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April 01, 2007

US Big Business Still Positive on North

News about Ireland & the Irish

SB 04/01/07 American Big Business Still Positive On North
SB 04/01/07 Opin: Now Comes The Hard Part
SB 04/01/07 Opin: Executive Has Tough Economic Choices

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http://www.sbpost.ie/post/pages/p/story.aspx-qqqt=NEWS+FEATURES-qqqm=nav-qqqid=22335-qqqx=1.asp

American Big Business Still Positive On North

01 April 2007

If Sinn Fein and the DUP can successfully share power in the
North it is likely to lead to significant investment, writes
Niall O'Dowd in New York.

If Sinn Fein and the DUP can successfully share power in the
North it is likely to lead to significant investment, writes
Niall O'Dowd in New York.

The advent of a new power-sharing government in the North will
open the door to major US investment in the region, according to
leading American businessmen.

The presence of Sinn Fein in that government will provide a
powerful boost to economic prospects, given that they have
already developed major links with Irish-American businesspeople.

''If political stability is assured, I see no reason why Northern
Ireland cannot develop along the Irish Republic model," said Don
Keough, former president of Coca-Cola and now chairman of
investment bank Allen & Company in New York.

Keough took part in a trip to the North with Bill Clinton when
Clinton was US president.

He has become familiar with many of the party leaders there and
they have frequently consulted with him on economic matters, as
has Taoiseach Bertie Ahern.

Keough was the businessman who first introduced billionaires
Warren Buffett and Bill Gates to Ireland, bringing them both over
on a familiarisation trip in the early 1990s.

He said he believed many leading businessmen would be willing to
help out in the North and to become part of an advisory group to
advise the new government on economic matters.

The belief is that the group will be modelled on the Taoiseach's
economic advisory group, which consists of about 20 leading
Irish-American businesspeople who meet Ahern when he is in
Washington or New York.

Keough is considered a major powerbroker in American business and
has been featured on the cover of Fortune and Forbes magazines.

As chairman of the University of Notre Dame, he raised more than
$2 billion for the college's endowment fund. ''It is time for
visionary thinking, for following up on the great promise of what
has been achieved this week," said Keough. ''The goodwill is now
here in America. It can definitely be tapped."

Bill Flynn, former chairman of Mutual of America, said he saw
great economic opportunity for the North now that the government
is being constituted.

''At last they will have a level playing field," he said.
''American business needs stability before it will consider
investment. Until this week, that could not really be guaranteed;
there was always the fear of something slipping back."

Flynn and Tom Moran, the current chairman of Mutual of America,
played a major role in the American dimension of the peace
process. They played host to every major figure in the North
during the past 15 years and also developed close relationships
with the various party leaders.

Indeed, a speech by Peter Robinson, the deputy leader of the
Democratic Unionist Party, to Flynn's National Committee on
American Foreign Policy group was seen as a watershed. It was the
first time the DUP began to engage with Irish-American business.
Like Keough, Flynn urged quick action on the investment front.

''Good news was rare from Northern Ireland for many years. Now
they have a tremendous story to tell and sell. They need to grasp
it right away." While the government in the Republic has made
great use of the Irish-American connection to win business, there
was always a more awkward relationship between the British
government and its economic agencies and Irish-American business.

''There was clearly a disconnect, a feeling of distrust that
never led to the creation of the bond that is there with the
Irish government," said one leading businessman. ''That can now
all change."

Indeed, efforts to put in place an Irish government type advisory
group were well advanced under the previous power-sharing
government. Seamus Mallon, the former deputy first minister was
particularly active on the economic investment front, but the
attempted link-up foundered with that government.

Sinn Fein leaders such as Gerry Adams and Martin McGuinness are
very familiar with Irish-American business leaders and will
certainly be drawing on their contacts. Sinn Fein has already
assembled a formidable fundraising operation in the US and has
access to many key Irish-American business leaders.

McGuinness tapped economic investment as the major priority from
America in an interview in the Irish Voice newspaper in New York
last week. He said he was looking forward to visiting the US on
such a mission soon after assuming power.

While a joint DUP/Sinn Fein economic investment mission will make
for strange bedfellows, it could play out very well, according to
the US businesspeople. ''America loves a story like this, where
former enemies become partners and the greater good is served,"
said Keough. ''This will be a great opportunity for them."

In addition to business support, there is no question that there
will also be massive political backing from the US political
establishment. After the announcement on power-sharing last week,
Senator Edward Kennedy rushed to the floor of the US Senate to
congratulate the parties in an unscheduled address.

All over Washington, politicians as diverse in views as Senators
Barack Obama and John McCain rushed to get out their statements
of support.

