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Breaking the wheel of economic karma

by Thomas Schellen

With no discernible forward motion and no convincing desire for creation of a reform government being exhibited by the parties to Lebanon’s latest and most severe political vacuum, the year to date has been
largely void of options. Generally it offered people from the humble worker to the most resourceful entrepreneur two choices: succumb to despair over lack of electricity, lack of money, lack of national political will and leadership, and rail against their unjust fate, or construct, with all mental resources, a space where awareness of this country’s assets of human and social capital creates realistic hope and practical economic solutions. Executive has had no choice in the matter. This magazine’s identity is based on the cognition of the real assets of Lebanon and on the idea of activating these assets for the economic and social good of the country and its people. Thus it was our ordained path to cross over barriers of international collaboration and engage in a mutually beneficial partnership with the United States Agency for International Development (USAID) on the opportunity to organize a journalistic project focused on employment creation and productivity improvement in five select industries. If there is such a thing as journalistic predestination, that was it. The project, strategically aligned with our Executive Economic Roadmap vision of the past five years, was twice fortuitous. It enhanced our roadmap concept by adding emphasis on practical ventures that can serve as models for success under duress. It delivered also a perfect fit with Executive’s new community model of inclusion of business leaders, future leaders, and dynamic stakeholders. Aligned with the thought platform of Executive’s new business strategy and allocation of our precious human capital, the project of the five industry roundtables was kicked off in February. Its entailed the diligent selection of a steering committee (SC) of experts and thought leaders, and a foundational meeting where our consultative approach determined the five industries the project would focus on. The SC discussed industries from luxury fashion to waste recycling, from traditionally under-reputed and financially non-profit maximizing ventures in communication and media to obvious choices of exportable products and exportable concepts.
When the roundtables convened on March 30 and 31, the first outcome was an affirmation. Although it is no
secret that Lebanon has a wide diversity of finance and investment experts, consultants and industrial practitioners, the energy that these experts invested into the roundtable deliberations left behind an almost
giddy assurance the these dynamic stakeholders in the private sector economy are not just knowledgeable and experienced but also dedicated to constructing a better economy. The valiant efforts of these roundtable participants to discuss constructively demonstrated their readiness to inquire about uncommon opportunities and to challenge their own positions and preconceived notions. A second result of the deliberations was that industries appeared to have as yet underused potential for coordination in the current crisis. At every roundtable, the discussants addressed the same challenges from gaining market access to absence of productive government interaction and finding the right finance model. Executive gained the impression that such cross-sectorial collaboration – perhaps with involvement of a supra-industrial steering and evaluation mechanism – could be unleashed with even more efficiency if pooling of plans across the five diverse industries was augmented by developing and monitoring a coherent policy on environmental, social, and governance as well as finance (ESGF). As a third conclusion and implication of untapped potential, the roundtable discussions have hinted at vertical and horizontal opportunities of supply chain development and innovative pairings of industries for mutual benefits. Local industries that in the past did not withstand the pressures of de-facto subsidization of imported goods have opportunities to explore. One could even make a case to pursue external lessons from in geography and size distant producers. Wine insights, such as the impact of fake products on the reputation of Austrian wine and the uneven boost triggered by the Argentinian economic collapse of 2002 for that country’s makers, or the difficulty of Lebanese content creators to compete in Arab markets against massively state-funded production houses, seem to hold many lessons that are not yet exploited. In this context, it is in order to add observe the experience of Executive Magazine with new publishing entrepreneurship: adaptation to the new models under preservation of our journalistic virtues has been a challenge until the economic crisis and the drying up of retail channels for print magazines coerced us to open up to the challenges. This project made the magazine break new ground as part of our response to the
economic crisis and challenges for journalism, wherein the overall adaptation of our business model in the
recent past has involved a retooling of our organization. Roles like customer care, community building, and sponsor outreach, were redrawn from previous emphases on distribution, circulation, and public relations. Roles in digital outreach and technology adaptation were newly filled or expanded. On the editorial and general management layer, Executive applied its ethical policy to new partnership and sponsorship concepts, in addition to tackling the new community building program of the Executive Circle, driven by fundamental agreement that this program will reach far beyond a marketing ruse or subscription campaign. The powerful show horses of industry and entrepreneurship are running up against triple-bar oxers as soon as they enter the Lebanese economy arena. These oxers comprise ascending obstacles of bureaucratic red tape, partisan self-interests, and ego-barriers. Flashback: a mental tug of war has been raging in Lebanon for a year. National rescue through reform and economic restructuring was the rope. Everyone was pulling on it. As with every tug of war, the game plan did not allow for a win-win outcome, and so the most concerned parties were dedicating all their efforts in order to win this competition. “The only way out [of economic free fall] is to regain the trust of the Lebanese people and the international community together, and to refuel and rebuild an economy living on productive and high added-value sectors,” argued one year ago the then government of Hassan Diab who was pulling to win from the angle of a forceful restructuring that put the blame and shame for the Lebanese crisis on the financial sector and proposed to save the country by means of state-induced focus on productive forces in the economy. The private sector party most-at-risk from the government plan was the banking industry. Diametrically opposed to the government’s attempt, the industry pulled just as hard as the government. “Lebanon is a cash-poor but asset-rich country that owns assets worth well in excess of what is needed to restore financial stability,” the Association of Banks in Lebanon argued in its proposal for national rescue. It took the perspective of blaming the crisis on irresponsible government spending but largely sought to absolve the financial sector from blame and concentrate on a solution that would keep banking power intact and allocate the reform burden differently, away from a forced banking restructuring. Whereas a win-win solution is not coded into a tug-of-war, one other outcome, besides win-lose, is a lose lose scenario when the rope snaps. The rope of any orderly plan for national rescue snapped first when the pandemic disrupted the nation with a few hundred daily infections, and then, much more violently, when the
criminality of the negligent governance “system” of wasta-cracy in Beirut Port shook the capital with the mother of all blasts and then with the resignation of the Diab cabinet. Thus, the Lebanese will never know if either rescue plan could have kept its promises. This 2020 season story of a doomed plan for national recovery is the most shocking of many cautionary tales in the annals of Lebanese plans. Only about two years
prior, another of those painful lessons on the vanity of politically induced plans for the Lebanese economy was provided with the delivery of a million-dollar plan called Lebanon Economic Vision commissioned by the Ministry of Economy to consultancy McKinsey for a very proud amount. By the time this plan was debated
from its revealed power-point slides, the first milestone targets in its design had already passed. And
so forth. Plans, all the way back to the Horizon 2000 vision in the 1990s, have a habit of becoming old before
they become real. But inaction is not an option for Lebanon’s economic actors. Surviving this polity is on one
hand a miracle of the people’s solidarity and ability to function while under attack from all sides, from patronizing foreign politicians and self-interested diplomatic aggressors, from pontificating neocolonial activists that sell their intrusions into Lebanese life as civil society interventions, local elites that dream of living in the 18th century, and a gun-happy bomber of civilization that has held onto power for too many decades.

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Thomas Schellen

Thomas Schellen is Executive's editor-at-large. He has been reporting on Middle Eastern business and economy for over 20 years. Send mail

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