August 15, 2007
Money talks and, right now, the North is doing most of the talkingPosted 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.