About two months ago, the assumption was that in terms of viral speed, the only things spreading faster than SARS-CoV2—the coronavirus’ official name—would be coronavirus rumors and fears. This view could pass as news of the month at the time when World Health Organization (WHO) Director General Tedros Ghebreyesus explained to the world that there was an infodemic going on, on top of the new epidemic—before the WHO’s declaration of the coronavirus pandemic on March 11.
But tracking what are now the four dimensions of the coronavirus crisis trajectory—infection numbers and death tallies; data on markets and rescue budgets; social catastrophe indicators; and fixation on coronavirus news and rumors (as well as its Lebanon specific impacts)—as they speed ahead on a daily basis is the new impossible task. All four of these new dimensions, by the way, are first-class generators of pain and fear.
Staying on the virus’s trail in spite of data uncertainty
The data on the virus itself, meaning its confirmed incident rate, its mortality, the time in which infections double in affected clusters or per country, its longevity or eventual seasonality, and the total count of unreported and unnoticed infections—is by now widely acknowledged to be overall uncertain, too much so to enable perfect decisions.
The least uncertainty has been assumed to exist in the mortality rate. But even in the reported deaths one encounters hidden data uncertainty. For example, the numbers of COVID-19 (the name of the disease caused by the virus) fatalities reported from G7 member country France, one of the most heavily affected nations in the pandemic’s European epicenter, had a massive error margin.
It became a matter of wider awareness only in early April that the French death tallies reported throughout March did not include deaths in nursing homes but only deaths in hospitals. Under a revised reporting methodology, a retroactively amended tally in early April showed a different and substantially higher number of deaths since March 1, which indicated that over 25 percent of COVID-19 deaths were occurring in nursing homes (which according to reports in French media also have no testing capacities for the virus).
As to fatalities, question marks thus come into play under several perspectives. One emotionally unsettling, but for response planning necessary, angle is the need to consider how many of the confirmed deaths in a given cluster or country might have occurred without any outbreak of the COVID-19 epidemic. This does not subtract one decimal from the sense of total horror that is created by the increasing fatality numbers but it could have consequences for designing optimal strategies for fighting the virus and alleviating its impact.
Besides uncertainty over the accurate mortality rate in clusters of seniors in nursing homes in the developed world, it does not appear unreasonable to wonder if a deep information gap related to death tallies is to be found across poorer countries. To what degree do clusters of mortality exist in slums across the southern hemisphere that have at best informal governance, with deficient or totally absent state presences? How accurately will deaths from COVID-19 be identified and reported from human population clusters in MENA, whether in camps of migrants in North Africa, informal refugee camps in Lebanon, camps in conflict zones in Syria, or in densely populated Palestinian territories that are ostracized by the nominal national government, namely the occupation government in Israel?
Confirmed incident numbers moreover are not universally transmitted into a consolidated tally with the same rapidity, even within developed countries, which is complicating analyses of infection patterns in addition to the fact that infection numbers are rising very, very fast. Nonetheless, the big picture says that the spread of the virus will not slow down anywhere with any abruptness. No country and no individual is magically protected. This means containment measures need to be strong and lasting.
It also means that by end of March, it was a sure bet to predict that the line of one million confirmed infections and over 50,000 deaths would be crossed in the following days—in a ten-fold increase when compared with the 100,000 confirmed infections tallied by March 6, a mere four weeks earlier. The tally of infections and deaths will continue to climb.
Venturing further into granular details does nothing to remove uncertainties. The location of the first reported coronavirus outbreak, China, was tallied to have 82,278 confirmed incidents and 3,309 deaths by March 31. Germany, France, Iran, and the United Kingdom were next in the gruesome statistics, with respectively 65,600, 45,200, 44,500 and 25,500 infections. Switzerland, Turkey, Belgium, the Netherlands, and Austria were shown as five countries that also counted more than 10,000 confirmed infections by the end of March, while earlier victim South Korea reported just below 10,000—not that the 10,000 infections line would make any difference. But as the numbers change and become more shocking by the minute, what is the value of such information for concerned global citizens by the second week of April?
