The Public Relations and Promotion of Countries in Transition
Speech delivered at the AIESEC congress in Skopje, 1997
By: Sam Vaknin, Ph.D.
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Many Macedonians ask me: why do foreign investors refrain from investing in Macedonia?
This reminds me of one Jewish joke and of three (true) stories.
The stories first:
In the November 1st, 1997 edition of the prestigious economic magazine, "The Economist", there is an ad published by the Berlin Economic Development Corporation. It contains the names of all the countries in Eastern and Central Europe including such godforsaken ones as Azerbaijan and Kyrgyzstan. Only one name is missing: Macedonia.
A second story: all the important internet sites provide their users with lists of countries. The users use these lists to identify themselves to the webmasters of the site and to other visitors. The lists are very comprehensive. Even the names of tiny quasi-republics are included (anyone ever heard about Tuvalu?).
With the exception of very few Websites, Macedonia is not to be found on any of these lists.
One last story: on my way from Prague to Skopje, I was seriously asked by a reservations clerk of one of the leading airlines whether Skopje (Macedonia's capital since time immemorial) was a suburb of Belgrade.
These are tragicomic incidents. Still, they remind me of the Jewish joke that I promised you:
In a small Jewish town there was a Jew who made it a habit to complain to God weekly: he never won the lottery while many of his neighbours turned rich by playing the game. Finally, God (apparently utterly fed up) thundered at the hapless Jew: I have been trying to help you for decades - but for Christ's sake, would you please BUY A LOTTERY TICKET!
To attract FDI (Foreign Direct investment), the recipient country must meet a few conditions.
The first condition is rather obvious: foreign investors must know that the country exists. Very few people know that the Republic of Macedonia exists, let alone where it is, what is it producing and selling and other basic economic facts about it.
In an age of advanced communications and transportation, investors are faced with a glut of information. Countries must differentiate themselves by investing in their own "brand names".
Any failure to disseminate relevant economic information translates into diminishing geopolitical leverage and decreasing foreign investments. In certain cases it puts the very existence of the country at risk. Is the West likely to send peacekeepers or soldiers, aid and know-how to a country no one ever heard of? If the West has no vested interests in Macedonia - will it really matter if it ceases to exist?
To answer these questions, I will analyze three cases: Israel between 1948-1968, Great Britain during the new "Labour" era (the "branding" period) and Slovenia after 1990. We can use the lessons derived from these three disparate case studies to draw up a blueprint of public relations for Macedonia.
I. The Case of Israel
The small (20,700 sq. km.) State of Israel was established in 1948. Its very establishment was a brilliant geopolitical and political coup, a masterly use of public relations.
Israel was openly described as an "ethnically clean" country intended to accommodate the world's Jews. Citizenship was granted on a racial-genetic basis: a person whose mother was Jewish was eligible for citizenship immediately. All others had to go through a tortuous (and often unsuccessful) process to obtain the same.
Despite these politically very incorrect and unappetizing features, the Jewish State enjoyed tremendous popularity throughout its first years of existence. This popularity was cleverly translated into one of the world's most thriving and vibrant economies. Many attribute this phenomenal success to the (partly imaginary) clout of world Jewry. This explanation is not sufficient (or true).
The political leadership of the Zionist (Jewish national) movement made good use of other PR angles:
One third of the Jewish people were cold-bloodedly slaughtered during the Second World War. Many other nations suffered huge losses in human lives (Russia lost 20,000,000 people!). Still, no other nation or ethnic group was wiped off the face of a whole continent and no other nation or ethnic group was persecuted merely due to its religion or racial origin. Jews were murdered because they were Jews and for no other reason.
Understandably, the world felt guilty. The remaining Jews were able to leverage this guilt and to extract political and financial benefits out of an otherwise reluctant international community. Many countries (both the USA and the USSR, for instance) felt that they had to support the creation of a safe haven for Jews somewhere on the planet. Others felt obliged to compensate the victims monetarily (Germany).
