SECTION I: GENERAL 20TH CENTURY POLITCAL HISTORY
were one under the British rule until the 26 southern counties were
granted independence from England
in 1921 with the Anglo-Irish Treaty. With the treaty
was independent but remained a member of the British
(a status similar to that of, for example,
Canada). At that point, the six
counties that make up Northern Ireland
remained under the economic and political control of
the end of
World War II, Great Britain’s
economy was in shambles as the war effort had completely drained
financial reserves. It was no longer affordable to govern the
vast, global empire held the previous century, and its colonial empire
disintegrated. Around this time, in 1948,
completely withdrew from the British Commonwealth
and became a truly free, independent republic. In 1973,
joined the European Community, today’s European Union (EU). The
Irish government created its own currency, the Irish pound, the exchange
rate of which was closely linked to the British pound. When the
common EU currency, the euro, was introduced throughout the union as a
replacement for the individual currencies of the various EU members, the
of Ireland voted to convert
to the use the euro as its primary currency. Great Britain joined
the EU, but not the Economic and Monetary Union
(EMU). Therefore, Northern Ireland’s
economy has always and continues to function under the British pound,
and does not participate in the euro currency bloc.
CURRENT SITUATION IN THE IRELANDS
for its pub culture and green, bucolic countryside,
Ireland’s economy thrives on tourism.
It is estimated that over 90% of the population is Catholic. As
the country is relatively small, with a population estimated at 3.8
million in 2000, it depends greatly on exports, especially to the EU
member states and the United States.
Recently, due to high amounts of foreign direct investment and the
development of multi-national corporations headquartered in
Ireland, the Irish economy has
witnessed unprecedented economic growth and the economic, social and
political benefits and drawbacks that accompany such growth.
Because of historically high levels of poverty,
faced a large emigration rate until recently, as the economic boom and
the benefits of previous investment in infrastructure have improved
overall living standards.
Ireland, commonly referred to as Ulster, consists of the northern six
counties of the Irish isle. Like
Northern Ireland is under British
sovereignty. About 2/3 of the population of 1.8 million is
Protestant, and the majority of the remaining population is Catholic.
It is historically one of the poorest and troublesome areas of the
United Kingdom, greatly due to uneven
development that has led to religious conflict between the Protestants
and Catholics. With the recent peace prospects due to the
Agreement, the citizens’ newly found confidence has manifested into
benefits such as greater peace of mind, increased property values, a
more developed tourist industry, etc.
II: THE TROUBLES
movements have existed from the beginning of Irish independence in 1921
for reunification of the two Irelands,
as civil upheaval between the Catholic and Protestant population clashed
over the issue. The seeds of the religious conflict grew from the 17th
century when English Protestants built plantations on valuable Irish
land. The Irish Catholics felt deprived of their resource and grew
long-existing tensions were exacerbated in 1921, the year that the
Republic of Ireland
gained independence. The northern 26 counties commonly known as
Ulster, the “wealthiest and most
Protestant part” of the isle, remained under the jurisdiction of the
United Kingdom. In these
better-endowed areas settled, for the majority, those loyal to
England, the Protestants. As they
had in the 17th century, the British benefited financially
from the valuable resources available in that region and the Catholic
population, again, felt suppressed.
geographic partition of Ireland mirrored the divide within society, as
the Catholics were left with embittered sentiments that Ulster belonged
with the rest of Ireland, and the Protestants were content to remain
under the rule of Great Britain. Each side strongly and
passionately believed in their cause, and the result was hostile
conflict. Over the last several decades, the climax of the clash
between the two groups culminated in Northern Ireland’s capital of
Belfast with years of harsh violence and terrorism that came to be known
as “The Troubles.”
groups formed to lobby for each side’s cause. The Catholics,
pro-reunification with Ireland,
were commonly referred to as nationalists or republicans, and the
Protestants, loyal to the British, were called loyalists or unionists.
