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01 December 2023

Which ‘foreign’ model to choose – Singapore or Iceland?

By Frank Kane


If the UAE wanted to choose an international business centre to emulate, would it be Hong Kong, Singapore or Taiwan? Or would it be Iceland?

There is not much in common, on the surface, between the UAE and the north Atlantic island. But climate aside, both countries have recently been expansionist and ambitious in their business relations with the world. For a time, Icelandic “Viking raiders” seemed to be behind every takeover rumour on the London market, as highly leveraged Icelandic financiers were prepared to fund almost any suggested takeover.

Now, in the rather more dangerous world financial climate, Icelandic banks are pulling back from the world, and there is the danger they might retreat into commercial isolationism. The international credit raters are thinking again about some of the A-class labels they handed out to Icelandic companies.

There is no such danger for the UAE, which is, of course, backed by real hard cash, just like the ambitious, outward-looking centres of the Far East mentioned above. But I had my worries when I read reports that “foreigners” are to blame for volatility and falling prices on UAE exchanges and that these investors were not acting out of the “best interests” of the local markets.

Of course they are not. International capitalism does not function for “best interests” of anything except itself. If the UAE wants to stop foreign investors from selling, it must make the markets and the corporates traded on them more attractive. That is the basic rule of the game in international finance.

If, like Iceland, the UAE were to pull back in its shell in a bout of financial xenophobia, it might satisfy the isolationist cravings of some in the local markets, but it would also cut the UAE off from the world of globalised business. So, the choice again – Singapore, or Iceland?