ANALYSIS-Scottish vote sparks soul searching in Northern Ireland

* Scotland's independence vote crucial to future of North

* Sinn Fein hails vote as beginning of end of UK

* Catholics in two minds about whether time is right

* Unionists hope 'no' in Scotland will help their cause

BELFAST, Dec 4 (Reuters) - London's decision to grant

Scotland a referendum on independence after 300 years has raised

an awkward question for Northern Ireland's Catholics.

After centuries fighting for its downfall, do they really

want the United Kingdom to collapse?

Irish nationalist leaders have seized on Scotland's 2014

vote as the beginning of the end of the United Kingdom and are

calling for their own referendum on ending hundreds of years of

rule from London.

But many Irish Catholics, the mainstay of the Republican

cause for a united Ireland, appear reluctant to seize what their

leaders say is a historic opportunity, fearful of upsetting a

fragile peace and nervous of who will pay the bills.

"We are better off staying where we are from a rational and

an emotional point of view," said Sean Kerr, a 61-year-old

supporter of Sinn Fein, the main pro-Irish nationalist party.

"We went through 'The Troubles' and things have settled

down, people are getting on together. Just leave us alone. Just

let the hare sit, as they say up here."

He is not alone. Fifty-two percent of the province's

Catholics think it should remain part of the United Kingdom,

according the last major poll on the issue, released last year.

That number has been seized upon by unionist rivals in

recent weeks as proof that a referendum would fail in Northern

Ireland, with the Democratic Unionist Party (DUP) saying that

Catholic resistance meant Northern Ireland's place in the union

was more secure that Scotland's.

POTENT HISTORY

Resistance to British rule has been at the core of Irish

nationalism since Henry VIII of England declared himself King of

Ireland in the 16th century.

After the Irish state secured independence from Britain in

1921, Northern Irish Catholics remained part of United Kingdom

in a northern state dominated by Protestants, many of whose

ancestors had settled from Scotland.

Catholics' protests that they were being treated as

second-class citizens and the desire to rejoin the south helped

fuel The Troubles, three decades of tit-for-tat bombings and

shootings that killed 3,600 until a peace deal in 1998

introduced a power-sharing government.

While Catholics say most of their civil rights grievances

have since been addressed, resistance to British rule, with the

Irish tricolour its most potent symbol, remains a central part

of their identity.

On the other side, thousands of Protestant "Loyalists" still

demonstrate their attachment to Britain every year by marching,

bowler-hatted, through Belfast and other towns in the province

to celebrate a 300-year-old battlefield victory over Catholics.

"TOTALLY INSANE"

A key concern for Irish Catholics, as they look south and

see the economic devastation left in the wake of Ireland's

Celtic Tiger crash, is the economics of splitting from Britain.

While activists in Scotland say direct control of the income

from its offshore oil fields would more than make up for

subsidies from London, almost everyone in Northern Ireland

admits that it benefits financially from London.

The province secures around 10 billion pounds ($16 billion),

or about half of total public sector spending, through an annual

block grant from Britain. Just under one-third of the population

is employed in the public sector, the highest level in the

United Kingdom.

Sinn Fein says combining public services for Ireland's 4.5

million people and Northern Ireland's 1.8 million would create

cost savings, but its arguments have not convinced many.

To split with London in the current climate would be

"totally insane" said Jim Wade, a Catholic businessman.

"If there was a vote in the morning, I would vote for a

united Ireland. But at the same time I don't think we could

afford it. I know down there, they couldn't afford it," he said

of the Irish government.

Many northern Catholics looked on in envy as the Celtic

Tiger transformed the Republic from one of the poorest countries

in Europe to one of its richest.

But since a property boom began to collapse in 2007 and

Dublin signed up to an EU-IMF bailout three years later,

unemployment has surged to a near-20 year high of just under 15

percent, compared to 8 percent in the north.

Even in staunchly Republican areas of Belfast, the economic

reality of the decision remains a nagging worry.

"I have never come across anybody in these areas who wants

to stay with Britain," said Margaret Shannon, 58, shopping on

the predominantly Catholic Falls Road in Belfast.

"But it depends on the moment that they pick. When people

look to the south and see them cutting funding again, taking bus

passes from pensioners. That's what would unsettle people."

HARD SELL IN SOUTH

In the Republic of Ireland the dream of united Ireland

remains a central tenet of Irish nationalism, the subject of

countless ballads and an article of faith for political parties

across the spectrum.

But economic reality is making unification a hard sell

there, too.

A poll of Irish voters last week showed one in five said

they expected it to happen within the next 25 years, with

one-third saying it would never happen.

In a sign it would have little appetite for the vast cost of

reunification, the Irish government announced last year that it

could not afford one of the few cross-border initiatives it has

signed up to, a 560 million euro cross-border motorway.

"The northern nationalist community is under no illusions

that the south harbours any desire even in the medium to long

term future to actually bring about a united Ireland," said

Graham Walker, professor of political history at Belfast's

Queen's University.

"That has been communicated to them very clearly."

UNION UP FOR DEBATE

Nationalists are selling the Scottish referendum as the

beginning of a one-way street towards the United Kingdom's break

up, saying that even if the Scottish vote is not passed London

will be forced to give it more autonomy.

"What the Scottish referendum has shown is that the union is

up for debate. The union is not set in stone or set there for

generations to come," said John O'Dowd, a senior Sinn Fein

minister in Northern Ireland's parliament.

The problem for Sinn Fein is that Irish nationalists may not

yet be in a position to capitalise on it.

While not everyone in Northern Ireland votes along religious

lines, most observers do not believe nationalists can secure

approval for a united Ireland while Protestants, who

traditionally vote for unionist parties, remain a majority of

voters.

A census due later this month is expected to show further

growth in the Catholic minority, although most observers say it

will take another generation at least before Catholic voters are

in a majority.

The 2001 census showed that 40 percent classified themselves

as Catholic and 46 percent were Protestant. However just over

half of the pupils in the 2010-11 academic year were Catholic

compared to 37 percent who were Protestant.

The next census figures will "demonstrate very clearly the

constitutional trajectory that we are set on," O'Dowd said.

Unionists, who say their link to Britain is a key part of

their identity, are hoping that a strong vote against

independence in Scotland could kill momentum for devolution

before the Catholic community secures the majority.

"If they vote to stay in the union by a significant margin

it will actually strengthen the union not weaken it," said

Democratic Unionist party member Jeffrey Donaldson. " I think

you will find that the outcome puts the issue to bed for many

years to come."

(Editing by Padraic Halpin and Giles Elgood)

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