The Taoiseach is pressing the British Prime Minister to agree to a dramatic demilitarisation move in south Armagh to help break the deadlock in the peace process. This would involve the Prime Minister rejecting the advice of the British security services, who are opposed to such a move.
The key element of a breakthrough formula now being worked on is a substantial and visible reduction of the British security presence in the republican stronghold of south Armagh. In return, the IRA would begin a series of discussions with the de Chastelain decommissioning body, including talks on new methods of putting weapons beyond use.
This would allow the North's First Minister, Mr David Trimble, to end his policy of preventing Sinn Fein Ministers from attending meetings of the North-South Ministerial Council. It is crucial to ensure these events occur virtually simultaneously, sources say.
The British gesture would involve one of three options: cutting troop numbers, removing a major military base, or dismantling some of the large lookout posts in the area. In return, the IRA would be required to embark on a sustained period of engagement with the de Chastelain commission.
Recent talks have also centred on a number of specific new methods of putting weapons beyond use. These include the idea of sealing arms dumps by pouring concrete over them.
However, Government sources say they believe the British military is mounting a sustained campaign to prevent a significant demilitarisation move such as is being discussed. There is therefore little expectation of an early breakthrough, but Government sources hope the visit of President Clinton, starting tomorrow morning, will help create the atmosphere necessary for significant moves.
Mr Ahern held further talks with Mr Blair on the matter in Nice yesterday to urge him to reject British security service arguments that the south Armagh bases are necessary to counter the threat from republican dissidents.
Anonymous British security sources have been quoted in the British press in the past week warning Mr Blair that they will blame him for any loss of life resulting from a reduced security presence.
The Irish Government has countered with its own security advice to the effect that good intelligence information, and not high-profile lookout towers and heavily fortified barracks, is the key to defeating dissidents.
Other elements of a deal involve the refinement of the implementation plan for police reform, as well as clarification of the position of prisoners on the run.
Republicans are understood to have argued in recent contacts that the highly visible military presence in south Armagh, six years after the first IRA ceasefire, strengthens the case of republicans opposed to decommissioning.
Government sources say last week's IRA statement confirms the IRA is committed to putting its weapons beyond use, so long as the British move on demilitarisation.