I am so at home in Dublin, more than any other city, that I feel it has always been familiar to me. It took me years to see through its soft charm to its bitter prickly kernel - which I quite like too.

Aren’t we great?

 

John Fanning

The Irish, Terry Eagleton wrote, were put on earth for other people to feel romantic about. If the positive image we have long enjoyed internationally is now slipping, one reason could be our perceived status as a tax haven. Given the benefits attached to having an attractive ‘brand’ as a nation, we might ask if stubborn defence of our 12.5% corporate tax rate is a wise policy.
SEO: Combating negative perceptions of Ireland’s brand deriving from the ‘tax haven’ accusation

Nation-branding first began to attract attention in the 1990s, for a number of reasons. Prior to that branding was assumed to be of importance only grocery items bought in supermarkets. But in the late 1980s, as the financialisation of the economy took hold and merger and acquisitions mania spread around the business world, a number of takeovers alerted the wider business community and opinion leaders everywhere to the financial implications of brands and branding. The Nestlé takeover of Rowntree Macintosh was a key catalyst: Nestlé paid well over twice the price city analysts had expected. The reason given was that the balance sheet did not account for the potential asset value of Rowntree brands like Kit Kat, Rolo and After Eight. All of a sudden, senior management and the financial sector were alerted to the power of brands.

If branding can be defined as the sum total of the impressions, associations, opinions and ideas that people have about anything, it follows that everything is a brand: banks, universities, religions and even countries. The term soon became ubiquitous, to such an extent that a few years ago, on the 200th anniversary of the death of Emily Brontë, The Guardian commented: “Charlotte Bronte worried dreadfully about the reputational damage Wuthering Heights might do to the emerging Bronte brand.” Charlotte was ahead of her time.

Nation-branding came a little late to the party. but the success of a well-funded Spanish campaign featuring an attractive Joan Miro illustration and the headline “Everything Under the Sun” encouraged other countries to follow suit. It is likely that this campaign only worked because it appeared in the immediate aftermath of the country’s smooth transition to democracy following the end of the Franco era. An equally celebrated campaign for South Africa under the heading “Alive with Possibilities” was launched using a well-known brand model derived from the global consumer goods company Unilever. This was launched after the dismantling of apartheid and the election of Nelson Mandela as president.

Objections are regularly raised about the very notion of nation-branding on the grounds that it is demeaning for a county to be reduced to a grubby little marketing concept. There is of course the danger that once you introduce the language of managerialism you run the risk of a country’s policies being overly influenced by business interests but in democratic societies there are usually enough critical voices to prevent this happening. The wave of enthusiasm for developing and attempting to capitalise on the nation brand image, specifically to increase inward investment and tourism, developed into the new millennium and many countries set up brand development units within their civil service. Expensive management consultancies were often employed to devise marketing communication campaigns and a number of these businesses launched global surveys to measure the impact of individual nation brands.

Ireland has tended to do well in these surveys, being regularly ranked as one of the top twenty global brands, although there are signs that we’ve slipped into the low twenties in the last few years. Two questions need to be considered here: first, does any of this matter and is such a nebulous, difficult to measure, concept worth bothering about? Second, why has the Irish nation brand image started to decline. My answer to the first question is an unequivocal Yes. We now know from advances in neuroscience and mountains of market research surveys that our decisions are heavily influenced by our emotions and that people do have impressions, ideas, opinions, and associations about countries which, whether we like it or not, constitute a brand, or for those of a more delicate disposition, a reputation. It is also incontrovertible that this “brand image” or “reputation” will have an effect on people’s willingness to invest in a particular country, visit that country or buy goods made in that country, or even study or attend cultural events there.

Regarding the second question, a number of factors may be causing a decline in our ratings over the last decade. Age is one: analysis of the data shows that Ireland’s ratings are stronger among older age cohorts. This is almost certainly because the initial power of the Irish nation brand image in the first half of the twentieth century derived from a lingering sympathy for the death and suffering caused by the Great Famine and admiration for the Irish struggle for independence against what was then the greatest power in the world. Younger age groups would have little awareness of these events. A second and related factor is the world balance of power tilting to the East. Much of the dissemination of the Irish nation brand story was carried by Irish emigrants across the Western world; few ended up in the Far East. A possible third factor is that Ireland has been mired in controversary over its corporation tax strategies over the last two decades. A recent New Yorker article accused the Irish of being “the world’s leading tax tinkerers” and recommended that a more secure country should be built on “things made in Ireland, by people who live in Ireland –who pay Irish taxes”. The thorny issue of Ireland’s corporation tax rate has been simmering away for well over a decade and is now coming to the boil. Joe Biden’s election as president in 2020, followed by his announcement of an overhaul of US corporate taxes, may present us with a chance to portray ourselves in a more favourable light.

