The religious and political partition of Ireland has long commanded academic interest, often at the expense of the economic implications of the division. It must be asked, however, on an island so small in world economic terms, how costly such a division is? The author will firstly critically examine to what extent economics has been used to justify or refute partition. These economic arguments will be examined from both a 'nationalist' and 'unionist' perspective. The author will proceed to assert that many sectors of the island's economy would stand to gain economically from some degree of 'enhanced unity'. Finally, the author analyses the implications of advancing European Integration on a small divided polity. At no juncture in this piece will the author express a preference for the political nature of a more integrated Ireland. No preference will be evinced for any of the hypothetical models, be it a sovereign independent state, a state within a Federal United Kingdom or a country united within the British Commonwealth.
The nationalist interpretation of Ireland's economic woes has been well documented. However, this paper will limit itself to two reasons why it is an abuse of economic rationale to further the ideological end of independence. It is a common nationalist claim that due to Ireland's distance from the British government's decision making locus, the country suffered economically under British rule. However, areas of the British Isles, far removed geo-politically from London did not suffer as harshly as Ireland. Central Scotland, southern Wales and parts of northern England were more heavily industrialised than the counties which border Greater London. Scotland, for example, managed to replace cottage industries with a vibrant manufacturing base in response to increased competition from English-based firms. Why Ireland did not do the same cannot be blamed solely on the political institutions in Westminster, but mainly on factors indigenous to Ireland.
It is worth noting that Ireland's underperformance was not unique. East Anglia, for example, also experienced population loss and underdevelopment despite what nationalists would perceive as governmental favouritism towards such areas at the expense of Ireland. What factors, then, resulted in Ireland's poor economic performance while under the British yoke? Many reasons have been propounded (e.g. land tenure system, lack of natural resources, lack of capital investment etc.). Whatever the reasons, placing the fundamental blame on the Westminster parliament seems a simple and convenient, yet ultimately inaccurate interpretation of Ireland's economic woes.
Unionist demands to be excluded from Saorstat Eireann had a seemingly strong economic logic. On the one hand, their belief that 'non-Catholics' had 'inherent and ineradicable endowments of character and aims' (Thomas Sinclair), which set them apart from the mainly agrarian Catholic populace of pre-Treaty Ireland. Quite apart from this, a more analytical argument against a united Ireland was espoused by J. Milne Barbour, a leading Belfast industrialist in pre-Treaty Ireland. Barbour's opposition to the six counties' participation in the Free State was threefold. Firstly, he claimed that the Free State would be highly protectionist in outlook, secondly that industrial interests would be subsumed by an overriding concentration on rural development, and thirdly that participation in an independent Ireland would result in restricted access to the UK market. While at first glance, his predictions would seem to have been accurate, a hypothetical analysis of what may have happened in the case of an all-Ireland state in the early 1920's can refute them.
It is generally accepted that Saorstat Eireann adopted a protectionist stance with the advent of the first Fianna Fail government. However, this should be seen in light of the fact that much of the developed world followed such a policy in the aftermath of the 1929 stock market crash. A more hypothetical argument can be based on the (albeit tenuous) assumption that Fianna Fail would not have gained power in a 32 county Ireland. Had Ulster Unionists been present in a 1930's all-Ireland parliament, they would have commanded about 25% of the seats (proportionate to the unionist population). The Unionists would, in such a situation, probably have leant their parliamentary support to Cosgrave's Cumann na nGaedhael, a party more sympathetic to their views than De Valera's Fianna Fail. If such a Unionist-Cosgrave alliance achieved power, it is likely the Unionists would have pressured Cosgrave into some sort of single market pact with Britain. Therefore, Unionist fears of protectionism in a united state were unfounded. While accepting this argument is open to much political and historical criticism, the author believes the economic reasoning in it to be essentially sound.
Secondly, the fact that rural interests did dominate in the free state can largely be attributed to the fact that the economy of the 26 counties inherited by the first administration was largely agriculturally based. Agriculture accounted for 54% of employment and 32% of GNP in the early 1920's. Given a more balanced sectoral economy, as the 32 counties would have been, it seems unreasonable to assume that policy would have been identical. In fact, this assumption provides a strong argument in favour of North/South integration. The 6 counties, excluding Belfast, were largely agrarian, while the 26 counties' industrial base was still in its infancy. Both sectors would have benefited from a more balanced approach on the part of economic policy makers in a united Ireland. Industry and Agriculture would have been addressed by a 32 county government, both being key sectors of the fledging nation.
If all the above conjecture is assumed, this 'alternative history' of Ireland would have answered Mr. Barbour's last argument, i.e. that participation in the Free State would lead to a restriction to the UK market. The continued dominance of the Cumann na nGaedhael - Unionist coalition would have been ensured that close links with the UK would have been maintained. It could also be reasonably asserted that if Fianna Fail came to power after a single market with Britain was established, this hypothetical status quo would have been maintained. Economic benefits from the 'union' would have deterred most politicians from a complete reversal of the policy. Whether the UK government would acquiese is a separate argument. A relevant observation that can be made on this issue is that continued pressure from Unionists would probably have been sufficient to maintain the single market - doubtlessly Westminister would still have been moderately pro-Unionist and would have been willing to maintain the single market with concessions to the 32 county state to appease unionist elements of the British ruling class.