From a perspective of policy-makers having to enact and adapt virus response plans, information gaps pertain to actual incident ratios in the pandemic, to existence or non-existence of seasonality, to the availability of tests, of emergency medical supplies, and to the time until vaccines and treatments will be available. Given the additional uncertainty about the effects and, inversely, potential short-term or long-term medical and economic detriments of one or the other containment strategy, the overall data insecurity and simultaneous decision-making pressure must be a living nightmare.
The financial world: a flood of pain mixed with determined rescue signals
The second, very powerful contender in the coronavirus race toward a global ground zero are financial market impacts, real economy impacts, and unemployment numbers. These doomsday notices are juxtaposed with signals of new governmental—meaning fiscal and legislative—measures and rescue packages, packages of monetary stimulus, bond buying and interest rate reduction by national central banks, and announcements of financing and debt relief initiatives by global financial institutions.
On the world’s financial markets, stocks and their trading platforms are the most sensitive seismographs, signal givers of the first order when it comes to economic health. Beginning from mid-February and all throughout March, equities around the world were impacted by radical drops followed by uncertain movements, sideway trading, and resumption of drops.
Between record highs in American and some European stock markets on or around February 19 and market readings on March 20, lay steep drops of about 30 percent in leading US indices Dow Jones and S&P 500, 40 percent on the German DAX, a drop of over 30 percent on Italy’s MIB, and more than 20 percent weakening on large Asian exchanges.
Sideways trading and minor temporary price recoveries made not only the indexes of equity markets show pictures of mayhem and uncertainty at end of March and into April. Markets for bonds, oil, commodities, currencies, precious metals, and cryptocurrencies were shaken into bouts of volatility. Many markets passed through phases of deterioration last month that in their sum defied comparisons and left it to the mind of the beholder whether to describe the various down phases in sensationalized terms as crashes or euphemize them as severe contractions.
Oil prices were caught between the rock of vanished demand due to the coronavirus pandemic and a hard place of a spat over production cuts between Russia and Saudi Arabia. Already subdued to levels below $50 over the first two months of 2020, due to weakening demand, prices moved down by 25 to 35 percent relatively early in March under the added impact of the price war. Scratching a $20/barrel price level that had in the oil price cycles during the 21st century only been recorded at a time when they were emerging from the $10 dollar lows seen ten years earlier, oil climbed back to the $30s by end of March and early this April. However, these signs of slight recovery were spiced with fears of possible further drops.
Dollar prices and currency exchange rates also had a wild and wily month—the latter in the fact that they were advantageous to investors who played their wiles best. For most countries in the developing world, the month was wild, as they were hit by capital flight and depreciating national currencies. In the confusing environments of fear and flight, even gold seemed less solid, swinging from gains to losses in coronavirus uncertainty. The supposed digital gold, bitcoin, had value sucked out of it as investors cashed out bitcoin positions to cover exposures elsewhere, and even as bitcoin and a few other cryptocurrencies were gaining some territory as markets moved in late March and into April, it seems crypto-hell was bent on demonstrating that virtual does not have the same tangibility as physical.
And so the sad markets stories went on and on. The data flood of bad and worse numerical signals from financial markets in March have in their volume and frequency rivaled the bad news on coronavirus infections and COVID-19 fatalities—the two crucial differences being that financial epidemics with inundation of deteriorating numbers do not imply growing risks of death and that the volatile financial signals reflected human behavior patterns. A crucial further element of financial signaling to the economy last month were the fiscal and monetary promises of countermeasures to the gathering coronavirus recension and ever-larger packages of support issued to themselves by leading economies.
Emergency rescue packages in the richest nations
In money trails on the global emergency supply plains, the top developed economies of G7 status have constructed the largest virtual caravans. Their money wagons are equipped with supplies that other countries can only dream of. The United States has legislated a $2.2 trillion dollar package, signed into law by President Donald Trump on the last weekend in March—an upward revision of the package and addition of another $1 trillion was later put on the table as parts of the program already looked insufficient to meet needs. Emergency packages worth double and triple digit billions of dollars were adopted by governments of the other G7 group countries. They were reported in early April as being: Canada ($75 billion); France (€45 billion in emergency aid to companies alongside €300 billion state loan guarantee package); Germany (€156 billion, upping its 2020 budget by almost 45 percent); Italy (€25 billion fiscal package, expected to be followed by much larger package); Japan (package according to government announcement on April 6 will amount to almost $1 trillion); and the UK (£350 billion/$430 billion under adjustable response framework with no limit).
