Ramzi Saliba, infectious disease expert and program manager in humanitarian and emergencies based in Canada, interviewed on what coronaviruses are and why we need to practice social distancing to help flatten the curve.
Interviewed by producer and host of Y Chats, Youmna Naufal.
When seeking to fathom how Lebanon’s pre-existing economic woes correlate to the newly unfolding global coronavirus recession, a first obstacle is posed by the extreme speed with which this recession is unfolding. In February, and even earlier in March, international agencies, leading economic powers, financial institutions, and noted economists assumed that the virus’s impact might be sharp or moderate but limited to the short term.
By the end of the second week in March, however, the tone of assessments had changed dramatically. Expectations of recessions in leading economies such as the United States now see a recovery starting in the fourth quarter of the year—in optimistic scenarios marked by a seasonal pattern with the first wave of coronavirus infections peaking this spring. Less hopeful scenarios see no resumption of GDP growth in corona-stricken G7 economies before the first quarter of next year, and some noted economists anticipate far worse, a deep recession of unpredictable length.
In a summary view, roughly three quarters of 41 Europe and US-based economists polled by Reuters in the third week of March said 2020 would see a global recession, and their sentiments reportedly grew still gloomier as the week progressed. Where does this leave Lebanon, struggling already with an historic economic crisis of existential proportion?
Frontline sectors of the Lebanese economy with reliance on uninterrupted daily business—from the marginally self-employed and informal workers to general retail, luxury retail, hospitality ventures, and hotels—are unquestionably the immediate victims of the standstill of economic activity forced upon them by the necessary containment efforts to counter the threat of the COVID-19 epidemic in Lebanon.
Beyond this portion of the economy that is exposed to short-term impacts, however, the situation has turned so dire for the entire economy, and the Lebanese people as its stakeholders, that attempts to verbalize the disaster’s scope can only choose between metaphors in the superlative range. Is it more appropriate to compare the state of economy to being faced with a volcano eruption on top of an earthquake, or is it more fitting to liken it to a tsunami that follows just after the devastation of a monster hurricane?
Lebanese economists whom Executive reached by phone confirmed the impression, albeit in less dramatic words, that the country is undergoing a two-in-one crisis. While the implications are especially severe in terms of further increases of poverty and social destitution of the population, it also impairs the motors of hope that had existed (when taking into account that a resurgence of the hospitality industry and tourism has shifted considerably farther away, and that new complications in the financial markets also appear to push prospects of development there farther into the future).
“The coronavirus effect will be catastrophic on the world economy, and the Lebanese economic situation will be more and more catastrophic, amidst the halt of economic activity,” says economist Elie Yachoui, framing the picture in neutral words. But that phrasing makes his subsequent description of the economic outlook no less scary. “We can say that the middle class in Lebanon will be totally extinct. They will be the new poor,” he says.
In Yachoui’s perspective, the economic downturn will leave even the moderately well-off, those who have some savings in their accounts, in no advantaged state as they are not able to fully access those savings due to problems with banking and inability to obtain hard currency. He tells Executive that only the top 10 percent of the population may find themselves to be better off, those who have deposits in accounts outside of Lebanon.
A similar assessment is voiced by economist Roy Badaro, who notes that a recent World Bank warning about the poverty level in Lebanon increasing from 30 to 50 percent of the population under the country’s prior economic crisis may no longer be adequate for describing the scope of the malaise. “I expect an 80 percent poverty level,” he says. “Only 5 percent of families will be able to keep the same level of consumption, and another five percent or so will be okay—all the rest will suffer a lot.” According to Badaro, the scale of economic suffering will vary but the relative poor of today will become very poor, and a serious threat of starvation could surface in about three months’ time.
Notably, the exacerbating effect of coronavirus health crisis and economic recession is also affecting the country’s manufacturing industry, a major driver of the economy. Fady Gemayel, the president of the Association of Lebanese Industrialists (ALI), tells Executive: “It is indeed a very dramatic situation. We [industrialists] are all primarily concerned about public health and of the health of workers in industry and the whole [manufacturing] chain.”
According to Gemayel, the immediate challenges, in addition to their human impact, have operational and economic dimensions. “We see that things are unfolding very dramatically as industry has been requested to limit their operations to basic sectors of food, pharmaceutical, necessary consumer product industries, and what is needed in the production of these products,” he explains.
New operational challenges affect manufacturing enterprises that can continue to work, he adds, because they have to take extra safety measures not only for their personnel but for all stakeholders involved in distribution of their products. “At the same time, there is a challenge as far as going ahead into the future as most [enterprises] are not working,” he says. “This poses serious [economic] problems because it [compounds on] the previous problems that we had. As if we needed that.”
Despite this overall burden that the recessionary environment of the coronavirus puts on all industrial sectors, the picture turns more nuanced when delving deeper into industrial activity and subsectors of manufacturing. Some subsectors—namely those with a stake in the digital realm and orientation toward exporting their goods and services—are saying they see those silver linings on their horizons, even as they are hit by the coronavirus crisis in conjunction with the preexisting Lebanese economic crisis.
Multilane, a company with wholly export-centric profile as supplier of infrastructure components for the global data center market, has been affected by the coronavirus on levels of work flow and its international supply chain but has been able to cope with these impacts, CEO Fadi Daou tells Executive. “We are doing okay,” he says. “Everybody is, of course, working from home, not just here (at the Lebanese manufacturing site) but also in our global offices in the US etc. The company is still on a steady path.”
A challenge that Daou had to deal with specifically relates to the company’s reliance on an international supply chain. Generally, disruptions of work at factories—first in China’s Hubei province, then in manufacturing plants in South Korea, and finally in countries around the world—and disruptions of international shipping and cross-border transport. These disturbances notably represented an impediment that differentiated the downturn of the real economy triggered by the coronavirus pandemic from the financial upheavals that played the central role in earlier recessions, including the Great Recession of 2007-9.
“We are affected by global supply chain delays,” Daou says. “Much of our supply chain is sourced from southern China and some from Taiwan. That has been impacted.” What mitigated the disruption for Multilane, however, were two elements. The first such factor, according to Daou, was that the area of origin of supply for electronic components is centered in the southeast of China rather than the midwest, where the Hubei province, the most heavily affected by the virus, is located. Besides the better functioning of the supply chain on the Chinese end, the second factor aiding Multilane in its management of component supplies was its habit of maintaining some inventory because of the well-known vagaries of importing materials to Lebanon. “We do have one to two months delay in our supply chain,” he explains. “That could, of course, be increasing—and we would be impacted—but since we operate in Lebanon we typically don’t rely on [just-in-time] supply chain but keep two to three months buffer of material.”
The deepest problems that Daou faced in terms of his international dealings actually occurred at the end of last year and were caused by the Lebanese economic crisis’ sudden restrictions on financial transfers via Lebanese banks. The problem was acute until the company could start to rely on inflows of fresh cash, meaning hard currency wired to its account after last October. “We did face some serious disadvantages when we were no longer able to pay our suppliers and our employees [in our offices abroad], so we lost quite a bit in the initial shock,” he says. “Banks did not give us three months to adjust and that was costly on our topline and our bottom line, which had a significant negative impact in the November/December time period of 2019. However, we recovered by January and we were able to shift some business outside the country.”
