The Role of the International Community in Supporting Tunisia’s Post-2011 Economic Transition

Introduction

In May 2011, the G8 issued the Deauville Declaration, pledging partnership with Tunisia and other Arab states to support democratic transition and “sustainable and inclusive” economic growth.^[1] This response followed popular uprisings that ousted Tunisian President Zine el-Abidine Ben Ali and other Arab dictators, with the protestors demanding jobs, bread, and dignity.

Yet, a decade later in 2021, Tunisia’s economy was worse off than before the uprisings. GDP contracted by eight percent in 2020 amid the COVID-19 pandemic, following roughly one percent growth the previous year, while total unemployment hovered around 16 percent, higher among youth and women.^[2] This marked the deepest economic downturn since Tunisia’s independence in 1956, after a decade of stagnation.^[3] Many analysts link this economic decline to the erosion of democratic institutions built over the preceding decade.^[4] 

This article explores why international financial institutions—the World Bank and IMF—and the U.S. government failed to realize their goals of supporting Tunisia’s economic reforms during its transition.^[5]  It argues that these donors either lacked the flexible tools needed or were unwilling or unable to back reforms given Tunisia’s political trajectory. The analysis draws on interviews with Tunisian officials, representatives from the IMF, World Bank, U.S. State Department, National Security Council, and legislative officials, as well as existing literature. 

Scholarship on Tunisia’s attempted democratic transition reveals that factors once seen as strengths were in fact a principal source of its demise. Early observers argued that the ability of its politicians to form a cross-ideological coalition set Tunisia apart from its neighbors.^[6] However, this same coalition also stymied key economic reforms, including those targeting the public wage bill, reforming pensions, and removing subsidies.^[7] The fragile compromise between Islamists and secularists from 2013 to roughly 2019 remained unsustainable due to its exclusion of large segments of the population from policymaking,^[8]  reflecting growing mistrust between Tunisians and their elected leaders.^[9] 

Few studies have examined the international community’s role in this unsustainable transition. Riccardo Fabiani (2018) highlighted how international lenders, enamored with Tunisia’s apparent democratic progress, continued to provide “cheap and plentiful financial assistance” despite Tunisia’s failure to implement required economic reforms.^[10] Robert Kubinec (2016) similarly warned that ignoring cronyism and inefficiency risked undermining Tunisia’s broader achievements.^[11] To date, no research has systematically examined why the international community’s declared support for Tunisia’s economic reform process had failed so profoundly by 2021.

International Economic Support to Tunisia, 2011-2021

Following Tunisia’s 2011 revolution, the country received various forms of assistance from international partners. The first donors to arrive were the World Bank, which quickly disbursed a $500 million Development Policy Loan, along with the EU, the French Agency for Development (AFD), and the African Development Bank (AfDB).^[12] In June 2013, the International Monetary Fund (IMF) signed a 24-month, $1.74 billion Stand-By Arrangement with Tunisia, followed by a 36-month $2.83 billion Extended Fund Facility in 2016. These programs aimed to stabilize Tunisia’s macroeconomic situation and create “breathing room” for longer-term governance and economic reforms.

Meanwhile, policymakers in the U.S. decided to reprogram existing funds and allocate new resources to support job creation and encourage American investment in Tunisia alongside other political goals.^[13] The U.S. Congress also appropriated funds for three loan guarantees that allowed Tunisia to borrow nearly $1.5 billion at affordable rates on international markets ^[14]

Exogenous Factors 

Global economic conditions at the time of Tunisia’s revolution were unfavorable for stabilization or reform. Western governments were still recovering from the 2009 financial crisis, weakening Tunisia’s main export partners in Europe as well as its key bilateral donors: Europe and the United States.^[15] Tunisia’s domestic environment was equally challenging. The uncertainty following the revolution damaged key sectors like tourism and dampened foreign investment, making government spending cuts more painful. Two political assassinations in 2013, followed by twin terrorist attacks on tourist sites in 2015, further undermined investment and delayed budget cuts as the government increased security spending.^[16] 

