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US investment conference – the ugly reality behind ‘Peace dividend’ hype

J M Thorn

17 May 2008

Even by the standards of the peace process, the recent US investment conference was probably one of the most overhyped and oversold events to have taken place in the North in recent years. This was particularly ironic given the fact that the conference had its origins in Gordon Brown's non-existent peace dividend. It was seen as a consolation for the lack of a financial boost for devolution. Also, the fact that it was a conference about investment (the fifth since 1994) rather than actual investment, serves to highlight the relatively low level of foreign investment that has come into the North over the last decade. Though the economy has grown, it has not seen the major uplift that was predicted in the wake of the Good Friday Agreement.

In many ways the conference was a rerun, though on a grander scale, of what has gone before - appeals and pitches from politicians to corporate representatives. The “chuckle brothers” routine was rolled out one last time as Paisley and McGuinness assured their guests that they had no political differences and that the power sharing executive was rock solid. The unrest among the unionist grassroots and the increasingly hostile attitude of the DUP towards Sinn Fein was completely glossed over. However, this show of unity was not that difficult as on the question of economic development the parties are as one. 

They have completely swallowed the neo-liberal orthodoxy. Liberalisation, competitiveness, low labour costs, low business taxes, foreign investment and the subordination of society to the needs of capital are all accepted without question. The essence of the pitch to the corporate delegates was that the North could provide a skilled workforce at a cheap rate. The buzz phrase, which was repeated over and over, was that the Northern colony was "open for business". The appeal by the politicians was shameless. Paisley didn't hesitate in producing the metaphorical begging bowl as he urged the executives to "be with us with your bank draft and cheque." McGuinness told the delegates that inward investment played a "crucial part" in the executive's strategy to boost the economy.

The appeal of local politicians was also reinforced by international figures. George Bush sent a video message of support to the conference in which he claimed that "free market policies" had "been proven effective in economies across the world".  He praised the Executive for making it clear that the North was "open to foreign investment." The EU President Manuel Barrosso praised the Executive for adhering to the polices laid out in the Lisbon strategy which pave the way for complete liberalisation of the European economy. Luckily for Sinn Fein, no-one picks up on the contradiction between their policy in Stormont and their anti-Lisbon rhetoric in the southern referendum. Brian Cowen, who was at is first official event as Taoiseach, vowed that the "relentless focus" of politicians north and south would be "on increasing economic growth, competitiveness, productivity and investment".

The whole conference was a hymn to capitalism. However, in terms if immediate results it did not produce anything substantial. There were a number of investment announcements made to coincide with the event, but these were small both in terms of capital and potential employment. Indeed, the organisers were downplaying expectations, claiming that a judgement could only be made on the conference in two or three years time. 

The most significant intervention in the conference came from Gordon Brown. Praising the Executive’s "pro-business" credentials he announced that he was to make extra funds available to it. However, like all Brown statements it was not what it appeared to be on first examination. A closer look revealed that what he was actually proposing was to allow the Executive to keep more of the proceeds from the sale of public assets. A year ago, at the time of the restoration of Stormont, he had set the limits of the sale at one billion pounds, now he was raising it to two billion. The simple equation of this is that if the Executive wants more funds it will have to privatise more. 

Brown's statement was very much in tune with David Varney's recent Treasury-commissioned report on boosting the North's economy. It set out a broad prescription for reform that will mark a complete shift towards neo-liberalism. While this process has been ongoing for a number of years, under both devolution and direct rule, the adoption of Varney’s proposals would be a dramatic acceleration. The main elements of Varney are privatisation and wage cuts. He calls for the Executive to increase the role of the private sector in the delivery of key public services while transferring other "non-core services" entirely into private ownership. The public assets he recommends selling off completely include Belfast Port, the NI Vehicle Testing Agency, car parks and the public housing stock. Alongside this privatisation programme Varney demands the lowering of wages in the North. His claim is that the marginally better pay and conditions in the public sector are hammering private sector growth. To counter this he proposes the introduction of regionalised pay for public servants, breaking the link with Britain that has acted as a ground floor for wages below which it was difficult to sink. He also proposes a regionalised minimum wage and changes to the benefit system. The effect of all this would be to lower wages across the board, and to coerce people off benefits and into low paying jobs. It certainly isn't a recipe for the "high value jobs" economy promised by Paisley and McGuinness. 

Dovetailing with the Vareny/Brown proposals are the private equity groups that have taken an interest in investing in the North. Among those at the conference was New York City Comptroller William Thompson who announced last month $150 million in pension funds will invested in infrastructure projects in North and the Republic through the specially created Emerald Fund.  This fund, which will effectively act as a private equity firm, will finance projects in the North in sectors such as energy, waste management, property, healthcare and ports.  Investment of this type will be a driver of privatisation as whole areas of the public sector are opened up to private capital.  This is what is behind the massive expansion of PFI schemes in the North.  Under these public assets such as schools and hospitals have been transferred into private ownership and taxpayers forced to pay for their maintenance.  This racket has run up hundreds of millions of pounds in public liabilities. Despite the rhetoric about additional investment, private finance actually extracts money from the public purse.   The equity funds want to get a slice of this lucrative market.   But it is workers who bear the cost of the “strong returns” for the likes of Emerald Fund, whether directly through jobs losses and deteriorating working conditions if they are employed in the public sector, or through having to pay charges and higher taxes for public services.

The US investment conference may have been more hype than substance but it did reveal the craven nature of the North’s political parties. They are utterly in thrall to capitalism and the neo-liberal programme. This is increasingly becoming clear through the policies they are pursuing in government, whether it be on health, education, transport or anything else.  The assaults on the public sector and the working class are being stepped up - everyday there is news of redundancies and cuts.   One positive consequence of this is the erosion of public confidence in the Executive and Assembly.  A recent survey found that only twenty per cent of the population felt that devolution has had a positive impact on their lives.   This finding probably represents disappointment rather than opposition, but without workers having their illusions in the Assembly broken there can be no opposition at all. 


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