Under pressure from rating agencies, Reykjavik’s top financial brass politely make their case – unlike Venezuela’s premier Hugo Chávez.
There are good and bad ways to present yourself on the world stage. The senior bankers and the finance minister of Iceland provide a lesson in how to do it right. Iceland has been under attack by analysts for its large current account deficit, rising external debt, overheating economy and overvalued currency. Earlier this year, a critical Fitch report sent the markets into a tailspin as investors reacted to the negative comments made by sovereign analyst Paul Rawkins. The banks themselves are under pressure for their rapid expansion and exposure to the stock and housing markets.
The knee-jerk reaction when under fire is to get all defensive, insult your critics and carry on regardless. It would have been easy for Iceland to take this approach. Instead, four senior Icelandic executives, as well as the finance minister Arni Mathiesen, made the trip from Reykjavik to London to face down their sternest critics at a Banker round table (see page 56).
Reassuring words
Their attitude was: “Yes, we are listening but have you also considered this?” Iceland could still fall out of favour with investors and find itself in trouble and, indeed, good presentation abroad is no substitute for taking the right policy decisions at home. But at least its leaders did their best to present their case, and both portfolio and direct investors will feel reassured.
Contrast this with the way Venezuela’s president Hugo Chávez creates waves instead of solutions as he travels around the world. There are not many similarities between Iceland and Venezuela. Venezuela is awash with oil while Iceland is a leader in alternative energy sources, a situation that allows Mr Chávez to strut his stuff on the world stage in a flamboyant and individualistic style. But what does it really achieve?
Arguably, Mr Chávez has spent the country’s oil wealth doing some positive things for the poor in his country but, in a globalised world, long-term economic success depends on attracting investment, not scaring it off. Insulting world leaders – so that on a recent visit to London Mr Chávez was reduced to meeting with the mayor of London Ken Livingstone rather than prime minister Tony Blair – is not the best way to go about it.
Perhaps Mr Chávez would benefit from a Reykjavik public relations course.