The uncertain political environment also hindered long-term reforms, especially in the early years. The first transitional governments largely argued that long-term reform was beyond their mandate.^[17] In mid-2013, a caretaker government led by Prime Minister Mehdi Jomaa took office. International donors found Jomaa’s government relatively cooperative, given the Western-educated profile of many of its members. Yet, these ministers faced volatile conditions similar to their predecessors and encountered barriers such as a Tunisian bureaucracy reluctant to innovate or think strategically.^[18] Even after the election of the first post-revolutionary president, Béji Caïd Essebsi, in late 2014, frequent turnover within the government formed by his secular party’s coalition with the Islamist Ennahda party complicated the implementation of international assistance programs.^[19]

From the international community’s perspective, Tunisia was not the only country in need of attention. Deepening conflicts in Libya and Syria often appeared more urgent. This environment of scarce resources contributed to skepticism among Tunisian officials about whether international donors would fulfill their promises.^[20] This wariness was likely compounded by the donors’ history in Tunisia, where, particularly after the September 11, 2001, terrorist attacks, they praised Ben Ali’s liberalizing reforms while showing little interest in the impoverished interior regions.^[21] 

Challenges Faced by International Donors

The United States

Barriers to deeper^[22] economic reform in Tunisia’s first transitional decade extended beyond domestic and regional instability. The United States viewed Tunisia as a promising investment because, unlike many of its neighbors, it possessed several “prerequisites” for stability and growth: stable macroeconomic fundamentals,^[23] a relatively well-educated population, and close ties to Europe.^[24] After the 2011 revolution, as democratic aspirations elsewhere in the region  faltered, U.S. policy generally recognized the importance of preserving Tunisia’s apparent democratization—while also seeking to limit the commitment of its resources. A State Department report on how to “go big” in Tunisia argued that the best approach was to find low-cost means of support.^[25] 

The loan guarantees appropriated by Congress between 2012 and 2020 exemplified this enthusiasm. Loan guarantees are typically reserved for more strategic partners, such as Israel. U.S. policymakers believed Tunisia’s economic potential justified these guarantees, which enabled the country to secure low-interest loans without obligating Washington to prolonged assistance.^[26] By 2019, however, this support had largely dissipated. ^[27] In practice, U.S. policymakers opted to reward Tunisia’s success with relatively low-cost policy “carrots”—such as Major Non-NATO Ally status—rather than anticipate its long-term needs through sustained economic assistance.

Tunisian leaders welcomed this support but, over time, argued that their country deserved larger programs, such as the U.S. commitment to Jordan of more than $1 billion in annual assistance or a free trade agreement. U.S. officials, however, knew that Congress, despite its enthusiasm, would not authorize such levels of support for a small, less strategic partner.^[28] 

Throughout the Obama, Trump, and Biden administrations, some policymakers continued to advocate for enhanced support to Tunisia, drawing comparisons to U.S. assistance for former Soviet states after the collapse of the Berlin Wall. Many recognized Tunisia’s ongoing economic needs, but their arguments were overruled by those who believed the transition was largely complete.^[29]

Meanwhile, security concerns quickly eclipsed economic and political priorities in Washington. After the attack on the U.S. embassy in Tunis in September 2012—just days after Ambassador Christopher Stevens was killed in Benghazi—the embassy staff was dramatically reduced, limiting attention to economic issues. The rise of al Qaeda in the Maghreb in 2014 and bombings in Tunisia in 2015 further reinforced the case for channeling limited funding toward security. Even after July 25, 2021, when President Kais Saied froze parliament and assumed rule by decree,^[30] the U.S. response was to further prioritize security assistance over economic and development support. 

International Financial Institutions

World Bank and IMF officials faced a different paradox. From the outset, these two international financial institutions (IFIs) surpassed other donors in their levels of assistance and, as outlined in a 2014 World Bank report^[31], aspired to support a comprehensive transformation of Tunisia’s economy and its broader socio-economic landscape. Many Tunisian technocrats and elected officials largely cooperated with their international counterparts to implement economic reforms.^[32] For institutions seeking to finance “homegrown” programs, such cooperation was an encouraging sign.^[33] 

However, these positive attitudes were no match for Tunisia’s highly organized and widely representative unions. While a full discussion of the unions’ influence– particularly the general workers’ union and the business owners’ union– is beyond the scope of this article, their significant membership and prominent roles in both the 2011 uprisings and in overcoming the 2012 to 2013 political crisis gave them enormous leverage over public sector hiring and wage increases. As a result, IMF benchmarks related to reducing the public sector wage bill were consistently delayed, but programs continued nonetheless. ^[34]