Another sector of industry to expect new opportunities are software companies that are currently anticipating a shift in corporate demand of local companies in favor of local suppliers, says Joe Hatem, CEO of Lebanese software house Profiles. The company has been in business for some four decades and is specialized in enterprise resource planning (ERP) software. “We are right now under the shock of the corona crisis but once the shock settles, the software industry has golden opportunities,” he says. “One because it is an industry that can export its services or its goods using very little imported material—mainly no imported materials at all.”
Secondly, in the domestic market, an effect of Lebanon’s economic crisis was that companies suddenly—due to the impossibility of making the requisite international transfers—ran into big problems with paying for software licenses from the international suppliers that dominate global markets. In this scenario, local beats global. “We suddenly become a better opportunity, because we are selling locally [and] cashing locally,” Hatem says. “Thus [software purchasers in Lebanon] can do better business with us than with imported software. I foresee that this will be a factor to give us a boost. What remains is for us to be aware of this and make good use of this opportunity. We are working on that.”
Hatem says it is a blessing for his company during the coronavirus-induced economic restrictions that “its work is digital” rather than dependent on physical production of goods and physical deliveries. Similarly to tech company Multilane, Profiles could quickly shift its engineers from coming to the office to working from home. The ability to service at least part of its client base remotely as well as being engaged in exports and receiving some payments in fresh money enabled Profiles to manage the coronavirus shock relatively well.
However, Hatem voices a grave concern that is of specific importance to his activity and industry. “The internet has become crucial more than ever,” he says. “We can survive as far as dealing with banks even as things are slowing down. But if internet came to be in a situation of slow operation or no operation, everybody will be in trouble.”
This highlights how different industries with different specializations are exposed to singular bottlenecks and technical vulnerabilities, even if they are embedded in the digital economy. It furthermore illustrates how complex modern economic and social equations are, as a human or economic risk in one area of digital-era existence may have a less obvious tradeoff in another area.
According to Daou, online connectivity does not play as crucial a role for Multilane’s operations as it does for the software industry. Instead of focusing on short-term risks of higher internet consumption and resulting stresses on the existing infrastructure (some European countries saw a 10 percent increase in internet usage in just one week in March), he sees an opportunity in the fact that internet usage has been recently spiking. Providers of web conferencing, video streaming, and entertainment will, in the mid to long term, have to invest in their internet and data center infrastructure. “We don’t know how long this will take but we expect a very significant uptick in business activities,” Daou says.
One question where the industrialists interviewed by phone for this article were of one and the same mind was the issue of governmental support. Asked if they were looking for any fiscal assistance from the Lebanese state, something that would reflect even a small portion of the large fiscal and monetary relief packages that recently made news from governments in countries all over the world, they just laughed or sighed in exasperation. They all know too well how severe the financial limitations of the Lebanese state are, and how drained the coffers at the treasury and the central bank.
Referring to what the Lebanese government should do, the Association of Industrialists’ president tells Executive that the government, at a minimum, needs to defer taxes to help mitigate the economic repercussions of the coronavirus pandemic, calling for a “lifeline for industry and for people.”
Gemayal continues, “I think the government should be very responsible in the sense of addressing the issues of dues to the public sector. What can they do with reference to this issue? [But also] there is a social issue that needs to be addressed, [and] a liquidity issue that needs to be addressed. How can the government [respond to these needs] and where can they bring funds from? I think it is necessary to solicit any specific aid from donor agencies that are not necessarily politically connoted.”
He concedes that it will put Lebanese industry at a competitive disadvantage internationally if they cannot benefit from direct financial support measures from the public coffers, whereas enterprises in other countries receive sizeable fiscal support under very large rescue packages. This is not what is on his mind, however. “We are not here to complain that their situation is relatively better than that of Lebanese industries,” he says. “We are concerned with moving forward and meeting the challenges head on. We need to limit the damage and take advantage of available resources.”
One further point of concurrence among industrialists and economists interviewed in the early stage of the corona crisis in Lebanon was that the beginning of the solution to their dual conundrum and emerging existential recession lies in the realms of politics and changing attitudes. Now, more than ever, a rethink of economic strategy for the Lebanese economy is needed and this enormous task requires universal investments of mental effort by political and economic decision-makers without regard for partisan political concerns, exclusionary views, or special interests on national level or even beyond. The coronavirus crisis is global and thus prone to generate long-term changes that can be opportunities to rectify misaligned political and economic patterns. As Hatem puts it, “We need to reengineer our minds as well [as our strategy for finance and economy], and our relation with nature and with the Earth.”
In this context of the overriding whole, the particular mood in the industrial camps of the Lebanese economy appears to be both defiant and desperate, but with an overall tendency of being determined to sustain industries against all odds in this two-in-one crisis of Lebanon’s mess and the global coronavirus recession. Even as he acknowledges that the pandemic is globally unique and that today’s obstacles to financing of raw materials similarly were never seen in Lebanon even in the days of the civil war, Gemayel says, “We do not want to give up. In Lebanon we have been through challenges in the past and lived up to them.”
To gauge the extent to which Lebanese manufacturing industry, an often overlooked but crucial driver of the economy, is being impacted by the current global coronavirus pandemic in conjunction with the previous difficulties in Lebanon, Executive conducted a phone interview with Fady Gemayel, president of the Association of Lebanese Industrialists.
How is Lebanese industry coping with the restrictions on economic activity that have been placed on the country? How serious is the situation for you and what measures were taken by the sector?
It is indeed a very dramatic situation as [the response to the coronavirus] is affecting all the sectors of the economy. We are all primarily concerned about public health of everybody and of the health of workers in industry and the whole chain. We see that developments are unfolding very dramatically as industry has been requested to limit their operations to those basic sectors of food, pharmaceutical, and necessary consumer products, and what is needed in the production of these products. It is a big challenge even for those firms which can continue to work, because they have to take extra safety measures, be it for their personnel, [or] be it for all stakeholders involved in the distribution.
Does the threat of the COVID-19 pandemic and the measures seeking to contain and limit its spread pose a threat to the survival of industrial enterprises?
There is a challenge going ahead as most [enterprises] are not working and this poses serious problems because it [compounds on] the previous problems that we had. As if we needed that. We are already in a big problem and face many challenges. The way ahead is challenging and we don’t know how long [this crisis] will take. Do we have a social responsibility to our workers, and how can we continue? It is okay if it is for a few days but how will it evolve if it continues? What will happen in general, not only in industry? How will daily workers or those who [rely on daily incomes] be affected? They have no revenue. How will they be able to sustain [their existence and their families]? Furthermore, the disturbance caused by the banking sector adds to the challenges.
Are you requesting fiscal support for industry from the government or asking it to instigate relief measures such as credit support or easing of monetary conditions?
Deferring taxes I think is the minimum that is needed. For sure, the government should be very responsible in the sense of addressing the issues of dues to the public sector. [But also] there is a social issue that needs to be addressed, a liquidity issue that needs to be addressed. How can the government listen [to these needs] and where can they bring funds from? I think it is necessary to solicit any specific aid from donor agencies that are not necessarily politically connoted. Something should be done. There should be a lifeline for industry and for people.
Besides the problems related to staying afloat financially, not being able to keep production running, and seeing demand weaken, companies in many countries face serious disruptions of their supply chains, especially when they are long and cross borders. Do manufacturers in Lebanon face significant problems with their supply chains?
