Massive spending on the peace process has not brought reconciliation, but new local government reforms may help to move things forward, writes Jim Dougal.
If the IRA had not robbed the Northern Bank beside Belfast City Hall last Christmas and if their members had not been involved in the murder of Robert McCartney at Magennis's bar in the Markets area of the city, the DUP leader, Ian Paisley, would now be First Minister at Stormont.
He would be leading an uneasy coalition with Gerry Adams or Martin McGuinness of Sinn Féin. A deal following the British general election last May, which put the DUP in charge of unionism, was on the cards, and Paisley would have done it, decommissioning permitting.
For whatever reason, the Provos blew it.
Such a deal will be done in the future, when both parties decide that the time is right.
This does not mean that the arrangement will be a model of partnership. Some of those involved will, of course, make good ministers, but the atmosphere will be consumed by bickering and bad feeling, and there will perhaps even be further suspensions.
What Northern Ireland Secretary of State Peter Hain has taken to describing as constitutional power-sharing is outdated, outmoded institutional sectarianism. But we have to start somewhere, and local people running their own affairs will be preferable to direct rule.
The theory is that, by working together, the parties and people will begin to trust each other, and normal politics will develop. But it will be a very long time before the DUP or Sinn Féin will be able to appeal to the other community.
And right now those communities are more sectarian than they have been in the past. The Provos are milking the British-Irish (mostly British) cow dry, and the loyalists, lacking leadership, make incoherent demands which derive from a mistaken belief that the republicans have more than they have.
At the same time both communities are held to ransom by paramilitaries and their cohorts, whether through so-called restorative justice schemes or intimidation and threats.
A culture of sectarianism also pervades Northern Ireland society. As Baroness May Blood told the SDLP's annual conference last week, "Loyalists believe that they are on their knees". They are "blighted by a lack of confidence, a lack of political leadership, bad press and the growth of paramilitaries".
Following the loyalist rioting after the Whiterock parade in September, unionist leaders demanded more financial support for loyalist areas. There is no doubt that further spending on social and economic development is needed. But it should be strictly controlled.
In the past 10 years, well over £1 billion of extra peace funding arrived through European and other programmes. Undeniably, some of this went into terrorist coffers.
A great deal was spent on cross-community partnerships to develop projects, provide work skills and training. This was meant to reinforce progress towards a peaceful and stable society and to promote reconciliation, address the legacy of the conflict and take advantage of the opportunities arising from the peace process.
It was meant to tackle division, exclusion, misunderstanding, poverty, resentment, nationalism and the way in which these all feed off each other. It operated in the belief that stability and prosperity were mutually reinforcing.
But it also operated on the understanding that this virtuous circle required the widest consensus and participation at local level. Reconciliation was at the top of the agenda, but reconciliation was not achieved.
The European Commission did not want to renew its peace programme after the first finished in 1999, but did as Peace 2, spurred on by the signing of the Belfast Agreement. Certainly, neither the commission nor the European Council wanted to extend Peace 2 from 2004 until 2006.
Enlargement from 15 to 25 European Union members brought with it many more communities in need. But it also brought opportunities. The opportunities are provided by a market of 450 million people, and regions can make alliances, work with and learn from other regions.
Can Northern Ireland take advantage of this? Not when the perception is of a society which wants to live separately, where people fight over 100 metres of road, where they can be killed in pubs or shot outside their homes, where buses are burned and houses of people deemed to worship in the wrong church are attacked.
An elite leadership bickering at Stormont will not resolve this problem. The curse of sectarianism must be removed if there is ever to be a normal and civil society.
The Good Friday agreement settled the constitutional position of the North. There is no chance that, in the foreseeable future, given the Catholic and Protestant birth rates and the fact that a small percentage of Catholics want to retain the status quo, a majority will vote for a united Ireland.
The Northern Ireland economy will suffer as long as the North is perceived to be a sectarian society. For 30 years, foreign investors stayed away, tourists stayed away and many young people just went away.
Northern Ireland costs £13 billion a year to run, and the receipts from it are about £7 billion, with the shortfall of £6 billion made up by the British taxpayer.
What is the Republic's answer to the possibility of subsidising six Northern counties to the tune of €10 billion a year?
Peter Hain was right when he told New York's Irish Echo newspaper that the Northern Ireland economy is not sustainable in the long term. It must work with the Republic, establishing where feasible all-island alliances. And it must work within the European Union to ensure its economic future, not just seek handouts
Segregated societies cannot have a secure future. Everyone has a right to a sense of identity, but when that identity seeks to dominate and deprive others of theirs, people retreat into their own communities in fear.
The Northern Ireland Office has decided to restructure local councils, reducing their number from 26 to seven and giving each more responsibilities. This and the reduction of the education and health boards to one of each provides a new opportunity to begin to defeat the deep-rooted sectarianism which has blighted Northern Ireland since its establishment.
More refined local government, representing bigger populations, will present local politicians with the challenge of working together for their entire communities. They must rise to meet it.
These new arrangements must encourage support for the development of integrated communities where a new generation can live, receive their education, play and work together.
It is unlikely that, where people grow up together and are educated together, they will learn to hate each other.
It is also time that the parties, particularly the Ulster Unionists and the SDLP, began to build a base which can include Catholics and Protestants.
The SDLP's Alban Maginness recently urged SDLP members to enter into cross-community dialogue. Until these things begin to happen, the chances of defeating sectarianism and stabilising the Northern community are remote.
Jim Dougal is a journalist and broadcaster, former Northern editor of RTÉ, Northern Ireland political editor of the BBC and head of the European Commission in Belfast and London