Until recently, the British and Irish governments had dared to hope that the problem of Northern Irish terrorism had been solved. Lessons about managing bitter civil conflict were being tentatively drawn in that corner of the world and beyond. One such lesson went roughly like this: As difficult as it may be to accept the fact, terrorists cannot always, or even usually, be defeated by force of arms alone. In the end, they must be negotiated with. Once that uncomfortable truth is grasped by all sides, however, even the most deep-rooted grievances can be overcome. Northern Ireland had seemed to prove it—or at least to offer one example of success.

After a series of sinister and bizarre developments, that conclusion is looking shaky. The mood of nervous optimism over Ulster is gone.

Sinn Fein, long understood to be the political arm of the Irish Republican Army, has already tasted legitimized political power in the North. After the recent moves toward a settlement (as it seemed) of the Troubles, the party was able to appoint ministers in the province's government—this, in effect, was its political reward for a sustained IRA cease-fire.

True, it was a shame, as the British and Irish governments conceded, that the deal-making had empowered the extremists. On the Catholic side, the moderate Social Democratic and Labor Party was squeezed out by Sinn Fein. On the Protestant side, the moderate Unionist Party was put under great pressure by the militant Democratic Unionists. Why did this shift of power to the extremes happen? Simple, really. Parties aligned with or sympathetic to terrorists were being allowed to dictate the province's political future. Why support politicians who made themselves irrelevant by pledging themselves to peaceful negotiation?

That was an ugly reality, to be sure. And there were others. The Troubles subsided, but paramilitary crime continued to flourish—protection rackets, punishment beatings and shootings, and the rest. The terrorists on both sides continued to run their scams and rule their fiefs. And there was the small matter of the Sinn Fein men arrested in Colombia for training anti-government paramilitaries in urban warfare.

Still, the prevailing view had been that all of this, however regrettable, was a price worth paying. If the terrorists and their allies could be persuaded to stop bombing in exchange for a portion of political power, so be it. Democracy would civilize them.

Meanwhile, support for the moderate Unionists, representing the Protestant majority in the province, drained away to such an extent that by last December, Sinn Fein and the Democratic Unionists were poised to share power there in a restored government. In the end, that deal stalled because the IRA refused to bow to the Democratic Unionists' demand that it should supply photographic evidence of disarmament. That is why, for now, the province is again being run from London. But it seemed only a matter of time before this last remaining obstacle would be overcome. Sinn Fein would then complete its transition to genuinely democratic politics—and not just in the North. The party had begun to challenge for a share of power in the Irish Republic, as well. In the next elections there, to be held by 2007, it could plausibly hope to hold a controlling bloc of seats in the Irish parliament.

Then, just before Christmas, a group of meticulously prepared robbers stole $50 million from the Northern Bank of Belfast. In unusually forthright terms, the police, both in the North and in the Republic, blamed the IRA. Sinn Fein denied that it or the IRA was involved. The Independent Monitoring Commission, which seeks to ensure that the paramilitaries observe their (qualified) cease-fire, then declared not only that the IRA had indeed carried out the raid, but also that Sinn Fein's leaders—past and would-be ministers in the province's government, the men negotiating with Britain and Ireland over the North's constitutional future—had sanctioned the operation.

The Republic's government feels especially aggrieved. In December it suggested, as a way to advance the talks on restoring a government in the North, that the IRA should renounce all its criminal activities. The IRA refused. Now Ireland's prime minister, Bertie Ahern, appears to believe that Sinn Fein was planning its heist while in negotiations with his government.

Sensationally, on February 20, the Republic's justice minister, Michael McDowell, broke a taboo that had been observed for decades, outing Sinn Fein leaders Gerry Adams, Martin McGuinness, and Martin Ferris as members of the ruling council of the IRA. For years, it had been convenient for all three sides—the British government, the Irish government, and the republican terrorists—to pretend that Sinn Fein and the IRA were separate organizations. This made it possible for the governments to negotiate with terrorists while claiming not to be. It is a sign of the two governments' dismay and exasperation, especially in the Republic, that this pretense has been abandoned.

The leaders of Sinn Fein/IRA have other matters on their minds, as well. At the end of January, a Catholic had his throat cut—by the IRA, according to his family, whose campaign to have the murderers brought to justice has attracted remarkable and unprecedented support in a staunchly republican area. Many Catholics in the North who would normally vote for Sinn Fein may not care very much about the bank robbery; in the province, this killing and the IRA's unconvincing denials of responsibility may do the movement far more political harm.

What happens next is unclear. Perhaps this sudden crisis in extreme republicanism will propel the movement toward abandoning, finally, its criminal and terrorist methods. Perhaps the IRA will split. Perhaps the "peace process" will collapse altogether.

As a skeptic about the "peace process"—in particular, as somebody who deplored the decision to let the IRA maintain a specious distance from the commitments being made by a supposedly separate Sinn Fein—you might expect me to say "I told you so." In fact, my reaction is not that, so much as plain incredulity. How could an organization as astute as Sinn Fein/IRA in the tactical use of politics and violence be so stupid? On the point of winning so much, it jeopardizes everything through actions as crass as this? Hard to believe.

So much so that a conspiracy theorist might venture the possibility that it is a setup. Perhaps the British government wants to hobble the prospects of a power-sharing government comprising Sinn Fein and the Democratic Unionists. Perhaps the Irish government, recognizing the threat that Sinn Fein may soon pose to its vote in the South, also wants to trip the movement up. Both of these theories, when you remember the investment that both governments have made in the peace process, seem even harder to believe than the idea that Sinn Fein/IRA has simply made an egregious error. Could the militant republican movement really have expected to thrive in democratic politics, keep its rackets turning over, and maintain a private, criminally financed army as well—all of them indefinitely? Evidently, yes.

Perhaps the most disgusting thing—and what may help to explain Sinn Fein/IRA's mistake—is that the two governments were actually willing to let the extremists on both sides get away with it, so long as the criminality was kept within bounds. A veil had been drawn over the smaller-scale crime that kept the movements in funds. The Republic's Criminal Assets Bureau undertook its first big operation against suspected IRA rackets in the South only in the aftermath of the robbery. Britain's government has mostly turned a blind eye to the rule by intimidation carried on by both kinds of paramilitary in the North.

Peace is a great prize, but it should not be bought at any price. That is one lesson from the Northern Ireland mess. Another is this: In the negotiations that resolve long-running feuds, it is as important to reward moderates as it is to draw in and pacify the extremists. The greatest failure of the Northern Irish peace process was the evisceration of the moderate and genuinely heroic SDLP. Finally, a third lesson is to require, to the greatest extent possible, honesty and plain dealing of all involved. To forgive the past crimes of extremists, whatever their allegiance, may often be necessary; to tolerate them going forward, in effect to institutionalize them, is indefensible and ultimately self-defeating.

Sinn Fein has been waiting for its now-customary St. Patrick's Day invitation to the White House. Apparently, that won't happen, but it seems that no Northern Irish parties are going to be asked: Sinn Fein/IRA is not going to be singled out. It should be. The group's fundraising in America should be prohibited, and its members should be denied visas to visit the country. How else should America deal with such an organization?