ULSTER BOOST AS BLAIR BROKERS ASSEMBLY DEAL

TONY BLAIR brokered a deal on the shape of the new Ulster assembly early today, raising hopes of significant progress in the peace process.

Amid hints that the start of an arms handover may be only days away, the agreement was reached between Unionists and nationalists on the number of government departments and North-South implementation bodies.

Northern Ireland Secretary Mo Mowlam welcomed the assembly deal as an important breakthrough which added "considerable momentum" to implementing the Good Friday agreement. A major stumbling block does remain, however, with First Minister David Trimble refusing to give Sinn Fein seats on the Northern Ireland Executive unless there is a start to the decommissioning of weapons. The deal was finally sealed after days of behind-the-scenes wrangling and 18 hours of talks at Stormont, during which the Prime Minister broke away from the Gulf crisis to negotiate with party leaders in Belfast by telephone. Hours earlier Ms Mowlam hinted that at least one terror group may be preparing to hand in arms only days before Christmas. That raised speculation that a move, perhaps by the loyalist Ulster Volunteer Force, could lead to reciprocal gestures by republicans. The UVF has said that if its ceasefire was recognised and opened the way to early release of its prisoners it would be prepared to begin handing over weapons. In an answer to a studio audience question on BBC television, Ms Mowlam said: "If there are some weapons, however small - we don't know how many there are, and of course they can build them up again the next day - but if they hand in some weapons that's a start and that may well kick-start others to do it. "It's the hardest issue, but you're right. That may happen this weekend and if it did it would be an important step in that momentum." On the agreement early today, which will set up 10 government departments and six North-South implementation bodies, Mr Trimble hailed it as a "major step forward". "This clears the way for the transfer of power from London to the assembly," he said. Sinn Fein President Gerry Adams gave a qualified welcome to the agreement, saying that while it fell short of fulfilling all Sinn Fein's objectives, it cleared the way and showed that "progress is possible". The SDLP's Eddie McGrady said it was "a very good Christmas present to the people of Northern Ireland. This endorses what they wanted and what they expressed in the referendum". The movement came as security chiefs sought to track down loyalist paramilitaries who have threatened a new campaign of hit-and-run attacks. The Orange Volunteers, a newly emerged terror group, said it carried out a grenade attack on Wednesday night on a pub on the shore of Lough Neagh, County Antrim, claiming it had been an attempt to murder a leading IRA man. Protestant and Catholic customers were drinking in the bar an hour before closing when it was rocked by the no-warning explosion. No one was hurt but the force of the blast left a small crater outside. A second claim was later made by the Red Hand Defenders, another loyalist terrorist renegade group.

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