The City of Conflict Where a Brexit Deal Matters Most

(Bloomberg Businessweek) -- Selina Horshi’s 58-room White Horse Hotel sits just off the usually busy A2 highway on the outskirts of Derry in Northern Ireland, a few miles from the border with the Republic of Ireland. It also stands in the middle of what risks turning into a collision of disasters. The city of 90,000 people, which is synonymous with the sectarian conflict that crippled the U.K. province for three decades, is now on the front lines of both Brexit and the Covid-19 crisis.

Nowhere has more at stake than Derry as Britain and the European Union try to thrash out a Brexit trade agreement before the transition period ends on Jan. 1. The fate of the now invisible U.K.-Ireland border and cross-border trade is unclear. In and around Derry, locals frequently live on one side of the border and work, shop, and attend schools on the other. Talks on a deal resume on Monday, with time running short and both sides suggesting there are still big differences.

Horshi fears that tensions will rise in Derry as virus restrictions hurt an already battered economy. Even before the pandemic hit, the city ranked among the highest in the U.K. for unemployment and among the lowest for economic well-being. Derry has faced heavier Covid-19 curbs than the rest of Northern Ireland and the U.K. for weeks because of its high infection rate. 

“The combination of the pandemic and Brexit could be felt more heavily here because this is an area that has historically suffered from poverty,” says Horshi. Many of the younger staff in her hotel have little memory of the violence known as the Troubles, she says: “I don’t want them to see how it could get bad again.”

Inflammatory language is already being used: When Covid-19 cases were exploding in the province last month, Edwin Poots, a pro-U.K. minister in Belfast’s power-sharing assembly, appeared to link the explosion of the virus to the mostly Catholic Irish nationalist community. This sparked a furious backlash, with one opponent calling it a disgrace to hint that it was a Catholic problem and demanding he retract. Poots denied he was making any link between religious identity and the spread of the virus. Rather, he suggested that the lack of social distancing by nationalist leaders at a funeral that filled the streets of Belfast had set a bad example.

Meanwhile, most nationalists fear that the U.K.’s exit from the EU—broadly backed by unionists, who support Northern Ireland remaining in the U.K., yet overwhelmingly opposed by Derry voters overall—could endanger the fragile peace and the economic revival that’s now being reversed by the virus. Joe Biden, who will become the next American president, tweeted in September that the Good Friday Agreement that largely ended the conflict in 1998 can’t become a “casualty of Brexit.”

“A hard Brexit, a no-deal Brexit, and all that flows from that would threaten the stability that we have,” says Colum Eastwood, a nationalist lawmaker and leader of the Social Democratic and Labour Party. “Added to increasing poverty levels, it’s a mix that could have really dangerous consequences.”

For many, Derry is the cradle of the violence that racked Northern Ireland. Transformed into a border city when Ireland was partitioned in the 1920s, it was ground zero for a civil rights movement in the 1960s and ’70s as Catholics marched from the deprived Bogside area, demanding housing, education, and political equality. Attacks on those marches by pro-U.K. loyalists and the British military helped encourage the emergence of the Irish Republican Army. In the most infamous incident, soldiers shot and killed unarmed civilians in the Bogside on “Bloody Sunday” in 1972.  

Reminders are peppered around the city, which is officially called Londonderry—the name typically favored by the Protestant, pro-British community, while Catholics usually refer to it as Derry. The Bogside is still plastered with murals depicting young victims of the Troubles and its iconic gable wall welcomes visitors to “Free Derry.” Not far away is the Peace Bridge that spans the River Foyle between the mostly Protestant and unionist “Waterside” and the mainly Catholic and nationalist “Cityside.”

The toll of 2020 on Derry is clear. Noel Faller, whose family has run a jewelry store in the city since the late 19th century, says the streets are emptier and his customer traffic is down by one-third. “Covid is a bit like a war in the whole, destructive nature on the financials and curtailing of demand,” he says.

Violence has largely faded since the 1998 peace accord, though Brexit is reigniting tensions. The city is closely bound to the EU, with about 78% of voters backing “remain” in the 2016 referendum, amid concern over the return of checkpoints along the border with the Republic of Ireland. Cross-border trade was worth €7.4 billion ($8.8 billion) in 2018, according to InterTradeIreland, a group funded by the Irish and Northern Irish governments to promote business. 

Last year, British Prime Minister Boris Johnson agreed to a deal with the EU to keep the Irish frontier invisible, no matter how Brexit unfolded. He has since threatened to walk away from that accord. The question of reunification with Ireland is back on the agenda in Northern Ireland, although there’s little chance of a vote anytime soon.

In July 2018, Derry suffered five nights of disturbances, and a car bomb exploded outside the city’s court house in January 2019. The same year, journalist Lyra McKee was shot and killed while reporting on a riot. Former U.K. prime ministers Tony Blair and John Major warned as early as 2016 of a potential return to violence over Brexit border changes, which unionist lawmaker Gregory Campbell dismisses as “claptrap:” “It was blatantly playing to the worst fears of voters, and it worked in Northern Ireland because people were fearful of violence,” he says.

The concern is that the pandemic, coupled with a Brexit that jeopardizes cross-border trade, could make some of those fears come true. The Derry region’s seven-day case count hit close to 1,000 cases per 100,000 people in October, among the highest in Europe. It’s since fallen nearer to 300 with the new restrictions. 

Back at the White Horse, Horshi is focusing on how to make sure her business survives after 28 years in her family’s ownership. It remains open to guests who stay on essential work trips during weekdays, but revenue is down by one-third from a year ago. So far, the hotel has managed to keep its roughly 40 employees without any layoffs. 

“We have a responsibility to try and do our best for our staff because not doing so could lead to more social issues,” says Horshi, whose father left Beirut in 1983 as the Lebanese Civil War raged to arrive in Northern Ireland during its sectarian conflict. “Most of us are aware of people who have had Covid—and they come from all sides of the community.”

©2020 Bloomberg L.P.