Europe at a cross Rhodes
In his new book, Banker to the World: Leadership Lessons From The Front Lines of Global Finance, William Rhodes, former senior vice-chairman and senior international officer of Citigroup, distils experiences from four decades of emerging market sovereign debt negotiations into handy advice to those struggling today to stabilize the finances of over-indebted developed-world governments.
The book is rich on anecdote, brief on history, with colourful stories of Rhodes confronting gun-toting Sandinistas in Daniel Ortega’s Nicaragua in the 1970s, facing down Robert Mugabe, working through the Latin debt crisis of the 1980s, and Asia in the 1990s and more since.
In negotiations where each side wants the other to commit first to take a hit, Rhodes often used his personal reputation to break the deadlock.
So he famously persuaded banks that they should maintain lines to Korea in late 1997 because the new government would submit to an IMF agreement, then flew to Korea to persuade the incoming president to do precisely that.
The book is structured thematically rather than as a narrative history and its chapter titles include curt advice such as Take Prompt Comprehensive Action, Execute in a Timely Fashion, Lead Boldly and Decisively, all things which European leaders have not done in the past 18 months.
European leaders failed to anticipate the inevitable. Rhodes says: "I had several meetings with members of the ECB board, and various senior European government sources over a year ago when I warned them that the same kind of contagion that swept through Latin America and Asia was going to hit Europe hard, but they were in denial."
Presumably, they’re paying attention now. What advice does Rhodes have for Europe’s leaders in the aftermath of Greece’s selective default?
Rhodes says: "The lesson for the Europeans is don’t announce your good intentions without also announcing a timetable for delivery. And once you announce a timetable, stick to it."