Six years ago, in a desolate patch of Derry, a bus burned and children pelted passing soldiers. Now, on the same spot, a shopping mall advertises the city's rebirth. Jim White reports
The last time Herbie Knott, an Independent photographer, had been on Londonderry's Creggan estate, it was to photograph a riot. It was a familiar picture of conflict: small children and unruly dogs gleefully circling a burning bus.

That was six years ago. On Tuesday he was back, photographing Bernadette Taggart as she strung together green cardboard shamrocks with which she was decorating her shop in time for St Patrick's Day.

"This estate has really picked up over the last few years," said Mrs Taggart. "You wouldn't recognise it, so you wouldn't."

Indeed not. Mrs Taggart's shop stands in the spanking new Rath Mor Centre, a shopping mall due to open officially at the end of this month, a construction built on the very battlefield where Knott had snapped the bus.

Back then it was a wasteland, littered with burnt-out vehicles and rocks of a size convenient enough to hurl at the passing Army patrols, which rushed temptingly by every five minutes or so. Now it is occupied by a marble and glass, slate and steel mall, filled with supermarkets, cake shops and, gently wafting from the public address system, the twang that soundtracks Catholic Northern Ireland: country and western music.

According to John Hume, the local MP and the man largely to be credited with inspiring Derry to rebuild itself from the wreckage of sectarian violence, the Rath Mor Centre, with its great glass dome on top of a hill overlooking the city, is a perfect symbol of the town's renaissance.

"The local development board owned the land and couldn't shift it to any outside business, which you can understand," said Conal McFeely of the Northern Ireland Community Development Association, which helped to fund the centre. "So the community took possession of it, organised the finance and built it. It took seven years of negotiations while a war was going on, but once the business interests realised we were in control, they were happy to move in. We have created 130 local jobs and brought shops and facilities to an estate that had never had them since it was built in 1947. The key thing is it creates a sense that you can do something."

From the day in 1688 when a group of local apprentice boys, rather than waiting for outside assistance, shut the city gates against the advancing forces of James II, self-help has always been the Derry way. These days the nationalists run the place, not the Protestant descendants of the apprentice boys ; but they have proven equally adept at helping themselves. When the city centre was bombed to pieces in the Seventies, for instance, it was rebuilt by local labour, which sent the unequivocal message to the IRA: don't bomb in your own back yard. For five years it has been bomb-free. When the rest of the province's Unionist-run local councils refused to speak to central government around the time of the Anglo-Irish Agreement ("Ulster says No"), Derry was more than happy to invite ministers over: they came almost once a week, delighted to hand out money to people who actually talked to them. And, with John Hume as their door-opener, the town has set the pace in attracting inward-investment from Irish America, doing all sorts of cunning things, such as researching which big American companies are run by men with Irish names and then inviting them over to see where they may have come from.

The most spectacular success of the Derry Boston Initiative as it was called, has also been in building a shopping centre. The Foyleside, down by the river in the city centre, cost £60m, most of the money provided by O'Connell Brothers, a firm of mall developers of Boston. In April it will open, bringing to the town Marks & Spencer and McDonald's, among others - the kind of multinational, big-name corporations that would not have contemplated setting up shop at the height of the Troubles. McDonald's arriving in your town: one of the penalties of peace.

"The ceasefire creates a great headline impression in confirming what has been going on here for some time," said Mark Durkan, chairperson of the SDLP and a local councillor. "Derry should naturally be a cross-border regional centre, and now those from south of the border are beginning to come back. I only heard the other day from a shopkeeper who was saying that down south they have a different television reception from us and since Christmas, he's been getting more and more people coming in from the Republic wanting videos that would work on their televisions. He never had to bother stocking them before, but now he has had to order in a load from Germany."

With a regenerated city centre, with the terrible housing deprivation of the Sixties and Seventies gone and the Bogside and the Creggan rebuilt during the last five years, and with a real possibility of the tourist business picking up (a cruise ship will dock for the first time on the Foyle this July, bringing in 800 people with 800 wallets to visit the stunning new Tower Museum), this is a city that feels it is on the move. So much so that many observers believe that Sinn Fein used Nationalist- run Derry as a template in its negotiations to persuade the IRA that things could be improved by politics rather than warfare.

But Derry has some way to go: its salvation will not come solely through shopping, or inviting Americans to examine the graffiti blooming on the corrugated walls of the police watchtowers ("Ian Paisley is a smelly bum", reads one bit of recent scribble). In the 19th century, 80 per cent of the shirts sold throughout the empire were made in Derry; now, even according to the Government's own manicured figures, unemployment is endemic. In certain wards, 23 per cent of the unemployed have been without a job for more than five years. Though the estates are now full of neat terraces of brick-built houses, they seethe with the standard visual indicators of poverty: the lack of cars, the packs of semi-feral dogs, the gangs of shaven-headed small boys wandering the streets at all hours. And figures released last Monday indicated that Londonderry is the heart-disease capital of the world. Though many are doing well, and house prices are rising faster than anywhere else in Britain, this remains a poor, poor town.

"We have to be aware that the ceasefire is not a magic wand," said Mark Durkan. "It will take time and it is going to be difficult, given how ingrained unemployment here is. We are not going to achieve it solely on local initiatives. We need manufacturing jobs. It will take time to attract them in, and we have to be careful we do not simply attract in companies looking for cheap labour."

It is all encapsulated up at the Rath Mor Centre, John Hume's metaphor for regeneration. There, Declan Ferry was starting his second month as security guard and odd-job man. He is 31, and this is his first job.

"It's great to be working," he said. "I was reared 400 yards from here, and I've got two wee ones and I honestly thought I'd never work in my life. I love this place, I really do, I love it here."

One of Mr Ferry's main tasks will be to organise the queues at the Rath Mor's soon-to-be-opened post office, the place that will be enjoying visits once a fortnight from the 300 other local people who also applied for his job and failed to land it.