This (totally justified) guilt was further compounded by the hostile and violent Arab reaction to the possible emergence of a Jewish State amidst them. Israel cast itself in the role of David against an Arab Goliath, the youthful underdog versus the corrupt giant (Rocky), the one against the many (Arab countries).
In truth , Israel was always much stronger militarily than all its neighbours combined. But it succeeded in maintaining the false image of a "maiden in distress" for decades. Moreover, Israel presented itself as the staunch ally of such Western powers as Britain, France (1956) and the USA. It assumed the role of a democratic bastion in an authoritarian sea, the protector of Western interests in a deeply unstable, unpredictable and perturbed part of the world.
Truth be told, until very recently Israel really was the only democracy in the Middle East, a stable polity with European roots (the Israeli elites emigrated from Central and Eastern Europe or from Western Europe and the USA). It came to resemble the United States and Europe in many ways, spawning hi-tech industries, its populace literate and numerate, sporting a varied and pluralistic culture. Israel firmly adhered to civil society principles like the rule of law, a work ethic, fair play, and maintaining a system of genuine popular representation.
Israel did protect the West's interests and, in the process, came close to becoming an outpost of neo-imperialism and neo-colonialism. But it chose right early on by wholeheartedly embracing capitalism and the West. It was aligned in a period of non-alignment (remember Tito and Nasser).
Israel cleverly positioned itself as the only humane solution to one of the world's most pressing problems: migration from Eastern Europe. During the 1990s, it received 10 billion USD in loan guarantees from the USA intended to help it to successfully assimilate a million mainly Russian Jews ("who otherwise" - the Israeli argument went - "would have flooded the West").
Granted, it is not all spin. Israel does offer some real relative advantages. It is a perfect transit point between all the important emerging markets (Africa included). It has an inordinately highly educated, polyglot workforce and it enjoys capital inflows from the West and from Jews all over the world.
Still, Israel is a triumph of image over substance and over fact.
Consider this: Israel is by far the most dangerous place for a Jew to inhabit - yet every Jew (and gentile regards it as a safe harbor and a shelter. Israel is of no real strategic significance (see its marginal role during the Gulf war) - yet the mighty USA behaves as though it is the most important spot on Earth. It is no longer the only democracy in the region - but is still wrongly known as such. This is the power of place marketing and nation branding.
II. The Case of Slovenia
From its inauspicious inception, Slovenia marketed itself aggressively. It even hired expert lobbyists to work the corridors of power in the UN and in the USA. It cultivated journalists, media executives, and public relations personnel in big business. It shamelessly - and successfully - engaged in outright economic and political propaganda. As a result, it has an excellent public image - supported by a far less excellent reality. Still, the country's marketing is sufficiently based on realistic elements to convince others.
The elections in November 1996 put paid to any semblance of political stability. The (former) communists opened old wounds by calling not to compensate collaborators with the Nazi and Fascist occupation forces for their nationalized property. A debate erupted between proponents of the free market and supporters of the "social model" concerning the future of the welfare state.
But everyone, regardless of political hue, are united behind a Western (EU) and Northern (NATO) orientation, away from the Balkans in general and from other former Yugoslav states in particular. The Slovenes even refuse to connect the port of Rijeka (Croatia) with Corridor 5 (the Barcelona-Kiev thoroughfare) for fear of being again identified with their backward neighbors.
The Slovenes emphasize their differences (and disagreements) with Croatia on shipping prices, border demarcation and control, banking, the use and abuse nuclear power an a lot more. They are eager to distinguish themselves from the morass that is their geography. The message they broadcast to the world is: see how different we are from these semi-civilized remnants of the Yugoslav Federation.
Slovenia presents itself as a bridge between East Europe and its West, between Central Europe and Asia. It made peace with Prodi's Italy and publicized the good services that it is offering to landlocked Austria and Hungary, current EU members and prospective ones (since the speech was delivered, both Hungary and Slovenia became full members of the European Union - SV).
The Slovenes flooded the world media with data regarding every aspect of their maritime ascendance. They celebrated when Slovenia's port, Koper overtook Trieste in cargo handled, with its docks improved. Traffic will double in 10 years, they boast.
