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Economy

Lebanon’s economy minister blames Beirut blast on ‘incompetence’ and ‘stupid’ decisions

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Raoul Nehme says he has no doubt that criminal negligence within successive Lebanese governments led to the devastating explosion that killed at least 135 people in Beirut on Tuesday.

More than 4,000 people were injured and huge swaths of the Lebanese capital city were destroyed in when 2,750 tonnes of ammonium nitrate in the city’s port area exploded.

The materials had been sitting in a Beirut warehouse since they were confiscated from a cargo ship in 2014, despite repeated warnings from customs officials that it was dangerous to leave them there. The government said Wednesday it is putting an unspecified number of Beirut port officials under house arrest pending an investigation.

Even before the blast, the country had been plunged deep into an economic crisis, with massive job losses, growing debt and shortages of electricity, water, and critical supplies — all exacerbated by political corruption and unrest, fighting along the southern border, and most recently, the COVID-19 pandemic.

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Nehme, a former banker, was appointed Lebanon’s economy minister in January by new Prime Minister Hassan Diab in an effort to meet protesters’ demands for a cabinet made up of people with specialized expertise, rather than partisan ties.

He spoke to As It Happens guest host Susan Bonner about how his country plans to recover from the explosion. Here is part of their conversation.

You just visited the site of this explosion. What was that like?

It was very sad because we have a number of casualties within our employees — missing people and dead people.

The site of destruction is really an apocalypse. It is something you cannot imagine. Everything is flattened in the place where the explosion happened. It sank into the sea. The silos are half felled, half of them unfortunately on some of our employees. And they are practically destroyed. I don’t think we will be able to recover any part of it, which is a big problem for Lebanon.

Warehouses burned down, destroyed entirely. Everything is destroyed. It’s absolutely terrible.

Everywhere in Beirut, we have major damage. Glass falling, doors broken, flying through the apartments.

Our ministry, which is in the city, is entirely destroyed. Nothing is left. Everything is broken. [In] my office … two windows fell on the place where I sit. Luckily, I was not there.

[Earlier today I was] in a meeting with importers and then supermarkets to discuss with them what they needed to make sure that we ensured supply. And we had to do a meeting outside of Beirut because we have no office any more in Beirut left that could be used.

And even five, six kilometres out of Beirut, a lot of glass is broken. In Beirut, stores are damaged badly and products in the stores [are] damaged badly as well.

So for the economy, it is absolutely terrible. We already had a major problem and now we have these huge losses. We cannot assess how much the losses are, but they are certainly in billions of dollars, and we just don’t have the means to resolve these issues. We have to count on international aid, heavily.

 

Destroyed buildings are visible a day after a massive explosion occurred at the port in Beirut. (Daniel Carde/Getty Images)

 

Minister, you describe this as an apocalypse. And yet the government knew that this explosive material was sitting in this port for six years in Beirut. How much responsibility does the government bear for what happened?

Personally, I think that there is a huge responsibility for the successive governments. And this is why we established that investigation committee. And we will go to the end. Whoever was responsible since 2014 until now will have to be brought to court. And really, sanctions should be very hard.

What happened is just unacceptable. And we will go to the end of this investigation. Whoever is responsible, we will go after him, whoever it is, wherever he is.

You say there will be an investigation, but critics say this goes beyond just individuals, that this shows the negligence, incompetence and corruption that runs deep in Lebanon’s political class. Would you agree with that?

Yes, we have a lot of corruption. But in this case, it’s not corruption that played a role. It is certainly incompetence. It is certainly, as well, people not understanding and assessing the risks.

It is bureaucracy and, frankly, in my opinion, stupid behaviours and decisions.

 

A woman looks out of the collapsed facade of an apartment, damaged by the explosion. ( Marwan Tahtah/Getty Images)

 

But, Minister, there were warnings that came from port officials over the years. Six formal letters to the country’s judiciary asking that this dangerous material be removed and, in fact, proposing ways to deal with it. How does this not go beyond just bureaucratic incompetence to criminal negligence?

What happened is criminal negligence. Absolutely. I fully agree with you. And it is criminal negligence from a lot of people.

