Tunisia President’s Nominee for Premier Angers Opponents

  • Youssef Al-Shahed served as local affairs minister under Essid
  • Parties to meet again on Aug. 3 to discuss nomination

Tunisia’s push to quickly seat a new national unity government threatened to stumble after President Beji Caid Essibsi nominated a former minister from his own party as premier, over the objections of smaller political factions involved in the process.

The president late Monday chose Nidaa Tounes member Youssef Al-Shahed, the minister for local affairs in the government fired by lawmakers over the weekend. Tunisia’s political parties will meet to discuss the nomination on Aug. 3.

Tunisian politics were plunged into turmoil again after the legislature voted no-confidence in incumbent premier Habib Essid on Saturday, leaving him heading a caretaker government until a successor is chosen. Smaller parties have warned they may not endorse another government dominated by Nidaa Tounes or Ennahda, the moderate Islamist party that is parliament’s largest faction.

The head of the Chaab political movement, Zuhair Al-Maghzaoui, said Monday the group would withdraw from national unity government talks if the new prime minister is selected from either of the two main parties or is closely linked to the regime of ousted President Zine El Abidine Ben Ali. Nidaa Tounes, the largest bloc in the legislature until a recent split, had signaled it would seek the premiership and Ennahda had said it wouldn’t object.

Won’t Solve

“The crisis in Tunisia will not be solved with a new government” because the 2014 constitution allows small parties “to impose their demands on any government,” political analyst Khalid Abid said. If the next government refuses to bow to the small parties’ interests, it will lose their support, he said.

Tunisia’s credit default risk fell the most in almost seven weeks after Essid’s firing. Five-year credit default swaps, which protect investors against non-payment of the country’s dollar-denominated bonds, retreated 2.2 percent on Monday, to 475 basis points, according to data provider CMA.

While a solid democratic process has taken root in Tunisia, the birthplace of the Arab Spring uprisings, political stability and economic progress have been elusive. Though spared the worst of the violence that gripped other regional players such as Egypt, Libya and Yemen, the country has been through a succession of governments since the 2011 revolt. 

Security forces, on guard against attacks within the country, are grappling almost daily with spillover unrest from neighboring Libya. Four major terror attacks have wiped out Tunisia’s tourism industry, its energy industry has collapsed, and social tensions are festering amid low economic activity and high unemployment. Youth joblessness, a main catalyst for the 2011 uprising, remains about 35 percent, more than double the national average.

IMF Loan

The International Monetary Fund, which in June approved a new $2.9 billion loan for Tunisia, has said that despite earlier reforms, the country still grapples with an overvalued currency, worsening budget composition and uneven performance on improving the business climate.

In return for the loan, Tunisia has promised to bring public debt to 50 percent of GDP from 53 percent in 2015, according to the IMF. It would also offer greater exchange rate flexibility and restructure public banks to improve financial sector intermediation, and has pledged to reduce energy subsidies, implement a more progressive tax system and reform state-owned bodies.

“It’s understandable to see why there’s public frustration with the government over the past year,” said Razan Nasser, senior economist at HSBC in Dubai. “The risk going forward is if the negotiations will be protracted, it could delay reforms.”

Before it's here, it's on the Bloomberg Terminal.