We were already faced with the issue for the sake of getting the proper financing for getting raw materials. Now comes, in addition, the issue of corona. But I must say that we have been in close contact on this issue with the government and the central bank; [we were engaging with them] about the highly needed raw materials for those [manufacturers] that are producing corona-related materials. There will be some urgent measures that will allow the imports of needed raw materials.
How about the supply chain scenario of your own company, to look at an example?
It is in corrugated materials. We supply packaging for companies in food and pharmaceutical, for detergents and such. So far we are able to cater to their needs, mind you that there are also paper companies in Lebanon. The issue [of our supply chains] is not related to corona but to the possibility of transferring funds for purchase of raw materials. This was preceding the corona issue and we are trying to find solutions.
All industrialists have to face up to costs as they have fixed costs that they have to pay whether they are producing or not. This is a serious issue. In fact, the corona crisis is now for us two crises. It is a raw material crisis that is aggravated by the corona [crisis]. It is two-in-one. This is where we are now.
News of large and previously almost unheard of governmental and central banking support packages are coming from numerous countries around the world. Are you concerned that the companies benefitting from such lavish support will have an added competitive advantage in global markets when compared with Lebanese manufacturers?
We are not here to complain that their situation is relatively better than ours. We are concerned with moving forward and meeting the challenges head on. This is why we are saying that we have to find the ways in which we can have damage control. We need to limit the damage and take advantage of available resources. Industry is one of the drivers of the economy. You can imagine [for example] that we are short of many medical supplies that could have been made in Lebanon and that other countries now would not want to export as they reserve them for themselves as a priority. I hope this is a lesson for everybody for the future.
Now is not the time to complain, though. What we are concerned with is having an emergency mechanism for facing up to the situation and doing all what it takes. For this, the government should revert to the international friends of Lebanon. The International Monetary Fund is a political issue, so let’s avoid that at this point in time. There are other agencies that are keen and that have been willing to help Lebanon. Already three months ago we, as Association of Lebanese Industrialists, approached such institutions. As the banking system was not performing, we were telling them that we needed a lifeline solution. This is what I am talking about.
Do you think that France, for example, is in a position to help Lebanon at this time and specifically Lebanese industry?
I don’t want to narrow the scope to any particular country. France, Europe [collectively], and other countries have always been close to the Lebanese people and would not shy away from their responsibilities in this most difficult moment. Don’t forget that we have three problems in one: We have the issue of the Lebanese, the issue of the refugees, and the issue of the Palestinians. We are assuming [responsibility] for all of them and should not be left alone.
As the industrialists’ association, do you have a vision and determination on how to grapple with all these compounded crises?
I want to assure you that we believe that Lebanese industry is called to play a better role in the economy in the future. We do not want to give up. In Lebanon we have been through challenges in the past and lived up to them. Although this one is unusual—the corona is worldwide unusual—and also the [previous crisis] of the need [to find finance] for getting raw materials was also unseen in the past in Lebanon. During the most vicious days of the war and those times, we never did have to think about inability to get raw materials, as it is now. It is a unique challenge.
On March 19, the Office of Graduate Studies and Research at the Lebanese American University (LAU) released the results of a study (see below) on the effects of different levels of social distancing on the number of COVID-19 related deaths by June in Lebanon. One note of caution for these figures is that the lack of data and predictive model used means these results are speculative, based on an analysis of trends. Though the team behind them did consult with LAU’s infectious disease unit when modeling the scenarios—and there are plans for collaboration across disciplines and universities in the future on the effects of COVID-19 on Lebanon—at the time of writing data is lacking. There is also a high likelihood that the number of cases in the country are above the official count, according to the researcher behind the study, Samer Saab, interim dean of graduate studies and research at LAU. He told Executive that the numbers he has produced, if anything, could be considered a conservative estimate, given the trends being witnessed in countries such as Italy (see Q&A below). The primary purpose of the study, he says, was to raise awareness among the public and policy-makers of the effects of social distancing and to underline that this situation would not be over in the short term.
Forecast of the daily number of infected cases and daily recoveries due to the new Coronavirus (COVID-19) in Lebanon (Graph 1). The forecast is projected in a window of 112 days, beginning with March 19 and ending by end of June 2020 for three scenarios under consideration:
FREE-FOR-ALL: No social distancing measures are followed, and normal life is assumed;
MODERATE DISTANCING: 1 out of every 4 people moves freely or resumes normal life;
EXTENSIVE DISTANCING: 1 out of every 8 people moves freely or resumes normal life. Forecast of the daily number of deaths (Graph 2).
The forecast is based on time-series analysis and uses the data before March 19 to predict the number of recoveries. The employed model assumes an initial death rate of 3% of the total identified cases, which increases to 6% once the total number of critical cases requiring intensive care exceeds 250 patients. The latter reflects the limitations of the healthcare system. The forecasted results do not consider confounding factors (such as lifestyle, environmental factors, consanguinity, etc.); however, the model is applied to Wuhan reported data and is shown to closely capture its trends.
Executive spoke over the phone with Samer Saab, interim dean of graduate studies and research and professor of electrical engineering at LAU, to learn more about the findings of the study, its limitations, and its implications.
Can you please briefly describe the study?
These are projected or forecasted numbers where I am looking at the trends; it is not exact science. I put forward three scenarios: if everyone will go out [the free-for-all scenario], if one in four people go out [the moderate distancing scenario], and finally if only one in eight people go out [the extensive distancing scenario].
The free-for-all scenario is where people decide to live their lives normally. If we had had an infinite capacity of hospital beds and intensive care units, then we would have a 3 percent death rate [under this scenario] but we don’t have that.
I am assuming that when the number of infected people who need treatment in intensive care units (which is typically 10 percent of those infected) goes beyond 250, then the death rate would be 6 percent [due to the lack of treatment for COVID-19 and assuming that some hospital beds will be needed for other urgent cases].
How did you arrive at 250 persons as the tipping point?
This is an estimate, based on what we hear about many of the hospitals not being prepared. If I change it a bit here and there, it is not going to change the numbers a lot. It’s more to give an idea.
The advantage of the free-for-all scenario is that after June/July, you don’t have to wait for a treatment to be developed because most people would have been infected and those who survived would likely develop immunity—though at this stage there are still many unknowns, like if the virus will be seasonal. Many governments initially tried to follow this scenario, as it would have the least impact on the economy with people able to work freely. Thinking has changed, however, as seen by recent measures in the UK to shut down schools despite initial resistance. The disadvantage of the free-for-all scenario is simple: Many people will die and health care systems will become overrun.
Whereas in the second and third scenario, if we maintain distancing until June/July, then it is possible that a treatment would have been developed and would be accessible to most people. If they get the virus then, they would be able to take medication and not suffer as much.
So this is the message we are trying to send to people: Please stay home and let us buy time. We are also trying to send a message to the decision-makers so that they don’t think that we will be able to open schools and universities and basically go back to normal in the next two weeks.
What’s the methodology used for this study? What model are you basing it on?
I used time-series statistical analysis [to mark data trends over time]. However, it is not straightforward like a typical time-series: Whenever more people get infected, the rate of spreading becomes lower and lower. In urban areas—which is the case for Lebanon as most of us live in urban areas—each person can infect three people, while in the rural areas the rate is less (1.5 persons). But at the end, it doesn’t matter much because it only affects how fast we will reach the peak and not the figures themselves.