But I don’t want to go beyond the investigation and say what my personal opinion is. The investigation will happen, and everyone that has a responsibility in it, everyone will have to be punished, will have to bear the consequences of what we lived through.

As for the economic consequences, that is your responsibility directly. How can you recover from this when … Lebanon was already dealing with virtual economic collapse, and now this?

Well, even before this, I was very clear, stating that without [the International Monetary Fund], we cannot get out of this problem and out of these issues.

IMF brings two things to the table. It brings financing, and [it] brings discipline. And that discipline brings in other assistance from the World Bank, from other countries, from [the International Financing Corporation] and so on.

So this is really what is important and what leads us to go to this program. But that was before. And now we have added this really cataclysm, as I told you. We just can’t handle it. We don’t have the means to handle it.

I’ll give you just one example. Where are we going to bring all the glass to replace windows? We just don’t have that. Where are we going to bring the aluminum? We don’t have that. All the doors, all the knobs, all the warehouses that were burned down.

We lived through a small Hiroshima…. It is really something that is just absolutely incredible.

So, what do you want me to say? It’s appalling. All day we have been working on emergency plans. And I have to say that we are very lucky that a lot of countries have been proposing that assistance, and [French] President [Emmanuel] Macron is coming tomorrow to Lebanon to prove once again that France is with us.

You talk about all the supplies that you will need to rebuild. Supplies will be forthcoming, as you say. But how do you convince the international community that you have the right government and the right bureaucracy and the credibility to do what needs to be done?

There is only one way to do it. Only one way and not two way. Not 19 ways. One way. We have to do the reforms that have been requested by the international community for over 20 years.

You are not a politician. You were brought in as a technocrat to help deal with the economic crisis. Do you personally believe that there is the political will to change the way Lebanon is governed?

I believe that the politicians will all have woken up to the problem enough to understand that we have now to stand united and work hand-in-hand to resolve all these problems. Because this is the solution. We have to stop bickering. Political bickering doesn’t take us anywhere. It takes us to a bigger problem.

 

Debris covers a street in Beirut after Tuesday’s massive explosion. (Marwan Tahtah/Getty Images)

 

You had hope when you took this job six months ago. How much hope do you have now, given everything that Lebanon has to face?

Look, with this new crisis, it’s getting more difficult. But I am always hopeful. My nature is to fight and never stop fighting, and to succeed.

So I am hopeful. And, always, there is light at the end of the tunnel. It is going to be difficult. It’s going to be hard. It’s going to be painful. Very painful. But we will succeed.

Written by Sheena Goodyear with files from The Associated Press. Interview produced by Jeanne Armstrong. Q&A edited for length and clarity.

Source: – CBC.ca

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Britain's economy went into recession last year, official figures confirm – The Globe and Mail

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People walk over London Bridge, in London, on Oct. 25, 2023.SUSANNAH IRELAND/Reuters

Britain’s economy entered a shallow recession last year, official figures confirmed on Thursday, leaving Prime Minister Rishi Sunak with a challenge to reassure voters that the economy is safe with him before an election expected later this year.

Gross domestic product shrank by 0.1 per cent in the third quarter and by 0.3 per cent in the fourth, unchanged from preliminary estimates, the Office for National Statistics (ONS) said on Thursday.

The figures will be disappointing for Mr. Sunak, who has been accused by the opposition Labour Party – far ahead in opinion polls – of overseeing “Rishi’s recession.”

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“The weak starting point for GDP this year means calendar-year growth in 2024 is likely to be limited to less than 1 per cent,” said Martin Beck, chief economic adviser at EY ITEM Club.

“However, an acceleration in momentum this year remains on the cards.”

Britain’s economy has shown signs of starting 2024 on a stronger footing, with monthly GDP growth of 0.2 per cent in January, and unofficial surveys suggesting growth continued in February and March.

Tax cuts announced by finance minister Jeremy Hunt and expectations of interest-rate cuts are likely to help the economy in 2024.

