August 15, 2007

Money talks and, right now, the North is doing most of the talking

Posted in Ireland · 17 comments ·

What did they think the Belfast Agreement was about? What did you think the St Andrew’s Agreement was trying to engineer? Where politics leads, economics follows, and vice versa.

But you cannot have your cake and eat it. We can’t aim to have a political say in the North without accepting that the logical next step will be Southern investment in the North.

Put simply, we can’t seek to end partition politically and try to uphold partition economically.

In the Belfast Agreement, which the vast majority of us voted for, we claimed that every person born on this island was entitled to an Irish passport and was, if they choose, an Irish citizen.

Logically therefore, those politicians who are arguing that Aer Lingus is abandoning the Irish citizens of Shannon, in favour of the Irish citizens of Belfast are being partitionist.

The reason this is an important point, and not a piece of smart arsey, is because over the coming years, Southern businesses will move to Belfast.

This is what happens when opportunities arise and when commerce is unimpeded.

Partition was extraordinarily effective in economic terms. Trade between the North and the South had practically dried up well before the Troubles. Anyone who remembered travelling from Dundalk to Newry in the bad old days could not fail to be struck by the impression that here were two sister towns, cut off from their economic hinterland, dying on their feet.

Today, the vibrancy of the border region is apparent.

In fact only two weeks ago, Dermot Ahern opened the new motorway linking both towns. This new infrastructure is aimed at generating economic links with the North and it might have some adverse impact on the rest of the country. But this example of positive discrimination is Government policy.

The motorway between Dublin and Belfast is far superior to the road between Dublin and Cork, despite significantly lower traffic volumes.

The only economic rationale for this is that the Government wants to promote, disproportionately, trade between the Dublin conurbation — home to over one million people — with the Belfast conurbation of 700,000 people over and above the Cork conurbation of 200,000 people. As for Shannon and Limerick, with their much smaller populations, the writing is obviously on the wall.

So whatever the rights and wrongs of the Aer Lingus decision with respect to its own pilots and costs at Belfast’s airports, we are seeing something much bigger. From a regional economic perspective, this is the extension of the Government’s Northern policy, which has been framed by the Department of Foreign Affairs for years. This is what the Belfast Agreement as about.

It was about fostering deeper economic links between the North and the South. Now as long as the Southern economy was motoring along, such a policy could be seen as a jockey riding two horses, but when one horse started heading off in its own direction, the jockey’s position becomes uncomfortable in the extreme.

We have now arrived at this divergent situation because the Southern economy is slowing rapidly, prompting companies to reassess the medium-term wisdom of additional investment here. Simultaneously, the competitive advantages of the North are becoming more apparent in this light. In addition, the fact that the North operates a different currency, different labour legislation, different pension scheme, different taxation policies and has a bigger state subsidy for practically everything, means that business opportunities for arbitrage between both jurisdictions will emerge and be seized.

The gravitational pull of the North’s and particularly Belfast’s higher population density, will continue to suck in Southern capital. This has implications for the rest of the country because the only viable alternative economic region to Dublin is Belfast.

Belfast has the population — its conurbation is three times bigger than Cork. It has the airports, the motorways, the electricity grids and now the income levels. It is understandable that local politicians from the west are complaining about the Aer Lingus move.

They are the ones under threat, not from Aer Lingus and its decision, but from the long-term economic implication of the Belfast Agreement.

It is ironic that so many of them are supporters of a united Ireland and the more nationalistic ones have railed against partition. Now that they have had their way politically and partition is becoming less relevant, the long-run implication of closer ties with the North is less money and opportunity for the west.

That’s one of the horrible things about economics: it takes the romance out of politics.

  1. The population of Greater Cork is about 300,000 and Cork County about half a million, but I accept the general point.

    It’s usually the case that politics follows economics which is of course the real reason we had partition in the first place.

    Interesting to note though that Paisley has been talking down links with the South in recent days. He said of the Aer Lingus move that it was welcome because it provided better links to Britain and also said that stronger links with Britain were his govts’ top priority.

    Today he said (in the letter) that the DUP had secured the union and stated that the EU Minority Language Act that requires the UK to actively promote its minority languages wouldn’t force them to accept any kind of official status for the Irish language in the North.

    It seems he’s delighted to see Southern money coming in so he can put it to good use strengthening ties with London.

  2. Thomas Kerlly

    Belfast is the second city of ireland and Air Lingus, should of course, do buisness there, but some of the slots should stay at Shannon given that they are leased to other Air Lines.

  3. David,

    Having grown up in Dundalk, I’ll agree with you that the town was a ‘cul de sac’ for many years. Most of the time , when saying to (southerners) where you were from, you’d get asked ‘is that in Northern Ireland?’

    We’d better get used to the notion of the North competing with the South for investment, and not just in the airline area. There have been a rash of IT investments that have gone North in recent weeks which I am sure Enterprise Ireland would have been proud to announce down here.

    For Ireland , I view this as a good thing, as the alternative to investing in the North for these companies would be to increase Dublin’s LA size sprawl. Cork isn’t an alternative when Belfast is less than 2 hours by Motorway. The Munster lads should be screaming for better road and rail links that everybody can use, not the restoration of an air link for a privilged few.


  4. Garry


    You couldn’t make it up… Ian Paisley welcoming Aer Lingus, Irelands national airline to Belfast while also trying to ensure his farmers produce is not regarded as british beef. Meanwhile the politicians complaining about aerlingus taking ‘their’ slots away from the people of the western seaboard, and comparing the CEO to Cromwell… What about people from donegal and derry, aren’t they irish and on the western seaboard?