But, there are a lot of factors I didn’t take into consideration. A lot of people will still go to work or go out if their family is relying on them to not go hungry, right?
How feasible do you think it is, both psychologically and economically, to practice extreme social distancing until June?
Excellent point. I cannot answer this question but I feel there are positive vibes and people are helping each other; they will not let people starve. But there will be bilateral damages, such as to the economy.
Still, 153,885 deaths in the free-for-all scenario versus 454 in the extensive distancing one is no joking matter. If our hospitals are overwhelmed, then our doctors will have to play God and decide who dies or not, which is catastrophic.
Were you able to account for the issue of under testing and potential under reporting in Lebanon in the study?
Because we are publishing under the name of the Lebanese American University of Beirut, we had to rely on the official data reported by the government.
However, what would change—if we assume that there are more cases than what is reported—is the date of the peak. We would reach the peak faster if we had more cases than what is reported.
What are the limitations of the study?
As I said before, there are many assumptions I had to take. The methodology I used does not take into account environmental or lifestyle factors, which could mean that more people don’t comply with distancing. The psychology factor is also important here: Will people stay home until June? They will probably cheat. People think the second case scenario is reasonable or doable (in terms of quarantine measures) but 4,259 people would still die in it and that is a big number.
We don’t know much about the virus and there are many unknown factors related to it so we need to stay at home and be patient. This outbreak is not going to end soon and the worst is yet to come. We need to buy time to learn more about the virus so less people will die.
This interview has been edited for clarity.
Pediatrician at the AUB medical center, Dr. Rana Sharara, answers all your questions when it comes to #COVID-19 and children.
Interviewed by producer and host of Y Chats, Youmna Naufal.
We are in the midst of a global pandemic. The novel coronavirus that has swept across the globe is having far reaching ramifications for our health systems and for the global economy. For Lebanese students, though among the demographic least likely to suffer severe health consequences from contracting COVID-19, the impact has been immediate and detrimental to a school year already besought with difficulties. Some institutions in Lebanon had sent students home before the Ministry of Education and Higher Education made the decision to close schools and universities on February 28 until March 9, a decision that has since been expanded into a country-wide lockdown until March 29. Lebanese students who were already in catch-up mode from the school disruptions at the height of the protests last year are now facing further disruptions, cancelled exams, and increasingly uncertain futures.
This crisis requires drastic measures. In order to slow the spread of the virus and flatten the curve (keeping cases at a manageable level so not to overwhelm healthcare systems) the Lebanese government has asked Lebanese to stay at home where possible. But these measures, while necessary, are also creating a crisis for our education system. Questions administers, teachers, students, and parents are now facing are those over the fate of this academic year, of standardized tests, and of the viability of our current education system in the long run should pandemics such as COVID-19 become more frequent occurrences.
Comparatively speaking, Lebanese schools and universities have reacted quickly to this crisis and the need to ensure that students continue to learn and progress from home. The answer, at least as a short term measure to ensure continuity and stability in Lebanese education for all learners amid limited resources, was distance learning. Across Lebanon, stakeholders and school and university directors have instructed their teaching staff (supervisors, coordinators, and instructors) to swiftly activate an online learning system to connect institutions to parents and students through educational platforms.
Several platforms have been adopted to ensure pedagogical follow up with students and minimize the disruption to their learning. Among them are: Google Classroom, a free web service that allows teachers and students to easily share teaching materials and teachers to continue grading students work; Zoom, a remote conferencing service that is being adapted by teachers to act as virtual classrooms; PRONOTE, an online system that links the school to the parents through a platform called KNED, which is being used by schools under the Institut Français du Liban umbrella; and ELearning, an app that allows for active learning through voiceover recordings or through use of Microsoft Teams and BBB (BigBlueButton), a communication and collaboration platform and an open source web conferencing system respectively.
Moving classes to an online, distance learning model was an immediate remedial solution to potentially long lasting problem, but it was not a universal solution. While many schools and universities have the capacity to teach students through remote learning, others do not, particularly less advantaged schools that are in remote areas with limited internet access or those experiencing severe financial restraints. Some schools simply do not have the technological capacity to adopt this model, others suffer from a shortage of resources (financial and staff) that compromises technological ones. Others still are currently working on building platforms that will be able to handle all lessons until the crisis is contained.
Another barrier to offering courses online is the scarcity of instructors who are trained in distance teaching and learning. Educational institutions did not foresee this crisis and so did not provide the adequate professional development to their instructors. This might come as a wakeup call to those who still believe that traditional methods of teaching are the one and only way to transmit knowledge.
Even when students have the means to connect online, sometimes you can have thousands of students trying to connect to a school or university’s system at the same time, crashing the server and preventing access to lessons. Other students may find connecting to the internet difficult or impossible, especially if they live in a region that is facing several crises at the economic and health levels.
Increasing the bandwidth is paramount, but difficult in a country like Lebanon where connection speeds are notoriously slow. The Lebanese government did announce that it was planning to double the speed of the internet as well as the capacity of consumption for internet service subscribers with the official Ogero network until April to encourage people to work from home. This is a good first step, but many Lebanese are not subscribed to Ogero.
Given the economic and financial crises that the Lebanese were facing prior to the coronavirus outbreak, is it even feasible to expect the government, blogged down as it is in its competing priorities, to open lines of access for students to compensate their inability to attend schools and universities. Is it capable of allocating budgets for training and equipment to less advantaged schools and universities who cannot cope with moving to an online model?
Holy Spirit University of Kaslik (USEK) launched a campaign on March 18 calling for all students to have access to free 4G internet to help with online learning amid this nation lockdown. On its Facebook page it posted: “Facing the huge difficulties of online teaching due to slow and interrupted Internet connection, free unlimited mobile data bundles for online teaching and e-learning tools are highly needed for all Lebanese students in these times of crisis.” The university is encouraging other educational institutions to back this campaign and has launched the #4G4education hashtag.
At the home level, not all parents have the capacity to encourage online learning for their children. Perhaps they do not have the means or the knowledge to help them to connect online. In these circumstances, relying on tutoring or on the help of relatives and neighbors who are more tech savvy is key, though increasingly difficult given measures to keep Lebanese at home where possible.
Distance learning is the best system we can adopt given the circumstances we currently face. It is possible, if adopted to the best of our abilities, that this model could help rescue what is left of the current school year. If, and assuming they will, schools and universities reopen and immediately put in place a summative assessment that would give them a reliable idea of what their students have grasped through distance learning. In the meantime, online instruction needs specific monitoring to insure its efficiency and equity toward all learners. Control should be implemented first on the level of the school/university administration, then at the level of supervisors, coordinators and finally instructors. Some schools in Lebanon have set a specific tracking time for online activities to monitor the interaction of teachers and learners. For example, the Elearning app used at USEK is tracking who is connected and who is not.
Teachers and lecturers should also be aware of compensation inflation and avoid overloading students with work as a reaction to the new distance learning method. We are not in a race here. We are in survival mode, where quality matters more than quantity to insure a good grasp of the subjects on the learners’ part and also to avoid exhaustion on the instructors’ part, who are familiarizing themselves with the world of distance learning. It is true that almost anything can be taught online, but teachers must ensure that concepts have been properly explained and mastered before inundating students with exercises and activities.