By the end of the day, close to 50 politicians - including
President George Bush - had pledged support for the new
government.

In one fell swoop - or perhaps one photo opportunity the face and
possibly the future of the North changed dramatically in America.
Doubts about peace have been erased and replaced with hope. With
that hope has come the best prospects of economic investment ever
from the US for the North.

Niall O'Dowd is publisher of the Irish Voice in New York.

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http://www.sbpost.ie/post/pages/p/story.aspx-qqqt=NEWS+FEATURES-qqqm=nav-qqqid=22332-qqqx=1.asp

Comment: Now Comes The Hard Part

01 April 2007

Sinn Fein and the DUP face a tough time in tackling the bread
andbutter issues when they take power in the North, writes Eamonn
McCann.

Sinn Fein and the DUP face a tough time in tackling the bread
andbutter issues when they take power in the North, writes Eamonn
McCann.

'There were two main issues on the doorsteps.

One was the constitutional issues, which remain very important,
and secondly, water charges . . . The people of Northern Ireland
deserve a financial package to ensure that the bread-and-butter
issues are appropriately dealt with."

Ian Paisley's first response to the March 7 poll summed up the
contradictory significance of a result which confirmed both the
dominance of the DUP and Sinn Fein within their respective
communities and the hunger of their electorates to move beyond
the limits of communal politics.

Time will determine whether the two parties can deliver on this
aspect of the agenda now set for them. They have won breathing
space by persuading the British Treasury to pick up the bill for
the first year's water charges, which had been set for imposition
tomorrow.

But the issue hasn't gone away.

The fact that water charges had emerged as a major concern
scarcely registered outside the North during the campaign. But it
forced, Paisley, just a week before polling, to issue a
''personal pledge'' - distributed above the DUP leader's
signature across all 18 constituencies - to ''tackle'' the issue
once in office.

At the same point, Mitchel McLaughlin declared that Sinn Fein
would support civil servants and postal workers if they refused
to process or deliver water service bills.

The moves reflected the strength of grassroots feeling, while
ensuring that water charges didn't become an issue between the
two parties. The Ulster Unionists and the SDLP made the same
adjustment.

Thus, few votes turned on the issue, even as the parties
acknowledged its centrality and urgency across all sections of
the electorate.

On the face of it, then, the election - once again - had the
character of selecting parties to champion the separate interests
of each community.

Candidates seen as the most vigorous in advancing ''our side''
vis-a-vis ''the other side'' were well set for success. The
British government played a role in promoting the outcome. Tony
Blair and Peter Hain were repeatedly explicit that they envisaged
Ian Paisley and Martin McGuinness as First Minister and Deputy
First Minister.

For New Labour, the delivery of mandates to the two parties to go
into government together was the point of the election. The
endorsement was something of a self-fulfilling prophecy.

Having been elected on this ''traditional'' communal basis will
make for difficulties for both parties, especially for the DUP.

It has been widely remarked that the Sinn Fein leadership has
managed to keep the party together and to consolidate its support
despite ditching once-cherished beliefs. The daring and skill
with which Gerry Adams and his associates managed this manoeuvre
have drawn widespread admiration.

However, the image of the Sinn Fein leadership coaxing an
initially reluctant constituency away from violence and
intransigence onto the path of compromise and peace may be
adjudged by history as, at best, inadequate.

This is one of the keys to understanding Sinn Fein's steady
advance since the ceasefires of the 1990s.

The mass of Northern Catholics have never been republicans in the
sense in which Sinn Fein has used the word.

Commentators frequently refer to the Falls Road as
''traditionally republican''. But Gerry Adams was, in 1983, the
first republican ever elected in the area. In the December 1918
general election - which, until recently, the modern
manifestation of Sinn Fein insisted was the last legitimate
election held on the island - West Belfast was one of only two
constituencies in which Home Rule trounced republicanism: Joe
Devlin hammered de Valera.

Thus it has been since. One former hunger striker recalled last
week: ''We were always a small minority on the Falls. Looking
back on it, we were a minority in the IRA."

Donegal man Eddie Gallagher, a very senior IRA activist in the
1970s, said: ''The fellows from Belfast weren't fighting for a
Republic, they were fighting for their streets."

The IRA's 25-year campaign can meaningfully be seen not as a war
to drive Britain out of Ireland, but as a reaction to British and
Unionist violence and a continuation of the civil rights campaign
by inappropriate means. Viewed in this perspective, the shift in
the line of Sinn Fein which culminated in acceptance of the
legitimacy of the Northern state - and all else followed from
that - appears not as a challenge but as an adaptation to the
consciousness of its base.

It has been Adams's genius (it's scarcely too extravagant a word)
to have sensed this at an early stage and to have patiently set
about drawing and implementing the conclusions.

