* Hundreds of Protestant youths take to streets in flag riots
* Political parties condemn violence, no threat seen to peace
* Tensions likely to simmer as Protestants see power ebb
* Demographic shift toward Protestant minority seen in data
By Ian Graham
BELFAST, Dec 12 (Reuters) - Petrol bombs on the streets of Belfast this month reveal anger and frustration among pro-British Protestants at a loss of dominance in Northern Ireland but do not - yet - pose a serious threat to a 15-year-old peace.
Launched after local councillors voted to end a century-old tradition of daily flying Britain's union flag from City Hall, 10 days of brick-throwing battles with police provided an outlet for a build-up of grievances among a community that new figures this week showed no longer forms a majority of the population.
But for all that the unrest stirred black-and-white memories of the early days of the "Troubles" in the 1960s or that it may have been organised by long dormant "loyalist" militant groups, a new armed conflict against the state, or with violent splinter units of anti-British Catholic republicans, seems still remote.
It was, however, a measure of lingering division that makes governing its 1.8 million people a complex affair as Northern Ireland, severed from the rest of the island 90 years ago as a Protestant-majority province, sees its demographic balance tip toward Catholics, who tend to favour joining the Irish Republic.
"Anything to do with the queen, the crown and our flag, there is no tolerance for it," said Jim Wilson, who was jailed for his politics in the 1970s and is now a community worker in a rundown Protestant area of Belfast that was at the heart of the protests by Union Jack-waving youths over the past week or so.
"It is pushing my community to violence," he said, accusing Catholics of provocation by voting in the city council to limit flying the British flag. "The nationalists went to war because their people weren't getting this and that and the other," he said. "This is exactly what are doing to my community."
In arguing that more serious violence is likely to be limited, analysts note that Protestant complaints have tended to focus on cultural issues, such as the flag and their traditions of parades to celebrate past victories over Catholic opponents, and as such are largely symbolic of their lost domination.
The flag vote only brought Belfast into line with practice at many town halls in mainland Britain by restricting the flying of the banner to 17 "flag days" a year. But it followed a loss of historic control by unionists over the municipal authority in the province's capital, itself a symptom of changing demography.
Data from a 10-yearly census released on Tuesday showed that a majority of the city's population is now Roman Catholic.
The same census also showed that across Northern Ireland, Protestants, largely descended from British settlers of 400 years ago, had fallen below 50 percent of the population for the first time since the rest of Ireland broke from British rule.
Experts predict that Catholics, who are on average younger and have higher birth rates, could become a majority of the whole province's voters within a generation.
Protests by the Catholic minority in the 1960s focused on access to jobs and social housing and their treatment as second-class citizens of a mostly Protestant-led British state.
A crackdown on rights protests were a factor in radicalising the founders of the Provisional Irish Republican Army (IRA), whose battle with security forces and pro-British loyalist militants killed some 3,600 people over three decades.
The U.S.-brokered Good Friday Agreement of 1998 brought an uneasy peace and the disarmament of militants on both sides as well as a power-sharing provincial government and parliament.
In scenes reminiscent of earlier times, 15 masked loyalists youths smashed the windows of a police car on Monday and threw a petrol bomb into it while an officer was still inside. She survived but was among some 30 offices injured in the violence that erupted on Dec. 3. It has now eased off.
Police say members of pro-British militant groups helped orchestrate and took part in the protests, raising fears that these movements could renounce ceasefire pledges, which have held good despite several killings by nationalist opponents.
The last time loyalists were accused of organising street violence was early last year, shortly after artists linked to the pro-British groups painted two large murals of gunmen of a kind that were once common across Belfast's urban frontlines but which had largely disappeared since the 1998 peace deal.
The main loyalist militant groups, the Ulster Volunteer Force and Ulster Freedom Fighters, both ceased hostilities in 2007 and decommissioned their stocks of weapons.
While the groups might buy small quantities of new weapons there have been no signs of this yet - although analysts say the growing disaffection could make it harder for their leaders to hold the line against frustration in the ranks.
"They haven't sought to use arms in any substantial way and there doesn't seem to be any indication of a desire to take on the dissident Republicans," said Neil Jarman, director of the Belfast-based Institute for Conflict Research.
"Where they are asserting the defence of their communities is in relation to cultural issues like parades, like flags. It's more a reaction to the state and perhaps even a reaction to a perceived lack of leadership in the Unionist community."
While the protests have left some predominantly working-class areas scarred with broken windows and burnt out cars, Belfast remains a city transformed since 1998 ceasefire.
The army checkpoints and republican barricades that once blocked Belfast streets have long gone, although fleets of white police jeeps and water cannon have become an increasingly frequent sight in the city.
Much of the population, on both sides of the divide and especially among the more prosperous, have reacted to the latest violence with a shared sense of irritation, though also a measure of resignation - complaining of disruptions to traffic and the temporary closure of City Hall's Christmas market.
But the gradual uptick of violence over the past four years has raised passions in poorer areas, worse hit by unemployment which the province's unrest has only aggravated. The authorities have been forced increase the number of "peace walls", barriers set up to divide Catholic and Protestant neighbourhoods.
The removal of the flag, Protestant community leaders say, is just the latest in a string of insults handed down from above; a parades commission, introduced after the peace deal to assuage Catholics, has they say unfairly restricted the Protestant tradition of marches celebrating the defeat of Britain's last Catholic monarch in 1690.
And they accuse police, a body long dominated by Protestants but now forcibly reformed to include more Catholics, of not doing enough to defend their communities from attack.
Pro-British militants also contend that a series of investigations into past attacks is unfairly focusing on them.
The naming of a children's playground after a former IRA gunman on the same day as the Belfast city hall vote on the flag has also been a particular focus of scorn.
"This has set back relations there 20 years or more, it is very regrettable," said Reg Empey, Chairman of the Ulster Unionists, the second largest pro-British party.
"I don't see an immediate fix for it." (Additional reporting by Padraic Halpin; Writing by Conor Humphries; Editing by Alastair Macdonald)