Business turns to politics for peace and leadership

Business leaders in Northern Ireland were this week finally presented with the

IRA ceasefire they have been consistently calling for since the ending of the last one. However, in sharp contrast to the ceasefire of August 1994, on this occasion the announcement was greeted more with words of caution than with any burst of optimism.

The two areas likely to benefit most if there is a lasting peace are tourism and inward investment, with tourism likely to feel the more immediate uplift.

However economists and business people have warned that economic gain depends upon rapid political progress.

Mr Bill Tosh, chairman of the Confederation of British Industry in Northern

Ireland has been at the forefront of the business community's campaign to get the peace process back on track. "The business community is quite hopeful, but hopeful in the absence of euphoria. That may be a good thing, because their hopes are somewhat more hard-headed and pragmatic this time," he says.

The CBI chairman believes lessons must be learned from mistakes made last time round. "We didn't clearly signal to investors that stability had been achieved. Sadly there was no progression in the political arena in the 18 months after the first ceasefire, and that is why I particularly welcome the time frame that has been set on this occasion."

In press interviews over the past week, Mr Tosh has done everything in his power to urge politicians into talks. If the ceasefire holds and political progress is made, he sees a peace dividend on two fronts. The first, he says, would be the opportunity to redirect money from the security budget to improve infrastructure and the skills base. Alongside this, the private sector would need "to deliver 21st century projects with sustainable high-quality employment".

The public expenditure issue is key because of the North's high dependency on transfers from the British exchequer. While the annual subvention is £

3.2 billion, the fiscal deficit is closer to £4 billion, a significant proportion of the total GDP of £13.8 billion.

At least £900 million is spent on security annually in the North. If there is a lasting peace, up to £500 million could be saved for the

British exchequer, according to Dr Graham Gudgin, director of the Northern

Ireland Economic Research Centre.

While Bill Tosh says he will be asking the New Labour government to maintain the level of subvention for three years, Dr Gudgin fears this is money Tony

Blair would be keen to spread across Britain. Estimates have put the potential job losses from a security wind-down as high as 20,000.

A statement from the Industrial Development Board, (IDB), which is charged with attracting inward investment, has welcomed the ceasefire, saying it is "a very encouraging development which should add additional impetus to the economic momentum which has been building here since the start of the 1990s".

The IDB maintains this economic turnaround predated the original ceasefire and that both export sales and investment from overseas reached record levels over the past three years.

Dr Graham Gudgin says that on average the IDB brings ten companies to the

North each year. This did not increase over the period of the last ceasefire.

However the number of inquiries did rise dramatically and it would be reasonable to assume that these would have translated into increased investment if the peace process had developed. Mr Tosh also called this week on corporate America to do more than "posture politically" and that the North should be given consideration for any European investment.

Economists agree that it is vital to attract more hi-tech companies, such as

Seagate International, which decided to locate in Derry, before the original ceasefire and which announced a major expansion in June. Vice-president Mr Ken

Allan said potential investors considered many different factors and stability was one of them. "If there really was a peaceful resolution, that would make a big difference," he said.

Dr Graham Gudgin cautioned: "The ceasefire will have an impact on inward investment but on a much smaller scale than people think." He believes the quality of investment could improve however, with more of the highly mobile and sought-after hi-tech companies considering the North as a location.

The sector expected to reap the benefits of the ceasefire first is tourism, which experienced a boom year in 1995. In that year total tourism revenue reached £270 million, which is equivalent to 2 per cent of GDP. The ending of the ceasefire and the Drumcree-related violence of the past two years have been a severe setback.

The Northern Ireland Tourist Board believes that a lasting peace could bring tourism revenue in the North up to a par with the Republic and Scotland where it accounts for 6 per cent of GDP. In money terms this would mean an additional

£500,000 million and the creation of 20,000 jobs.

Group Marketing director Mr Mark Alexander points out that a lot of investment and development has been taking place. The number of bed spaces available in Belfast doubled between 1990 and 1995. However even with the facilities in place, it could take up to 10 years before tourism revenue as a proportion of GDP would match that of the Republic. It could also be argued that employment created in tourism would not match the loss of many highly-paid jobs in the security sector.

Mr Garbhan O'Doherty, who this year opened a new hotel in Derry city centre in addition to his ten pubs, said political progress was vital if benefits were to be reaped from the cease-fire. He said business at the hotel had been building steadily in the first half of the year, but described as "woeful" the occupancy figures for July and August.

"It is fabulous to see the stage we are at now compared to two weeks ago.

There could be great gains if we could get stability, but it is down to politicians. They hold the future of Northern Ireland in their hands and they can't abdicate that responsibility," says Mr O'Doherty.