01/31/2013 03:51 EST | Updated 04/02/2013 05:12 EDT

Davos: Nation-States Are Brands Now

President Vladimir Putin's gift of citizenship and 13 per cent tax rates to French actor Gerard Depardieu highlighted the next phase of globalization: The nation-state as a brand.

Here more than ever at the World Economic Forum, nation-states have become all about gaining a bigger market share of the slowly growing global economic pie. This is the perfect venue to push for this goal because of the thousands of business and media leaders in attendance for the four-day confab.

It's clear now that any successful president or potentate must acquire the skills of a CEO selling soapsuds. And all week, leaders and their handlers have prowled the corridors to peddle "wares" such as low tax rates, mineral potential, free factory sites, pools of cheap labor or lax laws. They launched initiatives and new policies, staged special events and ran aggressive ad campaigns. Some will eventually emulate Putin by offering loss leaders such as passports with tax breaks.

Noticeably missing from the shilling were leaders from super-nations, such as the United States and China. This is because both are known, reliable and successful business brands: America is all about free enterprise, legal protections and innovation and China is about cheap labor plus a massive consumer market.

But 50 other heads of state were beating the bushes for business. These included bruised brands in the Middle East such as Jordan or Israel, and up-and-comers eager to raise their business profile such as Malaysia and Azerbaijan.

For instance, Malaysia's tagline was "Endless Possibilities", displayed on a five-story billboard on Davos' main drag and used as part of its aggressive campaign of advertisements in international business periodicals.

Another serious promotion was mounted for the second year in a row by Azerbaijan whose impressive President enhanced his nation's profile by appearing on a number of Davos panels about Central Asia and energy. He has embarked on reforms and joined a partnership, along with neighbors like Turkey, calling itself the "New Silk Road" which hopes to link the Central Asian region, along railway and pipeline systems, that will stretch from Beijing and London.

Another ambitious brand rollout was an effort by Kaliningrad, an uncontinguous seaport region on the Baltic. The oblast, with a population of 400,000, was acquired by Russia from Germany after the Second World War and had been called Konigsberg. One of its young officials appeared on a panel at Davos to sing the praises of this relatively unknown city-port.

"We are on the edge of the European Union, the biggest market in the world, we have no VAT tax and offer a six-year tax holiday to companies or people who locate here," said Kaliningrad spokesman Stanislas Voskresenskiy in a panel discussion. "We have a car assembly plant, have 90% of the world's amber and a university."

Kaliningrad certainly needs publicity but also needs rebranding. To date, it is known as a lawless jurisdiction that mostly exports contraband and floods Poland with black market cigarettes made in two gigantic factories.

Another controversial rebranding effort was unveiled in a speech this week by Prime Minister David Cameron and elaborated upon in Davos. Britain, said the Prime Minister, intends to renegotiate its terms of membership in the European Union then, after obtaining a new deal, intends to hold a referendum in 2017 on whether to stay or leave.

It's a gamble aimed at placating Britain's Tory backbenchers, who never agreed in the first place to join the Europeans. But already Cameron's announcement, and its timing on the 50th anniversary of the French-German pact, has seriously offended those two EU founders with whom Britain must negotiate more favorable terms of membership.

Worse yet, Cameron's goals are murky and his rhetoric criticizes the EU for its lack of innovation and growth, traits that also characterize Britain today.

Britain hopes to rebrand itself as a dynamic, international financial capital with tax benefits. But to announce a referenda with such profound implications five years in advance will tarnish the brand by introducing uncertainty, damaging the currency and undermining its strategy of attracting corporations to London as a Gateway to Europe.

To add to uncertainty, Cameron, and his sidekick George Osbourne did the rounds here claiming that they don't know exactly what terms they want to negotiate but will lead the pro-Europe side in 2017. "The single currency has started a move towards a banking union and fiscal union with huge implications for countries like the UK. Europe is a Club we belong to which is changing," said Cameron, hinting that Britain may simply wish to partially exit from the EU.

Reaction in France was critical, accusing Britain of stabbing the EU in the back, while Germany's Chancellor Angela Merkel was typically circumspect and left the door open to negotiations. Others, like Denmark or The Netherlands, said they understood the need for reforms but would have preferred that Britain merely initiate them internally without threatening a 2017 referendum.

Cameron's initiative should be even more concerning because it introduces a second profound referendum, in addition to the 2014 vote on independence for Scotland, which hangs over Britain's head. Besides that, it may help Scottish independents who have pledged that, if they win, Scotland will join the European Union and Eurozone as an independent entity. This week, Tweets described Cameron's 2017 EU referendum as another good reason for Scots to vote to leave the United Kingdom for good.

(Much depends on the 2014 referendum. Scotland is roughly 10% of the UK economy and population. As an independent country, Scotland would have an economy the size of Portugal's and bigger than Ireland's and the United Kingdom without Scotland would fall behind France in size, only slightly ahead of Mexico.)

Cameron's questionable rebranding wasn't the only flop. Russian Prime Minister Dmitry Medvedev talked about his nation's reforms and improved business climate as part of a feature keynote in Davos. The reality is that reforms have eluded the country, along with human rights, and Russia's only notable exports have been oil, hockey players, oligarchs and support for questionable regimes. But Medvedev boasted of looming changes as well as the country's new auto manufacturing, computer and scientific enterprises.

These efforts to win brand acceptance, on a global stage, is a welcome development, certainly far superior to nation-state models based on conquest or oppressive localism. Besides, the good brands will win and the bad ones will be punished.

*This previously appeared in the Financial Post