Executive confesses to nonsense fatigue. Our editors are tired of platitudes about the banking sector. If we hear one more locution implying that the Lebanese economy’s doom is inevitable, or another hackneyed phrase about a banking sector that is trying to resist bad economic tides to the best of its ability while continuing to develop new products and services, we will choke. Especially if such vain observations are tied to attempts to exploit journalists in marketing said products and services aggressively to consumers.
Trying to maintain integrity with respect to editorial independence and the separation of journalism from advertising interests looks more like a quixotic fight against windmills every year — but even if it is not a financially rewarding endeavor, it is a necessary fight if one hopes to be a genuine journalist. Thus, tired as we are of some parts of the Lebanese banking sector’s narrative, Executive is still fascinated by the sector’s unsung assets, and in this issue, attempts to explore how much the human capital in our banks is growing, how much intangible value banks create through employee training and continued education, and how through all this, banking contributes to alleviating the huge problem that fresh university graduates (and all Lebanese) face in finding quality jobs.
Also, we have to admit that our general nonsense fatigue is a mere nuisance when compared with our exasperation over hollow complaints by political types, who do nothing to move the national confidence dial higher but instead vainly berate people, including those very bankers who are trying to make the economy work. Can it be that there is a political class who have it in their hands to bring down corruption by relinquishing their privileges and fiefdoms, but prefer to sit idle?
Most of all, we are disgusted, turned off, and appalled at political tugs of war that are not only unworthy of democratic discourse, but harmful to national economic confidence. Such are the pointless and overlong battles over our electoral law, the budget, taxes on the ultrarich, and the dishonest attempts to derail the reappointment of central bank Governor Riad Salameh last month.
This reappointment battle is now over, and it is indeed Round Five of Salameh at the helm of Banque du Liban. However, that does not mean that the battles that are sure to come during his fifth term are already won. There are new attacks being formed in the shadows by prejudiced foreign friends, and there is an important area — corporate governance at banks — where progress is notable but further challenges appear to loom for all stakeholders.
Lastly, whenever a hero is born in the public’s mind, there are concerns that one must not forget. Hero worship is dangerous and being a hero — we guess because we cannot lay claim to any heroic deeds — comes with its own sort of fatigue. And in this regard, Governor Salameh’s most recent appearance before a Lebanese Euromoney conference could be seen as putting the onus on others to call for some fresh ideas at the central bank. Shaped as an on-stage interview, Salameh’s 30-minute appearance did not provide the kind of attention grabbing remarks that the once revered maestro of the Fed, Alan Greenspan, provided to financial markets with his speech on “irrational exuberance” just over 20 years ago.
One would wish for more than comments on global interest rates. What is needed now is not just the honest remark that the Lebanese central bank relies on the published analyses of international energy augurs for its oil price assessments and anticipations, not the evasive assertion that Lebanon’s central bank favors everything that boosts financial inclusion when the question was about the BDL position on Fintech, and also not the insight that oil and gas, the knowledge economy and the financial sector can be enablers of the Lebanese economy.
Thus Executive, while very relieved over the commencement of the fifth round of Governor Salameh’s reign at the central bank, calls for succession planning to start as of now. Should we wait until the governor of the central bank has completed his seventh term as an octogenarian and is perhaps ailing before we deign to call a surprise board meeting and advance one of his deputies to the head of the table? Apart from the fact that a sudden board change with internal handover to another office holder is not feasible politically or legally, the idea of running for another 18 years with monetary policy still pegged to the dollar is, today, simply frightening. Lebanon’s political economy is still too fragile to be caught by surprise in any Minsky moment or creative destructiveness that, according to economic learning, the country needs to be prepared to encounter somewhere in the future, whether in the next six years or later.
As if any reminder about the importance of developing a good political economy in Lebanon was needed, the 2017 edition of the World Competitiveness Yearbook (WCY) by Swiss business school IMD made it to our desks just as we were putting the last touches to this issue. The WCY — published on May 31 — showed a number of telling changes in the competitiveness rankings of the 63 countries covered this year. Notably, while the United States lost further ground and now is only the WCY’s fourth most competitive country, the strongest gainers in terms of ranks were Asian countries such as Kazakhstan, which advanced 15 spots to 32nd place, and Mainland China, which improved by seven spots to reach 18th place. Nota bene, the most competitive country in the Middle East was the United Arab Emirates, which improved five positions to 10th place (Cyprus and Saudi Arabia were included for the first time, and could claim respectable positions in the lower middle ranks).
According to IMD World Competitiveness Center head Arturo Bris, upwardly mobile countries maintain business-friendly environments that encourage openness and productivity. He traced China’s improvement to the country’s dedication to international trade. If such examples show that improvements in competitiveness are perfectly achievable, the WCY also reveals what keeps countries stuck in the bottom: The WCY’s lowest ranks are largely occupied by countries experiencing political and economic upheaval. “You would expect to see countries such as Ukraine (60), Brazil (61) and Venezuela (63) here because you read about their political issues in the news. These issues are at the root of poor government efficiency, which diminishes their place in the rankings,” Bris was quoted as saying. Lebanon, sadly, is still not covered by the WCY, but the message fits perfectly.