Moderate unionists saw Drumcree as a 'line in the sand'
The huge problem of contentious parades was highlighted to Tony Blair's incoming Labour Government.
Newly-released files show a report was compiled for Dr Mo Mowlam on the scale of the issue.
Weeks before Ms Mowlam became Secretary of State in May 1997, a senior Northern Ireland Office official said that the establishment of a Parades Commission would have "high political voltage on both sides of the community and would significantly impact on the prospects for local accommodations on a number of contentious parades in the summer months as well as the government’s primary duty of preserving life".
In a memo entitled 'Parades: the Way Ahead', the official stated: "most Unionists regard the parades issue as encapsulating their wider fears of a continuing shift of political advantage towards nationalism and even many moderates (uninvolved in the Marching Orders) saw Drumcree 1996 as a 'line in the sand' necessary to protect their identity and culture from progressive erosion".
The prospect of further constraints on parades aroused an "atavistic" response from the Unionist community which recognised that it had "lost dominance in Northern Ireland".
Unionists were convinced that the previous year’s operational decisions were influenced by the Irish Government, the memo highlighted.
At the same time many senior members of the Loyal Orders "were shocked by the physical and political damage caused by Drumcree and wished to see some kind of honourable accommodation" which would safeguard their "traditional" rights.
The memo added: "To many nationalists, the handling of the parades issue is an acid test of (the British Government’s) resolve to create in Northern Ireland a just and equitable society … Opposition to Orange parades derives from genuine popular resentment, existing for decades, which was fanned into greater anger by Drumcree 1996.
"The decrees of last summer dealt a serious blow to community relations and to the standing within the nationalist community of (the British government) and the RUC. The decision to allow the parade through Garvaghy Road was widely believed to be political and was interpreted by nationalists as caving in to loyalist pressure.
"At the same time, most nationalists would favour some degree of local flexibility and would oppose having their legitimate concerns hijacked by Sinn Féin.
"Much would turn on the willingness of the marching orders to engage with local residents’ groups. The republican movement had exploited the parades problem with considerable success regarding it as a win/win issue with potential to unite the broad spectrum of Nationalist opinion behind Sinn Féin and to discredit the RUC and the British Government."
The NIO official believed that Dublin could be encouraged to play a constructive role behind the scenes with nationalists in encouraging compromise.