On EU level, according to a statement of current European Central Bank (ECB) President Christine Lagarde on March 19, the Eurozone’s central bank designed a €750 billion Pandemic Emergency Purchase Program on top of a €120 billion program adopted earlier in the same month. “We are fully prepared to increase the size of our asset purchase programs and adjust their composition,” Lagarde assured.
It is predictable that these financial packages will not remain at these levels nor be nearly enough for doing what is needed, as already seen in the US context. A report in German newspaper Süddeutsche Zeitung said on April 5 that documents from the German finance ministry showed a total predicted cost of almost €1.2 trillion for measures in the country when all public measures are included.
Using a phrase that reminds of the then-ECB President Mario Draghi’s 2012 rescue assurance during the euro crisis, leaders of the G7 said in a statement on March 16 that they were “resolved to coordinate measures and do whatever it takes” to restore growth in their economies and avert downside risks.
Another early April news update: The United States’ rescue armament according to the New York Times comes with $454 billion in ammunition to enable Federal Reserve lending programs to small businesses, large businesses, local governments, individuals, and households. As a Treasury Department program for small business relief launched on the first Friday in April, the paper reported that over 10,000 applications for more than $3.2 billion in loans were processed that day.
The big multilateral money guns
Multilateral development banks and international financial institutions (MDBs and IFIs) were in the first tier of engineering their responses to the coronavirus pandemic and recession. With a financing quiver holding $1 trillion, the International Monetary Fund (IMF) signalled its readiness to mobilize all of its lending capacity, IMF Managing Director Kristalina Georgieva announced repeatedly last month, as the reality of a global recession projected at least as bad or worse than seen during the Great Recession of the 2000s dawned on international markets and global institutions.
While assuming a recovery of the global economy in 2021, the return to growth will require tremendous medical responses as well as extraordinary financial efforts, Georgieva stated on March 23 (after a regular G20 conference call), making appreciative references to efforts by major central banks and fiscal packages that had been declared by G20 countries.
After acknowledging the coronavirus-related economic relief measures taken by many G20 countries, she emphasized the continued presence of concerns over “the negative outlook for global growth in 2020 and in particular about the strain a downturn would have on emerging markets and low-income countries.” Early in March, Georgieva had announced that about $50 billion in fast emergency IMF funding, 20 percent of it in interest-free facilities, would be mobilized toward support for low-income and emerging markets.
The IMF endeavors to facilitate better access to its emergency facilities, given that “some 85 countries” have indicated that they would need to rely on IMF emergency funding, the IMF chief said in a further, extraordinary conference call with G20 members on March 31. According to her, besides widening its emergency support umbrella the IMF is seeking to enlarge its capacities to help its poorest member nations and assist countries that experience foreign exchange shortages.
In related efforts, the IMF in March initiated measures asking member countries to replenish a special catastrophe fund that has previously been used to support Haiti in 2010 and countries affected by the ebola epidemic in 2015, to a size of about $1 billion. Revising the catastrophe fund’s criteria enabled the granting of debt service relief for up to two years to poor nations as balance-of-payments support.
According to a World Bank press release from April 2, the group initiated a first wave of emergency support operations worth $1.9 billion for 25 developing countries, including Yemen and Djibouti in the Middle East and North Africa (MENA) region. New operations are moving forward in over 40 countries under a fast-track process, in addition to redeployments of $1.7 billion in already existing projects. Further redeployments of funds for countries with approved projects could reach up to $160 billion over the next 15 months.
An earlier World Bank Group factsheet had announced in mid-February that the group’s immediate emergency response would be dedicated to lifesaving operations, meaning support of healthcare needs, prevention and testing, medical research, and related development of community-based disease surveillance systems.
A list compiled by Reuters in the first week of April showed 28 countries in the developing world that were beginning to receive emergency funding in support of their efforts to fight the pandemic in these countries from the World Bank Group and IMF. Containing 13 countries in Africa, 10 in Asia, and five in Latin American and the Caribbean, the highest indicated amount was destined for the most populous country on the list, India, at $1 billion, followed by Senegal with $226 million.