Slovenia's Foreign Minister (Kracun) is unequivocal: Slovenia is politically and mentally removed from the Balkans. With 10,000 USD GDP per capita (14,000 USD in 2004 - SV), it is richer than the poorest EU countries (Portugal, Greece) and will soon become a net contributor to the EU budget thus joining an exclusive club (with Germany).
Inflation is low as Slovenia was not influenced by the collapse of the Yugoslav internal market (70% of its trade is with the EU), its currency is stable, its budget balanced, its public debt close to invisible. This is a country to do reliable, long term business with, imply the Slovenes.
Swept under the public relations carpet is the true picture: crony privatization, foreign investors shunned, state and private companies do not restructure and are not competitive, wages are much too high and price many Slovene industries out of existence. Unemployment is rising (14%), growth is slowing and industrial production slumping. Moreover, the Slovenes are highly xenophobic and fiercely independent. They do not want to belong to another political federation, so they detest the idea of the EMU (the euro).
Every now and then, the world media have a new star: it used to be the Czech Republic or Albania - now it is Poland and Hungary. Slovenia was never regarded as a meteor (rising and falling) - rather as the North Star: always present, a reliable navigational aide. These are the results of a very successful marketing, market positioning, lobbying, image making and public relations campaign.
Many countries have drastically altered their image through a concerted, intentional effort: Spain, Chile, Ireland, and Australia to mention a few. The last to seize on the idea that a country is like a brand name and (like any other product) has to be re-branded from time to time, is Britain.
To summarize a very livid and complex debate, Britishness has acquired either a bad or a staid name, depending on whom you ask. To be British means to be: past-oriented, xenophobic and imperialist, vaguely negative (older people) to totally indifferent (younger folks).
Foreign investors (inward investment is fairly high) identify Britishness with inflation, strikes and quaint products. British companies (British Telecom and British Airways as of late) are doing their best to disguise their Britishness. Tourists regard Britain as a huge museum with slightly eccentric traditions. The British Tourist Agency is dropping the Union Jack and Tony Blair is hosting film stars and fashion designers in Downing Street to project an image of a cool, creative, young country. This as opposed to the sitcom image of white, protestant and imperialist.
Paradoxically, to be British might mean to be less and less British. Only 48% of Britons see themselves as British. The Sports Minister called lately not to play the anthem and not to wave the British flag on international sports occasions. People think that less nationalism means more trade and less war.
A British think-tank (a novelty in Britain), Demos, defined the six new dimensions of future Britishness (courtesy of "The Economist"):
The belief (really ungrounded in research) is that rebranding Britain will boost its economy.
And from Britain to another poorly branded country: Macedonia.
Macedonia has a lot of marketable advantages - and one of the worst marketing strategies amongst the economies in transition:
- It has rich natural endowments (much more than Israel);
- An educated workforce (much more than South Korea, Thailand and China);
- (Relatively) cheap labour (paid less than in Croatia, Slovenia, the Czech Republic);
- A massive diaspora of Macedonians abroad (relatively more than any other nation except the Jews);
- Political and macroeconomic stability (much more than any other Balkan country, Greece included);
- Natural trading instincts (Macedonians have graduated from 500 years of the Turkish School of Survival and did their post graduation in the Communist University of Getting By);
- The sympathy reserved for a small country surrounded by mightier enemies
- A unique geopolitical and cultural role (by virtue of its history, its culture and, especially its peaceful role in the last Balkan War - the Yugoslav disintegration);
- An advantageous geographical location (the perfect transit route between Europe and Asia, much better positioned than Slovenia for certain purposes).
None of these advantages is properly brought to the attention of the world. Macedonia hits the headlines only when ethnic tensions erupt.
To thrive, this crucial handicap must be radically altered. The experiences described in this articles might show the Macedonian decision makers the way to the creation of a new brand name: Macedonia.
Nation Branding, Place Marketing, and Investment Promotion
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