The current discussion over the Taoiseach's remarks on changes to Articles 2 & 3 of the Constitution, and my offer of Fine Gael support on this, reminds us all that the outcome of the Northern talks must be put to the people in a referendum.

Every detail of the settlement will be argued over. At last, we are coming now to focus on those details of new political institutions. The new political institutions must be fair. But they must also be ones that work. Fair institutions which do not work will be no use to anyone.

Let me identify eight key difficulties that must be overcome in the Belfast talks.

1 In the case of a North/South body with "executive" functions, where would the budgetary authority for spending decisions lie? Would it have a block grant for all executive functions, or would it depend on separate amounts of project finance to be agreed by both the Department of Finance in Dublin and by the Treasury in London?

If the latter is the case, this could also lead to paralysis of action. This is no academic issue. Look at the difficulties with funding the Dundalk road bypass!

2 How much will the Departments and State agencies in Dublin be willing to give up powers and freedom to the North/South body? We have seen how difficult it is to get "Dublin" to give over powers and freedom to local government within this State, so we should not underestimate the problem of handing over power to the new inter-governmental bodies as well.

The decision-making process will need to be thought out very well, so that the natural forces of inertia do not predominate. If there is to be power-sharing, there must first be realistic powers to share.

3 The workability of the North/ South body will depend on the workability of the devolution of power from Westminster to Belfast. If the Northern Ireland internal institutions do not work properly, there will be no organisation with which the North/South body will be able to work. A key link will be missing.

The North's model institutions, as suggested by the British government in its "Framework of Accountable Government" paper of 1995, would be an exceptionally complex web of checks and balances.

There would be a panel of three people, elected across all the Six Counties, in one constituency. The panel would nominate the Northern heads of department from the Assembly on a proportional basis. It would consider or veto legislation, and it would arbitrate on public expenditure disputes, etc. The panel would operate by unanimity, and electoral experience suggests that one of the panel members could be a DUP representative. The possibility of deadlock in the panel is, therefore, very real.

4 How much would the work of the North/South body really touch the daily lives of nationalist people in the North? What effect would it have on the life of a farmer in Fermanagh, a guesthouse operator in Craigavon or a school-leaver in Ballymurphy? Will the work reduce the daily sense of isolation from the wider Irish reality that Northern nationalists sometimes feel?

I suggest that the impact on daily life, rather than economies of scale, should be the test of what should or should not be done by the North/ South body. This requires careful work to select issues that really will impact on daily life.

5 There is a risk that the work on these complex institutional questions could detract from the equally important pursuit of the "equality" agenda - measures to recognise the rights and identities of the two traditions.

The Anglo-Irish Agreement referred to cultural heritage, to flags and emblems, to discrimination, and to a Bill of Rights. I could also add the issue of the status of the Irish language, and bilingualism generally, in Northern Ireland. Detailed proposals are lacking on these matters.

6 The talks must also take account of devolution on the island of Britain. As devolution develops, the transfer of large amounts of money from one part of the UK to another will become much more transparent, but also much more controversial too. That will affect the financing of the settlement.

7 After 1999, the Border in Ireland will become the only remaining land border in all of Western Europe where people will have to change currencies. This will not make the task of the North/ South body, or the development of an all-island economy, any easier. If the euro falls in value relative to sterling, Northern exports to the South may become uncompetitive and vice-versa. These currency movements will be driven by forces outside this island.

8 Finally, there is the human legacy of violence. In South Africa, there was felt to be the need for a Truth and Reconciliation Commission. It has been rightly said of Bloody Sunday in Derry that the telling of the truth must come before true reconciliation.

But that applies also to IRA misdeeds. It applies to loyalist misdeeds. It applies to identifying the graves of the "disappeared". A truth commission would have to cover everything.

Cross-community and cross-Border political institutions will require extraordinary tolerance, patience and consensus-building. "Truth telling" and "compromise building" may sometimes conflict. That relationship needs to be worked out.

It is often said that truth is a casualty of war. Are there circumstances in which truth may become, temporarily at least, a casualty of peace?

In this article, I have deliberately set out to draw attention to difficulties. It would be doing no service to the participants to minimise the difficulties or to pretend that all that is needed is goodwill, without hard work and hard choices.

On this island we are coping with a problem that is far from unique. All over eastern and central Europe populations of different religious and national allegiances are mingled together.

In nationally heterogeneous states, nationalism and democracy can only co-exist if the nationalist ideal is moderated and reshaped. This calls for a redefinition of, and a distinction between, the two terms "state" and "nation".

The "state" is a form of political organisation which may encompass one or more nations.

The "nation" may express itself in more than one state.

"Self-rule'` and "national self-determination" may not always have to be one and the same thing.

Any institution, however well-designed, can be blocked in its operation if a large enough number of people bear ill-will towards it. That is why I believe the crucial task for those who wants to call themselves "nationalists" is to go out of their way to understand, and to identify with, the concerns and allegiances of unionists.

That is what the real "peace process" is about. To borrow from the phrase of Yitzhak Rabin, one makes peace with one's traditional antagonists - not with those who have been on one's own side all along!

John Bruton TD is leader of Fine Gael