Despite recognizing the need for economic reform, Tunisian leaders at the time prioritized consensus politics. Politicians focused on achieving political compromise– such as sharing power across their ideological divides– while deferring economic decisions, often arguing that reforms could wait.^[35] This approach may have reflected a belief that political “progress” would attract further financial rewards from the international community. Yet, as time passed, these political ambitions made economic reform increasingly difficult, as persistent uncertainty, weak security conditions, and ideological divisions blocked key legislation.

Economic issues remained a top priority for Tunisians, but the World Bank and the IMF confronted a legacy of public mistrust. Heightened demands for jobs and social protections frequently manifested in protests that disrupted economic activity, as citizens sought to leverage their newfound political voice. These demands often conflicted with the austerity measures—such as pension reform and subsidy reductions—required by IMF loans.^[36] Public pressure and entrenched inefficiencies frequently hindered the implementation of IFI-funded projects, leading many Tunisians to suspect that their politicians were misappropriating these funds.^[37]

Finally, by their own admission, IFI officials acknowledged that their programs were overly ambitious. Their approach was predicated on the belief that implementing difficult measures early would prevent greater hardship later. ^[38] For example, reforming inefficient state-owned enterprises might initially lead to job losses but would ultimately free up government resources for improved social protections. Although IFI officials worked with their Tunisian counterparts to proceed gradually and to communicate the necessity of reforms to the public, the newly empowered Tunisian “street”—to which elected politicians were now accountable—ultimately had the final say.

Conclusion

After Tunisia’s 2011 revolution, the country became somewhat of a victim of its own success: the perception that its democratic transition was secure led to complacency in sustained economic assistance.^[39] Had bilateral donors such as the United States prioritized economic reform on par with, or even above, political reform and security assistance, Tunisia’s trajectory might have shifted.^[40] This would have required conditioning further support on economic progress, rather than offering limited incentives only after elections or other democratic milestones. A continued strategy of encouraging reforms through “frontloaded” tools such as loan guarantees, or by exploring new avenues to enhance trade and investment short of a comprehensive free trade agreement,^[41] might have allowed Washington to effectively support Tunisia without elevating it to the status of a traditional strategic partner. 

Meanwhile, the programs of the World Bank and IMF—even with considerable local buy in—were often ill-suited to Tunisia’s historical and transitional context, which could not bear the full scope of reforms required. Both the United States and IFI cases suggest that the international community needs more nimble policy tools—ones that can support economic stabilization in transitioning countries and recognize the necessity of investing up front in longer-term reform. 

Sabina Henneberg is a senior fellow at the Washington Institute for Near East Policy, where she focuses on North Africa. She is the author of Managing Transition: the First Post-Uprising Phase in Tunisia and Libya (Cambridge, 2020).

[1] “Declaration of the G8 on the Arab Spring,” May 26-27, 2011 accessed October 16, 2014, https://obamawhitehouse.archives.gov/sites/default/files/uploads/declaration_of_the_g8_on_the_arab_spring_final.pdf 

[2] World Bank, accessed October 16, 2024, https://data.worldbank.org/indicator/SL.UEM.TOTL.ZS?locations=TN ; International Monetary Fund, “Tunisia: 2021 Article IV Consultation,” February 2021, https://www.imf.org/en/Publications/CR/Issues/2021/02/26/Tunisia-2020-Article-IV-Consultation-Press-Release-Staff-Report-and-Statement-by-the-50128 

[3] Bertelsmann Stiftung , “BTI 2022 Country Report -- Tunisia”, Gütersloh: Bertelsmann Stiftung, 2022, 3, https://bti-project.org/en/downloads?content=country&country=TUN 

[4] Eg Hamza Meddeb, “Tunisia’s Democratic Backsliding: The Revenge of the Economy, “ ed., Sarah Yerkes, (Washington, DC: Carnegie, 2022). 

[5] The Deauville Declaration states that in the short term, G8 partners would help stabilize the economies’ of the transitioning countries and in the long term help undertake bigger reforms. 

