Taken in isolation, the situation of Lebanon at the dawn of 2022 is that of a country which is still in the depths of a bewildering crisis. The national crisis of everything is singularly all-encompassing and, to be grasped by the human mind, needs no historical denominator, geographic comparison, or even numerical quantification of contraction in GDP, annual inflation rates, monetary depreciation or increased inequality, unemployment and poverty. A walk through Beirut and a trip to other urban centers and outlying villages is enough to nurture a sense of indescribable economic shock, common suffering and utter dismay at this national tragedy born and raised in the presence of corrupt and self-serving leaders. A religious founder walking through the hills of the region was supposed to ask his listeners “is there any among you who, if his son asks for bread, will give him a stone?” Looking at Lebanon, one might wonder why some will treat their people like no sensible moral person would treat a stray cat.
But this small slice of attractive real estate on the edge of a calamitous region, cannot be seen in isolation. Neither in time nor in its contemporary geopolitical space. It says first of all that without international influence, individuals and political factions charged by the people or by destiny with the care of the homeland and of society, will not budge. Left to their own devices, they will continue to be self-absorbed, pretending to honor their duties while constantly violating them, and acting corrupt or not at all. This has been demonstrated indisputably by governing bodies that have failed, aborted or stillborn over the past two years.
Yet there is no human situation without a way forward. Financial economics is a human idea and a practice of people (public and private). This is why our end-of-year issue focuses on the financial economy of Lebanon and the need to resolve misunderstandings and deliberately mistimed perceptions of the components of the financial economy, in particular the national relations with the Fund international monetary policy (IMF). and the options that always exist when two parties negotiate in good faith. There is no reason to think that the IMF wants Lebanon to suffer.
IMPERFECT BY DEFAULT BUT…
At this stage, a program for a virtuous financial economy will by default be imperfect. The mess is so deep that any attempt at a solution, such as whether to always opt for a currency board or how to restructure our banking sector so that we do not do our competing nations the favor of destroying our own asset strongest economy, will not be free from design and implementation errors. We asked the best experts we found to give their perspective on the financial economy, the engineering of which will have to be several crucial cogs in our national economic machine that must be operated in the coming year. , lest Lebanon lose more of its skilled people and those who remain slip through life like beggars.
However, thinking and tinkering with the financial economy will not be enough to start saving Lebanon this year, no matter what international contribution the country may receive. Two other considerations must be taken into account. One is the continued effort, against all previous conceptual flops, communication imperfections and current disempowerment, to debate our economic future from as many angles as there are strong and justified interests. . Let it be said clearly if reiterated: Lebanon has great business and economic minds. An abundance of talent, more than enough. Now more than ever, talent should not be buried.
If we want to benefit effectively from outside help, we must help ourselves and do our part to build the best operating system and the best economic machine. That’s why we’re publishing our 5.0 Roadmap right now, inviting you to join in the effort to promote economic democracy where the cogs of the public, private and third sector finally move productively in sync, strengthened by free and fair elections and by your constructive ideas. . Not only are we releasing an update, but we’re adding a new pillar, focused on empowering private sector industries and economic agency (for more details on the new pillar and our roadmap journey, see Leader on page 8).
USING THE WIDE ANGLE LENS
The third angle of our crisis of everything requires looking at the bigger picture. Compared to all conventional wisdom and experience in the country’s development, the paradox of the Lebanese situation at the start of 2022 is that the country has done worse, much worse, in the past year than rational thinkers would have expected. At the same time, the country, in its social fabric and its willingness to function with civil decency, has not deteriorated as badly as some evangelists of self-abandonment and despair had promised in pessimistic scenarios of a bankrupt company. The generosity and welcoming inclusion of people has not been destroyed. There are still those who want to make this country shine as much as possible.
However, if the optimists are successful, Lebanon could in a few years shine on a world stage considerably weaker than it did in the first twenty years of the century. Two recent benchmark publications show that the state of the world is causing growing fears at least for the next two or three years. The World Economic Forum’s (WEF) Global Risks Report (GRR) 2022, published in January, begins with three titles: burning societal and environmental concerns, collaborations on challenges made more difficult by rising inequalities in trajectories diverging economies, and the danger of a disorderly climate transition that will further aggravate said inequalities. The GRR sees a horizon marked by growing tensions.