Seven of the named countries, including India, were going to receive upward of $100 million, five $10 million or less. The smallest amount was earmarked for Sao Tome and Principe at $2.5 million. The countries identified on the list were of different income levels and population sizes, without apparent correlation of either factor with the amount slated for emergency support. The Arab countries benefiting from the first wave of emergency funding by the World Bank or the IMF according to the Reuters compilation were Yemen, Djibouti, and Mauritania.
Notable MDB/IFI initiatives from around Asia and the Middle East
The four-year old Asian Infrastructure Investment Bank (AIIB) announced in the wake of the March 27 extraordinary G20 summit by conference call to its directors the creation of a $5 billion crisis facility for public and private sectors to alleviate financial pressures and support post-pandemic recovery. The flexible facility would be part of coordinated international response efforts and could be expanded, the AIDB said on April 3.
Responses to the coronavirus pandemic from Islamic and Arab development institutions have come underway more recently and support announcements have been trickling when compared with the flood from global multilaterals. The Islamic Development Bank (IsDB) announced on April 1 that it would support implementation of “pioneering ideas in the fight against COVID-19” with a $500 million fund designed to invest in startups and entrepreneurship.
Kuwait-based Arab Fund for Economic and Social Development (AFESD) on March 30 announced a $3.2 million grant to assist Jordan in its fight against coronavirus impacts. The Kuwait Fund for Arab Economic Development (KFAED) said on March 25 that it would contribute 30 million Kuwaiti dinars ($96.5 million) toward the country’s efforts in countering COVID-19. Kuwait announced its first COVID-19 fatality on April 4.
Multilateral initiatives with private sector support angles
The World Bank Group’s International Finance Corporation announced $8 billion in support for private sector companies through its trade finance and working capital lines, in addition to support for clients and invested private sector companies in the agricultural, manufacturing, services, and infrastructure sectors. Commitments from the group also include $6 billion in guarantees from credit insurance arm, the Multilateral Investment Guarantee Agency (MIGA), according to the press release.
The European Bank for Reconstruction and Development (EBRD), released a €1 billion “Solidarity Package” aimed at the countries where the EBRD is active. The measures are targeting support for private sector client companies that are in financing troubles through temporary credit problems.
In addressing the global banking system’s very specific challenges under the coronavirus scenario, the Bank for International Settlements (BIS) declared additional funding and supervisory support measures for banks on April 3. Alleviation of pressures on banks according to the Basel Committee on Banking Supervision at BIS will relate to expected credit loss (ECL) accounting frameworks and regulatory capital requirements linked to ECL frameworks, as well as margin frameworks and annual assessment of global systemically important banks.
On March 27, a preceding statement by the Basel Committee’s oversight body of central bank governors and heads of supervision (GHOS) endorsed measures to free up operational capacity of banks and supervisors in the corona crisis by deferring introduction of Basel III standards, revised market risk frameworks, and revised pillar 3 disclosure requirements.
The specter of a global social crisis—a crisis of labor
What the entire relief army of fiscal and monetary initiatives in the G7 economies and the measures directed at the global economy’s countries in the “also-run” category could evidently not solve last month, was a scary momentum in the development of joblessness. The sad record in job loss news came from the United States with 10 million new claimants of unemployment benefits in the second half of March. Job losses in the first half of March, reported at over 700,000, were high by comparison with earlier periods but paled in comparison with the latter part of the month.
This translates into a dichotomy between relatively benign US job loss numbers in the first half of March and the outlook for next month and beyond. The existing data up to March 12, while indicating that over 10 percent of the review period’s job losses actually occurred in the healthcare sector (in services not involved with the coronavirus pandemic), mainly showed that about 65 percent of jobs lost across the US during the pandemic’s initial social impacts were in hospitality-related sectors—most of them in restaurants—and that job losses generally affected younger and less educated employees.
The shockingly high numbers of US unemployment in late March had to be expected in view of the immediate emergency of a shut-down US economy. There also is no reason to think that employment numbers in the US will become better in the medium term where a deep global recession—with, at least temporary, history-making work paralysis—now is the dominant assumption.
