For some years before the 1994 republican and loyalist ceasefires the RUC had a high rate of success in detecting loyalist crimes. Loyalists were, on average, almost twice as likely to be arrested and sentenced for serious crime as their republican counterparts.

At one point the RUC had a 100 per cent "clear-up rate" in respect of loyalist murders.

In the years since the ceasefires began this situation has changed dramatically. One of the main reasons was the need to concentrate on IRA activity when the IRA restarted its campaign between February 1996 and August 1997.

Another has been that loyalists have used the lifting of security pressure on them to reorganise. The Ulster Defence Association/Ulster Freedom Fighters (UDA/UFF) sacked some of its leaders, regrouped and recruited a large number of young members.

Despite the ceasefire it was ostensibly maintaining, the UDA is understood to have also acquired a large consignment of firearms and ammunition.

According to some loyalist sources, the UDA and the other loyalist paramilitary organisation, the Ulster Volunteer Force (UVF), decided to rearm in response to the IRA's decision to call off its ceasefire in early 1996. Other loyalists say the weapons were acquired before the IRA ended its ceasefire.

The rearming involved the acquisition of a large number of Uzi sub-machineguns. The Uzi can empty its 32-round magazine in about three seconds. It is not accurate over more than 15 metres or so.

In the Northern Ireland context these weapons are specifically chosen for close-range attacks on human targets such as groups in pubs or bookmakers. These attacks are the UDA's hallmark.

While it is not clear where the UDA acquired these weapons, it is known that the latest batch of UDA leaders have strong connections with extreme right-wing groups in Britain, including breakaway elements of the National Front. These groups, in turn, have close ties with right-wing criminal/terrorist organisations in northern Europe. There are strong suspicions that the UDA's weapons originated there.

Some of the Uzis are understood to be copies made on licence, or illegally copied in former Soviet states. It is probable that the weapons came from a European source with either criminal or right-wing extremist connections.

One of these weapons was used in the New Year's Eve attack on the Clifton Tavern public house in north Belfast in which Mr Eddie Treanor died and four other people were injured.

The RUC's inability to ascribe the attack immediately to the UDA might have been due to the absence of ballistic records on the sub-machinegun used in the attack, which had never been used before in the North.

The UDA's recruitment drive and its acquisition of new weapons have presented the RUC with significant problems. When the IRA resumed its campaign in February 1996 - while the loyalists retained their ceasefires - the RUC devoted significant resources to countering its violence, with considerable success.

However, it appears that as a consequence of this increased response to the IRA, the security force intelligence penetration of the UDA suffered during this period, allowing the organisation to regroup and rearm without any alarm bells being rung.

According to senior loyalist sources in west Belfast, the UDA, as a paramilitary presence, had virtually disappeared from the Shankill area two years ago but is now back in some strength.

It is strongest in the lower Shankill area, particularly the bleak public authority streets in the Shankill Estate, where local people say some UDA members operate the local drugs trade, selling drugs from a terrace fortified with armoured doors and windows.

The UDA in east Antrim, centred on the huge Rathcoole housing estate, has also grown under the leadership of a local "brigadier" who ousted his predecessor after the other man objected to the selling of drugs in local UDA clubs.

The UDA has recruited heavily in south-east Antrim and in the Shore Road area of north Belfast. Many of these young men have been involved in sectarian clashes around the Catholic Whitewell enclave.

There are new leaders in at least four of the UDA's seven "battalion" areas. At least three of these men are strongly suspected of being heavily involved in drug trafficking.

According to one well-placed source the UDA leaders acknowledge and excuse their involvement in drugs, saying it has provided the organisation with funds to buy new weapons and train recruits. There are strong suspicions that some leaders are lining their own pockets.

One of the UDA brigadiers, who described his job as "doorman", bought a public house last year.

Concern is rising that the UDA - which has a purely military wing calling itself the Ulster Freedom Fighters - will react very violently to the killing on Tuesday of the south Belfast UFF figure, Robert Dougan - especially if it turns out, as is strongly suspected, that the IRA was responsible.

Dougan, as well as being a leading UFF figure, was also deeply involved in drug dealing, according to local loyalists. Both loyalists and republicans in Belfast expect some kind of retaliation for his murder.

The turn of events might force the security forces to re-examine their operational policy, which has focused on the threat from republicans.

The extent to which the security forces were concentrating on republicans was evidenced in the middle of last month when a uniformed RUC patrol watching for loyalist gunmen in north Belfast accidentally came across a British army under-cover unit carrying out surveillance in the Ardoyne area in unmarked cars.

In the ensuing confusion the RUC gave chase to the undercover army unit and one of the soldiers, a woman member of the 14th Intelligence Unit, shot and seriously injured a uniformed RUC officer.

While no official comment was made about what the woman soldier was doing, it is now believed that she was part of a military surveillance unit which was spying on republicans in the Ardoyne area, despite this part of the city being in the grip of a murder campaign by loyalists.

According to senior security sources, the likelihood is that loyalist violence may go unchecked for the immediate future while security policy is re-evaluated and until the RUC Special Branch re-establishes a network of informants and agents to penetrate the loyalists.

Any sudden outbreak of republican violence - both the IRA and INLA are becoming active again - could also make the task of stopping the loyalists even more difficult.