MONEY talks. Or so it seemed as the economic prospects for Northern Ireland appeared brighter by the day in the wake of the ceasefires. Despite the lack of political progress, a strong revival in tourism appeared underway and inward investors were showing a strong interest. Cross Border business links were being built. Economic progress would underpin the peace, or so the argument went.
Then came last Friday's bomb in London. The resumption of IRA violence clearly threatens to undo much, if not all, of the economic progress. Peace offered the prospect of a boom in the tourism sector, a revival of inward investment and a more conducive environment for domestic business. Now the risk is that much of the potential in these areas will not be realised.
Everything, of course, depends on what happens in the political arena. However, confidence is the key for business people planning investment. The explosion in Canary Wharf, together with yesterday's defusing of a device in Shaftesbury Avenue, will have dealt a heavy blow to this confidence. Whatever happens next, the uncertainty itself will be very damaging.
Senior business figures in the North argue the progress made will not be completely undone. Many overseas investors' have visited Northern Ireland for the first time and the Industrial Development Board may still land some new projects. Domestic business, used to working against a violent backdrop, is already participating in a "Growth Challenge" designed to build competitiveness. Firms on both sides of the Border have had a look on the other side and realised that there are new business opportunities which they had not spotted before. However, a sustained return to violence would destroy much of the hoped for peace dividend.
Meantime, tourism will suffer immediately. The planned redirecting of Government funds from security to tackling long term unemployment is now under threat. The promised funds from the EU may still arrive, but the much more important flow of private capital will be severely curtailed.a Overseas manufacturing investors will look elsewhere, while hopes of private investment funds from the US putting money into the North will be stillborn.
What is striking, looking back over the past year and a half, is that economic progress moved well ahead of politics. Businesses were crossing the Border from day one, while politicians were unable to come up with a formula to even sit around the same table. Wiser business councils warned when the ceasefires were called that, if political progress was not achieved, the initial economic gains would not be sustained.
However, few, if any, expected peace to be shattered so dramatically. It remains to be seen what will happen to the projects in negotiation with the IDB or the invasion underway by British retailers.
Just as the economic progress ran ahead of politics, the danger now is that the economic reverse will be rapid, unless the situation stabilises quickly. Having based their investment plans on political progress, the outside investors which were a crucial element of the hoped for regeneration, will simply look elsewhere. The North was already coming in late, trying to cash in on the overseas investment drive by major US firms which has already been underway for a couple of years.
The spin off from the interest of President Clinton will be lost. Tourists who had hoped to travel to Northern Ireland this summer will pick another destination.
The economic window of opportunity for the North will pass unless the ceasefires are reinstated. And the danger now is that the initial willingness of businesses to push ahead with their plans and trust that political progress would be made may have been lost forever. Even if violence does not resume on the same scale as before the ceasefires, companies will now take a much closer and more critical look at the political situation before investing. And investment is the key to economic revival.