Emergency situations require emergency measures, such as alleviating the curriculum of supplemental information without jeopardizing the quality of instruction. What is crucial now, is to make sure to vary activities to keep distance learners motivated. Similarly, when schools reopen, we must implement a solid revision of concepts covered online to ensure proper knowledge acquisition.
This crisis has placed educators in charge of curriculum design and strategic planning, forcing us to rethink our teaching strategies and encouraging us to be selective by providing our learners with the type of information that is absolutely critical to have. In the long term, we should be asking ourselves why this is not common practice all year round, crisis or not, to lift up the load of unnecessary information off the shoulders of our young students.
If we look at the spread of coronavirus from a purely health perspective, it is true that the elderly and those with underlying conditions are the most at risk. But there are impacts beyond health, and unless we preserve a sound education system it will be detrimental to the well-being of all our children. We have to protect the right and access to education for our future generations. This should be the main concern of educators.
The key issue here is to know how to adapt to the crisis, to a new mode of teaching and learning. This crisis could be an opportunity to help us achieve a 21st century profile for our learners (a well rounded, critical thinker, problem solver, and creative). The ultimate goal is to reset our educational priorities by offering our learners only what is pedagogically sound to help them face 21st century challenges with the power that comes from knowledge.
At the time of writing (March 12) the number of known coronavirus infections had exceeded 126,000 and that the death toll was above 4,600 persons. Governments around the world have dedicated increasing medical, social, humanitarian, and financial resources toward bringing the threatening virus under control. At the same time, worries over the economic impact of the global pandemic have geared up to the point when the metaphor of a black swan (an outlier or rare financial crisis) has been employed by some financial experts.
In terms of what (rather than a black swan) might more neutrally be dubbed a combination of a pandemic and potential global recession, companies around the world are showing impacts, from manufacturers in China and South Korea to the internet giants on the west coast of the US, and banks and financial firms in New York and London. The latest new and massive disruption to the world economy by March 12 was an announcement by US President Donald Trump that passenger travel from Europe would be severely restricted. With equity markets tumbling further as the second week of March got underway, it was impossible to estimate where the corona fall would reach its bottom. Publicly traded companies in developed markets saw the share prices drop in broad ranges, led downward by listed tourism and travel companies, such as airlines and cruise operators but also event management companies. Travel and tourism companies, listed or not, anywhere in the world concomitantly experienced weakened demand besides falling market valuations.
Thus potentials for drastic contractions of business in countries heavily affected by the coronavirus outbreaks, such as China and South Korea, are emerging in tandem with a parallel contraction of global business. According to customs data released in China last month, exports fell by 17.2 percent and imports fell by 4 percent for the first two months in 2020 when compared with January and February of 2019. Expectations cited in media went as far as speculating on economic growth dropping to as low as 2 percent in the first quarter of 2020, compared with 6 percent growth in Q1 2019. The associated temporary stoppages of corporate activity have, moreover, been estimated to deny the global economy supplies of components of up to 50 billion dollars just in the month of February.
Among major European economies, industrialists in Germany expect a continued recession in their sector. The manufacturers’ association Bund Deutscher Industrie, which already had to deal for the last six quarters with contracting production, said recently that it expects German industries to be stuck in recession throughout 2020, attributing this assessment not to political factors such as trade conflicts with the United States but to the global spread of the coronavirus and its economic implications. In the same vein, financial analysts in Italy have uttered expectations of a national recession in 2020. In Britain, expectations are for a stagnation in the first and contraction in the second quarter, while analysts in France also expect a recessionary development. On the bottom line of global economic expectations, economists in Germany, the UK, the US, Japan, and other G7 countries were speculating about a prolonged global recession engulfing OECD countries, with minor economic powers and small countries likely to be dragged along for a bad ride.
The idea of a recession is deeply embedded in the mind of the average economist. This is to say, academic economists theorizing about cycles of expansion and contraction have been wedded to such concepts for at least a hundred years, since research of business cycles by scions of the profession—persons such as Nikolai Kondratieff, Wesley Mitchell, Arthur Burns, Simon Kuznets, and Joseph Schumpeter—elevated business cycle theories into international economic orthodoxy. Of course, cultural knowledge of multi-year economic cycles is much older. The central academic temple with air of quasi-religious authority on business cycles in the US, and with it expectations of recessions, is the National Bureau of Economic Research (NBER), which regularly surveys large numbers of economists what their expectations are in this regard.
Last year, around the middle of 2019, NBER surveys showed a heightened predilection of economists to expect a recession—but basically a garden-variety one, nothing undue or severe—to hit the US at some point in 2020, most probably toward the year’s end. By reckoning of many economists later in 2019, however, the onset of a recession in 2020 seemed counter intuitive to the upbeat economic sentiment that was prevailing then—when the mood was once again shifting to increased optimism over the good performance of US stock markets and promising data on economic trends in production and employment.
But in the first quarter of 2020, widespread expectations of a recession could not come as total emotional shock, especially taking into account not only data on the economy but considering external impacts such as a natural catastrophe, including an epidemic. Catastrophes or wars have long been understood to constitute potential triggers for a contraction and alteration of the business cycle, which in itself is not predictable in terms of its periodicity of shifting between expansions and contractions.
(By the definition of the NBER a recession does not consist of two or more not consecutive quarters of linear GDP contraction but rather the period between the top of a business cycle and its trough, consisting of “a significant decline in economic activity spread across the economy” that lasts for more than a few months and is usually reflected by developments of real GDP, real income, employment, industrial production, and wholesale-retail sales.)
Still, it is noteworthy that global moods have been fluctuating from initial optimism over abilities of markets to rebound and continue their long, slow expansion of the past ten years (the beginning of the latest expansion period in the US economy according to NBER was in June 2009) to concerns over a prolonged global economic downturn, or recession. This recession may now be spreading from large producer countries in East Asia, due to skyrocketing fears of epidemics in previously complacent “advanced” societies at the top of the global wealth roster of high GDP, plus nervous financial markets in the US, Europe, and Asia. Although central banks are responding across developed economies, many observers concur that the banks’ capacities to soften the corona impact may be minor, due to generally challenging monetary environments that stand against intervention capacities of these banks.
The trigger for all this involves the coronavirus, which, although far from being lethal in direction of an extinction level event in the manner of a scientific horror movie, was discovered to be highly infectious and capable of spreading despite immense efforts of containment by quarantining entire provinces and metropolises. Surrounded by a combination of justified medical concerns and an “infodemic” (a term used by the World Health Organization) entailing unwarranted panics, uncontrollable online rumor mongering, and outpourings of criminal energy by some who seek to cash in on those rumors and fears, the virus outbreak’s impact on economic activity negates some recent signs of recovering national strengths—such as the improvements in the US economy, moderate growth in China and, albeit feeble, post-Brexit optimism in the UK.
But even more concerning might be the impact on countries that in the current global GDP growth scenarios have already been marked by worrying signs of debt, anemic growth, unemployment, or recession. These run from weak economies in emerging markets like India, Brazil, and Turkey to political troubles in Iran, Iraq, and a number of developing and least developed countries under autocratic rule. Added to those are economic upheavals driven by social inequality and dissatisfaction in Chile and Hong Kong, next to deep troubles of economies in hotspots of inflation and debt like Argentina, Zimbabwe, Venezuela, and as of last year, Lebanon.