The new US proposals would involve a 21 per cent minimum tax rate, thus undermining Ireland’s 12.5 per cent corporate rate. This is partly designed to stop countries using corporation tax as a competitive tool to attract investment, but it is significant that the US proposal coincides with similar ones from the EU and the OECD. These initiatives are creating huge problems for Ireland, as we are regularly bracketed with countries like the Cayman Islands and Bermuda as tax havens. Leading accountants and financial academics are regularly wheeled out to deny these allegations, arguing that apart from an absence of palm trees and sunshine, we cannot technically be defined as a tax haven. But even if we do not correspond to the traditional definitions of a tax haven the fact that we are regularly designated as such means we are in trouble: from a branding perspective, it’s what people think that counts. At the heart of this debate is the changing nature of world business. In a recent editorial, the Financial Times pointed out that the global system of corporate taxation has long been in need of an overhaul: having been created for an age when capital investment meant spending on physical assets in a defined location it has struggled to cope with a world increasingly dominated by intangible assets which can located wherever a business decides.

The Irish government has given a cautious welcome to the new US proposals, saying that it is in favour of “an agreement that can bring stability to the international tax framework”, while asserting the right of small countries to use corporate tax as a way to compensate for the greater economic power of larger economies. In a recent article finance minister Pascal Donohoe, while striking a conciliatory note about the need for corporate tax reform, still stoutly maintained that smaller countries needed to be able to compete on corporate tax levels. But this is precisely what the new proposals are designed to eliminate; the majority view in the EU is that tax competition is wrong because it inevitably leads to a “race to the bottom”, resulting is less tax being available for national governments for essential spending on schools, hospitals, basic infrastructure and social welfare. Aidan Regan, an academic from the School of Politics in UCD, recently summed up Ireland’s dilemma: “Tax competition would not pass any abstract normative principle of fairness. Ireland risks making a fool of itself by using moral reasoning and principles of fairness to advance its national economic interests ‑ (the Irish) brand in the eyes of our US and European partners has become a symbol of trickle-down economics, wealth inequality and a failed neoliberal economic paradigm.”

A more recent contribution to this debate from Eoin Drea, an Irish economist working for a think tank in Brussels, makes the more damaging assertion that our apparent lack of strategic thinking in relation not only to corporate tax policy but to our wider relationship with the European Union has now left us dangerously isolated to the point of irrelevance: “at the heart of this problem lies Ireland’s lack of vision for the future of Europe”. Unfortunately, this lack of vision has a long history. Almost forty years ago Garret FitzGerald came to a similar conclusion: “As a people we are reluctant to engage with, indeed somewhat afraid of, ideas. Certainly, it has been my experience over the years that attempts, either in lectures or articles, to put forward ideas evoke remarkably little response. There is a strong Irish preference for the concrete over the conceptual.”

It is also worth asking if, by constantly banging on about the need to defend the 12.5 per cent rate, we are sending a very damaging message to the world that Ireland’s main attraction for FDI is low taxes. This is not only a weak argument: it is completely untrue. There are a wide variety of reasons why businesses are attracted to Ireland; a highly educated English-speaking workforce, more experience of dealing with overseas business investment than any other country and, perhaps most importantly, our favourable nation brand image. As Terry Eagleton recently wryly remarked: “the Irish were put on earth for other people to feel romantic about.”

A new book by Simon Anholt, The Good Country Equation, while not specifically mentioning the Irish tax controversy, does suggest ways of extracting ourselves from this problem. Anholt is a leading authority on nation-branding. He has written five books on the subject, was the founding editor of the academic journal Place Branding and Public Diplomacy, has given seven Ted talks and addressed numerous international conferences. One suspects he has made a decent living as a marketing consultant advising governments on the subject over the last thirty years.