[6] E.g. Noah Feldman, The Arab Winter (Princeton: Princeton University Press, 2020); Larry Diamond, “Tunisia is still a success,” The Atlantic (2015)

[7]  Sharan Grewal and Shadi Hamid, “The Dark Side of Consensus in Tunisia: Lessons from 2015-2019,” (Washington, DC: Brookings, 2020); Daniel Brumberg and Maryam Ben Salem, “Tunisia’s Endless Transition?”, Journal of Democracy 31., no. 2 (April 2020), 110-124; Nizar Jouini and Manel Ben Akal, “Political consensus, economic reforms, and democratic transitions in the Middle East: Evidence from voting on Tunisian reform bills,” Politics & Policy 50, No. 4 (July 2022), https://onlinelibrary.wiley.com/doi/10.1111/polp.12489 . 

[8] E.g. Fabio Merone, “Enduring Class Struggle in Tunisia: The Fight for Identity Beyond Political Islam”, British Journal of Middle Eastern Studies (December 2014), doi/abs/10.1080/13530194.2015.973188 ; Nadia Marzouki, “Tunisia’s Rotten Compromise,” Middle East Research and Information Project (July 10, 2015), https://merip.org/2015/07/tunisias-rotten-compromise/ 

[9] Amel Boubakeur, “Islamists, Secularists, and Old Regime Elites in Tunisia: Bargained Competition,” Mediterranean Politics 21, no. 1 (2016), 107-127; Irene Weipert-Fenner, “Budget politics and democratization in Tunisia: The loss of consensus and the erosion of trust,” Mediterranean Politics (May 10, 2023), https://www.tandfonline.com/doi/full/10.1080/13629395.2023.2207429 . 

[10] Riccardo Fabiani, “Tunisia and the international community since 2011: Rentierism, patronage and moral hazard,” Jadaliyya (January 2018); https://www.jadaliyya.com/Details/35142 . 

[11] Robert Kubinec, “How Foreign Assistance Can Hurt, not help, Tunisia’s Democratic Transition.” The Washington Post/Monkey Cage (December 19, 2016), https://www.washingtonpost.com/news/monkey-cage/wp/2016/12/19/how-foreign-assistance-can-hurt-not-help-tunisias-democratic-transition/. 

[12] See International Bank for Reconstruction and Development, Report No. 710799 TN, https://documents1.worldbank.org/curated/en/198181468311667883/txt/717990PGD0P128010701200SIMULT0DISCL.txt . The program was officially announced in November 2012: https://www.worldbank.org/en/news/loans-credits/2012/11/27/tunisia-governance-opportunity-jobs-development-policy-loan?utm_source=chatgpt.com

[13] Key examples are the establishment of the Tunisian-American Enterprise Fund (TAEF) to invest in small- and medium-size Tunisian Enterprises; the Department of Commerce’s Regional Investments to Support Entrepreneurship (RISE); and participation in Tunisia’s investment and entrepreneurship conferences .

[14] Alexis Arieff, “Tunisia: In Brief” (Washington, DC: Congressional Research Service, November 1, 2019)

[15] Interviews with State Department and World Bank officials, September and June 2024, Washington DC. Also see Christopher Blanchard (ed.), Congress and the Middle East, 2011-2020: Select Case Studies (Washington, DC: Congressional Research Service, 2021), 5-7.

[16] See IMF, Tunisia: Staff Report for the 2015 Article IV Consultation, Sixth Review under the Stand-by Arrangement, and Request for Rephasing (Washington, DC: IMF, September 16, 2015), 4-5.

[17] Sabina Henneberg, Managing Transition: The First Post-Uprising Phase in Tunisia and Libya (New York: Cambridge, 2020), 60-65.

[18] Interview with former Tunisian government official, September 2024, online.

[19] Interviews with former Tunisian government officials, April and September 2024, online.

[20] Interviews with former Tunisian government officials, April and September 2024, online.

[21] In October 2010 – two months before Tunisia’s revolution broke out -- Prime Minister Mohammed Ghannouchi was invited to Washington to speak at World Bank headquarters about Tunisia’s “model” for economic growth. Interview with former Tunisian government official (online, September 2024).

[22] Although beyond the scope of this paper, it is important to note that Tunisian authorities did make progress on certain reforms. A frequently cited example is the revised investment code of 2016.