Reasons why the US numbers have jumped so strongly last month and resulted in alarmed reports by news organizations might include the fact that employment preservation is less of a thing in the US than in Europe, which explains the higher spike of American unemployment when comparing these two economic areas. A perception bias is another usual suspect. Job losses in China, which were in the millions in February, seem to be perceived in western media as a statistic, not a social catastrophe.
This is all unsurprising, and since surges in social challenges have kicked Washington into activist gear in March, the US Department of Labor in early April informed state-level authorities of a $600/week boost to unemployment benefit payments for eligible groups and instructed them in perfect bureaucratic precision to what categories of benefit claimants these additional benefits are to be disbursed. Notwithstanding specificities of the American labor market and social response system, the indications from March 2020 as to the social groups most affected by unemployment in the US foreshadow where the enormity of social troubles is likely to be clustered in other, less affluent economies.
Overall, the outlook for restoration of labor prospects across developed markets and creation of jobs that can substitute for those lost in financially destroyed SMEs and long-term devastated sectors also appears rather dim, considering that design of emergency measures for workforces generally has been aimed at softening financial blows by compensating for losses in labor income. The most promising steps range from loan holidays, rent suspensions, and disbursement of survival cash to laid-off individuals. Regulated reduced-work arrangements—Austria’s and Germany’s employment defense recipes via labor department substitution of a part of lost wages and salaries, if employees are forced to work fewer than their contractual hours but remain on payroll—will help, just as similar arrangements in countries where governments have announced they will be assuming responsibility for paying as much as 80 percent of wages if employers keep their staff members on even if they have nothing for them to do.
The future looks dim
All these measures are beneficial and immeasurably superior to total absence of personal security—but they cannot negate the destruction of work in the coronavirus crisis or guarantee the creation of additional job opportunities for new labor market entrants during the interlinked national recessions that are expected to follow upon the pandemic and be unlike other cyclical downturns. Nor can the measures generate new jobs that would replace jobs lost in hard-hit sectors where, for a long time, no full recovery of pre-corona employment levels is expected, be that service jobs in travel, tourism and hospitality or manufacturing jobs in automotive and aviation industries.
Moreover, most countries in the world do not come near to the fiscal power of the US and other G7 countries. Yet it seems unpleasantly safe to assume that similar patterns to those of the March 2020 job losses in the US will be seen by the time when downward labor developments across the world will come to be analyzed for G20 countries as well as less privileged economies.
In a short-term outlook projection by the International Labour Organization, developing markets will be impacted more severely by evaporation of work than developed countries. Arab states will suffer the largest loss of labor that is being inflicted by the COVID-19 crisis on the world economy in the current quarter, the ILO said on April 7. The organization expects 8.1 percent of work hours to be lost in the Arab states, equating to 5 million full-time workers, which is 1.4 percentage points above the projected 6.7 percent rate of work hours that will be wiped out worldwide. Under the ILO projection, the global loss of work will be equivalent to 195 million full-time workers, 125 million of which will be in Asia.
Job losses beyond the current quarter are very hard to anticipate because they would, to a significant proportion, depend on the timing and speed of recovery from the expected global coronavirus recession—key open questions are if recovery would start as early as the third quarter or only later on and if the recovery will be fast (a V-shaped recession), slow (U-shaped) or marginal (as in a L-shaped recession). However, the residual unemployment that has to be expected even after the pandemic has turned into a bad memory means that repercussions from increased chronic unemployment—including impaired physical health, increased emotional distortedness, and damaged mental stability—are likely to affect the entire globalized economy of the 21st century over decades.
Socioeconomic epidemics will affect countries with highly developed analytical methodologies and data on domestic labor markets but will be even more hurtful to countries where the domestic labor market is a job casino with crooked croupiers—a large group of countries that includes Lebanon, which is in no way unique in this regard.
The ultimate result of all this could be that job loss in the coronavirus crisis turns out to be a class of harmful societal bacteria prone to induce chronic illnesses in developed and poor countries alike, inflicting social pains and causing mental epidemics with unrestrained emotional infectiousness in all seasons and comparatively minor but unpredictable death rates.
The fourth stream in the deluge
Such a social reality, unless balanced by a surge in social solidarity, looks to be no fun at all. Moreover, it links to the fourth swelling torrent that impacts and impairs daily lives in the form of a deluge of narratives.
