When I decided to participate in the Blog Action Day, it didn’t take me long to decide what to write about. Reputation and nation branding. I believe the greatest assets any nation has is it’s reputation and that’s what poor nations should focus on. How to build a strong reputation for it’s core industries, a reputation of quality and trust, within whatever field you choose. That’s what they need to be able to strengthen their weak economies.
The “funny” thing, is that since I decided to write about this, my country’s reputation has been ruined. And so has the economy. A few bad PR mistakes at crucial moments ruined my nation’s economy and reputation over night. I never expected that. A month ago we had an excellent reputation, admired by those who knew anything about Iceland.
It takes years to build up a strong reputation. But it only takes moments to ruin it. Egypt has been having problems with their security reputation because of occasional attacks on tourists. Tourists are generally very safe there. But extreme incidents of kidnapping, bombing and attacks have made headlines across the world and that’s what people remember. China’s manufacturing reputation has been hit hard lately, with lead in children toys and poisoned milk formula for infants, we are now skeptical about anything made in any of the millions of factories in China. It’s much harder to make headlines because of something positive than something negative.
Where’s the emergency unit?
We had an earthquake last May. It was 6.3 on Richter. Houses were ruined but only minor injuries reported. Within a minute from the earthquake a reaction team was on the task, monitoring casualties and destruction, organizing help relief, setting up emergency centers, sending water supplies, tents, blankets and necessities to the epic center. It was impressive to watch. Everybody knew what to do because they had a plan.
Just like you prepare for a natural disaster with plans, teams and emergency supplies, you have to prepare for a PR disaster. Within minutes your PR emergency unit should be at the scene starting their damage control. We’re not talking about a few buildings or a single village being at risk, but a whole nations most valuable asset – it’s reputation.
In the beginning of last year I participated in workshops with Simon Anholt, a specialist in nation branding, organized by the chamber of commerce here in Iceland. One of the results of that workshop was that we had to establish an information agency of some sort which had the role of mediating correct information and prevent panic and hysteria driven by lack of information or misinformation. Since then, that plan has been going through committees and ministries, but nothing done. So when we were hit by a PR disaster, those things were not in place to react.
What happened?
It’s a series of many mistakes that resulted in the meltdown of the Icelandic economy. But the most vital mistakes in my opinion were comments made by the head of the central bank in Iceland, David Oddson in an interwiew on Icelandic television. He repeatedly stated that Iceland would not pay any foreign debts. Icelandic tax payers should not have to bleed for disordered people, calling the people running the Icelandic banks names, like arsonists. When the reporter asked him why he called them that, he said it was what he learned from his grand mother.
It’s not particularly trustworthy for banks fighting for their reputation to get something like that from the head of the central bank. Icelanders have now learned that the central bank is no place to keep burned out politicians who learned their economics from their grand mother. But just a little to late.
The second crucial PR mistake was made by Gordon Brown, the prime minister of Britain. The morning after the interview with the head of the Icelandic central bank he was interviewed in Britain stating that no guarantees were for the deposits made to Icelandic banks, and that Iceland would not pay, using very aggressive statements regarding Iceland. Maybe understandable, considering what Mr. Oddson had said the night before, but resulted of course only in panic in the UK with people rushing to the Icelandic banks to withdraw all their savings. The banks were shut down and confiscated by the British government using anti-terrorist law. This brought a perfectly healthy bank like Kaupthing to complete isolation from all financial markets that could only be broken by being nationalized. As Richard Portes, professor of economics at London School of Economics said in an article in the Financial Times last Monday:
Kaupthing still seemed viable. But last Tuesday, Mr Oddsson made public remarks that were interpreted to mean that Iceland would not meet its obligations to UK depositors. This was politics for home consumption. So was the UK's retaliation, with an ill-considered invocation of anti-terror laws to seize the UK assets not only of Landsbanki, but also of Kaupthing. Gordon Brown's highly aggressive statement was not his best moment of the financial crisis.
In such sensitive times it’s important that the leaders of the nations try to calm things down instead of escalating them for their own personal agenda resulting in tremendous damage for the economy, both in Iceland and the UK. I think never in the 1.100 year long history of Iceland has any man caused as much damage to our nation as David Oddson did in the interview that night.
The side effects of his remarks are that all trust in Icelanders and Icelandic companies has been ruined. Everything Icelanders have to pay for in the UK and Denmark has to be paid in cash up front, credit cards and accounts of Icelanders in Denmark have been closed, transactions cancelled, credit cards confiscated. Students in Denmark have even had to beg for food because they can not get any money from their banks. The treatment Icelanders have been getting by the UK government and from Danish banks and shops has been unbelievable and very hurtful, both economically and emotionally. Those were supposed to be our closest allies.
Now what?
It’s crucial for Iceland to react calmly but fast. First of all, David Oddson has to be removed from his post ASAP. Secondly, we have to proof to the world that Icelanders stand by their words and their commitments, no matter what it means for the tax payers. If we don’t, we will not be able to regain the trust and respect we used to have, and need to have.
The eyes of the world are focused on Iceland. There are loads of reporters stationed here at the moment. Between press conferences those reporters should be invited to prosperous companies in Iceland, on sight seeing tours, to concerts. Let’s grab that attention and direct it into positive directions. Let’s show the reporters what we’re made of, what we’re capable of and where we’re going from here. That's what I did yesterday when I went down to the media center and presented IfTheWorldCouldVote to the reporters.
This post got maybe a little bit longer than it was supposed to, but it's an example of the importance of reputation for the economy of nations.
Hjörtur
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