The first duty of government is to protect the powerless from the powerful.Hammurabi Code
The events of this week in Beirut are a sad reminder of what can happen when a government – along with the rest of the political actors in a country – ceases to be efficient in its operation to the point of not being able to carry out the most basic security functions.
What at first looked like a terrorist attack is revealing something even worse: a tragedy of cataclysmic proportions caused mainly by corruption and government negligence. How is it possible that a cargo of nearly 3,000 tons of ammonium nitrate was never transferred to a safer location after being seized from a Russian ship more than six years ago? What leads a government to reach such levels of inefficiency and passivity? According to a report by The Guardian, Beirut port personnel warned several times in writing of the enormous danger of keeping this merchandise in their warehouses. Those warnings even reached the judiciary, but no one ever did anything.
There are several similarities between the challenges Lebanon faces and those we face here in Mexico: On transparency issues, for example, Lebanon ranks 137th while Mexico ranks 130th on Transparency International’s list. According to this same list, in Mexico 34% of the population reports having had to pay a public servant in order to obtain a service in the last 12 months, while in Lebanon that percentage is 41%. Although Lebanon’s economy is much smaller than Mexico’s, its per capita income at current prices (2019, nominal, World Bank) is close: $ 7,784 USD in Lebanon versus $ 9,863 USD in Mexico. Finally, according to the World Justice Project’s list on Respect for the Rule of Law, Lebanon ranks 96th out of 128 countries, while Mexico is 104th. Just for the record, Denmark, Norway and Finland occupy the first three places. on this list, while the Democratic Republic of Congo, Cambodia and Venezuela occupy the bottom three.
The World Bank estimates that this year 50% of Lebanon’s population could fall below the poverty line. Even before the Covid-19 pandemic began, the Lebanese economy had already entered a crisis. The Lebanese pound has devalued 85% in the last twelve months and inflation is beginning to spiral out of control, reaching rates of 50% per month and perhaps more than 600% annualized. From being the “Paris of the Middle East”, Lebanon could very soon become the Argentina or Venezuela of the region. Beirut has already reached out to international financial institutions to request financing to help resolve this crisis. However, institutions such as the International Monetary Fund have made the implementation of structural reforms in the public sector a condition for initiating dialogue, particularly in the fight against corruption.
Lebanon today teaches us many things: Having an efficient and functional government is not a luxury, but a matter that can be the difference between life or death. Building a country’s prosperity takes many years, but destroying it can happen in five minutes. Having healthy competition between different political forces in a democratic environment is essential to reward or punish our leaders through voting. Corruption, negligence, and absolute power go hand in hand. As business people, we have the responsibility to raise our voices to highlight these issues. Let’s not allow these lessons to go unnoticed.
Managing Partner of Nuricumbo + Partners. His work as a consultant has focused around CFO services and challenges, in companies of all sizes, both in Mexico and abroad. He began his career at PWC. Later, he held the position of internal audit manager for Young & Rubicam and The Interpublic Group, two international advertising groups, working for five years in New York City and performing audit projects in many countries.