He began putting some context and structure into the new discipline in the late 1990s and claims to have invented the term “nation branding” in 1998. He was quick to warn against the notion that expensive marketing communications campaigns could affect nation brand images, arguing that the image of a country cannot be artificially constructed. He also makes a useful distinction between the promotion of individual sectors of the economy like tourism and specific export sectors, for example food and drink, and changing people’s long-standing beliefs and prejudices about a country. He points out that studies of countries whose reputations have fallen or risen over time show that the process was clearly the result of “fundamental and sustained change of social, economic or political direction”, citing Germany and Japan, whose reputations have been transformed since the end of the Second World War. In this connection he has frequently referred to Ireland’s decision in the late 1960s to grant tax-free status to creative writers as an excellent example of nation-branding and he repeats the point in his new book: “It wasn’t a PR stunt ‑ it seemed to prove that Ireland was a country that truly valued culture and its contribution to society which in turn served to reinforce some of the better aspects of Ireland’s existing image.”

Having set out his stall Anholt, developed his consultancy business working as a policy adviser to presidents, prime ministers, monarchs and governments of more than fifty countries. He operates to a format which he titles conversationi: a briefing process involving an informal discussion among key politicians and public intellectuals to discuss what a country has to offer to the rest of the world and how it might go about developing and maximising the benefits of the offer. The approach does mean he gets to mix with more interesting types than the average marketing consultant. He once had dinner with Vladimir Putin at his country retreat with four top Russian officials including the powerful foreign minister Sergey Lavrov, but apart from a better understanding of the dangerously high level of injured self-esteem of his hosts nothing concrete came of the discussion. One is left with the impression that Anholt was more relieved than disappointed.

His thinking has developed over the years and rather than being content to advise nations on their national image Anholt is now engaged in a much more ambitious exercise expressed in his book’s secondary title: How We Can Repair the World in One Generation. He suggests that the five key drivers of national standing are morality, relevance, sophistication, strength and aesthetics. Of the five ,he regards morality as the most important and this led to his setting up a Good Country Index in 2012, a series of global surveys designed to measure what people think of other countries in relation to a wider range of worthy attributes including contribution to science and technology, culture, world order and planet and climate. Each country’s score was divided by its GDP to ensure that smaller countries weren’t unduly penalised and in the first published results in 2014 Ireland came out on top, but in subsequent surveys we have slipped down the rankings possibly for some of the reasons discussed above.

Anholt’s thinking on nation brands has now evolved to the stage where he believes that the world will be a better place if more nations would aspire to be “good” by collaborating rather than competing with each other. It’s a worthy objective and there’s no doubt that the very real threat to the environment, the likelihood of future pandemics and the continuing problem of migration flows from South to North will necessitate greater collaboration between nations in the immediate future. However, I believe it is unrealistic to think that competition between states, especially in the economic arena, will lessen anytime soon.

Although Anholt’s vision of a world where nations collaborate rather than compete may be unrealistic there are a number of ways we might consider incorporating some of his ideas into a new strategy to escape the chains of the 12.5 per cent tax rate, which was designed for a very different world. We are moving into an era where taxes are likely to increase. If the 2008 recession dealt a mortal blow to the neo-liberal minimum tax rate era, Covid 19 has finished it off. We now have the ideal opportunity to become a “good country” by abandoning the 12.5 per cent rate and accepting the proposed new European rate with grace and dignity instead of belligerently defending our current position until we are forced to concede.

However, we might also consider a new initiative to reposition ourselves as one of the good guys by adopting Anholt’s Conversationi idea and setting up another citizens’ assembly to come up with ideas. These assemblies have attracted worldwide admiration for the way they enabled us to tackle controversial issues with a minimum of fuss. One possible proposal an assembly might consider would be the setting up of an Education Corps, along the lines of President Kennedy’s Peace Corps in the 1960s. There is a precedent here as Irish missionaries have performed a valuable role in the education systems of less developed countries throughout the twentieth century. As vocations have declined our contribution has lessened but it has left a powerful legacy which could be redeveloped. It might only represent a small step in saving the world but could be a major contributor to restoring Ireland’s nation brand image.

We are facing into a hazardous post-pandemic world which will be dominated by the battle for supremacy between America and China, with the latter looking the likely winner. Small countries, and some not so small countries, will be caught in the crossfire and will need a strategic intelligence of Machiavellian proportions to survive and flourish. Ireland’s nation brand image is one of our most precious strategic resources; it needs to be acknowledged, understood, regularly monitored and finessed.

The Good Country Equation is published by Berrett-Koehler in the US.

1/10/2021

John Fanning lectures on marketing communications and branding at the Smurfit Business School. His new book, The Mandarin, the Musician and the Mage, will be published next year.

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