In recent weeks, the Tunisian and Egyptian people have peacefully overturned decades of authoritarian rule, withstanding an onslaught of state apparatuses that have kept them in fear for decades. The new face of the Arab people - young, vibrant, educated, organized, connected, and hungry for democracy - has replaced stereotypes of a people mired in authoritarian political structures. The claims that the Arab world does not want democracy may finally be put to rest.
Subsequent calls for reform have reverberated across the Middle East - from Bahrain to Jordan, and from Lebanon to Yemen. In addition to "where next?,:" the pertinent questions are whether and how these successes can be converted into real political and economic gains. Now that transitions are underway, what is next for the region? The answer depends on recognizing the importance of strengthening nascent democracies and channeling energy into real reforms.
Emerging trends in Tunisia since January 14, 2011 have been worrisome. Economic, free market-oriented discourse is on the verge of being marginalized Talk on the street, in the media, and among the various political forces is veering perilously close to a populist rhetoric that could be potentially ruinous for the Tunisian economy. If these populist reforms take the lead in Tunisia, they will limit the private sector's ability to generate critically needed high-value jobs for Tunisians - especially its youth.
The picture does not have to be so dire. If necessary reforms are applied properly, Tunisia may be able to foster a better business climate for the domestic private sector. In addition, it could bring in foreign investors that will view a democratic Tunisia as an opportunity to do business based on the rule of law.
A democratic state that is dependent on revenues generated from its citizens and businesses will necessarily become accountable to its citizens. Unlike other countries in the region, Tunisia's economy is upheld not by natural resources but by the productivity of its workforce and the ability and innovation of its private sector. Tunisia has many valuable assets at the ready: ample human capital, including an educated and hardworking youth population; connectivity to the developed world; a secular middle class; and a reform-minded private sector. Tunisia's many assets create the opportunity for this period of transition to become a perfect storm for reform.
Ultimately, the country's leaders must come together and develop their own roadmap. Yet, it is clear that any plan would have to include some basic elements:
Legal & Regulatory Reform - There is an urgent need to harmonize and simplify the laws that govern the local economy and investment. As legal and regulatory burdens increase, opportunities for corruption also increase, which undermine the growth of the private sector and the strength of the rule of law and transparency. The country's laws were opaque by design, allowing an elaborate corrupt patronage system. Reducing legal and regulatory burdens has a direct influence on consolidating democratic governance and improving economic growth.
Onerous regulatory barriers, weak rule of law, and weak or non-existent property rights prevent entrepreneurs from participating in the Tunisian economy. While Tunisia has already implemented some legal and regulatory reforms, it still needs to improve how it handles construction permits, registers property, facilitates obtaining credit, protects investors, and enforces contracts. Governance of the services sector - a significant contributor to gross national product - will need particular attention during the transition. Tunisians perceive that discretionary powers are abused in regulating this sector, constricting productivity.
Anti-Corruption - Tunisians must make combating corruption a national priority and address it from an institutional level, including developing a robust respect for the rule of law. This means investigating the supply and demand sides of corruption, and putting into place an incentive structure that limits corrupt behavior. Transparency in decision-making means not only addressing opportunities for corruption in government institutions, but also supporting businesses' understanding of corporate governance and the many linkages between improving private and public governance.
As one concrete example, Tunisia must focus on improving the integrity of customs offices, in terms of inspections and verification techniques, and municipality-level bodies. Yet this must be bolstered by updating the knowledge and training of local magistrates so that they can fairly implement the law, and providing adequate salaries to eliminate a factor in the demand of bribes.
Public Sector Reform - Current levels of public sector employment are an untenable strain on resources. Reform of this inefficient sector must both a national priority. Improved governance of state-owned enterprises would increase the efficiency and effectiveness of the public sector. In a new Tunisia, the private sector needs to be the engine of growth, competitiveness, and high-value job generation.
The Role of Civil Society - Civil society organizations represent a diverse group of reform-oriented institutions, including chambers of commerce, associations, and think tanks. They need assistance with strategic planning and advocacy techniques so that citizens from all positions on the political spectrum can participate in the marketplace of ideas and enrich Tunisia's democratic experience.
Political Party Building - With critical elections on the horizon, these political parties must start building an issues-based narrative. The current political situation lacks a comprehensive discussion on economic solutions to many national issues. In preparing for free and fair elections, and the creation of a representative government, the discourse must include all interested parties - government, opposition, and civil society voices. The nature of institutions that govern those in power, and mechanisms available for citizens to participate in decision-making, become a significant factor in a democracy's ability to deliver for its citizens.
The private sector's immediate and dedicated political engagement is crucial for Tunisia to attain its development goals and gain its place as the economic powerhouse of the region. In Tunisia, youth used its collective voice to demand democratic change. Tunisia can be the test case for a new development model for the entire region, leaving behind authoritarianism and economic stagnation and moving forward with healthy improvements in economic growth, high-quality jobs, and democratic, accountable governance.
This can only be attained by ensuring that the new policymaking process for the country includes input from diverse actors within Tunisian society - political parties, civil society, labor, and, importantly, the voice of the private sector. Crucially, the enormous excitement generated by a "perfect storm" of favorable conditions for reform must be harnessed into positive energy if Tunisia is to realize the full potential of this golden opportunity.