Three men in suits, with the carefully groomed looks of advanced-middle-age males, stand on Beirut’s landmark cliff and contemplate the mysteries of the sea that looms some 150 feet below them. One is a reputed banking economist, one a famous government technocrat, and one, with a much cheaper suit, the driver/bodyguard that brought them to this scenic spot for a secret personal discussion about Lebanon’s economic future.
The technocrat and the banker are almost ready to start their confidential conversation on how to rescue the Lebanese economy together. Then a sudden, relentless gale—the type that lifted Dorothy over her rainbow—strikes out of an almost blue sky, grabs the suddenly helpless suits and dumps them unceremoniously in the sea below. Thank God, they all can swim and it is a balmy June 2020 afternoon in Raouché.
Treading water, the sharp banking economist immediately whips out a—coincidentally waterproof—tablet and produces a chart to illustrate how impossibly remote the risk of such a long-tail event is, all but proving that it could never have happened. The government technocrat pulls out his encrypted secure phone and vigorously calls for an international rescue team and an investigation into who stole the money that had been allocated in the previous decade for putting a railing on the cliff. The driver sheds his useless, and now dangerous, jacket and bullet-proof vest and starts swimming to shore.
Before you place your bet on who you think would be the first of the three to reach safety—please answer why this fantastic scenario is even more improbable than a black swan event?
The answer, our smart readers will easily surmise, is that there is no chance that any member of the government and any representative of the banking sector would, during this month of June 2020, enter into constructive communication, secret or otherwise, even if the survival of the entire Lebanese economy were to depend on it (which it does).
While they are not saying it in so many words, the signals that persons of the greatest importance to the rescue of the Lebanese economy—namely the country’s political decision-makers and its financial power players in banking, historically the best performing sector in the economy—are sending out, and have sent out for the past six months, have been pointing in direction of continued lost time. There is plainly, at the time of writing, no sign of hope for unpolitical and ideology-free deliberations between the two most important groups of power over the Lebanese economy, irrespective of the month after month of swelling outcry over systemic political disasters and the people’s socioeconomic torture.
From mid-March up to the month of May, it seemed almost understandable that momentum for decisive action was not visibly building. To arrive at this thought, one needed to take stock from imagining these decision-makers’ perception of what happened in the first four months of the year: the experiences of being faced with an outraged and no longer acquiescent public in the thawra (revolution); the destruction of jobs and income opportunities at the beginning of the year; the birth pangs and alignment of a supposedly technocratic government; the decision to default on the early March Eurobond payment; and the initial coronavirus shock of the 40 days thereafter. Noting all this, it would have been a miracle to see decisiveness from any person of power in this country, which has accustomed its people to practices of clientelism and to expectations of radical escapism from responsibility by nominal political leaders.
Moreover, when talking about the period from early May onward, it must be noted that complex and painful decisions take time if they are to be achieved through constructive discussions instead of unreasonable and panicked shouting matches. This need for reasoning and well-considered time has to be accepted. But key here is the word “constructive,” not the word “discussions.” And the big mystery in this regard is how constructive were discussions that ensued after the contrarian presentations of a “Financial Recovery Plan” at the end of April by the government and a “Contribution” to the Financial Recovery Plan by the Association of Banks in Lebanon (ABL) several weeks later in May. It is already water under the bridge as far as discussions that could have happened in those weeks of late spring. In the intervening time, of course, there have been—at the time of writing—13 sessions with the International Monetary Fund (IMF), all or partly involving the government and Banque du Liban (BDL), Lebanon’s central bank, which presumably entailed technical, financial, and policy and reform negotiations.
We know that these sessions happened, we know that they were—in line with our coronavirus restrictions—happening via digital link, and we have heard the usual cryptic comments and witnessed the, even more usual, flood of stupid, malicious, and unsourced rumors.
It thus would be wrong to say the people know nothing about what is going on in the determination of their present and future fortunes. They just know nothing reliable or precise as they were not deemed eligible to sit at the virtual negotiations table or be informed of what really happens at the online party and slugfest of Lebanese and IMF decision-makers—who notably have in common that they are persons without popular mandates in the true sense of the term.
The central bank, true to its form of never having dedicated itself even to the veiled forward-guidance communication adopted by some other central banks (most notably the Federal Reserve), would not answer to questions or requests for additional information beyond its customary data and the circulars that are its mandate to issue.
Communication about the negotiation sessions by the government’s team was limited to an array of terse and unhelpful information releases by the Ministry of Finance relayed by the National News Agency to the media and public and to balmy political assurances of progress by finance minister Ghazi Wazni and Prime Minister Hassan Diab. The bulk of these latter political assurances about the outlook and time needs of the IMF negotiations reminded of the declarations of nothing in particular that a curious patient could expect to get from an indulgent senior physician who knows that it is expected to sound reassuring at all times.