This torrent combines several sub-streams. One is flooding the internet and social networks with inane conspiracy theories. These dystopian fantasies are too numerous and on average far too stupid but they command a lot of attention. They can traumatize listeners with artificial fears and even lead to damages in the real world, as a brand new example from the UK demonstrates: burning mobile phone towers. Some towers were targeted by arsonists this month, apparently because of a conspiracy tale that fifth generation (5G) mobile networks have something to do with the spread of the coronavirus. Scientists were dismayed.
There are furthermore significant streams of deliberate fear mongering and disinformation. The disinformation stream’s fake news can be state-sponsored or state-aligned, suggest observatories of such data, and are revealing digital frontlines that are culturally entrenched and throwbacks to Cold War times. Unimaginative horror movie scripts about villainous military leaders underwriting secret laboratories for biological weapons research that have set a virus loose deliberately or inadvertently, are an old hat. But such allegations recently seemed to be popular fake news grenades deployed by various global powers on their disinformation fronts.
A third detrimental sub-stream of the online information deluge is criminal with the objective of financial gain. Real world price gouging and criminal behaviors of seeking to exploit the desperate demand of municipalities, public and private healthcare institutions, and individuals by charging sky-high prices for—often substandard—emergency medical supplies from masks to ventilators for COVID-19 patients is a morally despicable and legally criminal practice that has surged with the pandemic.
Mirroring and even preceding these practices have been cybercrime syndicates and individual crooks who fraudulently promised to deliver medical equipment, virus tests, imaginary vaccines, and even miracle cures in online environments. Further fraud strategies include scams related to banking, financial services, coronavirus research, donation solicitations—the Action Fraud reporting system in the UK warned of soaring fake governmental emails asking for donations to the UK’s National Health Service, in one example—and charities.
While real-world property crimes saw a downturn during the lockdowns, virtual crime in connection with the coronavirus pandemic soared into existence by February and ballooned in March, to the point that platforms for reporting such crimes, such as Action Fraud, were flooded and sometimes overloaded with requests by April.
“The pandemic opened up a business opportunity for predatory criminals,” said a report by Europol that announced the results from a global operation against counterfeit medicines, mostly counterfeit surgical masks, which, according to the report, resulted in the dismantling of 37 organized crime operations and closure or some 2,500 online links. In the US, the justice department warned of rising online scams related to the coronavirus and the National Center for Disaster Fraud asked coronavirus fraud victims to contact a hotline. It is too early in the trajectory of coronavirus-related online crime to have meaningful numbers on average damages to victims or the accumulated financial gains of fraudsters during the pandemic, but as with all crime, this online scamming epidemic will leave behind traumatized victims.
The rise of mainstream news and economic forecasts
On the other end of the information spectrum are the not so bad guys—news organizations and individual journalists, academic research initiatives, for-profit consultancies, and individual economists, celebrity and otherwise. In this realm, the coronavirus has been dominating the attention of journalists for more than a month, which resulted in daily flows of virus-related news on every mainstream and niche media that Executive accessed during the pandemic (including Executive’s own website and social networks).
Detailed and high-level economic research reports from academic institutions, bank research departments, and professional consultancies have flooded the global info sphere with studies, graphs, tables, projections, and guesses about the trajectory, severity, and outcome of the global coronavirus recession and nation-scale recessions. There was even a first “infodemiological study” by Chinese scholars about correlations between the COVID-19 epidemic and the COVID-19 infodemic.
It can and must be pointed out that the work of journalists and media organizations is driven largely by people’s right to information on the pandemic and all that it implies (NB: Many for-pay online magazines and news sites have punched holes in their paywalls and are offering their coronavirus coverage pro bono, and advertising revenue at other media sites is down). This is the media’s mission. However, with the rise in mainstream reporting, daily monitoring of the flood of journalistically produced news also nurtures concerns over imbalances in reporting, the nurturing of self-fulfilling prophecies, and the reinforcing of prejudices and misperceptions in absence of sufficient verifiable information.
Concomitantly, the relentless spike in production of economic opinions, analysis papers, and presentations suggests an increase in risks that the users of these reports will by way of selective perception chose to peruse materials that reinforce their narrow views and existing biases.