However, Britain remains one of the slowest countries to recover from the effects of the COVID-19 pandemic. At the end of last year, its economy was just 1 per cent bigger than in late 2019, with only Germany faring worse among Group of Seven nations.

The economy grew just 0.1 per cent in all of 2023, its weakest performance since 2009, excluding the peak-pandemic year of 2020.

GDP per person, which has not grown since early 2022, fell by 0.6 per cent in the fourth quarter and 0.7 per cent across 2023.

Sterling was little changed against the dollar and the euro after the data release.

The Bank of England (BOE) has said inflation is moving toward the point where it can start cutting rates. It expects the economy to grow by just 0.25 per cent this year, although official budget forecasters expect a 0.8-per-cent expansion.

BOE policy maker Jonathan Haskel said in an interview reported in Thursday’s Financial Times that rate cuts were “a long way off,” despite dropping his advocacy of a rise at last week’s meeting.

Thursday’s figures from the ONS also showed 0.7 per cent growth in households’ real disposable income, flat in the previous quarter.

Thomas Pugh, an economist at consulting firm RSM, said the increase could prompt consumers to increase their spending and support the economy.

“Consumer confidence has been improving gradually over the last year … as the impact of rising real wages filters through into people’s pockets, even though consumers remain cautious overall,” Mr. Pugh said.

Britain’s current account deficit totalled £21.18-billion ($36.21-billion) in the fourth quarter, slightly narrower than a forecast of £21.4-billion ($36.6-billion) shortfall in a Reuters poll of economists, and equivalent to 3.1 per cent of GDP, up from 2.7 per cent in the third quarter.

The underlying current account deficit, which strips out volatile trade in precious metals, expanded to 3.9 per cent of GDP.

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How will a shrinking population affect the global economy? – Al Jazeera English

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Falling fertility rates could bring about a transformational demographic shift over the next 25 years.

It has been described as a demographic catastrophe.

The Lancet medical journal warns that a majority of countries do not have a high enough fertility rate to sustain their population size by the end of the century.

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The rate of the decline is uneven, with some developing nations seeing a baby boom.

The shift could have far-reaching social and economic impacts.

Enormous population growth since the industrial revolution has put enormous pressure on the planet’s limited resources.

So, how does the drop in births affect the economy?

And regulators in the United States and the European Union crack down on tech monopolies.

The gender gap in tech narrows.

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John Ivison: Canada's economy desperately needs shock treatment after this Liberal government – National Post

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Lack of business investment is the main culprit. Canadians are digging holes with shovels while our competitors are buying excavators

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It speaks to the seriousness of the situation that the Bank of Canada is not so much taking the gloves off as slipping lead into them.

Senior deputy governor, Carolyn Rogers, came as close to wading into the political arena as any senior deputy governor of the central bank probably should in her speech in Halifax this week.

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But she was right to sound the alarm about a subject — Canada’s waning productivity — on which the federal government’s performance has been lacklustre at best.

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Productivity has fallen in six consecutive quarters and is now on a par with where it was seven years ago.

Lack of business investment is the main culprit.

In essence, Canadians are digging holes with shovels while many of our competitors are buying excavators.

“You’ve seen those signs that say, ‘in emergency, break glass.’ Well, it’s time to break the glass,” Rogers said.

She was explicit that government policy is partly to blame, pointing out that businesses need more certainty to invest with confidence. Government incentives and regulatory approaches that change year to year do not inspire confidence, she said.

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The government’s most recent contribution to the competitiveness file — Bill C-56, which made a number of competition-related changes — is a case in point. It was aimed at cracking down on “abusive practices” in the grocery industry that no one, including the bank in its own study, has been able to substantiate. Rather than encouraging investment, it added a political actor — the minister of industry — to the market review process. The Business Council of Canada called the move “capricious,” which was Rogers’s point.

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While blatant price-fixing is rare, the lack of investment is a product of the paucity of competition in many sectors, where Canadian companies protected from foreign competition are sitting on fat profit margins and don’t feel compelled to invest to make their operations more efficient. “Competition can make the whole economy more productive,” said Rogers.

