* Adams arrest over 1972 murder brings issue to crisis point
* Two cornerstones of 1998 peace under threat
* Police neutrality questioned by Deputy First Minister
* Gaping holes emerge in de facto pardon of militants
By Conor Humphries
BELFAST, May 4 (Reuters) - Major cracks are appearing in the deal that brought peace to Northern Ireland, and there appears to be no easy fix.
Police investigating an unsolved 1972 murder on Wednesday arrested Irish nationalist leader Gerry Adams, whose Sinn Fein party was for decades the political ally of IRA militants fighting to end British rule in Northern Ireland.
Reviled by some as an apologist for bombers, hailed by others as a freedom fighter and peacemaker, Adams led Sinn Fein in the talks that produced the 1998 Good Friday agreement, which ended three decades of sectarian killing in Northern Ireland.
His arrest raises questions about two cornerstones of that deal: the pardoning of militants, and the confidence of all sides in the neutrality of the police.
The province now faces an unpalatable choice between driving forward with prosecutions that have the potential to bring down its power-sharing government, or telling families that the killers of their loved ones will never be brought to justice.
"This could destabilise the entire process if this goes further into serious arrests," said Malachi O'Doherty, an Belfast-based author who has written extensively on the violence between mainly Catholic Irish nationalists and Protestant pro-British Loyalists that tore Northern Ireland apart.
"If it doesn't balance at least (with the arrest of major pro-British figures), this is going to be calamitously unsettling," he said.
A number of former members of the Irish Republican Army have said Adams was a senior IRA figure, but he has always denied it. Before his arrest in connection with the 1972 abduction and murder of mother-of-ten Jean McConville, he told Irish state broadcaster RTE he was "innocent of any part in the abduction, killing or burial of Mrs McConville".
Former IRA commander Brendan Hughes was quoted in a book by Boston College researcher Ed Moloney as saying that McConville was killed by an IRA squad "established by and ultimately ... responsible to Gerry Adams."
Police were due to decide on Sunday whether to charge Adams, release him, or seek a further extension in custody.
The arrest sparked a furious reaction from his Sinn Fein colleague Martin McGuinness, deputy first minister in Northern Ireland's power-sharing government, in which Protestant and Catholic ministers work side by side.
McGuinness blamed "dark forces" and a "cabal" within the Police Service of Northern Ireland (PSNI), saying his colleague's detention was an example of "political policing".
It was the first time in the decade since the PSNI was formed to replace the Royal Ulster Constabulary - widely reviled by Catholics for perceived pro-British bias - that one of the major parties had so directly questioned the neutrality of the police.
McGuinness stopped short of saying Sinn Fein, the largest nationalist party, would withdraw its support for the PSNI, a move that would spark a major crisis. But he said it would wait and see if the Adams situation was resolved in a satisfactory manner
"If it doesn't, we will have to review that situation," he told a news conference on Friday.
First Minister Peter Robinson, a Protestant, on Sunday accused Sinn Fein of a "thuggish attempt to blackmail" police by criticising the arrest of Adams.
At the heart of the stand-off is the fact the 1998 deal had neither a blanket amnesty nor the kind of exhaustive Peace and Reconciliation Commission that lifted the threat of prosecution from South Africans who confessed to apartheid-era crimes.
While nothing in the Good Friday accord would prevent a prosecution of Adams or other senior Sinn Fein leaders, there was a widespread expectation in the nationalist community that this would not happen, said O'Doherty.
Yet in the absence of an amnesty, there is no mechanism to stop investigations into senior figures by police and other authorities charged with probing crimes from the period known as the Troubles. These include an ombudsman body and a historical enquiries team.
"These agencies all compete with each other and arrest people and throw up all kinds of difficulties," said Brian Feeney, a Belfast-based historian and political commentator.
"It has brought a danger to the whole process," he said.
Justice Minister David Ford said on Friday there was no reason that "normal policing" should cause political instability. But he did not offer any ideas about how the stand-off might be defused.
PEACE AND RECONCILIATION
Instead of an amnesty, the 1998 deal created a patchwork of smaller measures.
The vast majority of people in prison for crimes related to the Troubles saw their sentences suspended; many who were on the run outside Northern Ireland were given assurances they would not be prosecuted if they returned; and people who gave information on the burial places of missing persons were assured the evidence from the sites would not be used against them.
The only element of the accord that would impact Adams directly, if he were to be charged and tried, is a measure that limits any sentence for Troubles-related crimes to two years.
"We have a peace process that has created institutions, but has dealt very inadequately with the issues in the past," said Peter Shirlow, a professor of conflict resolution at Queen's University Belfast.
"But I don't think any one expected it to come back and bite us the way it has," he said.
The first major sign that a decade of relative peace might be under threat came last year, when hundreds of pro-British youths staged daily riots over a decision to stop flying the British flag over Belfast city hall.
The protests were widely seen to have been fuelled by moves to prosecute pro-British Loyalist paramilitaries - and a perception of a lack of prosecutions against nationalists.
"Not investigating crime is building resentment in Northern Ireland, it is entrenching division," said Sammy Morrison, a candidate for local elections with the hard-line Traditional Unionist Voice party, who attended the flag protests last year.
Weeks of rioting led to talks brokered between Northern Ireland's parties by Richard Haass, a former adviser to U.S. President George W. Bush, on how to deal with issues of the past, but they broke up with no agreement.
The idea floated by the Attorney General last year of a blanket amnesty was shot down by politicians across the spectrum, and lawyers have suggested it might not have been possible under UK law.
There has been heavy coverage in recent days of the family of McConville, who disappeared after being dragged screaming from her 10 children by abductors - a crime the IRA only admitted to in 1993.
One of her sons said in radio interviews that he recognised some of the men who came to snatch her, but would never disclose their identities to police because of the risk of violence against him or his family.
Among the wider public, many are eager to close the door on the past in order to extend the calm and relative prosperity that Northern Ireland has enjoyed for the past decade.
"Most people would like to draw a line in the sand, just finish here and go on," said Andrew Loker, 62, a bank worker in central Belfast.
"We're not going to go anywhere still looking backwards." (Additional reporting by Padraic Halpin and Maurice Neill; Editing by Mark Trevelyan)