By Paul Hoskins

BELFAST, March 26 (Reuters) - Large sums of cash and a string of threats helped British Prime Minister Tony Blair secure a breakthrough in Northern Ireland but analysts say he has shown a knack for more than just "sledge-hammer" diplomacy. Northern Ireland's main Protestant and Catholic parties put aside decades of hostility on Monday by meeting for the first time and agreeing to run the British-ruled province together.

It is a goal Blair has doggedly pursued since the 1998 Good Friday peace deal that largely ended three decades of bloody conflict in Northern Ireland and gives him the legacy he has been searching for months before he leaves office.

With his popularity undermined by the Iraq war, Blair had been keen to clinch a deal in Northern Ireland as a tangible achievement of his decade in power.

"It may sound like a big sledge-hammer, but I think that the diplomacy from Tony Blair's end has been quite masterly," said Michael Anderson, a Northern Ireland specialist at University College Dublin's Institute for British-Irish studies.

Blair's finance minister, and presumed successor, Gordon Brown last week offered Northern Ireland's politicians an extra 1 billion pounds ($1.96 billion) to play with on condition they agreed to share the powers that will administer it.

That followed a string of threats to stop paying the wages of those elected to Belfast's power-sharing assembly, to rule the province directly from London indefinitely and to give Dublin a greater say in its running.

"I think they have been playing hard-ball but it's been a tighter form of diplomacy than in the past," said Neil Jarman, director of the Institute for Conflict Research in Belfast.

"There's a sense in which the British government has been dangling carrots but not giving as much as some had hoped."

SUCKED IN

Both the Democratic Unionist Party (DUP) of Protestant cleric Ian Paisley, which fiercely defends the province's place in the United Kingdom, and Sinn Fein which wants a united Ireland, had said Britain's financial package was too small.

"It's fairly conventional person-to-person bargaining but I guess Blair did it quite well," said Michael Marsh, professor of political science at Trinity College Dublin.

"They were prepared to wait and not push it and take the risk it might slip back," he said of almost a decade of complex manoeuvring that at times looked like a "strange quadrille".

It has taken almost 10 years to secure an elusive political settlement since the peace accord in 1998.

Anderson also praised Blair's patience and his readiness to apply pressure layer-by-layer until the key players found themselves "sucked so far in" that there was no turning back.

"He has perfected the art of the process and the process has been so meticulous that they very nearly killed each other with boredom," he added.

Perhaps the smartest move by Blair and his top minister in the province, Peter Hain, was introducing hugely unpopular water charges, ensuring both the DUP and Sinn Fein came under growing public pressure to agree to share power and abolish them.

"More than that, it also gave the public a growing sense the assembly would have a specific job to do and not just be a talking shop," said Anderson.

"Most importantly, it encouraged the middle classes, who really had absented themselves from politics, to get involved again and make it clear they weren't going to put up with any more messing around with constitutional issues."

Blair's reward for what Hain described as his "forensic attention" will be to have a power-sharing government up and running on May 8 -- just days after British regional elections which are expected to be the trigger for him to announce the date for his departure from office.

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