Northern Ireland looks to make peace dividend pay

By Jonathan Saul

BELFAST (Reuters) - For years, Northern Ireland was a byword for brutality and fear. But now, the tiny province is selling itself as a central, low-cost land of business opportunity, and investors are buying.

A year after Catholic and Protestant political foes put aside decades of hostility and agreed to share power in a regional government, attention is focused on opening the public sector-heavy economy and attracting investment.

"There is no doubt that Northern Ireland is now seen as being open for business," Economy Minister Nigel Dodds told Reuters. "People now see a major opportunity."

Northern Ireland's proximity to Europe, its English speaking population and still relatively lower cost base than centers such as London are helping to lure foreign money.

U.S. investors lead the pack and accounted for at least half the 1.1 billion pounds ($2.2 billion) invested in the past five years especially in financial services, technology and pharmaceuticals. Asian and European firms are also arriving.

"Increased political stability has improved Northern Ireland's brand image in the eyes of the world," said Ulster Bank economist Richard Ramsey.

The government plans to pump almost 20 billion pounds ($39.7 billion) into the economy over 10 years to develop tourism, repair infrastructure and regenerate neighborhoods that were violent flashpoints and scenes of clashes with British soldiers.

But there are hurdles. The corporate tax rate stands at 28 percent compared with just 12.5 percent in the Republic of Ireland, which boasts many of the same logistical and geographical advantages as its northern neighbor. Belfast is lobbying London to cut the rate, so far to no avail.

The global credit crunch, combined with a local housing market slowdown, could also put the brakes on growth in a region that was once a textiles hub and world leader in building ships, including the Titanic.

The province's success has won admirers especially among those seeking to rebuild their economies after violence or war.

Last month, a delegation from Iraq's southern province of Basra toured Northern Ireland to learn how inward investment helped transform the economy since violence abated.

FOREIGN INTEREST

A 1998 peace deal largely ended three decades of violence between majority Protestants, who favor British sovereignty in the province, and Catholics who mostly want a united Ireland.

Northern Ireland's authorities hope that era, which claimed over 3,600 lives and was known as The Troubles, is now closed, and they say they are already reaping a peace dividend.

In the past 10 years, over 100,000 jobs have been created, and the unemployment rate now stands at around 4.2 percent, below the UK average of about 5.2 percent.