This circumstance will enable Sinn Fein to settle much more
comfortably than the DUP into a power-sharing executive.

Paisley's fundamental problem in holding his party together over
the coming period will be the fact that he has spent his life
preaching that, in Northern Ireland, religion and politics were
coterminous. The defence of ''Ulster'' and the defence of
Protestantism were one and the same thing. To give an inch to
Nationalists, then, was to go against God. Hence a Ballymena
councillor last week, understandably, described the Paisley/Adams
pact as ''blasphemous''.

While Republicans have been accused over the years of claiming an
''apostolic'' succession from revered founders and expressing
their ideology in ''theological'' terms, they have never been as
theological as that. The rumbling and recriminations about the
''sellout'' of cherished beliefs will continue to be more ominous
and threatening within the DUP than within Sinn Fein. Whether the
two parties, thus positioned, can buckle down to deal in
businesslike fashion with the issues which a majority on both
sides want resolved is questionable. They may have succeeded in
finessing the water charges issue, as far as campaigning for
votes was concerned. But on this - as on education, health,
''reform'' of the public sector and much else - now comes the
hard part.

They and their voters may discover that, notwithstanding talk of
''local elected representatives taking the decisions which affect
local people'', key decisions are - and, it is intended, will
continue to be - taken by individual s and institutions who don't
present themselves for election to anyone.

Three days before a photographer recorded the historic
Paisley/Adams picture, the chief executive of the NI Water
Service, Katharine Bryan, wrote to senior members of staff urging
them not to be confused by press reports.

''Northern Ireland Water will still be established, as planned,
on 1 April. NIW will be a government company outside of the
Northern Ireland Civil Service . . . Planned changes in how we
are regulated both economically and environmentally will
continue."

The thought that water privatisation the charges are designed to
provide a revenue flow for the envisaged private company - might
be affected or even reversed by an incoming executive clearly
hadn't occurred to Ms Bryan.

If a new executive is to make even a plausible show of delivering
on the economic agenda its leaders were pressurised into
outlining to the electorate, it will have to take on Ms Bryan and
scores of other New Labour appointees to key economic agencies
and boards who remain in place.

The best evidence of whether this will happen may be that no DUP
or Sinn Fein spokesperson has yet told Ms Bryan to cool her neo-
liberal ardour, that there's a new management in town, with
different ideas and an electoral mandate.

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http://www.sbpost.ie/post/pages/p/story.aspx-qqqt=NEWS+FEATURES-qqqm=nav-qqqid=22330-qqqx=1.asp

Comment: Executive Has Tough Economic Choices

01 April 2007 By John Bradley

Economic policy challenges were not completely absent from the
deliberations that led to Monday's post-dated agreement between
the DUP and Sinn Fein.

Economic policy challenges were not completely absent from the
deliberations that led to Monday's post-dated agreement between
the DUP and Sinn Fein.

Neither were they the crucial deciding factors. But beneath the
guarded statements issued by both sides, and their obvious
pleasure at seeing off Peter Hain's hollow threats, all the
Northern parties are totally united on some important economic
policy issues. This is progress of a kind.

First, whereas the British government was unwilling to shut down
Stormont if no Executive was formed last Monday, they might not
have been so unwilling to remove the protection from the high
taxation and user charges that apply in Britain, but not to the
same extent in the North. Over the years, as the private sector
was buffeted by the collateral damage of civil war, the North was
granted a degree of relief that was not given to other British
regions.

Nationalists and unionists are united in their determination to
continue this protection.

The second issue that unites both sides is the conviction that
the North needs a 'devolution dividend', in the form of increased
financial inflows from London, if the DUP and Sinn Fein are to
implement power sharing. Superficially, this might seem a
reasonable request. But one should realise that the North is not
Kosovo.

Since the mid-1970s, the size of the existing annual London
financial aid to the North has grown massively. The British
Treasury already has to pick up the tab for the difference
between Northern public expenditure and tax revenue, an annual
sum that amounts to about 30 per cent of regional GDP every year.

I calculate that this aid (the so-called 'subvention') in one
single year (2000) amounted to more than we in Ireland obtained
from the EU Structural Funds over the entire seven-year period
1994-1999.

Any extra devolution dividend is just as unlikely to stimulate
sustainable private sector growth in the North as the decades of
subvention that have gone before. In Ireland, it was mainly the
swingeing MacSharry fiscal reforms of 1987-89 that kickstarted
the high growth of the past 15 years, combined with social
partnership and EU Structural Fund development aid that was
strictly ring-fenced for use in improving physical
infrastructure, the quality of education and training of the
labour force.