The use and abuse of economic argument was frequently employed by both political persuasions in the six counties. The extent of its use shows how most people are driven by consideration of personal wellbeing rather than ideological dogma, and this was recognised by politicans of both persuasions to further their own cases.
The economic benefits which would accrue to both parts of the island from further integration would be substantial. If integration could deliver an end to violence many of the negative externalities associated with 'the Troubles' would disappear. Inward investment to Ulster, and to a lesser degree the Republic, would increase due to greater stability bolstered by membership of the EU and proximity to the UK. A more visible impact of the removal of the border would be a more efficient deployment of security forces, a type of economy of scale in the amalgamation of two police forces. The border, by definition, separates two distinct legal juristictions which results in a distribution of manpower which is wasteful. However, there are a number of sectors in the more conventional economic field which could benefit from cross border co-operation in an integrated economy.
Firstly, an integrated energy policy has been hampered in the past by terrorist attacks on the interconnector between the two electricity grids. Due to the fact that peak use of electricity differs between the two parts of Ireland, savings could be made (by both consumers and producers) by the reopening of the interconnector. These greater uses of economies of distribution could potentially lead to an All-Ireland electricity company or, perhaps, a degree of competition between the two sheltered existing companies. It is estimated that the ESB alone would achieve a saving of £10m per annum, by such a move, which is particularly notable in light of the restructuring that the company is currently undergoing.
Another area where enhanced cooperation would be beneficial is tourism. Indeed, this has already been recognised, with the Northern Ireland Tourist Board, and Bord Failte now engaged in cooperative marketing. Quite apart from foreign tourists, the dismantling of the border (and particularly the psychological baggage of the border) would increase cross border tourism. This form of 'import substitution', principally at the expense of comparable destinations such as Scotland or Wales, could in itself prove crucial to the development of the tourist sector. That both countries have the potential to increase tourism is clear. The North's tourism revenues during the troubles were approximately one third of the Republics', while the post-ceasefire tourism increase in the Republic is being consolidated by infrastructural investment by a number of hotel chains, both domestic and international. Therefore, increasing co-operation further would seem to have many positive effects on tourism if the benefits from the current joint promotional exercise is to be used as a guide.
The final sector analysed here is transport, which has been adversely affected by violence and partition. The most salient example is the Dublin-Belfast train line which was the target of many terrorist attacks. Other areas, however, could also benefit from increased cooperation. A prime example would be an integrated road-port development policy. An 'Economic Corridor' between the Dublin and Belfast regions has already been mooted by the Joint Council of IBEC/CBI. Such an improvement in the transport infrastructure would enhance the potential benefits of increased trade on the island, which would be an asset in the fight against unemployment.
Finally, reference should be made to the EU and Monetary Union. An integrated island would entail an 'All-Ireland' negotiated framework. The structural funds, intended to narrow the gap between the richest and the poorest states in Europe as EMU approaches, are going to be reduced for the Republic in the late 1990's. Economic growth and structural funding from 1987 onwards has nudged Ireland's national income per capita closer to the EU average. Northern Ireland's prosperity (as it is) depends upon subvention from the UK government which, at around £3 billion per annum, is worth approximately 20% of the North's GNP. If the peace process is resuscitated, this subvention is likely to come under severe pressure, despite any protests from Ulster's relatively small representation in Westminister.
On the assumption of the gradual but inexorable fall in the subvention and structural funds, Ireland as a single unit in Brussels might prove extremely successful in increasing EU transfers to Ireland because of increasing economic clout. Further, a reasonable claim could be made to the effect that the reintegration of the two economies is crucial to their development after a quarter of a century of terrorism and three quarters of a century of partition. However, mutual benefits could be achieved with joint negotiations on matters involving agriculture, fishing etc. It is notable that northern fishermen of the unionist persuasion pondered publicly over whether they might have got a better deal from the Irish government than from Westminister in the recent negotiations relating to the Irish Box.
All this conjecture is particularly relevant in light of the trend in Brussels to Commission and Parliament representation based more on population size that on a state by state basis. Both parts of Ireland are small players in Europe, and while some form of integration might not produce a monolithic state, a more unified and cogent All Ireland approach would in all likelihood reap more benefits vis-a-vis policy influence. Another crucial feature of the EU is the question of EMU and a single currency. This could be a medium for a single currency for the island, whose population of five million currently uses two currencies. In light of the arguments made previously regarding trade, tourism and the integration of infrastructure, the maintenance of two separate currencies between economic regions with striking similarities seems spurious. Unfortunately, a country's currency is one of the most visible reminders of its identity, so whose face is on a particular note can depend more on emotions than economic rationale. The transaction costs imposed and the uncertainty that is bred however, seem to make a good economic case for integration.
In conclusion, economies of scale dictate that efficiency on this island can best be achieved by some form of integration of the two parts of the island. Rather than view economics as a useful tool to achieve a particular political, social or religious end, economics and individual well being lie at the heart (as Marx pointed out) of most conflicts. An apolitical, detached examination of the two economies shows the benefits that could be achieved on a sectoral basis, with inevitable (but unquantifiable) efficiency gains as well. This is all particularly relevant in light of the shift of policymakers from the various states to Brussels where political, historical and religious considerations play second fiddle to economic realities.
Bibliography
O'Hagan, J. (1995) The Economy of Ireland , Gill & MacMillan, Dublin