By Padraic Halpin and Ian Graham
DUBLIN/BELFAST (Reuters) - The Irish and British governments will seek a way to get talks on restoring Northern Ireland's power-sharing government back on track and neither is contemplating a return of direct rule from London, Ireland's foreign minister said on Thursday.
Talks to end a political stalemate broke down yet again on Wednesday after the leader of the largest unionist party said there was no prospect of a deal and called on Britain to take further financial control of the region.
The British province has been without a devolved executive for over a year since Irish nationalists Sinn Fein withdrew from the compulsory power-sharing government with their arch-rivals, the Democratic Unionist Party (DUP). The executive is central to a 1998 peace deal that ended three decades of violence.
The vacuum has limited Belfast's say in Brexit negotiations that will decide the future of the border between the North and EU-member Ireland.
The situation is also complicated by the fact that British Prime Minister Theresa May's minority government depends on the support of the DUP to pass legislation in London.
"The focus now has to be on trying to get these discussions back on track so that the two governments can find a way to find a way of ensuring that the institutions that are the heartbeat of the Good Friday Agreement can be re-established," Irish Foreign Minister Simon Coveney told Irish broadcaster RTE.
"Certainly there is no appetite to move toward direct rule (from London)... The statement from the DUP was so unwelcome and so disappointing, but that doesn't mean we give up."
The two parties, representing mainly Catholic proponents of a united Ireland and Protestant supporters of continued rule by Britain, have failed to meet a number of deadlines and the latest round of talks fell apart over disagreement on additional rights for Irish-language speakers.
Appearing to agree with Sinn Fein, Coveney said he had thought the parties had reached an accommodation on the issue in recent days that would have legislated for additional rights as part of a broad recognition of cultural and language diversity.
Sources close to the negotiations told Reuters that some DUP members had issues with the proposed compromise and "robustly raised" their concerns earlier this week.
"Those gaps were closed, that's why I don't understand (that) the commentary yesterday was as definitive as it was," Coveney said.
Following a meeting in Belfast to decide their next move, Sinn Fein's leader Mary Lou McDonald said agreement was still possible but in the meantime the governments should establish the British Irish inter-governmental conference.
Last November, Irish Prime Minister Leo Varadkar said that if an administration could not be formed, he would seek a meeting in the New Year of the British Irish Inter-governmental Conference, a joint decision making body recognizing the Irish government's special interest in Northern Ireland that last met a decade ago.
Britain has already had to take steps toward ruling the region directly for the first time in a decade, setting a budget late last year that runs until the end of March.
Many fear a return to full British direct rule would further destabilize a delicate balance between nationalists and unionists who, until last year, had run the province since 2007 under the terms of the 1998 accord that mostly ended decades of sectarian conflict that killed more than 3,600 people.
However the delay in setting last year's budget has left teachers, nurses and police officers waiting on modest pay rises given to public servants elsewhere in the UK, while compensation due to victims of past abuse in state-run institutions has been put on hold in the absence of an executive.
Most of the 1 billion pounds in extra funding that the DUP secured for Northern Ireland in return for the support has also yet to be allocated.
(Additional reporting by Graham Fahy; Editing by Matthew Mpoke Bigg)