No time to despair - where there's talk there's hope

THE omens could hardly look worse. The Gardai find a massive 1,000lb republican bomb in a white BMW waiting to board the Dun Laoghaire ferry for Holyhead. A few hours earlier, a tight-lipped Bertie Ahern, the Irish Taoiseach, has left Downing Street after three-and-a-half hours of talks which conspicuously fail to resolve some of the deep disagreements between the two governments over the future of Northern Ireland. Surely only an insane optimist could now think there is a chance of a resolution? And all this when negotiations for a comprehensive settlement have less than a week to go before their deadline.

Perhaps. The formal negotiating positions of Unionists and nationalists are still far apart on many key issues. But then not everything is quite as it seems. The bomb is almost certainly not the work of the mainstream IRA, but of one of two breakaway organisations determined to sabotage the talks if they can. More important still, the talks between Ahern and Tony Blair may not have been quite as much of a catastrophe as they are feared to be. Yes, they did not close many gaps. But no, it was not a breakdown. Blair and Ahern still have a high regard for each other. Can political agreement therefore be salvaged in the painfully few days remaining?

If all it took were the efforts of Senator George Mitchell, the talks chairman, the answer would certainly be yes. Today and throughout the weekend Mitchell will, in consultation with all the parties, be drafting and redrafting a paper which can form the basis of the last stage of the discussions that begin in Belfast on Monday morning. Ministers stress Mitchell's independence of mind, but he will be in close touch with both governments.

Finally there is every chance that Ahern and Blair will both travel to Belfast later next week to act as a final "court of appeal". Opinions differ about the prospects for settlement but not many people expect a positive outcome, if there is one, to emerge until the deadline is very near. Which was one inevitable difficulty about Wednesday night's talks. They covered voting systems for the Northern Assembly, which all parties now agree will be established as part of any settlement. They talked about the contentious issue of whether the assembly should have a Cabinet-style executive, as the nationalists want but the Unionists don't. And above all they debated the most - though by no means only - difficult question: the scope, powers and basis of the North South bodies envisaged in the outline plan of a settlement.

The difference is over the nationalists' desire to see these bodies, probably under the aegis of a North-South council, given free standing, statutory powers defined by legislation in Dublin and Westminster with their own "dynamic", and the Unionists' insistence that their scope should not be specified until after the assembly is established, and even then should be subject to the overall control of the assembly and Dublin government. Imagine a plan for a cross border motorway from Cork to Portrush. On the nationalist model, a joint transport body would have the statutory power - and therefore the funding - to build the road. The Unionists, by contrast, would see the joint body recommending the road and then seeking funding for the section between Portrush and the border from the Northern Ireland Assembly. Unionists see the first as creeping all-Ireland government. Nationalists see the second as providing the Unionist majority with a veto over any cross-border proposal.

To understand why gaps like these are so difficult to bridge, its necessary to understand the pressures on the participants. Ahern has to deal with some of his own Fianna Fail MPs who are asking how much the Unionists are really giving up in return for the abandonment of Articles II and III of the Irish constitution, which lay claim to sovereignty over Northern Ireland. The nationalist SDLP are looking over their shoulders at the potential electoral threat from Sinn Fein. Gerry Adams and Martin McGuinness face further defections to groupings like that which was caught with yesterday's bomb.

And perhaps above all the Ulster Unionist leader David Trimble faces concerted opposition within and outside his own ranks (in the menacing form of Ian Paisley) to any deal. There is anxiety among nationalists that Tony Blair appears to be treating David Trimble with special consideration, for example by inviting him to Chequers for talks last weekend. But that misunderstands the UUP leader's special position. Nationalists have their advocates in the Dublin government. The position of the British government, and that of the tireless Dr Mowlam in particular, is necessarily not an exact parallel. Holding authority over Northern Ireland she has to be even handed between both communities. It's hardly surprising that Blair has been at some pains to articulate the fears of Ulster Unionists to nationalists and to the Irish government, and in doing so ease the dangerous sense of isolation Trimble must sometimes feel.

But all the parties will have to make further concessions if a deal is to be reached. Trimble has made two important concessions - acceptance of some form of cross-border body and the existence of a power-sharing assembly. But in a thoughtful article in yesterday's Irish Times, the Alliance Party leader Lord Alderdice criticised the minimalist view of the assembly held by the UUP, pointing out that "there is no point in having power sharing if there is no power to share". And he urged Trimble to see that Northern Ireland has "more to gain than to lose" from effective cross-border co-operation on tourism, the economy, transport, agriculture, security and so on. So there are hugely painful choices ahead, not least for Trimble, since many of his activists and rivals seem prepared to pay the terrible price of maintaining the status quo.

One of several big dangers next week is the poverty of expectations in Northern Ireland itself about the chances of success. There is a numb sense of fatalism among many people there about the outcome, amply justified by recent history. Blair knows all this very well; but he also still thinks that this time not one of the parties wants to take the blame for failure. If he's right - and he almost certainly is - there is hope yet.