OMAGH, Northern Ireland (Reuters) - Irish nationalists may force a prolonged collapse of Northern Ireland's devolved government and a return to direct rule from London if they cannot agree a new government with unionists, the leader of the British province said on Friday.
First Minister Arlene Foster told Reuters such a scenario would be "very damaging" for a province recovering from three decades of sectarian violence and now facing the upheaval of Britain's exit from the European Union.
The province's cross-community government - a forced coalition between Irish nationalists and Foster's pro-British Democratic Unionist Party - collapsed last month after Sinn Fein's Martin McGuinness resigned as deputy first minister.
Sinn Fein has detailed a number of red line issues it says must be met before it governs with the DUP again, including legislation to give equal status to the Irish language.
Sinn Fein has, however, not called for direct rule. Neither side has made any indication of compromise and decision-making would automatically return to Westminster if the deadlock persists.
"Sinn Fein seems to be saying if they don’t get what they want then they are prepared to live with direct rule," Foster said in an interview.
Northern Ireland's economy had prospered in the 10 years since devolved power was transferred to the Northern Ireland Assembly, she said.
"We will lose that if we have direct rule and that is very dangerous," she said.
The two parties supported opposite sides of a three decade conflict between Irish nationalists who wanted a united Ireland ruled from Dublin and pro-British unionists who wanted the province to remain British, which ended with a 1998 peace deal.
Neither side is showing signs of blinking first ahead of next week's election, which was triggered by McGuinness' departure. Sinn Fein says he quit over the alleged abuse of a green-energy scheme, which could cost the Northern Ireland Executive nearly £500 million.
But Foster said the breakdown was "caused by Sinn Fein wanting to push ahead on their own agenda."
Some political commentators have suggested Sinn Fein wants a collapsed administration to minimise the influence of the DUP during Brexit negotiations, a charge Sinn Fein has denied.
The province could be the region hardest hit by Brexit due to the loss of significant European Union funding and the risk of border controls that are fiercely opposed by Irish nationalists.
"To deal with Brexit ... we need to have a voice at the table and at the moment we don’t have an executive to have that voice," Foster said.
Foster has rejected the proposed Irish language act, saying it would be too costly to operate and that the Irish language should not have equal status with English in the United Kingdom.
Sinn Fein is also demanding an investigation into the green-energy heating scheme. While a public enquiry has been established to probe Foster's role, it has not started sittings and the first minister has refused to contemplate standing down.
Most opinion polls indicate the DUP will remain the largest party, but that Sinn Fein may make gains.
Foster described the March 2 vote as the province's most important in two decades due to the possibility that Sinn Fein could become the largest party and push for Irish reunification just as Britain is negotiating its exit from the European Union.
Under the terms of the 1998 Belfast Agreement, Britain's Secretary of State to Northern Ireland is obliged to order a referendum if it appears likely that a majority would seek to form part of a united Ireland.
Even if it was not successful, just holding a vote would be destabilising to Northern Ireland, Foster said.
"That would be disastrous for Northern Ireland in terms of the divisive nature of such a campaign and indeed the instability that would cause," she said.
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Editing by Conor Humphries and Richard Lough