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Tunisia – Reshuffled Government Still at Risk

Although the main governing Nidaa Tounes has been weakened by the defection of nearly two dozen of the party’s lawmakers in January 2016, signs of a strengthening partnership between President Beji Caid Essebsi, the founding leader of Nidaa Tounes, and Ennahda leader Rachid Ghannouchi, has reduced the risk of a bout of damaging political instability. The alliance was cemented in late August by the assignment of additional Cabinet posts to Ennahda in the expanded national unity government headed by Prime Minister Youssef Chahed, and although the short shrift given to some of the smaller parties in the unity coalition carries a risk of sowing resentment, the government can count on a comfortable majority in the ARP as long as Nidaa Tounes and Ennahda are able to maintain internal unity and are prepared to stick together.
Unfortunately, recent events suggest that meeting that condition may be easier said than done. Nidaa Tounes is enduring another bout of internal turmoil, and as was the case in the dispute that prompted the defections early in the year, the evident dynastic ambitions of Hafedh Caid Essebsi, the president’s son, are at the center of the conflict. In late October, a self-proclaimed “reform and rescue group” within the party called for the suspension of the party’s executive board, which is headed by Hafedh Caid Essebsi, and its replacement by an interim body pending the holding of party elections in March 2017.
Even if the latest dispute within Nidaa Tounes does not trigger additional defections, the tensions will create a distraction from the task of implementing the government’s reform agenda, which will be challenging under any circumstances. The austere 2017 budget provided the first major test of whether the new governing arrangement could produce the consensus the president was hoping to promote through his proposal of a unity government, and it is clear that the non-participation of the unions will continue to pose a significant obstacle.
The government retreated on key revenue-generating measures when faced with public opposition. The ARP removed a proposed tax on lawyers and pharmacists when thousands of professionals went on strike and organized public protests against the taxes. But the most telling reversal was the abandonment of a planned freeze on public-sector wages in response to the UGTT’s threat to launch a general strike in mid-December. The budget passed on December 10, but only after the government reached an agreement with the UGTT on wage hikes that will be spread over two years, with the cost in 2017 estimated at about $420 million.
In a bid to stimulate faster growth, the government held a conference in November aimed at attracting investment and financing for capital projects. The event produced pledges of some $14 billon in support. However, much will depend on how much of the pledged assistance is actually delivered, and how effectively and efficiently the funds are used. Success in both cases will depend on the maintenance of a stable government and steady progress toward restoring order to state finances. The possibility that those two conditions cannot be met simultaneously will be a major risk factor in the near term.
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