Ireland Looking for Ways To Continue Economic Boom by Sean OíDriscoll In 1991, a national Irish newspaper published a survey in which teenagers listed their greatest concerns about the future of the country. The results were not surprising: Unemployment, mass immigration and the spiraling political violence in Northern Ireland topped the list. Those surveyed had precedent to back up their fears: During the 1980s, the Republic of Irelandís unemployment rate rose to almost 20 percent (the second highest in the developed world), and borrowing per capita was three times that of Mexico. In Northern Ireland, meanwhile, the business communityís efforts to attract investment were vastly overshadowed by the depravity of revenge killings by Catholic and Protestant extremists. By 1994, anti-Catholic fanatics had taken to spraying bars with machine gun fire as revenge for a disastrous Irish Republican Army (IRA) bombing in the Protestant area of Belfast. By 2000, however, it was like entering a different universe. A power-sharing government in Northern Ireland has been running for two years, and the former chief of staff of the IRA, who once vowed to bring Northern Ireland to its knees, is now the minister of education, gladly discussing gove rnment policy with his pro-British cabinet counterparts. In the south, the population has a new dilemma: how to deal with the tens of thousands of immigrants streaming into the country, looking for a small piece of one of Europeís most successful economies. The country has full employmentóin fact, employment experts warn that unless the number of suitable workers increases to the level of jobs available, it could lead to a downturn in the economy. This was particularly important in the software industry, the second largest in the world after the United States. So how did this happen? How did one of the worst economies in Europe become a textbook model for economic management, studied by finance officials all over the world? ìBy some solid planning and a lot of great minds,î said Ray MacSharry, the former finance minister who was in power when the lagging Irish economy began to take shape as ìThe Celtic Tiger,î a term widely used in Ireland to describe the booming economy. As a reflection of how much interest the economic turnaround has generated, a book MacSharry co-wrote on the origins of the Celtic Tiger has become a surprise best seller. He can vividly recall the bad old days when he would spend Sundays in his ministry finding savings of as little as $1,000 to reduce the chronic budget deficit. ìWe inherited an economy that was in really poor shape,î he said. ìThe national debt had almost doubled in four years and unemployment was spiraling. It was time for an entirely new approach.î With the help of the opposition Fine Gael party, MacSharryís government set on a course of budget tightening. Long before the boom years, the new approach was showing remarkable results. Between 1986 and 1990, unemployment fell from 225,000 to 174,000, and the budget deficit dropped from 8.6 percent of gross national product to 0.7 percent. The countryís unions and management also put aside bitter disputes in favor of a national pay agreement. ìIt was like the whole country could see the big prize,î MacSharry said. Solid investment in third-level education and $11 billion in grants from the European Union (EU) lay the groundwork. Meanwhile, the countryís Industrial Development Authority aggressively campaigned for U.S. investment, armed with a 10 percent tax rate for manufacturing, the lowest in the EU. ìThis was the unique and essential foundation of Irelandís foreign investment boom,î said Padraic White, MacSharryís co-author and the former managing director of the Industrial Development Authority. With an unbeatable tax offer, White knew that he only had to get the message out to U.S. companies and watch the offers roll in. ìThe key was searching out the emerging growth niches and then tracking down the emerging star companies,î he said. Those growth niches turned out to be pharmaceuticals, medical devices, electronics and software. The jobs poured in and by 1997, arguably the defining year for the new Irish economy, Ireland ranked fifth in the world as a destination for U.S. investment. By sheer good luck, Northern Irelandís feuding paramilitary groups finally ended 35 years of crushing violence with the signing of the Good Friday Agreement in 1998. After 800 years of conflict, Ireland finally seemed to be at peace. The new Northern Ireland government, made up of a rainbow of former enemies, brought about a new external investment confidence that would have seemed impossible in the dark days of the conflict. Outgoing Republican Rep. Benjamin Gilman (R-N.Y.) set out the economic benefits of the Good Friday Agreement at a fundraising dinner for Gerry Adams, president of Sinn Fein, the predominately Catholic political party associated with the IRA. He noted that tourism in Northern Ireland had increased by fourfold, unemployment levels were at their lowest since 1975, and there had been an 86 percent increase in housing prices. Professor Gerry McKenna, president and vice chancellor of the University of Ulster, has seen a huge increase in research cooperation with U.S. companies. ìWe have set up a system for incubating small biotech and health companies that develop from research, and together with our U.S. partners, we help them grow. From that, we have been able to set up our own company base in Boston,î McKenna said. ìThe increased energy of this cooperation with the U.S. has been enormous.î This success was highlighted by Septemberís U.S.-Ireland Business Summit, in which Irish and U.S. political and business leaders met for a series of discussions on biotechnology, financial services and information technology. And U.S. Secretary of Health and Human Services Tommy G. Thompson promised a trade mission the following month to both the Republic of Ireland and Northern Ireland. However, dark clouds have formed on both sides of the Irish border. One month after the summit, the Northern Ireland government was dissolved and direct rule was imposed from London amid bitter allegations that the IRAís political wing, Sinn Fein, had been operating a spy ring from inside government offices. Thompsonís trade mission has been cut to a two-day conference in the Republic, but a U.S. Department of Health spokesperson denied media suggestions that the collapse of the Northern Ireland government was a factor in the shortened trip. The Republic also has its problems. The countryís huge investment reliance on the United States has left it vulnerable to the downturn in the U.S. economy, particularly in the computer industry, which has been struggling since last year. Current Finance Minister Charlie McCreevy set out the stark reality in a recent speech: ìThe boom is over,î he said, before pointing out that economic growth this year had slowed markedly, with growth rates of about 2.5 percent and 3 percent for gross national product and gross domestic product, respectively, ìand even that may be overoptimistic,î he added. McCreevy, known for his plain speaking, also warned that there would have to be cutbacks in public spending to offset the 750 million euro the country would have to borrow the following year. ìWe cannot spend whatís not there, no matter how desirable the objective,î he warned. ìThe key for Ireland will be to stabilize what it already has,î said Susan Davis, the leader of the National Assembly of Irish American Republicans and the chairwoman of the U.S.-Ireland Business Summit. ìA lot has been gained. This is a time for consolidation. Both the Republic and Northern Ireland have a huge amount to offer the U.S. investor, but the concentration should be on maintaining all that has been gained. If it can do this, Ireland has a very bright future.î For Mary Harney, Irelandís deputy prime minister and the first woman to lead an Irish political party, the key to weathering the storm lies in moving up ìthe value chain.î ìIn the í80s, our message was ëjobs, jobs, jobs,í but now our economy has matured,î she said. ìWe are looking to create research opportunities ourselves, and to lead the world, rather than rely too heavily on the U.S. economy, which may be open to risk.î According to Harney, if boom times are to survive on both sides of the border, then Ireland will have to take control and lead the world by investing heavily in research. ìTo use an analogy from the entertainment industry,î she said, ìwe have for 30 years been like the gifted musician playing the tune. From now on we want to be the composer writing the music.î Sean OíDriscoll is a freelance writer in Washington, D.C.