Many economic research departments and consultancies appear to compete in bringing out reports fast (as a non-representative example: the World Economic Forum’s lineup of contributors and experts in April churned out over 25, often elaborate, online pieces in less than a week). Many such reports will have to come at the price of having to use preliminary, partial, uncertain, and not yet corroborated and robust data. Perhaps too many.
Casually put, the fourth stream in the corona environment of spring 2020 is a lavish information kitchen that allows economic addicts to overeat on a high-protein diet of advice and opinion, conspiracy theorists to indulge in nutty snacks with no nutritional ingredients and news junkies with a taste for the morose to feast 24/7. Given, however, that the torrents of so far mostly depressing SARS-CoV2 and COVID-19 data, discouraging economic data, and highly worrying social trend data in their confluence already make any previous experience of TMI look like a joke for preschoolers, the presence of the fourth stream in the deluge seems to transmute the combined mental coronavirus experience into something like a distributed denial-of-service attack on human brains—with no telling about the damages that might be inflicted.
In any event, as a long defunct economist and political philosopher wrote in an exchange with a fellow socialist one and a half centuries ago, “Every child knows [that] a nation which ceased to work, I will not say for a year, but even for a few weeks, would perish.” It seems that the world will in due course find out if, per chance, Karl Marx was right on this one.
Deeply embedded in the coronavirus crisis: The case of Lebanon
And where is Lebanon in this global apocalypse that comes with the destruction of all human ability to predict what will happen to the world economy in the coming six, nine, 12, 21, 40 or even 120 months? The answer might be mostly one of cultural coherence and mental resilience.
In terms of infection count, Lebanon, showing 541 infections on April 6 on a continually updated list maintained by Johns Hopkins University in the United States and registers in the middle field of the 183 countries that are included in the tally. The list on that day shows more than 60 countries with 10 or less infections each and just over 100 with more than 500 such incidents.
A world map at the site shows a not too large red spot in a world that is plastered with circles of red (one must assume that the size of the circles correlates with the number of infections but does not give information on the ratio of infections to national populations). Over 70 countries have reported higher infection counts than Lebanon. The world total that day is approaching 1.3 million confirmed infections and 70,356 deaths.
Lebanon’s tally of 19 deaths seems elevated in relationship to other countries that show between 400 and 700 infections, as countries in the group with a lower count outnumber those with a higher fatality count about three to one. The time for the doubling of infections in Lebanon is shown as about 30 days, with a stable trend and looks rather good in context of another visualization of the Johns Hopkins COVID-19 data. However, the overall robustness and depth of country data about most countries, including Lebanon, appears at a fleeting glance to not be sufficient yet to allow for real analysis and conclusions with a high degree of confidence.
Carnage and more carnage
The economic picture in Lebanon is not one of a country that has been ripped away from its healthy economic trajectory by a sudden external shock—as is the scenario in other countries that have come to regard a lockdown as the only way to avoid an unacceptably high loss of lives among their citizens. Lebanon’s economic picture is one of sustained carnage, or rather the governmental self-dismemberment of the little that has remained of the country’s political and socioeconomic integrity after a series of vacuums and utterly result-free policy cycles in the 2010s.
With transmission of guidance impulses into the economy through the administration’s dysfunctional central nervous system frequently interrupted over the course of a decade, vital parts of the economy started to wither and die off. The resulting dismal state of economic and financial affairs, having become unmistakably clear in the third quarter of last year, is by now known perfectly well and has been documented almost to excess. There is no need to reiterate a description.
However, if one wishes to refresh one’s memory on the entwined elements of the Lebanese mess, one only needs to glance across national and international assessments of this existential crisis, for example by reviewing the six joint statements which the International Support Group for Lebanon (ISG) has issued in course of the past seven months.
A meditation over such documents and the economic realities delineated therein gives the impression of only two possible approaches. In recognition of the persistent economic emergency that has only been exacerbated but not induced when the first coronavirus infection was discovered in the country seven weeks ago, the possible reactions to the twice cursed reality of pandemic and deep economic crisis are a realist’s approach and a utopian one.
