The Government in Dublin is cautiously optimistic that the Northern parties can agree a political deal before Christmas.
Taoiseach Enda Kenny and British prime minister David Cameron will begin two days of talks in Belfast on Thursday aimed at breaking the long running deadlock between the North's five main parties.
A Government spokesman last night expressed “cautious optimism” that a deal can be concluded but he pointed to the complexity of the issues involved. “The burden of responsibility for agreement rests with the parties at Stormont,” added the spokesman.
Senior Northern talks sources were also expressing degrees of guarded optimism following recent days of talks where some of the key issues have been “narrowed down”.
There was general consensus tonight that agreement will hinge on the British government particularly, but Dublin as well, providing a financial inducement that would go someway towards cushioning swingeing budget cuts of £1.5 billion up to 2019.
There was speculation too that Taoiseach Enda Kenny may make some financial commitments relating to the A5 road in Northern Ireland.
Three years ago the Government, due to austerity measures, withdrew from a £400 million commitment to meet half the £800 million cost of upgrading the 50-mile route from the Border at Aughnacloy in Co Tyrone to Derry City.
Sources said some renewed Dublin pledges on the A5, which additionally would improve access to Letterkenny and north Donegal, could be part of the British-Irish financial package to try to achieve agreement.
Senior sources said while there was a long list of issues on the table these had been effectively “narrowed down” to five critical matters: financial measures that might soften the effects of welfare reform and budget cuts; the so-called Haass issues of the past, flags and parades; and restructuring Stormont.
They said following negotiations and exchanges of papers there has been progress on the past, with some of last Christmas’s Haass proposals being “customised” to try to address that issue.
Alliance leader David Ford said in the Assembly: "I believe that there are significant legacy issues, which were not dealt with fully in the talks that Richard Haass convened a year ago, and which, it now appears, are being dealt with in a more comprehensive and joined-up way in the talks."
The parties are also coming closer on agreeing to reduce the size of the Assembly from 108 to 90 members and reducing the size of the Northern Executive from twelve full departments to nine or ten.
However, sources stressed that, as ever, achieving a compromise on flags and parades was proving very difficult.
While acknowledging the progress achieved and the potential for a deal senior talks figures warned that parades and flags could yet wreck the chance of a deal.
“I am not sure if this can be settled this week – we might need another 10 days or so to sort this out – if it can be sorted out,” said a well-placed talks insider.
Meanwhile, as Mr Kenny and Mr Cameron prepare to travel to Stormont the Northern Secretary Theresa Villiers called on the political leaders to show "strong leadership in the coming days".
“We are entering a crucial few days. There’s a huge amount at stake as we roll up our sleeves for what we hope will be the conclusion of this process.
“The credibility and effectiveness of the devolved institutions is on the line. I cannot stress enough how important it is for all talks participants to go the extra mile,” she said.