    And Aer Lingus that ex public service company, correctly taking advantage of the border to set up a base in Belfast, close enough to Dublin that they can have a backup, but in a different juristicion…. and an area with strong potential for growth in its own right….

    And Ryanair, the champions of capitalism, getting into bed with the gombeen men in shannon, to stuff it to the government and waste Aer Lingus management time. For a while I thought they would support the aer lingus pilots strike and we would have the sight of Michael O’Leary on the airport roundabout with a placard! But that appears to be a bridge to far for micko!

    Solution: Bring back the Shannon stopover!!!! but for all flights in and out of Ireland…. Yes every flight. Actually, why not force them to go through Cork as well, … sure didnt we build a brand new terminal for them with practically all the cost being lumped on dublin……

  5. David

    Good piece of analysis and totally agree.

    This is the future and those of us who worked on the political side at its birth could not be happier to see the economy follow.

  6. Ciarán Mc

    I think most would agree that Ireland needs better regional development and probably a restructured political infrastructure to deliver them (yea, that’ll come soon!). Anyway, while I welcome the links with the North ( I come from Donegal which probably has a longer border with the North than any other county in the Republic and the economic partition that David mentions was particularly acute) there is a danger that it will copper-fasten the East-West divide in the country in terms of development. For it’s true that the same phenomenon affects the North as the south – the East of the province has been the economic centre of gravity since the industrial revolution. And today it’s the East that is enjoying the peace dividend, while in the west, investment and government support is more lacklustre. Derry has secured a few high-tech projects in recent years, but the difference between it and Belfast is vast.

  7. Steve

    I remember reading a while back about a US professor who had what he called a “Northern Ireland List”.

    This was a list of regions around the world that had such severe embedded problems that he wouldn’t even pretend to have an opinion on them let alone a solution.

    Incredible to think now that he’ll have to remove Northern Ireland from his “Northern Ireland List”.

    Having said that though, I don’t expect to see a resurgence in the name ‘Patrick’ in the unionist community anytime soon even though St.Patrick is the patron saint of the entire isle – including the orangy bits. ;-)

    I wonder if we might be getting a bit overexcited about the economic union we are embarking on. The “Norn Iron” of today is not what it used to be. The north was once stronger economically than the south, but that is no longer the case. Its industrial base has been heavily eroded.

    The huge cranes of the shipyards are quiet as shipbuilding has gone elsewhere. The famous Irish linen industry is largely a memory. And during the celtic tiger years when we enjoyed an influx of high-tech businesses, the north was largely left out.

    The north in the context of the UK is currently a burden. It requires the pumping of a multi-billion annual subsidy to sustain it!

  8. Ciarán Mc

    You talk about the North being set to suck southern capital. That’s probably right. But if Northern Ireland could make the transition from the heavily supsidised economy to a dynamic, enterprising one, and in the process, started to boom – wouldn’t it also create 1.5m consumers. Trade and co-operation between the two parts of the island was at a virtual standstill – as you pointed out by referring to economic partition. As that economic border disappears, is the Republic not going to benefit hugely from the appearance of a sizeable market right in front of it’s nose. Plus, is there not room for a kind of dynamism which might spring from companies on both sides of the border being able to increase their critical mass by operating on an all-Ireland basis (true, some have been doing this for some time, including the banks).

  9. ian

    Well, I feel if the youth of our generation are invited to break through the barriers that comodification has placed on us, then maybe we may learn to accept that time will heal many worries when the individual accepts responsibility for his or her own thoughts, actions, and interpersonal skills. Time will heal what science and commerce may sometimes seem blind to. Bridge the gaps. One piece at a time.

  10. Ciarán Mc is right. The real divide is East / West not North / South.

    The political situation has masked this to a large degree. The problems facing Fermanagh and Derry are the same as those facing Mayo and Kerry.

  11. ian

    Ok, Dave. What do you feel about how the nations current youth can tackle these problems. I am speaking particularly about the implosion of inappropriate information, and lack of MEDICAL healing from eastern countries. I would appreciate your responce,

  12. You should do stand up.
    Maybe they could all move to Dublin?

  13. ian

    Add me as a friend on and you will maybe see what I stand for?

  14. Wessel

    David spot on!

    About a year and a bit ago Sean Dorgan, CEO of the IDA, addressed a conference on “local” economic development in Ennis. In attendance, most of the politicians and public officials from the Shannon Region. His message… in the global economy, if you don’t have a critical mass of approx a million people, you are not a player. He argued that the Shannon Region needs to develop a Strategic Business Area (IDA speak) with surrounding areas i.e Galway, Tralee etc and collectively pull their weight.

    Fast forward to the Aer Lingus “shocker” and the “Atlantic Alliance” is born.

    The fact is gombeenism brings about little sporadic gains here and there… If the West wants to significantly influence the political agenda (and hence resource allocation for economic infrastructure), it needs all its politicians and business leaders to lobby on an agreed five to ten point agenda, starting with the top priority … the Atlantic Corridor (tucked away in the middle pages of the NSS).

  15. ian

    Thank you. I am disgusted at how easily people seem to think that youth is not to be treasured. This means a lot to my opinion and what I believe in.

  16. Mary

    I think that a United Ireland is on the cards. If this happens with the North
    in its current economic state the RoI couldn’t cope with the impact.
    Think of West Germany after the collapse of the Berlin Wall.
    I think the two Governments should just say that part of the Good Friday
    Agreement is the unspoken realisation that a United Ireland will come about
    (and with the North now just a police state with no British army back-up, that
    day edges closer).

    The North does not have an economy to speak of (do we in the Republic??).
    The region has to have investment and be developed up or the eventual
    unification will submerge both state-lets.

  17. Casey

    hi nice post, i enjoyed it

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