An example of a nationalist political party is the Sinn Fein, the group
credited with the 1921 victory that led to independence of
Ireland. The infamous Irish
Republican Army, or IRA, which sometimes resorted to terrorism in the
fight for its cause to fight for reunification, was associated with the
Sinn Fein. An example of a rival loyalist party is known as
the Ulster Unionists, a group with staunch beliefs in support of
maintaining the union with Great Britain.
stated by Political Geography
Syed Hasnath, “If existing cultural hostilities are the fire, inequality
is the fuel to the fire that leads to terrorism.” The Irish
Catholics historically felt adverse feelings toward the British for
centuries of subjugation, with British financial and military
superiority preventing the Irish from doing much to oppose them.
When the better endowed northern counties were those counties retained
by the United Kingdom in 1921, levels of inequality increased even more.
This inequality instigated rage among the people and eroded social
cohesion. Inequality by definition suggests that some people are
better off than others; some are “haves” and others “have nots.” In the
case of the Northern Ireland and Ireland conflict, the Catholics
considered themselves the “have nots,” and in that position, felt they
had nothing to lose in the fight for their cause. This led to the
use of terrorism by radical groups such as the Irish Republican Army and
social fear and instability.
FOR PEACE: THE BELFAST AGREEMENT, OPPOSITION
In April of
1998, the British and Irish governments came together in an historic
attempt to settle the conflict that had taken thousands of lives through
brutal acts of terrorism of both the Catholics and the Protestants.
After long negotiations between 12 Northern Irish political parties, it
was agreed that “Britain
(would keep the) province, but (the) Republic gain(ed) a voice in its
affairs.” This agreement came to be known as the Belfast
Agreement, or the Good Friday Agreement, and was signed on May 22, 1998.
A Northern Ireland Assembly with 108 seats was established in which both
Catholic and Protestant representatives would jointly govern Northern
Ireland. The Republic of Ireland agreed to amend its constitution
by eliminating claims on Ulster territory. Other councils were set
up to improve relations between the governments, including the
North-South Ministerial Council (between
and the Republic
of Ireland) and the
British-Irish Council (between the Republic
and Great Britain)
to name two examples.
Agreement, although seemingly beneficial to all involved in the
conflict, was signed with some opposition. One example of a group
opposed to the Belfast Agreement is the Unionist party, the pro-British
political faction in Ulster, who very firmly believed and continue to
believe in the importance of maintaining the union with Great Britain.
As they strongly state on their website, www.ukup.org (United Kingdom
“The United Kingdom Unionist Party advocates full and equal rights for
everyone, regardless of their political, religious or cultural
orientation. The Party's central purpose is to maintain the UNION
between Northern Ireland and Great Britain, as this is in the best
interests of all of the people of Northern Ireland.
This Party fully supports the aim of peace and reconciliation and is
determined that those who use or threaten violence and retain the means
to do so shall no say in the governance of Northern Ireland. To do
otherwise would be to accept peace at a price that no democrat should be
asked to pay. The UK Unionist Party remains resolutely opposed to the
provisions of the Belfast Agreement that have violated the basic
principles of democracy by installing the front men for terror into
Government. There can be no role whatsoever in any democratic
institution for those who remain inextricably linked to terrorist
Unionism seeks to apply the same standards of democratic accountability
as available elsewhere in the United
opposition, to the world and many Irish people (both Catholic and
Protestant), the Belfast Agreement offered a promise and hope for a
peaceful settlement to the decades of conflict in Northern Ireland.
Catholics and Protestants to work together to govern their territory;
this mutual cooperation is unprecedented in the history of the Irelands.
Countless benefits such as a more peaceful state of mind for those
living in the area, less crime, increased property values, and other
positive economic, political and social effects result from the Belfast
Agreement. However, the Agreement is just a first step. In a
speech one year after the signing of the Agreement, Prime Minister Tony
Blair spoke in support of the Agreement, hailed the efforts that had
been made since the signing, but declared that more progress would be
made with continued cooperation. The Belfast Agreement is
encouraging, but there is still much more to work on, as centuries of
unrest and bitterness cannot be erased with one treaty.
the Republic of Ireland and Northern Ireland had been known for high
levels of poverty and inequality within their populations.
