How Neoliberalism Fosters State Capture: Insights from Tunisia

Abstract

Despite the popular protests that took place in 2011, the political economy of Tunisia remains largely characterized by processes of state capture and cronyism. While benefiting the ruling class, the social and economic costs of these mechanisms are detrimental to most of the population. There is a tendency in policy and academic circles to characterize state capture as the result of a late-development syndrome and unfair competition. This policy paper, however, proposes to adopt an alternative outlook. It argues for the need to critically reflect on the key role of the current neoliberal economic model in sustaining these dynamics. Based on the pursuit of the profit rate, the push for neoliberal reforms in Tunisia have sustained predation and rentierism since the late 1980s. In such a context, the European Union (EU) should rethink its terms of economic engagement based on neoliberal premises, and instead sustain an economic agenda aiming to regulate the rights and responsibilities of local and international capital in the interest of all.