The IRA was costing up to £3 million a year to run during the 1980s, according to newly declassified security briefings.
The then RUC chief constable John Hermon told government ministers the Provos had no problem getting the cash they needed to sustain their campaign.
“It costs the IRA £2-£3 million per year to maintain its activity,” he told a private meeting of British and Irish minsters at the Anglo-Irish Intergovernmental Conference in April 1987.
“That amount is no problem to them and they have no shortage of money to purchase weapons.”
Most of the money at the time was coming from “protection rackets, from the drinking clubs and from overseas”.
“Unfortunately the IRA is almost self-sustaining – it has got to be crushed,” the police chief said.
A report of the talks, which was sent to the Department of the Taoiseach, showed Northern secretary Tom King sounded a note of pessimism.
The IRA was so unscrupulous that “they are capable of creating a situation of Greek tragedy,” he told the meeting at Stormont Castle in Belfast.
“It is an almost irresistible force.”
Minister for foreign affairs Brian Lenihan took a different view. "Money was the problem," he said. "If that could be reduced and their income cut."
Lenihan added: “I think we can win it. I think we can defeat them.
“I would be optimistic about this. There are elements in the Provisional campaign at present which are elements of desperation.”