The young Europeans, et al.

THE north bank of the River Liffey in central Dublin, around the old Georgian customhouse, once the heart of the city's maritime traffic, should soon be blossoming with another kind of commerce: an international financial services center. Think of it as a sort of ``festival office park.'' Not unlike, say, a Quincy Marketplace, the center will, however, be based not on retail shops but on Fortune 100 companies. Huge multinationals with subsidiaries around the world need constant cash management, to ensure that they have the right currency for the right country, and that any idle cash is in currencies going up rather than down. This arcane work could be done anywhere - by a team orbiting Earth in a space station - but the Irish government hopes at least some of it will be done along the Liffey.

To entice multinationals, industrial development officials point to state-of-the-art telecommunications, to the high education levels in Ireland, and probably most important, to very generous tax breaks. It also helps that the Irish speak English, and that Dublin shares a time zone with London, which it sees as its principal competitor. (The sun never sets on the most sophisticated firms, with three cash management teams working in shifts around the globe.)

The financial services center is a chief element of the Irish government's two-pronged economic strategy. On the ``negative'' side, Prime Minister Charles Haughey is leading his country through a period of severe austerity; on the ``positive'' side are projects like this, designed to dent unemployment - about 19 percent now, and likely to rise - but with only minimal direct government expense.

Will it work? The austerity program is already showing some results, however modest. Industrial development is going to be harder to make work - and harder to measure as well. Certainly the Custom House Docks Development Authority is moving expeditiously on its project - which has generated considerable corporate interest. But global competition for this kind of foreign investment project is getting tighter all the time.

The financial services center illustrates both the challenges Ireland faces in economic development and its characteristic top-down approach to facing those challenges. Ireland continually faces the fact of being ``an island off the coast of an island'' - Britain. At one point Irish policy was fiercely protectionist; in the late 1950s, a move toward free trade began. In the 1970s, aggressive courting of foreign investment led to computer firms such as Digital Equipment establishing a presence in Ireland. The Custom House project reflects a helpful broadening of focus from manufacturing to service industry.

Given Ireland's small domestic market, its best shot is to develop ``niche'' industries - specialties in which it can become a world leader. Frequently mentioned examples might be Guinness-Peat Aviation, an aircraft leasing concern, or Waterford Crystal. Meanwhile, back along the Liffey, the remarkable Custom House project typifies this approach, too.

Last of an occasional series on Ireland.

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