Real estate, alternative real assets and other diversions

Derry needs a Marshall Plan

The Economist

‘In the early morning the shirt factory horn called women from Creggan, the Moor, and the Bog.’

The lyrics of Phil Coulter’s popular song, ‘The Town I Iove so well,’ evoke a time when Derry, under fire in the early days of Northern Ireland’s Troubles, could still provide jobs for the city’s working-class estates.

The factories are long gone, but the estates remain, entrenched in deprivation. Last week’s local government elections saw Gary Donnelly, a convicted criminal, dissident republican and former member of the ‘Real’ IRA, top the poll in the streets where journalist Lyra McKee bled her life away just two weeks previously. It is a depressing outcome in a contest that saw Northern Ireland’s centre-ground politics gain confidence and seats elsewhere.

The Moor electoral ward is something of a struggling outrider even in a liminal place like Derry. Economic and social deprivation here has stubbornly resisted years of peace processing and dependency on an otherwise (politically) resented state is generational. More than 40 per cent of its residents have no educational qualifications and 62 per cent are not in employment. The years since the signing of the Belfast agreement have been relatively kind to Northern Ireland’s capital city in terms of prosperity. By contrast, Derry, the second city on the fringe of the United Kingdom in every measure from per capita income to economic growth has either stagnated or gone backwards.

There’s plenty of evidence globally to show that there are strong links between economic stagnation and the sort of violent extremism that still glows with malignant strength in some of Northern Ireland’s forgotten communities. It is far easier to cultivate a grievance narrative in a place with very few legitimate ways for young people to advance out of poverty. A lack of formal power or agency is then easily overwritten by a combination of simple mythology and the insurgent glamour of excitement and status. A fragile state, rejected beyond its handouts and locally dysfunctional, cannot compete with the hate groomers.

These toxic factors continue to incubate a low level insurgency that while very local and mostly contained by the security forces is nevertheless sporadically lethal and also immune to treatment. Saoradh, the sullen mouthpiece of the New IRA is content to hold its position as the Millwall FC of Irish politics. No one likes them and they don’t care. The integrity of the armed struggle, no matter how rejected by society beyond the ghetto, is undimmed as long as what they see as Britain’s colonial presence persists in Ireland.

In this sense they are, for all the ‘community activist’ bluster implacably opposed to raising the condition of the people they represent. For just as there is a relationship between economic stagnation and violent extremism, they can’t have prosperity threaten their fiefdom or redirect a ready supply of credulous teenagers to the cause. To paraphrase James Joyce, the old sow of physical force republicanism still needs her farrow to eat for Ireland.

Derry doesn’t need more peace-processors to defeat these goons. Derry needs jobs.

But the plain fact of the matter is that jobs don’t need Derry. The city sits on the peripheral edge of a peripheral region in a peripheral Kingdom near a complex and contested border. Transport links are poor and markets are distant.  Entrepreneurial spirit, as measured by the Global Entrepreneurship Monitor is the lowest here both in Northern Ireland and the British Isles. This perhaps reflects an over-reliance on public sector jobs but even these opportunities seem to have missed out the citizens of Creggan and Bogside.

Moreover, Derry’s hardline districts are distinctly unattractive places for private capital, ungoverned by sentiment and in search of profit. The market wants a steady supply of well-educated young people in a stable environment that meets a favourable cost-benefit analysis. These are high enough hurdles to climb over but Derry needs more than ‘some jobs’ to soak up and transform latent extremism into legitimate aspiration, it needs high quality jobs that are there to stay and an infrastructure to get people work ready for them. This is not a job for the market alone – the state must and should intervene.

There is a precedent for this sort of thinking, albeit not a particularly helpful one. The DeLorean Motor Company was enticed to West Belfast in the early 1980s with huge grants from the new Conservative government. This reversal of Thatcherite orthodoxy meant more than £85 million of taxpayers money underwrote a factory built not for economically rational reasons but to provide hundreds of high quality jobs in a communal interface area and entice the area’s young people away from paramilitarism. It failed for multiple reasons, including the bizarre behaviour of its founder, but perhaps we can see lessons for Derry to go back to the future.

Move forward four decades and you can see the seeds of this interventionist pump priming in what is known as ‘expeditionary economics.’ This theory, described by Carl Schramm in 2010 envisaged the US military becoming heavily involved in economic reconstruction and encourage entrepreneurialism as a way to stabilise communities and prevent them from becoming failed states.

Now Derry is clearly not Fallujah and the idea of the British Army training entrepreneurs in Creggan is, er, a bit post-modern. But the fundamentals remain valid. In places where the market dares not tread or provides only contingent, unstable employment, there won’t be enough traction for people to be weaned off violent extremism.

Moreover, people with prospects and a decent education either take the scarce jobs already going or leave the area to sell their skills elsewhere, thickening the soup of deprivation. The people left behind are those most in need of external intervention.

And we are talking about a few square miles of Northern Ireland, not a country and not somewhere, as with DeLorean, built on a sectarian interface where an insurgency raged all around its front gates. The very local nature of this problem means that state intervention in partnership with the market is both justified and achievable in terms of the societal and security gains.






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