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Good morning. David Meyer here in Berlin, filling in for Alan.
Like many people, I spent much of yesterday evening and this morning slack-jawed at footage of the devastation in Beirut, caused by a monumental explosion at the Lebanese capital’s port.
Early indications are that 2,750 metric tons of poorly-secured ammonium nitrate, which had been sitting in a warehouse for six years, somehow ignited.
At the time of writing, the death toll is at least 100–given how the blast flattened a wide area around the port (and carved a sizeable chunk out of the port’s landscape) it is hard to imagine the final count not being many times that. At least three hospitals were destroyed as the shockwave tore through neighborhoods; over 200,000 people are now homeless. Lebanon’s primary wheat stores and the country’s main entry point for imports are gone.
“For someone like me, who lived through 15 years of war, it’s incredible to see that yesterday’s explosion destroyed the city worse than the war. The effect of the explosion can be only compared to that of a nuclear bomb,” says Sr. Hanan Youssef, of the Sisters of the Good Shepherd, who run a clinic in Beirut’s Roueissat neighborhood.
“The port is the only gateway for imported goods into the country. Lebanon is highly dependent on imports, over 80% of goods are imported. This is an unprecedented humanitarian crisis. Food insecurity is huge now.”
This is clearly an enormous tragedy, but what, you might ask, does it have to do with business and the rest of the world’s economies?
Apologies for the negativity, but I find it unavoidable in this case: The blast was a grim reminder that just because things are going really badly, that does not mean they cannot get substantially worse.
Lebanon was already under deep stress before this tragedy struck. Its government was mired in dysfunction and protests were on the rise; its economy was in tatters and its currency in freefall. Power outages were the norm–indeed, a lack of electricity hampered the overnight rescue efforts. And, of course, the coronavirus pandemic bit Lebanon just as it did other countries.
Then the Beirut blast happened—a hammer blow to a country already on its knees.
COVID-19 has taken many societies to what feels like breaking point, but other tragedies will strike while the pandemic rolls on. The U.S., for example, would be extremely lucky if it emerged relatively unscathed from what looks set to be an above-average hurricane season this year. How do you evacuate thousands of people while also trying to maintain social distancing in the context of a pandemic? Hopefully someone is figuring that out.
Everything is extra-fragile now and we all need to take heightened risk into account, to the extent that we can. This awful year still has a long way to go, so be alert for unknown unknowns.
More news below. And please do consider donating to the Lebanese Red Cross, the Good Shepherd International Foundation, or other organizations doing crucial work in Lebanon at this time.
David Meyer
@superglaze
david.meyer@fortune.com
TOP NEWS
Jim Hackett
Jim Hackett is stepping down as Ford's CEO after just a few years. Fortune's Shawn Tully notes that he tried to modernize the industrial icon, but failed "to perform what a bloated automaker needs most, a basic restructuring to squeeze far more dollars in profit from a shrunken, highly-efficient base of plants and design centers." Fortune
China deal
Part of the "Phase One" trade deal between China and the U.S. involves China importing $25.3 billion worth of U.S. energy this year. So far, China has achieved a mere 5% of that amount. The deal's targets always seemed fanciful, but as Fortune's Eamon Barrett explains, "the pandemic has made China’s shortfall all the more pronounced." Fortune
Kodak loan
The circumstances around Kodak's $765 million government loan, aimed at helping it produce drugs in the U.S., are reportedly now the subject of a Securities and Exchange Commission investigation. The big question is how Kodak controlled disclosure of the loan—Kodak reportedly shared information about it with media outlets the day before the public announcement, leading Kodak's share price to pop by a quarter. Some company executives were granted stock options on that day. Wall Street Journal
Vaccine nationalism
Bill Gates has urged the U.S. to think about less-developed nations, and not just itself, when producing and procuring potential COVID-19 vaccines. "We’re trying to make sure we can end it not just in the rich countries," the philanthropist and Microsoft co-founder said. Fortune
AROUND THE WATER COOLER
TikTok debate
Australia's prime minister, Scott Morrison, says his country sees no reason to ban ByteDance's TikTok video app. Morrison: "There’s nothing at this point that would suggest to us that security interests are being compromised or Australian citizens are being compromised…But people should know that the line connects right back to China and they should exercise their own judgment about whether they should participate in those things or not." Reuters
Testing delays
Coronavirus testing in the U.S. remains a shambles, and Fortune's Sy Mukherjee explains why: a variety of failures at an institutional and personal level that "are inextricably linked and feed a vicious cycle. If you’re looking for someone to blame, it’s not so much a straight line as it is a constellation of culprits." Sy adds: "The good news is that public health officials say testing capacity is growing. The bad news is that it’s still very inconsistent." Fortune
Google probe
The European Commission is investigating the potential antitrust implications of Google's $2 billion Fitbit purchase, specifically as regards the online advertising market–it fears Google could use Fitbit's health data to further cement its leading position there–and the nascent health-tech market. Google has promised the Commission it would keep Fitbit's data separate, but the regulators are not convinced. Fortune
Wirecard fallout
The Wirecard collapse hit Commerzbank harder in Q2 than the pandemic did. The German bank's loan-loss provisions for the pandemic were €131 million ($155 million) but it had to write off €175 million in loans to the now-defunct payments provider. Financial Times
This edition of CEO Daily was edited by David Meyer.
