The first relates to the perception that "loyalism" relates to loyalty to the Crown and government of the UK. This is loyalty in accordance with the old Scottish Presbyterian concept of covenanting. Here loyalty is not an absolute that is simply given and implies blind obedience, but is part of a bargain struck between two parties (the covenant). Both sides have to keep their sides of the bargain, otherwise the "deal" is off. Many "loyalists" fear that the Crown (via its government) is not being loyal to its side.
The above is not a use of the term "loyal" that would be commonly thought of in England, Wales, America or even the Republic of Ireland. This highlights the importance of not assuming "Anglican" definitions.
A second usage of "loyalist" in Ulster is that of loyal to each other; "loyal and true" to your fellow "Prod" in the struggles with Catholics that have been a feature of nearly 400 years of history. This builds upon the old tradition of "banding" - coming together in common defence to keep the peace and protect life and property in the face of rebellion and attacks, where the individual interest was seen as inseparable from communal welfare. For Ulster Protestants this is especially important, given their identity myths of siege and massacre at the hands of Catholics.
It is only those unfamiliar with Ulster Protestants who find a contradiction in the use of the term "loyalist".
Centre for the Study of Conflict
University of Ulster
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