IRA's City of London Bomb Aimed for Financial Impact

IN the glass and granite canyons of London's financial district a huge effort is under way this week to make it look like business as usual.

But nothing can disguise the destruction done by an Irish Republican Army bomb which on Saturday exploded in the heart of the area known as "the Square Mile," causing damage assessors say may eventually top 1 billion British pounds (US$1.58 billion).

Only one person died and 40 were injured in the attack. For the second time in a year, however, the IRA proved its ability to plant a massive amount of explosives in the financial district's epicenter and hit what is widely regarded as Britain's No. 1 economic target.

Last April the IRA attacked the Baltic Exchange, a block away from Saturday's blast, killing three and causing 800 million British pounds in damage (US$1.26 billion).

This time the terrorists chose a Saturday morning, when much of the area is thinly populated, to launch their attack. A bomb detonated during business hours on a weekday would certainly have caused widespread loss of life.

Assessors yesterday said 750,000 square feet of emergency office space would be needed for two years to replace the premises taken out of action by the blast.

Yesterday Prime Minister John Major delivered a defiant message to the bombers, reminding them that they would fail in their campaign to force British troops to quit Northern Ireland. But some of the ruling Conservative party's most influential figures demanded a new range of security measures to safeguard the financial district against terrorist assaults.

Sir Ivan Lawrence, chairman of the House of Commons home affairs committee, demanded "much more effective security efforts," including more antiterrorist police and new laws to curb the movement of terrorists. Government sources privately expressed concern about the possibility that successful IRA attacks would dent London's prestige as a world financial center.

Mr. Major ordered an immediate inquiry into the security lapse that let the IRA plant and detonate its bomb.

Hours after Saturday's incident, assessors examining the three acres of shattered windows at the 52-story NatWest tower and the ruins of the Hongkong and Shanghai Bank headquarters, forecast increases of 30 to 40 percent in insurance premiums to cover possible future terrorist attacks. A 300 million British pounds (US$473 million) "pool" of emergency insurance cover, one assessor said, would be exhausted by claims after Saturday's bomb. Police, caught off guard by the blast, have been ordered to step up surveillance of the more than 500 banks and finance houses crowded into the Square Mile.

David Mellor, a former cabinet minister, said Sunday that it was "imperative that the government launches a fundamental rethink of its response to the IRA threat."

Mr. Mellor said the IRA had struck at an "optimum time" for telling the world that its terror campaign was continuing. Saturday's 2,000-pound bomb, planted in a parked dump truck, exploded as some 1,000 international bankers and politicians were meeting at the nearby European Bank for Reconstruction and Development. That building was undamaged, but windows in other buildings half a mile away were shattered by the blast.

Scotland Yard antiterrorist officers said that in its campaign to force Britain to remove its troops from Northern Ireland the IRA has decided to concentrate on economic and industrial targets. Britain's current economic recession has made such attacks especially newsworthy and likely to attract publicity.

London's financial district is the focus of a huge amount of national and international business. The two attacks on it represent the IRA's most ambitious assaults in mainland Britain so far. Nicholas Balcombe, a loss assessor, said that apart from a massive repair bill for wrecked masonry and glass, computers and other high-tech electronic equipment would need to be replaced.

The immediate cost of repairing the damage would be British pounds300 million to 500 million British pounds (US$473 million to $788 million), but the figure would probably more than double when all the bills for equipment replacement, office relocations, and increased insurance premiums were in, Mr. Balcombe said. The bomb also closed the 2.4 billion British pounds (US$3.78 billion) Liverpool Street rail station complex opened 14 months ago and reduced to rubble the 600-year-old St. Ethelburga's church.

To emphasize their psychological advantage, the IRA triggered a Saturday afternoon rush-hour bomb hoax at Harrods West End department store. Saturday night the IRA hijacked two taxis and detonated explosive devices in them in different parts of London.

Eamonn Mallie, author of the book "Inside the IRA," said attacks on economic targets in Northern Ireland had been occurring for several years. Now the terrorists had "switched their attention to the British mainland."

"The IRA considers that in terms of publicity, one bomb in England is worth 20 in Belfast," said Paul Wilkinson, director of the Research Institute for the Study of Conflict and Terrorism.