About a quarter of respondents for the GRR 2022 are worried, more than 60% are worried and not even 4% are unrestrainedly “optimistic”. Without claiming to be scientific, this magazine’s recollection of having heard Lebanese business leaders say they are optimistic for this country, optimistic despite all that they have been through, is a multiple of 4%. Note: Lebanon-based business leaders included in a sample of some 12,000 individual leaders who were asked by the WEF to rate the top risks in their country, most often cited state collapse, followed by environmental damage caused by man and the absence/collapse of social security. Global risks, by comparison, were concentrated around climate and weather, followed by societal risks, with economic and debt risks lagging far behind.
Another report, more comprehensive and authoritative than the GRR, released in January is the World Bank’s Global Economic Prospects (GEP) study. The report’s announcement to the press condenses its key message by saying grimly that the global economy is entering a “pronounced slowdown”. Citing some fascinating figures, the GEP informs, for example, that total global debt reached 263% of global GDP in 2020 and that public debt in emerging markets/developing economies (EMDE countries) jumped nine percentage points to reach 63% of GDP (one could dream that Lebanon would be in the middle range of EMDE public debt).
The headlines on the first pages of the report portray the global economic horizon as clouded by unprecedented macroeconomic imbalances and growing inequalities within and between countries. He also sees the horizon entangled in an exceptional uncertainty, which further aggravates the equalities. “Half or more of the economies in East Asia and the Pacific, Latin America and the Caribbean, and the Middle East and North Africa, and two-fifths of the economies in sub-Saharan Africa, will be still below their 2019 GDP per capita levels by 2023.” (emphasis added) it bodes well. concerted efforts to mobilize external resources and accelerate debt relief efforts”, as well as reinvigorated measures for “domestic growth and innovation”.
MICRO LOOK LEBANON
Lebanon is the only MENA economy estimated in the GEP to have ended 2021 with a contraction in GDP (minus 10.5% compared to regional growth forecast to increase from around 3% in 2021 to 4.4% in 2022) , and has a 99.999% outlook to have GDP well below 2019 figures by the end of 2023. The World Bank did not see fit to include GDP estimates for Lebanon (nor Libya, Yemen and Syria) for 2022 and 2023 in the regional figures. Lebanese who are told in the GER that their “new government formed in September 2021 is beginning the process of economic stabilization”, will no doubt be seduced by the promises of World Bank leaders to accelerate debt relief efforts. debt and good advice on growth and innovation. .
But even though there were projected numbers for Lebanon’s economic fortunes in 2022 and 2023, it must be remembered that not all models and experts in the world have proven more reliable in predicting the medium term or even global performance. imminent, neither before the Great Recession of 2007 nor during the unfolding pandemic recession of 2020. Nevertheless, considering the mood of exuberant brash expectations in early 2007 versus today’s avowed skepticism, the he painful anticipation of unrest in the next three years seems more believable than past irrational exuberance.
This brings home two messages. Lebanon’s efforts to build the national economic machine in 2022 must be both holistic, i.e. encompassing all political, social and economic fronts, and self-sustaining as much as possible. They will have to include foreign aid and agreements, but must assume that the global community, and with it the ability to meet the growing needs of developing countries and failed states, will be heavily strained this year. Lebanon must use its own devices, expatriates and locals, and all its so-called friends, but above all, it will have to be motivated to design a new economic democracy with the tools of public buildings and build trustworthy contracts.
The global message is not to ignore that the past seven fat decades of global growth will have to be replaced by a paradigm of prudent resource conservation that involves much more than mitigating climate risks, calming societal upheavals and improving virtual spheres or cyber defenses. If the coming global change will be disruptive as long as the necessity of climate risk, demographic risk and information society risk is ignored or mistreated, we are in for decades of disruption, shock and denial. , stagnation, restless restoration, and the recreation of our economic democracies in a context of continuing uncertainty. The lessons of the crisis of everything in the Lebanese laboratory deserve to be preserved and the solutions that could be successfully tested in Lebanon in the coming years could become this country’s most productive and valuable exports. This is the time to prepare for the most interesting challenges, whether in Lebanon or around the world.