A matter of perspective
This depth of information on the Lebanese side was shamefully matched, and only minimally improved on, through the information promulgated by the IMF. In the fund’s global briefing of journalists in early June, IMF communication director Gerry Rice characterized the discussions with Lebanon as “constructive”—noting that he had used the exact same term in the previous briefing. To one who does not hang on every word that pours forth from the IMF, “constructive” appears to be a general-purpose term for all occasions. Moments later in the same briefing, when Rice talked about the fund’s negotiations with Argentina, he varied his description by saying that there was a “very active and constructive dialog” with the Argentine authorities.
As far as the timeline of the Lebanon negotiations, the briefing’s listeners were enlightened with the confirmation that Lebanon’s problems are indeed intractable. “I don’t have a timeline for the conclusion of the discussions. We do expect them to be rather lengthy due to the complexity of the issues,” the IMF spokesman allowed. The most tangible information provided in the media briefing was on numbers, as Rice reported (with enough veiled caveats to allow for any sort of later clarification) that “the preliminary view from Fund’s staff, is that the estimated losses presented in the reform plan, are broadly in the right order of magnitude, given the assumptions presented.” It is comforting to know that the Lebanese numbers are not off by a few trillion liras or dollars.
Those who were not invited to sit in on the IMF discussions—and who by some assumptions should have been grilled at the virtual table and by others should have been consulted for their expertise in running, almost entirely, the finance scene in Lebanon—namely the commercial banks and the ABL, did not have messages of a reassuring outlook for mutually constructive deliberations with the government during their first interactive communication encounter with media. When four ABL board members, led by the association’s current president Salim Sfeir, faced journalists on June 10 after having essentially been shrouding themselves in silence for the entire period since the release of the contribution cited above, they broadly restated the rationale of the ABL position as laid out in the contribution document.
The ABL contribution’s banking sector perspective is presented in form of five strategic priorities, of which the first priority (securing the most agreeable debt restructuring process) and the fourth priority (constructive financial sector restructuring) seem to have the greatest potential for being debated productively against the positions in the government’s rescue plan (see data story).
However, despite those highly discussion-worthy elements in the ABL contribution, Sfeir indicated that there was not even progress toward constructive discussions yet, let alone progress in closing the vast gaps between the ABL and the government’s positions, saying in response to a question by Executive that communication was still pending “until we sit together with the government people. And we are still waiting for the right time to sit with them. So far they do not have time for us.”
To empower competent stakeholders, including academics, civil society financial experts, or economic media to contribute an educated opinion to the current IMF discussion that is crucial for the future of the Lebanese people requires access to the right information. Yet, no one in Lebanon—not the bankers, not the media, and not the people—can rightly and truly claim to being trusted with the type of facts and quality information necessary.
The right to know
It is deplorable that Lebanon is not moving forward by power of such competent collaboration. It is deplorable that there is no visible progress and interaction across the economic and ideological divides on issues such as banking sector restructuring, rescuing the impoverished lower-middle income, low-income, and no-income families; and it is additionally deplorable that there is a surge in conspiracy tales, reporting of uncorroborated rumors, and persistent lack of honesty in the current situation.
In 2020, the world has conducted two decades of incessant talk about an ever widening canon of rights of the people on both the level of the United Nations and on the level of academic and civil society discussions. Despite being painfully aware of the specters of rising inequality, poverty, racism, and discrimination and the, by now, predictable failure to achieve the sustainable development goals by the target of 2030, Executive editors regard the economic rights of the people, and especially the economic rights of people in scenarios of economic distress under provision of minimal unconditional support from the government—as is the case in Lebanon and most countries—as non-negotiable rights.
Freedoms and rights of any type are chained and suffocated if they are not able to stand on foundations of economic self-determination, security, and protection from ideological experiments. At the most fundamental level, and wholly irrespective of their ability to influence policy and international financial entanglements with global institutions and foreign lenders by democratic participation, people in Lebanon have the unalienable right to know what is in store for them in form of systemic economic prescriptions. This right must have priority with regard to all human machinations and implementations of whatever rescue or revival concepts (of which, as Executive has reported, there is a plethora in Lebanon beyond the government and the ABL models), however well-intended and financial expertise-fortified such solutions and their inevitable economic dictates and policy impositions may be.
Executive thus calls for the Lebanese, and for people of financial and banking power first of all, to make every effort to roll back all infringements on rightful freedoms and historic and new diversities found in this country. We call for transparency, honesty, and as much popular consultation as technically possible with 2020 virtual communication tools between the IMF and the Lebanese people. We call for those in Lebanon who are—openly or indirectly—in the political driving seat and who have been entrusted by fate and circumstances with monetary, financial, policy-making, and political and opinion power to waste not a minute more by arguing from their silos of partisan interests and ideological ambitions, but to make utmost haste in collaborating for holistic and historically coherent solutions to the national economy.