[23] International Monetary Fund, “Tunisia: 2010 Article IV Consultation” (Washington, DC: IMF, September 2010), https://www.imf.org/external/pubs/ft/scr/2010/cr10282.pdf 

[24] Interview with former State Department official, September 2024, Washington, DC.

[25] Interview with former State Department official, May 2024, Washington, DC. Also see Sarah Yerkes, “What Can Tunisia Expect from the Biden Administration?”, in “Biden and the Middle East: A Challenging Road Ahead” (Washington DC: Arab Center Washington DC, 2021), 153-159; https://arabcenterdc.org/wp-content/uploads/2021/01/Biden-and-the-Middle-East.pdf 

[26] Interviews with former State Department officials, June and September 2024, Washington DC and online.

[27] As something of an exception, Congress guaranteed a minimum floor of assistance to Tunisia beginning in Fiscal Year (FY) 2016. 

[28] Interviews with former NSC and State Department officials, May and June 2024, Washington, DC, and with former members of Congress, July 2024, online. For more on Congressional engagement with Tunisia, see David E. Price, “The Congressional Experience: An Institution Transformed,” 4^th ed. (New York: Routledge, 2021), 209.

[29] Interview with former State Department official, May 2024, Washington, DC. Also see Yerkes, “What Can Tunisia Expect from the Biden Administration?”

[30] Tarek Amara and Angus Mcdowall, “Tunisian President Ousts Government in Move Critics Call a Coup,” Reuters, July 25, 2021, https://www.reuters.com/world/middle-east/tunisian-president-relieves-prime-minister-his-post-2021-07-25/ ; Tarek Amara and Angus Mcdowall, “Tunisian President Moves to Cement One-man Rule,” Reuters, September 23, 2021, https://www.reuters.com/world/africa/tunisia-president-takes-new-powers-says-will-reform-system-2021-09-22/ 

[31] Antonio Nucifora et al, “The Unfinished Revolution: Bringing Opportunity, Good Jobs, and Greater Wealth to all Tunisians”, 2014, https://www.worldbank.org/en/country/tunisia/publication/unfinished-revolution 

[32] Interview with World Bank, IMF, and Obama Administration officials, June-September 2024, Washington, DC.

[33] See International Monetary Fund, “Tunisia --  A People United, A Destiny Responding,” Address by Christine Lagarde, IMF Managing Director, September 9, 2015,  https://www.imf.org/en/News/Articles/2015/09/28/04/53/sp090915 

[34] See International Monetary Fund, Tunisia – Fifth Review Under the Extended Fund Facility (Washington, DC: IMF, July 2019), 37-38.

[35] Interviews with World Bank officials, June/July 2024, Washington, DC and telephone.

[36] Interviews with Tunisian and IMF officials, April-September 2024, Tunis, Washington, and online. For example, the IMF’s Stand-By Arrangement program begun in 2013 included a Memorandum of Economic and Financial Policies (MEFP) included points such as reform of energy subsidies and control of the wage bill, among other monetary policies, and banking and private sector reforms. 

[37] Interviews with Tunisian politicians, Washington, DC and online, April 2024 and February 2025.

[38] Interview with IMF official, October 2024, Washington, DC

[39] Kevin Koehler, “Breakdown by disengagement: Tunisia’s transition from representative democracy,” Political Research Exchange (November 2023), 6.

[40] Rosa Maryon, “The Role of Security Assistance in Reconfiguring Tunisia’s Transition,” Mediterranean Politics (February 16, 2023), https://www.tandfonline.com/doi/full/10.1080/13629395.2023.2183666 ; Maria do Céu Pinto Arena, “The US and EU response to Tunisia’s democratic backsliding: promoting democracy or protecting interests?” International Spectator (May 2024), https://www.tandfonline.com/doi/full/10.1080/03932729.2024.2357172 . 

[41] Tunisia’s proposed Millennium Challenge Corporation (MCC) compact offers another example of a sweeping policy measure that turned out to be inappropriate. In June 2021, after years of negotiations, the MCC approved a $499 million compact to help improve Tunisia’s water, transportation, and trade sectors. This arrangement is now indefinitely suspended due to President Saied’s autocratic reforms.