It was a great honor to have Prime Minister of Iceland Geir Haarde come to my seminar on Trade Insiders. PM Haarde was confronted with managing the deep recession in Iceland of 2008. His presentation addressed the special links of macro and micro forces which had to be managed in order to restore trust in government and the economy. A true insight of national impact in a multilateral world!
A pleasant surprise: An unexpected visit from Svala Guðmundsdóttir, head of the University Programs in Reykjavik, Iceland. She is visiting to prepare for an upcoming visit in November by two former Presidents of Iceland to discuss trade and economic policies. Thank you Svala!
The effects of politics on international marketing is determined by both the bilateral political relations between home and host countries and the multilateral agreements governing the relations among groups of countries.
The government-to-government relationship can have a profound effect, particularly if it becomes hostile. Numerous examples of the linkages between international politics and international marketing exist. One such example involves British-Icelandic relations, following the Icelandic government’s 2008 decision to assume control of three of the country’s largest banks hit hard by the global credit crunch.
Iceland initiated a deposit freeze that affected deposits of approximately 4.5 billion pounds from British citizens.
The British government promptly used its anti-terror law to seize and estimated 4 billion of Icelandic resources, which, in turn, forced Iceland to cover the losses of British depositors at a cost to Icelandic taxpayers of more than 2.2 billion pounds. With a population base of only 300,000 people, such new debt was huge.
While the U.K. chose to adopt this “stick” approach, the Dutch government secured a commitment from Iceland to pay back its savers using a different tactic, perhaps more conducive to long-term good neighborly relations. It offered to loan Iceland the money.
Excerpt from the 9th Edition of International Marketing by Michael Czinkota and Ilkka Ronkainen.
Please watch the next episode in our video series. In Episode 5, Prof. Skuba and I discuss the recent Icelandic volcano eruption.
More episodes to come soon.