Realistically, and this is prudent, the country needs things: the virtue of hard work by motivated and determined business movers, shakers and makers—the kind of people who are investing themselves into the Lebanese economy and put their own fortunes on the line—and help from outside by whoever is willing and able to help. Leaders of industry and economists have reconfirmed earlier in the coronavirus crisis that they are determined to work with everything they have and that foreign help is vital and urgently needed, ascertaining at the same time that they would not expect the Lebanese government to be able to spend any significant own financial resources on alleviating the repercussions wrought by the coronavirus crisis or the economic malady. (See March 2020 industry story).
All that can be said at this moment with reasonable confidence about the search for foreign help, is that talks between the Lebanese government and interlocutors on the global level, such as the IMF, the World Bank Group, and stakeholders in the ISG, have been ongoing for months now. The details discussed in these talks are by and large less transparent than one would wish for and the outcomes appear not predictable, but the potential enablers, foremost the enabler of fiscal reform, are known.
In this regard, the latest communication between the Lebanese state and the ISG has reconfirmed this month that Lebanon is appealing for and depending on international support. The official message to the ISG reiterated baseline information on the Lebanese government’s perception on the scope, roots, and growth of the national economic crisis, and the fundamental precondition for receiving aid that consist of empowering an efficient government that enacts reforms and disavows all corruption. The message contained the assurance that “the Lebanese state is currently working on putting up a comprehensive financial and economic plan, within a national rescue program,” and the promise that “the plan is about to be completed” as President Michel Aoun told ambassadors, EU, UN, and World Bank representatives in a April 6 speech.
An alternative utopian approach might reason differently, however. It might admit for example that unadulterated carnage of the Lebanese economy is just as strong as it was before the coronavirus struck—but continue to say that under the conditions of the coronavirus crisis, financial drainage, ballooning debt, currency blowout, poverty explosion, social emergency, and vanishing jobs are no longer just cluttering the Lebanese horizon but that these ominous signs now are looming over multiple countries.
A utopian approach might further reason that the current outlook of a deep global recession represents an opportunity. With the entire world facing the possibility that new economic paradigms—a need that had also been debated toward the end of the 2007-09 Great Recession but that did not materialize then—a utopian Lebanese might argue that the financial and economic apocalypse is finally taking shape, but that in Lebanon it is the apocalypse of flawed finance and dysfunctional economy and does not mean the end of the world.
Utopians are raising their voices and concerns internationally, advocating for debt forgiveness or introduction of universal basic income solutions, stakeholder capitalism and new social contracts, replacement of outdated models for externalizing climate and environmental costs, for trying out Modern Monetary Theory, for better financial constitutions in the public economy, for central banks that become pawnbrokers of last resort, or for ending the antagonism between markets and public administrations, societies and states.
A Lebanese utopian might see an opportunity for contrarian thinking to be effective in the country’s redesign of the national economic strategy, perhaps by way of a new form for sustainable monetization of state-owned lands while retaining public ownership, or by encouragement of a creative revolution in design and tech entrepreneurship and a giant national leap into digitalization in pursuit of a moral economy, or by activation of a diaspora network for long-distance job creation, or by institution of a policy that would encourage restructured banks to deploy their knowledge into healthy banking sector growth, or, or, or. A determined utopian might even rejoice that the global powers that are, have been put under downsizing pressure by the coronavirus pandemic and its collateral recession so that they have less ability to deploy financial superiority for their own power gains, being false friends for countries that should realize that they have more than enough talent and more than enough own concentrated wealth to stand on their own feet.
One thing to remember
The Lebanon apocalypse is unfolding but it will not be the end of the Lebanese and not the end of Lebanon. The economic apocalypse of 2020 is a chance and a double opportunity to learn from the country’s systemic failures and step up to global challenges.
Henrik Mueller, professional observer of international business realities and professor of economic journalism in Germany, argues this month that the coronavirus revision of everything has just successfully refuted the old accusation that capitalism subordinates everything to the almighty profit motive. Some budding economists, meanwhile, blurted out in an Austrian School economics forum in the United States their ideology that, fundamentally, freedom is more important than security, or an illusion of security.
A Lebanese observer of such discourses might ask in response, “What is most valuable and important in and after the coronavirus crisis for a society that has neither security nor could benefit from past laissez faire capitalist freedom in a rentier state?” The answer, one hopes, is human solidarity and productive collaboration between utopians and realists.