Tunisians chant slogans and hold pictures of assassinated leftist politician Belaid during demonstration against Islamist Ennahda movement in Tunis

The assassination of a leading anti-Islamist politician, Chokri Belaid, at the start of February plunged Tunisia into its deepest political crisis since the revolution of January 2011. It crystallized widespread dissatisfaction with the failure of the interim government, led by the moderate Islamist party, Ennahda, to halt the rising tide of political violence and improve living standards, or even to conclude negotiations on the new constitution and organize elections for a permanent administration.

With the assassination sparking the biggest anti-government demonstrations the country has seen in the past two years, then prime minister Hamadi Jebali tried to restore stability by forming a cabinet of neutrals and resigned when this was rejected by Ennahda leader, Rached Ghannouchi. The resulting political vacuum, combined with rising public unrest, threatened to precipitate a second revolution.

insight eiu new INSIGHT: Tunisia – Crisis Averted But Challenges RemainTunisia’s democratic transition appears to be back on track. A reshuffled cabinet under a new prime minister, Ali Larayedh, has won a vote of confidence by a comfortable margin in the National Constituent Assembly (NCA), Tunisia’s parliament. The NCA has also agreed a timetable to approve the new constitution between April 27 and July 8, and to hold elections between October 15 and December 15.

The new cabinet is not the “government of national unity” that the government’s critics had demanded. Because Larayedh failed to tempt any opposition party to join the government, it looks very similar to its predecessor, with ministers from Ennahda and its left-wing secular partners, Congrès pour la République (CPR) and Ettakatol, together with a number of independents. Nevertheless, its very formation after long negotiations demonstrates that democratic practices are gaining traction, and Ennahda’s agreement to give up three key ministries – interior, justice and foreign affairs – demonstrated, once again, that the party is willing to compromise to keep the coalition together.

“[T]here is a growing risk that political forces will opt to settle their differences by force and not through the ballot box.” – The Economist Intelligence Unit

The government, however, needs to tackle a number of challenges. Its majority of eight in the 217-seat NCA (Ennahda has 89 seats, CPR – 15 and Ettakatol – 13) is vulnerable to further defections from CPR and Ettakatol, which have lost 14 and seven MPs respectively since the last elections and are riven with internal disagreements. Ennahda is also divided between moderate and radical wings, although the party has managed to avoid any defections so far.

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Tunisians hold images of assassinated politician Chokri Belaid during a rally in Tunis February 23, 2013. (Reuters)

Reaching agreement on the constitution will not be easy. There will be difficult negotiations between Ennahda and its coalition partners over what the constitution says about the role of Islam, the rights of women and the form of government to be adopted; Ennahda wants a strong prime ministerial system, and CPR and Ettakatol want power to be shared between the prime minister and president. Each clause in the constitution will be put to a vote in the NCA and those that are not approved by a two-thirds majority will be put to a referendum, which could wreck the government’s timetable for elections.

The chances of a smooth democratic transition are reduced by the polarization of the political landscape between Islamist and anti-Islamist blocs, the former centred on Ennahda and the latter on Nida Tounes (NT), a broad coalition that has attracted support from the now-banned former ruling party, the Rassemblement constitutionnel démocratique (RCD). Recent opinion polls suggest that Nahda and NT have similar levels of public support and that neither could form a government alone. A coalition between them is highly unlikely, however. NT has been trying to form a “Union pour la Tunisie” with other secular parties, which could win enough votes to form a government that excluded Ennahda.

Rising street violence is worrying

The increase in street violence over the past year is already a serious concern. Police brutality in suppressing peaceful demonstrations using batons, water cannons and tear gas has often been reminiscent of the former regime and has provoked a violent response from demonstrators.

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Tunisian Salafi Islamists rally in the central town of Kairouan May 20, 2012. (Reuters)

Salafis, ultra-conservative Islamists who want to bring in sharia (Islamic law) and an Islamic caliphate, have attacked critical journalists and politicians, as well as members of the public that they deem to be improperly dressed. Their supporters have also ransacked bars and hotels selling alcohol, and cinemas, theaters and art exhibitions they deem offensive to Islam; Salafis also led the attack on the U.S. Embassy in September 2012. Although the government has belatedly taken steps to crack down on them, arresting scores of their members, the potential for further Salafi violence remains.

More worrying are the so-called Leagues for the Protection of the Revolution, groups of militants who support Ennahda. The leagues have been responsible for a series of violent attacks on secular politicians and, especially, trade unionists, who they accuse of undermining the revolution by fomenting strikes and of seeking a political role. If Ennahda appeared to be in danger of losing the next elections, the party leadership might not be able to control the leagues, which are already widely characterized as the party’s armed wing.

Economic challenges remain

Another threat to a smooth democratic transition is the sluggishness of the economy, an unemployment rate of almost 17 percent (compared with 13-14 percent before the revolution) and the erosion of living standards by inflation that averaged 5.6 percent in 2012. Unfortunately for the government, many of the difficulties faced by the economy are outside its control, including the recession in the E.U. – the destination of 80 percent of Tunisia’s exports; the revolution and continuing unrest in Libya, an important trading partner and provider of jobs for Tunisian workers; and the rise in world oil and commodity prices that has stoked inflation. Moreover, the economy has been harmed by the disruption caused by the revolution and the widespread industrial unrest that has followed. And the unrest, together with uncertainty over Tunisia’s future political and economic direction, has deterred local and overseas investors, and harmed Tunisia’s international credit ratings.

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A vendor waits for tourists to visit his souvenir shop in Carthage, near Tunis, February 10, 2013.

Public dissatisfaction with the government’s handling of the economy is based on unrealistic expectations of what a post-revolution government could achieve. Nevertheless, it means that the democratic transition will continue to be accompanied by outbreaks of popular unrest.

Political parties will have to settle differences

On balance, the progress Tunisia has made so far and, in particular, the willingness of politicians to compromise to keep the democratic transition on track bodes well for the future. However, against the background of an increasing polarization of politics between Islamists and secularists, each with a very different vision of Tunisia’s future, there is a growing risk that political forces will opt to settle their differences by force and not through the ballot box. Crucial to this is the willingness and ability of the Ennahda leadership to control the party’s more radical adherents if the party’s political fortunes begin to wane.

This post has been authored exclusively for MEV by The Economist Intelligence Unit.

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 INSIGHT: Tunisia – Crisis Averted But Challenges Remain

The Economist Intelligence Unit

This post has been authored by experts of The Economist Intelligence Unit.