A new financial map for Ireland: Alan Murdoch describes an extra benefit the peace process may bring

Click to follow
The Independent Online
MORE than 200 leading Irish- American executives packed the Irish Consulate in New York at the weekend to hear Dick Spring, Dublin's foreign minister, map out his hopes for a future in which business opportunities oust the bomb and bullet.

Turning Armalites into ploughshares is beginning to preoccupy a replacement army of bankers and business forecasters on both sides of the Atlantic.

Under the banner of the International Fund for Ireland, US federal aid to areas affected by the Troubles - essentially the North and the border areas of the Republic - is currently worth around dollars 20m a year.

But the gathering considered a potentially far more lucrative idea - imitating the Jewish-American bond, which was designed to raise funds for the Israeli economy. The suggestion has the support of a number of Irish-American business figures, including influential members of the New York Comptroller's Office, who hope to secure state approval for the scheme.

As Mr Spring was speaking people in County Monaghan, on the Irish border, were trying to turn his words into reality, opening roads blocked by the Army. They were premature - soldiers have since closed them again. But such gestures demonstrate how radically the financial and economic map of Ireland may soon be redrawn.

Short-term hopes are focused on increased cross-border trade, but business organisations are looking in the longer term to boost direct North-South business links.

The ceasefire in any case has coincided with tentative progress in this direction. Dublin's Irish Business and Employers' Confederation is close to completing proposals for a five-year joint business development programme with Northern Ireland's Confederation of British Industry.

They want to create a 'business corridor', a special development zone running for the 100 miles between Dublin and Belfast.

Two years of collaboration between the two bodies have highlighted engineering, services, clothing, textiles and tourism as the sectors best placed to benefit from increased cross-border links. They place special emphasis on the possibilities for new employment created.

The background has been a growing realisation that economic co-operation does not need to wait for new political structures.

Ulster Bank's Sir George Quigley has fostered this with a report on the business potential of 'the single Irish market'. And Albert Reynolds, the Irish prime minister, has claimed peace could yield 75,000 new jobs and double the home market for Northern business.

Traditionally the balance of trade has been in favour of the larger, export-based Southern economy. Exports from the South to the North, at Ir pounds 648m last year, were 56 per cent greater than those from North to South. While companies such as Guinness in food and drink and Dublin-based banks have long been active in the North, the level of interest shown in the Southern market by Northern Ireland-based firms is much smaller. The Troubles have left them heavily reliant on trade with Britain - they also do less business with EU partners than their Southern counterparts.

Not all the consequences of peace will necessarily be employment-creating - tens of thousands of security jobs seem set to go if peace becomes permanent.

A recent study by the Dublin economic consultants Davy Kelleher McCarthy, which focused on quantifiable costs and benefits, estimated 46,000 jobs were lost in foreign-owned industry in Northern Ireland between 1973 and 1990, a fall of 53 per cent in the total. This compared with a rise of 27 per cent in the Republic.

Yet Northern Ireland's economy has been supported by what is in effect an annual subsidy from Whitehall amounting to pounds 3.3bn - a figure which does not include the cost of deploying troops. The subsidy is equivalent to the entire income tax take in the Republic.

DKM's analysis gives a grim insight into the effect of fear and suspicion in depressing cross-border trade. Fear of terrorist attack has slowed infrastructural investment in utilities, notably in the failure to link the island's two gas networks.

In Northern Ireland tourism has fared worst of all business sectors. Its revenues sank by 63 per cent between 1968 and 1972. By 1988 real revenues were still only at 83 per cent of their 1967 levels.

While the in-fashion South has enjoyed a surge in European visitors since the late Eighties, the North remains heavily dependent on British visitors - 58 per cent of the total, against just 28 per cent from the Irish Republic and only 14 per cent from other countries.

Tourism could be one of the main beneficiaries of the mooted Irish-American bond. But the success of the ceasefire is critical to both. Previous bond schemes have encountered suspicion among conservative Irish-Americans that their money could end up paying for terrorist weaponry, while few wealthy tourists are attracted to war zones.

But both sides of the border need investment. While the Republic's gross domestic product is steaming ahead at nearly 5 per cent this year, growth has been concentrated in large multinationals. Domestically owned industry has been flat.

There are home-grown financing opportunies, however. As Sinn Fein itself noted in a recent report on the economics of a united Ireland, 32 per cent of the Ir pounds 9.2bn held in the Republic's pension funds is invested outside the country. Economic convergence should persuade at least some of that money to come home.

(Photograph omitted)

(Graphic omitted)

Comments