Disease is a scourge of humanity, no question about it, and new infectious diseases carry with them a combination of new health risks and even greater fears. This was the unmistakable case with the coronavirus epidemics and its races around the world in the first quarter of 2020. Still, the question remains puzzling: Why or how would a virus with the number of confirmed infections in the tens of thousands versus a global population estimated at 7.8 billion and the mortality rate—except for the highly aged—residing in the single percentage digits produce recessions that affect numerous countries?
Economically speaking, there are at least five downturn factors to the development of the coronavirus recession, which will affect individual economies, regional economic blocks, and the global economy. In a headline capture, these factors relate to both the real economy, and there specifically also to globalization, as well as the financial markets. This is an unusual pairing of factors when one considers that most of the notorious recessions of the past century were related to either speculation or brought on by financial crises.
In a more detailed tally, the multi-faceted factors that are fueling the corona recession, imply that it will be a potentially large and severe economic downturn—comparable in the words of some analysts to the Great Recession of 2008/9. These factors appear to entail the impact of the disease: preventive and cautionary measures on productive people and reduction of their full ability to work; supply chain disruptions; challenges to finances and debt situations of corporations, medium and small businesses; upheavals in equity markets; and some divergent developments in the sector with an overweight on sectors exposed to contractionary impulses versus sectors that are likely to realize gains from producing goods or services that see an increase in demand due to the virus.
To be still more detailed, the first and most direct response to the comprehension of a new and highly infectious respiratory virus (other than momentary stonewalling by Chinese and later Iranian bureaucrats against full acknowledgement of the dangers related to the coronavirus) affected people and their workplaces. Swathes of people—in case of China, millions in Wuhan, a mega-metropolis of ten million people, plus in the surrounding Hubei province with a total population of nearly 50 more million—were sent into lock down quarantines. Demonstrating the rapidity of change in political responses and issuance of quarantines was the example of Italy, where a declaration of restrictions on northern provinces were expanded into nationwide measures. Responses and containment attempts furthermore multiplied in form of restrictions of cross-border travel into countries bordering heavily affected areas. In a side note, in the second week of March new infections in Hubei province were associated with travelers coming from Italy and Iran, hinting at the double possibility that the spread of the virus in the original hot zone of infections is slowing while infected persons now are found among those coming back from countries with subsequent infection waves.
With workers asked to stay in home quarantines and movements of individuals being restricted, affected workplaces from factories in Wuhan and manufacturing plants in South Korea to a corporate office in Bavaria to Microsoft and Google sites in Seattle to churches, cultural attractions, universities, and bank offices in northern Italy had to implement closures that ranged from hours (for disinfection) to weeks of unscheduled vacations or home office work, with varying and not small concomitant results for employee productivity. Within weeks, these epidemically induced reductions in work and productivity spread around the world.
While theoretically of limited economic impact under the temporal nature of such extreme measures, the reduction of work productivity extending into several weeks and perhaps even the major portion of a quarter has repercussions on output that reverberate for many additional weeks or even months by impacting production and sales of goods.
A related and actually more severe economic impact to follow these local restrictions on manufacturing became visible in form of supply chain disruptions, as globally interdependent factories faced shortages of vital components in their productions even if they themselves were not affected in form of having to keep employees at home. Supply chain disruptions in the globalized economy generated ripple effects of inabilities to maintain production at desired levels across multiple countries due to non-deliveries of parts and components under supply chains that have grown to unprecedented length, complexity and—as is visible now—vulnerability. Thus supply chain disruptions caused by non-concurrent corona production outages and transportation problems have impacted globally industries from mobile phone producers to vehicle manufacturers to the point that some industry leaders in developed economies started advocating against hasty abandoning of cost-saving lengthy supply chains.
The supply chain disruptions at multinational corporations as well as emergence of bottlenecks in industries that affected smaller enterprises translated quickly into financial problems ranging from payments of suppliers to servicing loans and credit lines by the affected companies, which in turn sent central banks and fiscal policy-makers into overdrive of initiating monetary and fiscal measures from reduction in the prime interest rates by the Federal Reserve and the Bank of Canada, and likewise steps by the Bank of England, to releasing of special credit facilities and billions of dollars in emergency measures and financial relief such as tax holidays for affected companies across countries, beginning with China where the People’s Bank of China initiated support for the local economy with a February 2 announcement that it would perform reverse repurchase operations worth 1.2 trillion yuan renminbi ($173 billion), alongside other financial relief operations mounted on local to national levels. Other countries to pass or say they contemplate fiscal measures to date include the US (an $8.3 billion package was adopted in Congress, of which $3.1 billion were earmarked to the federal department of health and human services), Japan, the UK, Australia, the European Central Bank (the ECB is expected to proclaim stimulus measures on March 13) and various EU countries. In Hong Kong measures even extended to provision of cash payments to residents (known as Santa Claus or helicopter money) in hope of creating economic stimuli that would balance Hong Kong’s losses of economic activity due to demonstrations and now health-related reductions or absences of consumption.
Correlated to the real economy’s sufferings were not only financing difficulties but also significant falls in equity markets. Seeing both economy-wide contractions in equity price or many companies and double-digit drops of stock market indices, billions could be lost in market capitalizations. After an upbeat mood early in 2020, markets dropped from February highs in the developed world and saw trillions of dollars wiped away from the global equation of wealth and corporate valuation in the first part of March. These losses in turn—under the concept of equity prices being key drivers of corporate investments into production, facilities and labor—spell trouble in form of negatively impacting willingness to invest by the listed companies, as well as signal possible reticence of households to consume.
Finally, but also importantly, in specific sectors, recessionary impacts became visible immediately. Also reflected in their market capitalization and share prices, large airlines and tourism economy players from hotels to cruise companies saw dropping demand, facing the need to revise flight schedules and frequencies as well as reduce their capacities that they had allocated for expected levels of corporate and leisure travel in 2020 that will not be fulfilled. Hospitality enterprises from multinational holiday operators to SME-sized restaurants likewise were forced to revise their expectations that usually can count on office workers on lunch break or on Chinese tourists visiting the sites from Bali and Macau to Sydney, San Francisco, Paris, Rome, and London. Event organizers from large international trade exhibitions and conferences to cultural happenings and sports events had to cancel activities planned for the month of March and April and uncertainty has even risen over the staging of the multi-trillion dollar global sports spectacle of the 2020 Olympic Games, which are planned to be staged in Tokyo, Japan.
One can expect some business to also derive increases in demand due to the coronavirus eruption and a few to capitalize on the fears that relate to the new health threat. In the latter category, shady communications outfits and providers of useless and fear-driven goods or services will reap criminal revenues. On the side of respectable services, some remote services—from home schooling and online tutoring to delivery services for daily consumables—will likely benefit in varying degrees (some of the added gains might be counterbalanced by higher cost of sick leaves) but this will not affect the economic equation enough to provide an equilibrium to the downturns of tourism, travel, conferencing, event, and hospitality services. This inability of balancing losses with new windfall gains must be expected, especially if the trade-offs between higher demand for some manufactured goods such as home entertainment, medical devices manufacturers, pharmaceutical companies, healthcare services, and preventive disinfectant and protective supplies providers are counter-weighted against weakened demand for cars, smartphones, restaurant supplies, airplanes, oil and other commodities, and reduced production capacities due to supply chain disruptions.
