21 NOVEMBER 1998, Page 30

Sovereign risk

Still, the City is always resilient, and prob- lem-solving is its business. The Queen's City round took her to Merrill Lynch and to its dealing room, where there are emptY desks these days. Not a sight to set before her — and the old ruse of draping spare jackets over the backs of the chairs would not do. Merrill sensibly arranged for the girls from the back office to move in, sit down and look like dealers. In the same way, when Catherine the Great sailed down the Volga, her minister, Potemkin, stage- managed the appearance of prosperous vil- lages along the banks. Sovereigns have to take these things at their face value.