Beginning in the 1840s (the time of the Irish Potato Famine) until the
1970s, Ireland faced a consistently high emigration rate, due greatly to
impoverished peoples searching for better opportunities in other
the 26 counties of Ireland and 6 counties of Ulster were governed under
British rule, and therefore, the British pound. Since Great
Britain did not join the EMU, Northern Ireland continued to use the
British pound. After the signing of the Belfast Agreement,
Northern Ireland remained a British holding, and therefore, again,
functioned still under the British pound.
CURRENT ECONOMIC CONDITIONS IN THE REPUBLIC OF IRELAND
Republic of Ireland established its own currency, the Irish pound, once
it became independent. In 1973, Ireland joined the European Union,
and agreed to, in join the EMU in launching a single European currency,
the euro, with the Maastricht Treaty of 1991. According to the
European Union Online, a single currency offers “five advantages to the
citizens of Europe:
a more efficient single market after disruptions to trade and investment
adjustments have been eliminated
growth and employment will be stimulated by better borrowing conditions
and a currency based on sound economic foundations
end to the costs of converting between currencies
greater international stability by means of a new currency on an equal
footing with the dollar and the yen
sovereignty regained through collective management of a single monetary
policy. A national monetary policy is no longer a sustainable option
with capital flowing freely between interdependent economies.”
The EU’s Economic
and Monetary Union is considered a liberal application of economics in
its promotion of more open economic relations and exchanges, whether in
labor, financial, trade, or other markets. Ireland’s liberal
policies, low corporate income tax, and highly skilled but relatively
inexpensive labor force attracted especially American foreign direct
investment and multinational corporations throughout the 1990s.
The result was high GDP growth, averaging around 9% over nine years.
So much foreign money had been funneled into
that in 2000, the difference between Gross National Product and Gross
Domestic Product in Ireland
was 16%. Unemployment has steadily decreased since 1997.
Such historic growth caused some to call
the “Celtic Tiger.”
speculate that the juggernaut-like growth of the Irish economy could
overheat, and such growth could not be sustained. With Irish
technology industries relying heavily on exports to
recessions could result in similar recessions in the Irish economy.
The textile industry, in comparison with the growth of the high tech
industry, has lost sales greatly due to less expensive goods provided by
Asian and Eastern European competitors. The agricultural industry
has been called inefficient and also faces competition, but from other
members of the European Union. While
Ireland’s growth has been historic and
a significant achievement, the government must be cautious in relying on
similar growth rates for future economic decisions and planning.
CURRENT ECONOMIC CONDITIONS IN NORTHERN
has been a global financial powerhouse for centuries. It has to
date not joined the EMU, as its currency is one of the strongest in the
world historically and in the present.
Therefore, Northern Ireland
continues to function under the pound.
The government in
sent Northern Ireland
large amounts of economic aid during the Troubles, but until the signing
of the Belfast Agreement,
“no investment was enough to stabilize the situation.” The
prospects of peace created by the signing of the
Agreement have been beneficial to
Northern Ireland economically. It
has allowed property value to increase due to the peace of mind of
citizens. A tourism industry has grown, attracting visitors who
were once afraid to see the sites in
due to the violence associated with the religious conflict.
Northern Ireland, a new plan for
economic development called Strategy 2010 was introduced in 1999.
Strategy 2010 reports on economic conditions affecting
Northern Ireland, including economic
statistics on topics such as unemployment and sector production in
relation to GDP. The plan recommends an economic strategy to be
pursued through the first decade of the century.
statistics in Strategy 2010, many economic trends in
Northern Ireland follow trends in
Great Britain. According to the
plan, “This is to be expected; Northern
and GB share common fiscal, monetary and exchange rate policies; GB is
Northern Ireland’s main external market
and the Exchequer makes significant transfers to
Northern Ireland to enable the region
to maintain UK
levels of provision.” Accordingly, unemployment was higher in
Northern Ireland than
in 1998 at 6.8%. The major economic sector is manufacturing.