No such process appears to be envisaged by the about-to-be
ministers and their advisers in the North. Rather, any devolution
dividend it is likely to continue to support a bloated and often
inefficient Northern public sector that has battened off the
British state since the troubles started. Somehow, I do not see
Prime Minister Brown agreeing to such demands.

Other than out of sheer frustration.

The third policy issue that has brought the warring factions
together is the conviction that corporate tax rates applicable in
the North must be lowered to the low rates that apply here in the
Republic.

A consultancy study recently commissioned by the Northern
business sector (Assessing the Case for a Differential Rate of
Corporation Tax in Northern Ireland) purported to prove that such
a tax break for the North would be a positive sum game within
Britain as a whole.

However, on closer reading, this conclusion was based on a crude
assumption that the impact of a lower corporate tax rate in the
North would be (essentially) to give it the same share of future
inward investment as that of the Republic (adjusted for effective
economy size), and that there would be no threat to the other
(higher taxed) British regions through investment switching away
from Britain to the (low tax) North.

Of course, the consultants did realise the North was not the
Republic. But they assumed away this complex and crucial issue in
a sentence that takes one's breath away: ''Based on a simple
force field analysis of competing factors in the RoI and NI, and
assuming future political stability in the latter, it is
difficult to see that other than in the area of tax there is a
decisive and enduring difference between the two territories from
the point of view of a prospective investor''.

Such an extravagant claim was even contradicted within their own
report, when they rowed back and heavily qualified their forecast
in the report's small print: ''The assessment of potential FDI
flows is based on recent flows into the RoI. For this potential
to be realised will require a complete overhaul of our existing
economic development mechanisms and institutions, and a dedicated
focus on opening Northern Ireland to the world economy''.

Perhaps everything is fine in the North, except for the high rate
of corporation tax. Or perhaps everything is not fine, and lots
will have to be done before the Northern economy is as responsive
to the needs of inward investment as the Republic's economy
gradually became over the decades after 1960.TheNorthern business
sector cannot have it both ways. They urgently need to get their
story straight.

Stepping away from strictly economic matters, surely it crosses
the minds of the Northern politicians, policy makers and the
business sector that if solving their development problems could
be reduced simply by lowering the corporate tax rate (and keeping
all the other fiscal benefits of remaining in British fiscal
union, including lots of direct aid to firms), then every other
depressed region in Britain would press for the same freedom?

Gordon Brown has set up a treasury committee of enquiry to
examine the corporate tax issue. I believe they will be no more
convinced by simplistic and self-serving arguments than I am, and
consequently, they will take a stern view on the granting of such
fiscal freedom to the North.

Based on my own experience of the new EU member states and
regions, I have found a crucial necessary condition for
development success supported by EU-aided National Development
Plans, is the quality of background analysis and research. I have
profound reservations about the quality of regional economic
research carried out in the North.

Crude analysis, misleading conclusions and overly simplistic
policy recommendations are grasped at by politicians who would be
far better served by the kind of deep, searching, and often
excoriating analysis that supports (and chastises) policymaking
in the Republic.

How might this situation be improved? The logic in favour of
deepening NorthSouth supply-side links, thus making the two Irish
regional economies less peripheral to each other, is partly
economic (dealing with cross-border policy externalities and
spillovers), partly geographic (close proximity and land borders
have inescapable consequences), partly cultural (although this
aspect is not without its negative side), and partly political
(since deeper North-South economic links might aid the
consolidation of peace and political stability within the North
and greater North-South trust and harmony).

The Irish government is driving an economic and business agenda
that is built on the premise that in order to upgrade the
competitiveness of Ireland, it simultaneously needs to make the
whole island more competitive. If it succeeds in this, genuine
synergies can be realised for the mutual benefit of both regions.

Such synergies would ultimately have to be reflected in the
formation of deeply embedded, inter-connected and supportive
island industrial, service and agricultural activities. The
unfortunate reality is that, according to already published
strategy blueprints, both the North and the Republic are still
attempting to improve their competitive advantages largely in
isolation from each other.

It might appear (post-Belfast Agreement and the latest St Andrews
update) that many of these imperfections have been addressed, and
that cross-border institutions are now in place. But deep
crossborder business cooperation has remained at a rather narrow
level that has left the underlying development processes of both
regions largely untouched.

The jury is out on whether this is due to the short time that has
elapsed since the institutions were put in place, or whether the
wrong kind of institutions came out of the agreement
negotiations.

It does not strike me that the DUP has any enthusiasm for
redesigning and enhancing these cross-border institutions. But in
their absence, the notion of an island economy will remain a
mirage, and we will all suffer the consequences.

Dr John Bradley, formerly a professor at the Economic and Social
Research Institute (ESRI) in Dublin, now runs research
consultancy EMDS.

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