Thursday, 23 February 2012

International Interest and Investment: The Rise of the Celtic Dragon?

Casting the eye back over the economic affairs of the past four years it is not difficult to deduce that Ireland was in a state of financial, and at times political, ruin. Hidden loans, resignations and the so-called ‘Golden Circle’ became Dublin’s public face, and the country plunged into the crisis of depression. A whacking great bailout followed and the once mighty Tiger was left in the shadows to lick its wounds.

But as with a forest regenerated by the results of a fire, Ireland has begun to attract interest again and there is considerable economic gain to be made by any nation who deploys an economic partnership with the country. Ripe for the picking, Ireland is a blank emerald canvas complete with a willing workforce and a modern infrastructure. The land is fertile again.

Who to plant it? Certainly not Europe, with its unsteady financial relations with Ireland still very much a problem, or a United Kingdom struggling to keep itself together economically as well as geo-politically. No, the new suitor must be from further afield, somewhere not fuddled by years of nitty-gritty, and outside Western Europe, things are certainly rosier. Bill Clinton for one is leading the charge in the States, encouraging widespread investment in the Republic, pointing to Google and Paypal as pioneering examples. Clinton’s calling has certainly been gathering momentum and tangible progress has been made, with US companies being behind almost 40 per cent of offices bought or leased in Dublin last year. But America has been hit hard by the recession and needs to baton down the hatches during the expected uncertainty of an election year, especially one in which the incumbent has recently unveiled plans to introduce measures to tax American companies operating overseas.

Instead the spark comes in the form the world’s most populous nation: China. Beijing too has suffered from the global downturn, with America’s problems damaging trade between the two nations as Washington began its retreat. Only in the latter half of 2011 did China engage with the idea of an internal recession, but immediately sought positive solutions. And like a great deal of Chinese problem solving, the blossoming relationship with Ireland is one that is to be viewed in the long term.

China is again booming at the forefront of the global economy, with Beijing predicting imports to exceed $8 trillion by 2015. And Ireland has not been slow to react, with existing bi-lateral trade between the two countries recently having increased to $8.6 billion.

And when Chinese vice-president Xi Jinping visited the country earlier in the week, the relationship between Ireland and China was broadcast on a global scale.

350 delegates gathered at an Ireland-China forum in Dublin on Monday, where Mr Jinping not only reiterated that the two nations would continue to work closely to strengthen investment ties, but that Chinese investment would become beneficial to Europe as a whole.

East-West tensions and suspicions go back far, but the nature of the current recession allows for an easing of past uncertainties, with even the United States admitting that Beijing and Washington must work together to reinvigorate global economics.

Progress can be made in such an environment, and not only economically. Trade will indeed help to ease the pressures born from unemployment, in turn injecting much-needed stimulus into Ireland’s bourgeoning infrastructure of new motorways and airport redevelopment, but also allows the Republic to escape the age-old roll and tumble contest with the United Kingdom. By escaping from this stagnant state of conceived dependency on one hand and financial intimidation on the other, Dublin can make a bold statement of its existence as an international power in its own right.

But what about Ireland as an island? How can Northern Ireland benefit from the promise shown in the south? This is a tricky issue, for Westminster can connect with Dublin’s Chinese romance, and indeed the flattering – but no less inviting – attention from America, through the mutual medium of the Six Counties. But London must realise that this Ireland is confident, with Taoiseach Enda Kenny already planning great strides to the East for a visit to Beijing in March. When this is considered alongside the current preoccupation of Scottish independence and the potential loss in capita faced in 2014, Anglo-Irish relationships may just find themselves at an interesting and highly potent crossroads.

The pressure is squarely on Dublin to do this properly. It must keep an eye on its banks, ensure sound economic checks are in place and be firm, but flexible, in its demeanour. On the one hand, Ireland must seize this chance to reinvent itself. On the other, it must keep its head together and its eyes firmly focused on its goals. Most importantly, it must learn from all the implications, both positive and negative, stemming from the rise and the fall of the Celtic Tiger, before it fuels the fires of the rapidly growing and potentially powerful Celtic Dragon.

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