Sanctions still at issue as hopes rise of Ulster deal

Significant movement was reportedly made in Northern Ireland yesterday in a day of negotiations involving Unionists, republicans and the British and Irish prime ministers.

The progress meant that Tony Blair and Bertie Ahern decided to keep the talks going until late last night. They will resume negotiations this morning.One of the main unresolved issues revolved around whether a new deal would include sanctions being built in against anyone defaulting on its terms.

David Trimble, the Ulster Unionist Party leader, described the issue as crucial, while Sinn Fein was resisting anything that might result in their expulsion from government. During the day, hopes of a breakthrough rose as Sinn Fein and the Unionists held lengthy meetings together. "Serious engagement" was said to have taken place.

Earlier, Mr Blair and Mr Ahern presented the local parties with a 28-page document dealing with issues such as policing, justice, equality and fugitive republicans.

The talks are aimed at achieving progress in these areas in the expectation that the IRA would then react with major moves of arms decommissioning and a suspension of its activities. Such IRA movement is only expected in the event of an agreement across the board on the issues being discussed yesterday. But although many thorny issues were being tackled, the sense was that the issues were being worked through gradually.

One of the questions that was apparently dealt with successfully was that of republican "on-the-runs" – several dozen republicans officially wanted in Northern Ireland. Under a new arrangement, they will be able to approach first an eligibility body and then a judicial commission, which will consider their cases. The understanding is that they will not be sent to prison.

The decision to prolong the talks increased speculation that an overall breakthrough today was a possibility, with the two prime ministers calculating that extra hours of talks could settle the outstanding issues.

The discussions are said to be particularly time-consuming because all the participants in attendance have to be consulted about any proposed amendments to the 28-page document.

Mr Trimble said yesterday afternoon that there was "no great progress to report". He added: "The Government has given us a draft which is still evolving. My understanding of this is something which might be brought forward by the Government in response to the necessary statements and actions of republicans."

Pat Doherty, a Sinn Fein MP, was more optimistic. He said if as much progress was made today as yesterday the potential was there for a deal to be struck. "Today has been a good day of good solid work and good solid progress," he said as he left the talks last night. "We welcome the fact that the Taoiseach and Tony Blair will be back here tomorrow, which will give us all a chance to refocus on the remaining work that has to be done."

Mark Durkan, leader of the nationalist Social Democratic and Labour Party, said: "If the IRA can create confidence and can give certainty that they are absolutely deactivated, that there is no continuing paramilitary activity, that they're truly in a 'cease-army' situation and not just a ceasefire, that actually offers very positive developments for all of us."