Clark's Iraq gaffe hurt NZ say business leaders

By JIM EAGLES

New Zealand's top business people are still extremely worried about the risk to trade with the United States as a result of the Prime Minister's comments on the Iraq war.

The latest Business Herald business leaders survey produced near unanimous agreement that the trade relationship has suffered a severe setback.

Even business leaders normally fairly supportive of the Government registered their disappointment, with one commenting: "It's been very poorly handled."

The survey also reveals that the country's key business leaders have a gloomier view about economic prospects and the Government's role in the economy.

It is clear from the responses that business considers relations with the US and the possibility of a free trade deal to be extremely significant.

Asked how important to the economy it is for New Zealand to have a good relationship with the US the business leaders assessed it - on a scale of 0 to 10 - as 8.7.

The importance of getting a free trade deal with the US rated 8.3.

Unfortunately, the business leaders also indicated they believe that relationship to be in tatters.

Asked specifically if New Zealand's stance on Iraq had harmed the relationship, all but one respondent said it had.

Similarly, asked specifically if the Prime Minister's comments had damaged the relationship further, all but one said they had.

Several respondents were highly critical of Helen Clark's stance with comments such as:

"The Prime Minister's comments did not need to be made and reflected both a lack of maturity and an unstated underlying agenda."

"The Prime Minister's comments were completely unnecessary and evidence of a Government arrogant about its own position and completely out of touch with international politics."

"The Prime Minister's unnecessary and indiscreet statements about Bush v Gore did untold harm and are but another example of her arrogance and desire to put her personal prejudices ahead of the national interest."

The business leaders were in no doubt that the comments have done serious damage.

The present state of the relationship between the two countries was assessed as a very negative 3.3.

The possibility of getting a free trade agreement rated an even more gloomy 2.6.

Not all respondents were entirely negative, with one commenting: "We'll still get a free trade agreement ... it will just take a lot longer."

Despondency about trade may have been a factor in this month's responses from business leaders being more gloomy than usual on the economy.

Their assessment of the present business environment dived into negative territory for the first time since the survey started with a rating of 4.7.

And business leaders' expectations for business conditions 12 months out were only marginally better at 4.8.

The likelihood of respondents' own business expanding in the next 12 months was still in positive territory, at 6.6, but again was the lowest since the survey began.

The business leaders' assessment of the Government's impact on the economy dropped to just 3.7.

By contrast the Reserve Bank's economic stewardship stayed fairly steady on 5.9.