Whatever can be expected to disrupt the global economy in upcoming quarters in form of the usual suspects—whether trade disputes, inequities brought on by neoliberal fixations, nationalism and populism nourished by social fears, parochial sentiment or even patriotic ambitions, economic fallout from the need to mitigate climate change, elections, selfish politics, and now the corona recession—the detrimental or difficult-to-mitigate impacts can hardly be estimated as far as key national economies and global interrelations at a point when even the impact of a corona recession in the first half of 2020 might be felt globally for an unforeseeable number of months.
Furthermore, it seem far from inconceivable that the economic impact of the coronavirus outbreak, as well as any other recession scenario that may play out across multiple countries in the coming months, could be damaging to aspirations of achieving crucial social goals such as the sustainable development goals. Such follow-on problems from the fight against hunger and poverty to the long-term battle to improve control of diseases could affect the global poor more than—as of this writing—the coronavirus’s hard impact in terms of increased mortality rates in even the most severely affected societies.
Many of history’s more notorious recessions—among the overall immeasurable number of sectoral, national, and transnational recessions since the enigmatic agrarian revolution of multi-millesimal age or even since the first industrial revolution some four centuries ago—were rooted in speculation (such as the famous tulip mania) or in finance and the overbuilding of asset values in “bubbles”—such as asset bubbles involved in the knickerbocker trust recession over a century ago, the 1997 recession in southeast Asia or the “subprime” real estate bubble in the United States between the early 2000s and the bursting of this bubble in 2007/9.
As such, many noted recessions began in the financial world. By contrast, the corona recession of 2020 seems to involve factors in the real economy of production and repercussions to globalization and the complexification and extensions of supply chains thereunder alongside with financial elements involving buildup of corporate debt and equity asset bubbles on stock exchanges. This might then justify seeing the corona recession as an outlier to the usual recessions with an extreme impact that could transcend or be qualitatively different to recessions related to classical boom-bust swings or overheating asset prices.
In longer-term outcomes and structural ramifications, a global corona recession starting in 2020 and extending for who knows how many quarters could lead companies and countries to rethink some supply chain aspects and result in shortening of these chains; it could take some of the heat out of tourism markets that had been stoked by China’s travel hunger that rose in parallel to the country’s wealth increases. It could exacerbate nationalist economic orientations and populist fear responses to alien cultures.
However, taking trends and behavior patterns of people under more careful consideration, it is at the same time almost unimaginable that a corona recession, even if severe, could radically dial down globalization and supply chain interconnections, international lust for foreign travel and tourism, or clamp cultural exchanges shut. Shorter term ramifications for some of these activities—which correspond to human desires for cheaper and better goods, fun and discovery of the stranger—will be their minor adjustments, plus economic repercussions that will hit some companies, industries, and countries which are overextended and candidates for capitalism’s creative destruction.
However, in the scouting of economic horizons and the possibility of further unexpected disruptions of economic life, additional factors may have to be considered. As human interaction with planetary environmental factors is both intensifying and lacking in responsiveness, the future is likely to experience new contributing factors to economic recession arising from natural catastrophes, including recurrent patterns of sudden epidemics and the impacts of climate change. The insurance industry—led by the European behemoths in the reinsurance business—already started worrying years ago about the accumulation of risks in coastal regions around the world that have been candidates for heavy impacts of feared rise in sea levels.
Aggregation of risks in scenarios where increasing urbanization and continuing globalization of supply chains and integration or interdependence of financial markets and real economies are driving forces, appear logical in the continuation of global integration and concentration of economic and financial power, market dominances, and corporate wealth that is not mitigated by redistribution and diversification efforts.
Moreover, just as intensifying business cycles of indeterminate duration but relentless economic interwoven-ness might be on the horizons, the cultural cycles of exposure to epidemics under conditions of ever increasing competition for overlapping living environments of animals and the human species are to be considered. Over the past few decades, hunting of—protected or not—wildlife as well as the exploitation of domesticated animals such as cattle and chicken have been associated with formation of viruses and outbreaks of new diseases. Such epidemics seem to recur in cultural biological cycles that correspond to expansions and contractions of concern over self-protection, regulatory controls, and enforcement of veterinary standards—which gives every reason to speculate that such epidemic cycles will also in future be observed and contribute to economic recessions.
The figures for coronavirus in this piece were accurate as of March 12. As it is an ongoing situation these numbers will rise.
Hardly anyone in Lebanon has been left unscathed by the economic crisis, the worst since the end of the civil war in 1990. Its impact has been most devastating on communities already marginalized prior to the crisis. The situation for the estimated 250,000 migrant domestic workers, for instance, who are excluded from labor law protections, has gone from bad to worse.
Prior to the economic crisis, individuals and businesses used US dollars and Lebanese lira interchangeably at the official exchange rate of LL1,515 to the dollar. But as economic growth stalled, and remittances from the Lebanese diaspora decreased (dropping by 7 percent in 2017), dollars became increasingly scarce. Banks introduced informal capital controls, restricting the dollars people can withdraw or transfer abroad. As a result, the value of Lebanese lira has dropped by almost 40 percent in the unofficial market since October 2019, and the price of imported goods has risen exponentially.
Businesses have either been forced to close or have drastically reduced their operations. InfoPro Research, a Beirut-based market research and polling firm, estimated that between October 2019 and February 2020, more than 220,000 people lost their jobs. They also estimated that one third of all companies have reduced their workforce by 60 percent, and half of the companies surveyed have reduced salaries by more than 40 percent.
Domestic workers, who lack any protections under the law and have virtually no access to judicial redress, have also suffered severe consequences. Many domestic workers have reported that their employers slashed their salaries—if they paid them at all. But even the more fortunate workers who are still receiving their salaries in full have seen their money’s value decrease by almost a third as the Lebanese lira depreciates. A worker who used to earn LL300,000 per month could transfer $200 to her family abroad. Now, the same salary can get her as little as $120 at the unofficial exchange rate, which fluctuates day to day at the sarraf (exchange shop). Projections indicate that the lira may depreciate even further.
Making matters worse, even though some migrant workers stand to effectively lose out on half of their pay or more, they cannot readily leave their employers or advocate for better pay or conditions. Their presence is regulated under a kafala (sponsorship) system—which former Labor Minister Camille Abousleiman likened to “modern-day slavery”—under which they cannot leave or change jobs without their employer’s consent. Giving employers this level of control over workers’ lives has led to an array of abuses that Human Rights Watch has been documenting for years, including non-payment of wages, forced confinement, no time off, and verbal, physical, and sexual abuse.
In December, the Philippines embassy in Lebanon said that more than 1,000 Filipino workers who “have recently lost jobs and income opportunities” registered for their free repatriation program. At the time of writing, no other embassy has offered similar services to its nationals in Lebanon.
For years, the Lebanese government has been shirking its duty to protect migrant domestic workers, leaving employers, recruitment agencies, and embassies to manage the working relationship—often with disastrous consequences for the workers. As the economic crisis worsens and the situation of migrant domestic workers becomes even more precarious, the government should no longer look the other way.
