Shooting exposes holes at heart of Northern Ireland peace deal

By Conor Humphries

BELFAST (Reuters) - When masked gunmen linked to the Irish Republican Army (IRA) opened fire on a former member outside his Belfast home last month, they blew a hole in the already tattered agreement holding the British province together.

The 1998 power-sharing deal ended three decades of tit-for-tat killings between Catholic Irish nationalists who want the province to unite with Ireland and their Protestant rivals that killed 3,600, but the forced coalition has struggled amid intensifying sectarian bickering in recent years.

The police said the gun attack showed that the IRA, responsible for around half of those deaths, was still active, infuriating one pro-British party which pulled out of the grand coalition. The other is threatening to follow even though Sinn Fein, the political party associated with the IRA, says the IRA has "left the stage".

"The situation has been deteriorating since 2012. Something has to change," said Neil Jarman director of the Institute for Conflict Research, a Belfast-based think tank. "Things were barely working before this killing."

The latest crisis began when former IRA member Kevin McGuigan was shot dead at his house in the Irish nationalist Short Strand estate in east Belfast.

The attack forced police to admit to an open secret that the IRA still exists in some form a decade after their relinquishing of violence paved the way for a power-sharing government.

The junior pro-British party, the Ulster Unionists said it could no longer work with Sinn Fein, and quit.

The larger Democratic Unionist Party threatened to follow and is currently in talks about starting formal talks.

Analysts say an admission by Sinn Fein that a demilitarized IRA exists or the creation of an independent monitoring group might defuse the stand-off.

But failure would result in the collapse of the executive, forcing a return to direct rule from London that Sinn Fein Deputy Leader Martin McGuinness says would "create a vacuum that would be exploited by violent elements on all sides."

Commentators say there appears little appetite among either side for a return to violence, but analysts say it is unlikely British Prime Minster David Cameron or Irish counterpart Enda Kenny would take the risk.

"Neither government has displayed a great deal of interest, but this may concentrate minds," said Margaret O'Callaghan, Senior Lecturer in Politics at Queens University in Belfast. "Neither government can afford to let it fail."

"FROM ONE CRISIS TO ANOTHER"

While only a sporadic campaign of violence by small splinter groups remains after the 1998 peace deal, the compulsory coalition of bitter rivals that took a decade to establish any sort of a stable devolved government has not moved on with the same speed.

Since 2012 disagreements over parades, flags and social welfare reform have created stalemate, forcing the repeated intervention of international mediators and the British and Irish governments.

"It just lurches from one crisis to another without providing much real governance," said Maire Braniff, a lecturer at the University of Ulster.

On Tuesday, Cameron was asked by the DUP to suspend parliament for a month to facilitate talks to solve the latest impasse.

But Catholics living in the Short Strand and Protestants on the union-jack lined streets that surround it were less than enthused at the prospect of a new round of crisis talks.

While some of a dozen people interviewed voiced anger at politicians from rival communities, most said more fundamental change was needed.

"It's not that I want to be ruled by Westminster... but I've yet to meet anyone who would speak well of Stormont (Belfast's parliament), that would miss it if it was to go," said Eamon, a 63-year-old Catholic council worker in the Short Strand, who declined to give his surname.

(Editing by Guy Faulconbridge and Anna Willard)