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Old-fashioned is the name of a cocktail. Or is it a high-ball?

Kitty Miv, Editor
07 June, 2012

Kitty's Kountry Rankings are below, with a description of how they are kompiled. This week, as every week, I give out three Encomiums to countries which have done Good Things, and award three Execrations for countries which according to my highly personal and partial views have done Bad Things.

Ed Fast for the WTO! This is not to do down Pascal Lamy, who soldiers on gamely with the Doha Round, but even this determined marathon runner has to get tired sometime, and when he does, Ed would be a good replacement. He has bone-dry free trading credentials, on display once again this week as he took a 30-strong delegation of Canadian business-people to Russia. You do have to wonder slightly what they are going to sell each other: hockey players? snow-ploughs? But that's the wonder of free trade: once the barriers are down, all kinds of amazing things happen. In BT 50 (an alternative calendar, BT for before taxes, round about 1900, and AT for after taxes) my great-great grandfather made money buying eggs in Kazan (that's where Ed was this week) and selling them in Rochdale. Who could have guessed it?

I don't know if awards count for encomiums; I mean, there could be an argument that they should only be given for actions, whereas an award is the result of lots of actions, rather than being an action itself. Anyway I'm giving a mark to Hong Kong, which won the 'world's most competitive economy' moniker this week for the nth time. Do countries have award cabinets full of silverware, like tennis players and boxers? I mean, do you get a cup when you are the most competitive nation? Otherwise, what's the point? Some people are more competitive than others and gloat over their medal cabinets. I won a silver corkscrew once playing tennis, but it broke soon afterwards. I'm just not competitive that way. But Hong Kong must be the most competitive nation on earth for competing in competiton competitions. Perhaps I can't take that any further!

Old-fashioned is the name of a cocktail. Or is it a high-ball? As an adjective, it sounds a bit dowdy. But the Swiss would probably be happy to be remembered for William Tell, who helped save the country from Austrian warlords in BT 500 or thereabouts, rather than their resistance to the diktats of Brussels in AT 112. And Widmer-Schlumpf just doesn't have quite the same ring as Tell. But this week she was hard at work adding the once-hated Austrians to the charmed circle of EU nations who have agreed to turn a blind eye to Swiss banking deposits as long as they get a good share of the proceeds. Between the UK, Germany and Austria, with Italy coming up on the outside, it's getting close to a wrecking majority from the EU's perspective. How they must hate it in Brussels!

The Middle Kingdom. For any company, just about, at least for any company of significant size, it can't be ignored, and it is a source of riches either directly through selling Western gizmos to newly affluent Chinese, or indirectly as a source of cheap production inputs. But the Chinese are no pushover, and the days when they laid down a red carpet for Western investors are well and truly over. As they themselves get stronger in international business terms, and as they start to suffer middle country growing pains, they become more and more difficult to deal with. This week's report from the EU's local Chinese Chamber of Commerce shows just how much tighter the business environment is becoming in China. And it is not to China's credit. Joining the WTO was a brave step, and of course it was in the country's long-term interests. But taking every opportunity to put obstacles in the way of foreign investors is short-sighted. The fact that the USA is equally protectionist is no excuse. In the end, the countries which will do best will be the ones that are open, welcoming and even-handed. China is becoming none of those things.

India, another face of the BRIC, has also had a bad week. One newspaper said kindly that at least India hasn't reversed the reforms it undertook ten years ago; but it's not good enough to live on past glories, and the mean-minded, grasping, litigious attitude the country is showing towards major foreign investors through its retrospective M&A legislation is little short of disastrous for India's future investment prospects. All the signs are that the weak, and ever weaker government has fallen into the clutches of merchantilist commercial interests, whose natural instincts are protectionist and xenophobic. It's a sad end to what appeared to be a genuine opening, five years ago.

It's difficult to explain why Cyprus has driven the EU to attack its treatment of imported cars from other EU states. It's not as if nobody had noticed until now that a new resident, spending EUR300,000 on building himself a new house, and wanting to import his treasured 20-year-old MGB from the UK is forced to pay registration duty on its new value.The local English-language newspapers have been full of such horror stories ever since Cyprus joined the EU in 2004 and started to break Community law with its continuing treatment of such cases. It can't be for the money, surely? The government is so cack-handed financially that this intrinsically rich and successful country has been forced to crawl to the Russians for a low-interest loan, and even then managed to lend billions to the Greek government when the whole of the rest of the world knew Greece was bankrupt. No, I'm afraid it's just bureaucratic muddle. As between cock-up and conspiracy, in Cyprus it's always the first.

Kitty's Encomiums and Execrations

Methodology: each week (this is the fifth) three countries are given encomiums and three are given execrations. Those are the entries below with descriptive links. In the following week, each encomium counts as 1 for that country, and each execration counts as – 1, being added to that country's existing score. Over time, therefore, a ranking will build up for each country, and further countries will join the listing. Germany has a ranking of – 1, since in the second week it had an execration and in the first week it had an encomium, leaving it at neutral; then it had an execration last week, thus dropping to – 1.

The rankings are intended to be a proxy for business friendliness; evidently they are highly partisan, but hopefully one day they will become useful for decision-making, even if for the moment it is all just an amusing game.

Kitty's Encomiums:

New Zealand 2

The Philippines 2

Canada 1

Canada trading in Kazan

Dubai 1

Hong Kong 1

Hong Kong takes home the bacon

Ireland 1

Russia 1

Switzerland sticks to its crossbows

In neutral territory:

Australia 0

United Kingdom 0

And Kitty's Execrations:

China having its cake and eating it

Cyprus SNAFU

Germany – 1

Hungary – 1

India – 1

India hates foreigners

Italy – 1

United States – 2

Spain – 3





About the Author

Kitty Miv, Editor

Kitty was born in Argentina in 1960 to a Scottish cattle rancher and his Argentine wife. Educated in Edinburgh and at Princeton, Kitty worked for the World Bank as an economist, where she met and married an emigre Iranian banker. During her time with the Bank, Kitty worked in a number of emerging markets, including a spell in the ex-USSR as a Transition Economies Team Leader. Kitty is now a consultant in Brussels and has free-lance writing relationships with a number of prominent economic publications. kitty@lowtax.net


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