Last year, a colleague and I represented Human Rights Watch in a working group headed by the International Labour Organization and established by then-Labor Minister Abousleiman to dismantle the kafala system. In July, we sent the minister our recommendations for legislative and policy changes. If these changes were carried out, they would help create a fairer labor relationship, including by allowing domestic workers to choose to terminate their contract. However, the minister resigned soon after the outbreak of nationwide demonstrations, before he had a chance to see these reforms through.
The new Labor Minister, Lamia Yammine, has an opportunity to correct this historical injustice. Dismantling the kafala system will not solve the economic crisis, but it will ensure that the tens of thousands of women who left their homes and families to work in Lebanon are not left to bear the brunt of it.
Drilling of Lebanon’s first offshore well started on February 27. All eyes are pinned on Byblos 1, waiting to find out whether it is a dry or a commercial well. It will take at least three or four months before there will be a conclusive result, however. What is critical to understand is that this is merely an exploration phase. Lebanon has not yet joined the new group of oil and gas producing countries—in fact there is still a chance it might never do so. What is even more critical to realize is that even if the stars align for Lebanon and offshore oil and gas is discovered—and at a volume that would make its extraction commercially viable for energy companies—that becoming a new oil and gas producing country will take time.
Take Guyana as one sobering example of the length of time it can take to see results. It was only after 16 years of exploration and 40 dry wells that Guyana made its first offshore oil discovery in 2015. A similar example in the Eastern Mediterranean is that of Zohr field, an offshore natural gas field located just off the coast of Alexandria, Egypt. Ten years of failed attempts and a number of dry wells in the Shorouk Block led France’s Total to walk away and sell its share to Italy’s Eni. Two months later, Eni made the biggest discovery in the Eastern Mediterranean—the Zohr field has an estimated 30 trillion cubic feet of gas, making it likely far larger than nearby Leviathan gas field offshore Israel. What these examples tell us is that exploration for oil and gas takes times, patience, and a degree of luck.
At a time of complete economic meltdown and critical liquidity shortages, it is expected that Lebanese politicians will try to position the potentially lucrative oil and gas sector as Lebanon’s savior in the making. This is exact opposite of what they should be doing. Unleashing expectations, in these desperate times, could trigger use of a resource-backed borrowing mechanism—as was witnessed in countries such as Mozambique. Such loans usually prove detrimental to developing countries, especially those using their future revenues from natural resources as collateral. For a country such as Lebanon, which is already nearing its breaking point because of the heavy debts, resource-backed borrowing could prove to be the straw that breaks the country’s back.
What Lebanon can do right now, while waiting for a potential discovery of offshore oil and gas, is engage in certain immediate reforms that can help to ensure that all its citizens have an equal opportunity to economically benefit from current exploration activities.
A number of services and goods are expected to be provided across the supply chain to support the exploration phase. Subcontracts are usually awarded by the rights (license) holders during this stage to companies that are able to offer a number of services. Examples of such services are a local logistics base, platform supply vessels—such as boats to transfer equipment to and from the drill vessel—and a supply of marine gas oil. It is vital that the names of all companies currently subcontracted are revealed and that beneficial ownership disclosure is implemented as soon as possible.
Ensuring that no politically exposed persons own the companies providing goods and services during the exploration phase will help to ensure that the Lebanese have an equal economic opportunity to benefit from this nascent sector. Moreover, beneficial ownership disclosure in Lebanon is required by law, as per article 10.7 of Law 84 (2018) on enhancing transparency in the petroleum sector.
A journey of a thousand miles starts with a single step and finally, at the tail end of February 2020, we have started on the road toward offshore oil and gas discovery in Lebanon. But nothing is guaranteed. Managing our expectations and ensuring from the get-go that Lebanese have equitable economic chances of benefiting from this sector will help us not to falter down the line if a commercially viable well is discovered in Lebanese waters.
To overcome the current crisis, the new Lebanese government will need to develop innovative policies—quickly. Currently, authorities are following a conventional model by seeking ideas from a bureaucracy of civil servants and consulting agencies. Perhaps a more effective way for the government to find solutions is to engage citizens directly via a digital crowdsourcing campaign.
Crowdsourcing is obtaining information and ideas by asking for input from a large group of people, often sourced via the internet. It is based around the theory of collective intelligence, where Swiss researchers estimate that a million individuals working independently have a 97.7 percent likelihood for solving any problem.
The most basic form of crowdsourcing is to run an open online contest for solutions to specific challenges. The relevant ministry drafts and posts a challenge for citizens to respond to with ideas. The proposals can either be voted upon online by peers or judged by a selected committee of specialists. A successful example of this model is challenge.gov, a platform developed by the United States for members of the public to compete to help the government solve public problems. Since 2010, the site has run nearly 1,000 challenges to find solutions for more than 100 federal agencies.
This competitive crowdsourcing process is simple, cheap, and effective—but it limits innovation. By competing, citizens are not incentivized to work together and build upon each other’s proposals.
A more complex, collaborative model could yield better results. In 2013, the Finnish environment ministry invited 700 citizens to participate online to reform the off-road traffic law. Using a blend of online engagement platforms, citizens shared around 500 ideas, 4,000 comments, and 19,000 votes throughout the process. A Finnish Parliament review of the exercise found it beneficial to democracy by 1) providing access to a large pool of knowledge for policy-makers, 2) opening an avenue for civic participation with the potential to increase citizen engagement, and 3) providing a point of contact between citizens and lawmakers that was likely to increase trust—if done well. The paper did caution, however, that crowdsourcing was not an end within itself and would need to be directed toward a specific goal or policy target.
More complex and collaborative crowdsourcing models are more difficult to run and more susceptible to design flaws. How decisions are made, who gets to participate, and how participants contribute could improve or hamper the process. Online crowdsourcing could also marginalize those who are not digitally literate or have no access to the internet.
As a result, a Lebanese model should follow a merged online and offline concept. A platform where citizens can submit ideas should be developed, with the ideas voted upon publicly and filtered. In parallel, specialists across the Lebanese community, both locally and globally, could be invited to form large, digitally-enabled panels to develop expert proposals informed by citizens’ proposals. Ultimately, these proposals would be submitted to government actors as prospective policy solutions to be debated internally, and implemented.
A 2017 paper, published in the bimonthly journal the Public Administration Review, found that “properly designed crowdsourcing platforms can empower citizens, create legitimacy for the government with the people, and enhance the effectiveness of public services and goods.” Applying crowdsourcing solutions for Lebanon could yield multiple benefits. First, Lebanon has exceptional talent. Whether locally or abroad, members of the Lebanese community are innovating and pushing the boundaries of science, technology, and the arts worldwide. The caliber of solutions they submit could be much better than those proposed by a government committee or consulting firm. A digital, open approach would bring the estimated 8 million-strong Lebanese diaspora directly into the governance process, allowing the crowdsourcing campaign to leverage expats’ knowledge about successful solutions implemented abroad.
Second, crowdsourcing innovation could increase faith in the new government from a skeptical public. By providing citizens with an open, transparent space to discuss problems and contribute solutions, the Lebanese have an alternative means to express themselves beyond protesting. Such a move would shift the conversation from what is wrong and who is to blame to how to solve our problems.
Finally, a progressive digital crowdsourcing campaign would send a positive signal to the international community. It would position Lebanon as a pioneer in digital governance, willing to try innovative new ways to overcome its crisis, as well as highlight a real commitment toward democratic inclusion in regulatory reform.