The Conservatives now look set to make this an election issue. Ontario MP Ryan Williams has just released a slick 13-minute video that makes clear his party intends to act in this area.

Using the Monopoly board game as a prop, Williams, the party’s critic for pan-Canadian trade and competition, claims that in every sector, monopolies and oligopolies reign supreme, resulting in lower investment, lower productivity, higher prices, worse service, lower wages and more wealth inequality.

(As an aside, it was a marked improvement on last year’s “Justinflation” rap video.)

Williams said that Canadians pay among the highest cell phone prices in the world and that Rogers, Telus and Bell are the priciest carriers, bar none. The claim has some foundation: in a recent Cable.co.uk global league table that compared the average price of one gigabyte, Canada was ranked 216th of 237 countries at US$5.37 (noticeably, the U.S. was ranked even more expensive at US$6).

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Williams noted that two airlines control 80 per cent of the market, even though Air Canada was ranked dead last of all North American airlines for timeliness.

He pointed out that six banks control 87 per cent of Canada’s mortgage market, while five grocery stores — Sobeys, Metro, Loblaw, Walmart and Costco — command a similar dominance of the grocery market.

“Competition is dying in Canada,” Williams said. “The federal government has made things worse by over-regulating airlines, banks and telecoms to actually protect monopolies and keep new players out.”

So far, so good.

The Conservatives will “bring back home a capitalist economy” — a market that does not protect monopolies and creates more competition, in the form of Canadian companies that will provide new supply and better prices.

That sounds great. But at the same time, the Conservative formula for fixing things appears to involve more government intervention, not less.

Williams pointed out the Conservatives opposed RBC buying HSBC’s Canadian operations, WestJet buying Sunwing and Rogers buying Shaw. The party would oppose monopolies from buying up the competition, he said.

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The real solution is to let the market do its work to bring prices down. But that is a more complicated process than Williams lets on.

Back in 2007, when Research in Motion was Canada’s most valuable company, the Harper government appointed a panel of experts, led by former Nortel chair Lynton “Red” Wilson, to address concerns that the corporate sector was being “hollowed out” by foreign takeovers, following the sale of giants Alcan, Dofasco and Inco.

The “Compete to Win” report that came out in June 2008 found that the number of foreign-owned firms had remained relatively unchanged, but recommended 65 changes to make Canada more competitive.

The Harper government acted on the least-contentious suggestions: lowering corporate taxes, harmonizing sales taxes with a number of provinces and making immigration more responsive to labour markets.

But it did not end up liberalizing the banking, broadcasting, aviation or telecom markets, as the report suggested (ironically, it was a Liberal transport minister, Marc Garneau, who raised foreign ownership levels of air carriers to 49 per cent from 25 per cent in 2018).

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The point is, Canada has a competition problem but solving it requires taking on vested interests. Conservative Leader Pierre Poilievre has indicated he is willing to do that, calling corporate lobbyists “utterly useless” and saying he will focus on Canadian workers, not corporate interests.

“My daily obsession will be about what is good for the working-class people in this country,” he said in Vancouver earlier this month.

Even opening up sectors to foreign competition is no guarantee that investors will come. There are no foreign ownership restrictions in the grocery market (in addition to the five supermarkets listed above, there is Amazon-owned Whole Foods). When the Competition Bureau concluded last year that there was a “modest but meaningful” increase in food prices, it recommended Ottawa encourage a foreign-owned player to enter the Canadian market. It was a recommendation adopted by Industry Minister Francois-Philippe Champagne, to no avail thus far.

But it is clear from the Bank’s warning that the Canadian economy requires some shock treatment.

Robert Scrivener, the chairman of Bell and Northern Telecom in the 1970s, called Canada a nation of overprotected underachievers. That is even more true now than it was back then.

It’s time to break the glass.

jivison@criffel.ca

Get even more deep-dive National Post political coverage and analysis in your inbox with the Political Hack newsletter, where Ottawa bureau chief Stuart Thomson and political analyst Tasha Kheiriddin get at what’s really going on behind the scenes on Parliament Hill every Wednesday and Friday, exclusively for subscribers. Sign up here.

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