GDP per capita in 1998 was 20% below the
average at $19,048, as compared to $23,498 in
during the same year. Strategy 2010 places importance on the need
of investment in knowledge, that is, improve the skills of the labor
force, and to invest in research and development.
ECONOMIC SIMILARITIES BETWEEN THE
Republic of Ireland
and Northern Ireland
are presently demonstrating the economic benefits that follow carefully
planned political liberalization and government assistance. These
benefits have led to higher standards of living in both countries never
Ireland, the political integration with
other European states in the EU led to the joining of the EMU.
Membership allows the Irish people to vote for issues that arise in the
EU, as they did in favor of ending their currency for the euro.
But this liberalization was assisted by the government’s actions.
By keeping corporate taxes low and encouraging foreign direct
investment, multinational corporations were attracted to the country.
The relatively inexpensive but
labor force was another asset to the multinational corporations, which
helped to decrease unemployment in
been called “one of the most open economies in the world” due to the
high number of foreign firms in Ireland
and as evidenced by a 16% gap between GDP and GNP. Thus, liberal
policies in Ireland
allowed for an economic boom unprecedented in Irish history.
Northern Ireland, months of
negotiations led to the historic and promising
Agreement. The National Assembly created with shared power between
Protestants and Catholics inspired hope to the people of
Northern Ireland. This peace in
combination with further planning and direction via Strategy 2010 has
resulted in vast improvements in Northern
Ireland’s economy in just the last
couple of years. Peace of mind of citizens increased values of
homes, a tourism industry is developing quickly, business seems intent
on moving forward with innovation, etc.
Liberal policies have also
benefited Northern Ireland.
SECTION IV: AN ECONOMIC FOCUS ON EXPORTS IN THE
and Northern Ireland
are relatively small economies, they depend on exports to drive their
economies. Both economies have seen a dramatic increase in
exports due to the pursuit of liberal policies. However,
has witnessed such growth in the industrial and services sector while
Northern Ireland’s growth has been
mainly in the manufacturing sector. The influx of multinational
corporations in Ireland
for reasons previously stated led to large levels of high-tech exports
and was a major factor in the high growth rates experienced in the
1990s. The production of industrial goods accounted for 40% of GDP
Ireland exports 59%
of its commodities to the European Union, 29% of which is shipped to the
United Kingdom alone, and 18% to the United States. According to
the CIA World Factbook, the most popular commodities exported from
are: “machinery and equipment, computers, chemicals,
pharmaceuticals, live animals, and animal products.” These
products coincide with the strongest sectors of the Irish economy:
industrial, services, although it has decreased significantly since
with Strategy 2010 in action, is currently encouraging investment to
launch the economic growth. With the peace of the
Belfast Agreement, the manufacturing industry has
had the opportunity to grow and most exports are associated with this
industry. The manufacturing industry is considered less advanced
than the lead sectors of industry and services in
Ireland. With increased
investment being filtered into the economy of
Northern Ireland, Strategy 2010 aims to
launch the growth of these more advanced sectors, considered
Through the 1990s,
witnessed an 11% increase in exports as a percentage of total sales,
from 28% to 39%. As in the Republic
Ireland, membership in the EU makes
it beneficial to trade within the Union due to,
for example, lower tariffs, and therefore about one-half of Northern
Irish exports are to Europe. The second
largest trading partner is the United
States. This increase was a main
Northern Ireland’s position as the
fastest growing economy out of the Scottish, Welsh, and Northern Irish
regions in the 1990s; GDP growth in the last decade was at 82.9% as
compared with 71% in the United Kingdom.
The main exported manufacturing goods include transport, electrical, and
optical equipment. With strategy 2010 in place, business is in the
process of making a transition from concentration on manufacturing to
the information technology sector. High tech foreign corporations
are investing in Northern Ireland,
creating more jobs and continuing the electronics, telecom, and
international traded software focus. As in the
Republic of Ireland,
the relatively small size of Northern
requires a high level of exports for maximum economic benefit.