The £26.5 million Belfast bank robbery has severely damaged trust between political parties, the Catholic primate has warned.
The Archbishop of Armagh, Dr Seán Brady, told the BBC: "I believe that that robbery has done huge damage to the trust that was being built up, and perhaps that was the intention . . . But my concern is to limit that damage for the sake of peace."
Dr Brady added: "The challenge is to rebuild the trust and to rebuild it more securely maybe than ever."
Last night a British government spokesman accepted that London and republicans were blaming each other for the current crisis. However, he denied the situation was hopeless with opposing sides refusing to rethink their positions.
He stood by the British Prime Minister's claim that ongoing paramilitary and criminal activity was of central importance and could not be ignored. "The issue of criminality is clear cut," he told The Irish Times.
"It's all down to the willingness of everyone involved to seek out progress."
However, it was accepted that time was short with a British general election expected in May.
"We can see why people are talking about September" for the next realistic opportunity, he said. The special report by the Independent Monitoring Commission on December's Northern Bank robbery is expected to be published on Thursday.
It will underscore the assessment by the police and security services on both sides of the Border that the IRA was behind the £26.5 (€37.85 million) robbery - a claim twice denied by the IRA.
Financial sanctions, if imposed, will target Sinn Féin Assembly salaries and/or benefits.
The SDLP South Down MP, Mr Eddie McGrady, accused the IRA of acting above the law.
"Let's be clear about this. Holding up a family at gunpoint is a crime. Terrorising women and children, brutalising them and threatening them with death is a crime. Theft of £26.5 million is a crime. That is what the Northern Bank raid involved. That is why it was a crime," he said.
"The governments have to send the strong message that nobody is above the law."
His party colleague Dr Seán Farren welcomed tomorrow's Dáil debate on the crisis facing the peace process. "In the Dáil chamber are members of parties whose leaders in the past chose to travel the road that Sinn Féin must now also travel, the road to undiluted democracy.
"As democrats, the leaders of those parties know that democracy and paramilitary organisations operating outside the law are incompatible.
"The criminal activities of the IRA and loyalist paramilitaries clearly demonstrate that those organisations now simply want to operate as criminal gangs pursuing their own selfish interests."
Conor O'Clery adds:
The Washington Post has called on President Bush to reconsider the St Patrick's Day reception this year because of the Northern Bank robbery.
In an editorial, the Post blames the stalemate in the North on the IRA refusing to disarm.
The governments of Britain and Ireland, which have historically been at odds over Northern Ireland were now unanimous that the IRA was responsible for the Northern Bank raid, it stated, and the Taoiseach claimed some of Sinn Féin's elected officials knew about the robbery and several others in advance.
This should be enough to destroy any remaining American sentimentality about the IRA which has become "an organized crime syndicate", the Post said. "Although it has become traditional for the US president to hold a reception for Northern Irish politicians on St Patrick's Day, Mr Bush should think hard about whether he wants to have bosses of that syndicate in the White House next month."