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Bloody Sunday, election, Irish, Ireland, British, Ulster, Unionist, Sinn Féin, SDLP, Ahern, Blair, Irish America

Time to get economic house in order as peace process goodwill runs out

(by Liam Clarke, Sunday Times)

It's a sign of the times that Peter Robinson's first public appointment after he is elected unopposed as the DUP's leader tomorrow (Monday) will be with Brian Cowen, the leader of Fianna Fail.

Robinson will assume the role of Northern Ireland's First Minister next month, just a few days after Cowen gets his seal of office as Taoiseach. The relationship between the two men is central to the next phase of the peace process. A pragmatic managerial style of leadership will have to replace the political knockabout of the past

Ian Paisley made his reputation by lampooning previous Fianna Fail leaders, but his successor will have to concentrate on cross border economic co-operation and devising joint pitches with Dublin for inward investment. Tomorrow will be spent unveiling and discussing such initiatives with Danuta Hubner, the EU Commissioner for Regional Policy.

Hubner will announce the outcome of a European commission task force on Northern Ireland which was launched last May. It is expected to include structured aid to Northern Ireland as peace funds dry up and the rest of the world starts looking to the province to stand on its own feet. The development of the cross border financial services sector, with jobs for both Belfast and Dublin and some Irish government investment, may also be unveiled on Monday.

There will be other announcements tomorrow, including Peace Three, the latest tranche of EU funding for conflict transformation in the north. This funding will probably last only a year and Northern Ireland had better make the most of it because it is fairly clear that there will be no Peace Four.

Northern Ireland, like the Republic and the rest of the UK, is now attracting immigrants from the new accession states who see it as a land of opportunity and a high wage area. It is hard to keep on making a case for preferential treatment over places like Bulgaria, Poland and Latvia.

Northern Ireland has lost time. The international conditions for devolution were far more favourable in the Trimble Mallon era when the Celtic Tiger was still roaring and the world economy was booming. Tony Blair was fully engaged as British Prime Minister and didn't count the cost when it came to bedding down the peace process. President Clinton was fully committed and, like Blair, spent far more time on Northern Ireland than his successor.

That opportunity was largely missed because a deal could not be made to stick as the IRA played hard ball on decommissioning and David Trimble died a death of a thousand cuts as a unionist leader.

Now devolution is on a firmer basis. The DUP and Sinn Féin appear fully committed to it and the north is getting a second chance, but it is not quite as good as the first one. The global economy is precarious, the Celtic Tiger is looking decidedly mangy and the world's attention has moved on. Nobody expects Northern Ireland to sink back into violence, and with so much ethnic conflict elsewhere it's less of a special case.

International goodwill is not quite exhausted and the Irish American vote still counts for something on the America's East coast. Last week the New York City Funds, whose controller, William Thompson, is running for Mayor, announced a $150 million investment in a new Emerald Fund. It will channel venture capital to suitable investments on both sides of the border, but especially to the north where Emerald Fund will have its headquarters.

This is a very significant peace dividend. In the past the New York Pension Funds steered clear of Northern Ireland after being lobbied by the Irish National Caucus and others over discrimination in employment. Now the Irish and British governments, the DUP and Sinn Féin are all speaking with one voice in urging investment, which can unlock the full potential of Irish America.

Next month, at the US Investment Conference, further transatlantic initiatives, with the possibility of another one from the New York Pension Funds are expected. Even in a recession and even without Bill Clinton in the White House the opportunities are immense. With political stability Northern Ireland is now a safe and congenial place for foreign executives to live and a well educated English speaking population makes it a good place, with low office rents, to launch a business into Europe.

There are opportunities for American equity funds to buy into local firms, particularly in the financial services sector, and make them staging posts to Europe. The island's differing tax regimes makes it attractive for companies to establish a trading presence on both sides of the border so they can transfer profits to take advantage of more generous grants in the north and lower corporation tax in the south.

These are opportunities which Robinson and Cowen can pursue as they attempt to pull the island economy through the credit crunch to greater prosperity.

In the north it means businesslike emphasis by politicians. They need to solve problems instead scoring points. Last week in Dublin Sir Hugh Orde, the PSNI Chief Constable, spoke of the problems he encountered on the Policing Board which he said had "gone a bit tribal". He was ritually condemned by the tribal leaders on the board, and he may have spoken out of turn but it's hard to fault his analysis.

Not just the Policing Board but the Assembly itself has wasted time on sectarian point scoring instead of getting on with serious decisions at a time of economic crisis.

The fact is that despite having 108 MLAs and 12 ministers, not a single piece of legislation has been passed by the assembly since devolution.

The OFMDFM itself has two junior and two senior ministers and nearly as many staff as the White House but it was unable to agree on who to appoint as Victims Commissioner. Instead it compromised on four full time commissioners instead of one. This required new legislation and last week the OFMDFM was forced to admit it could not agree on the legislation.

Four very able commissioners are now paid £65,000 a year each, but have been warned not to deal with victims until their legal status is sorted out. The devolution of policing and justice powers is being vetoed by the DUP largely because it is a way to cause Sinn Féin political pain.

Power is being carved up rather than shared, a process which leads to entrenched inefficiencies and the duplication of services. Last year a British government commissioned survey by Deloitte found that the extra cost of duplicated services and managing communal division amounted to £1.5 billion a year beyond what might be expected in a rationally ordered society.

Sinn Féin condemned the study as "a calculated attempt to dilute the equality agenda".

This sort of attitude is not unique to Sinn Féin. It is a mentality born of years in opposition when the safest reaction to any financial dilemma was to demand more cash from the British exchequer. That approach won't wash now that all the main parties are in a devolved executive which has to manage its own budget.

These systemic problems must be tackled if the whole island is to make best use of the last dregs of international goodwill at the end of the peace process. That means strengthening north south and inter communal co-operation, building an effective mechanism for decision making at Stormont and the replacement of tribal stalemates with creative compromises.

The summer is the opportunity to get things on track. Due to renovation work at Stormont the Assembly will be in recess from July 5 until late September.

That is the perfect opportunity for the Irish and British governments, Robinson, Gerry Adams and their parties to get round the table to find a way of working together.

The novelty of seeing Sinn Féin and the DUP in government is wearing off both at home and abroad, nowadays both international investors and local voters are looking for signs that the place is being properly governed and public money is spent effectively.

April 16, 2008

This article first appeared in the Sunday Times on April 13, 2008.