown economic catastrophe that would result. As it stands now, the Tunisian government is already struggling with one of the world’s worst budget deficits.
At this point, Saied may be too stubborn to alter his behavior. He has dug himself in. But his allies in the army, the judiciary, and other institutions are likely to have a different calculus. Unlike in most Arab countries, the Tunisian military has been relatively apolitical and professionalized, including during the decades of dictatorship before 2011. Fearful of elevating the army as a competing power center, Zine el-Abidine Ben Ali, the strongman who ruled the country from 1987 until his overthrow in 2011, relied instead on the police and intelligence services as his enforcers.
Saied, in contrast, has thrust senior military officers into politics, insisting that they accompany him during nationally televised speeches and meetings. This has put them in an increasingly awkward position. After an initial burst of enthusiasm when Saied seized power for himself in July 2021, the president’s popularity has been on a downward trend. The military has taken notice, and some of its officers have reportedly grown uneasy with the authoritarian direction Saied has taken. As one retired officer told a reporter from Le Monde last August, “Concern is settling in . . . because of the concentration of powers.”
The military has good reason to worry. An outright economic collapse would implicate it in the country’s mismanagement and further erode its reputation for professionalism. The Tunisian military enjoys a close relationship with its U.S. counterpart, forged during the country’s once promising decadelong democratic transition. Any strategy to return Tunisia to a democratic path would require making use of those military-to-military relationships and impressing on Tunisian officers the importance of remaining neutral and avoiding any perception that they are buttressing Saied’s authoritarian consolidation.
The point of combining of economic pressure from the IMF and military-to-military pressure from the United States would not be to punish Tunisia. The goal would be to incentivize Tunisians across the political spectrum and across state institutions to reconsider the dangers of dictatorship, which, once entrenched, would be difficult to undo. To be sure, if Tunisia ended up defaulting on its debts, ordinary Tunisians would be affected. But they are already suffering under a seemingly never-ending economic crisis, which has only intensified since Saied’s power grab. Like so many populist leaders before him, Saied promised that he alone could fix it. And like so many populist leaders before him, he didn’t; he only made things worse.
Economic progress and political inclusion are linked, and to imagine that they can be separated is a mistake. Simply put, it is extremely difficult to improve a country’s economy in a context of growing political chaos and social unrest. It is true that authoritarian regimes—wielding the tools of repression—can appear efficient and effective. An autocrat can quickly mobilize the full resources of the state and impose reforms without the headaches of parliamentary opposition, for instance. But an economic strategy that is personalized and subject to the whims of an unpredictable leader can also mask underlying problems that become more dire over time.
The only way to provide relief to ordinary Tunisians—in the medium to long term, if not necessarily the short run—is to address the country’s political impasse. Exerting pressure through IMF talks isn’t the only option, but it is the best one available. Other levers are available to the United States, but they are more coercive and are likely to be nonstarters. For instance, the Biden administration could use the Global Magnitsky Act to sanction Saied and other top officials for human rights abuses, as some Tunisian activists have suggested.
If the IMF bails out an unapologetic Saied, it will bear direct responsibility for the end of Tunisian democracy.
But the United States would be smarter to withhold carrots than to brandish sticks. Although Saied himself may be indifferent to external pressure, those around him are not necessarily a lost cause—at least, not yet. With considerable leverage at its disposal, Washington can offer the prospect of both political stability and an economic lifeline to Tunisia, instead of prioritizing one at the expense of the other. Anything short of this would amount to the IMF subsidizing and enabling Tunisian authoritarianism just as Tunisia becomes more authoritarian.
In the event that the country defaults, Tunisian officials would have even stronger reason to meet any political conditions attached to emergency support from the IMF and other international donors. If Saied still refuses to budge, then he alone would bear political and moral responsibility for the resulting collapse. At that point, Saied would likely find himself even more isolated, inviting greater pressure from the military and other state institutions to change course. Although that would be far from an ideal scenario, it would still be preferable to a medium- to long-term outcome in which Saied plunges Tunisia into an unyielding authoritarianism that could last years, or even decades.
On the other hand, if the IMF bails out an unapologetic Saied, it will bear direct responsibility for the end of Tunisian democracy and consigning millions of Tunisians to a tragic fate. And if the Biden administration allows the IMF to go ahead without imposing further conditions, then the United States will share in the blame.