Shooting of Prisoner Shakes N. Ireland

Northern Ireland is entering the New Year amid a crisis prompted by the shooting of a Protestant terrorist while in prison, an act that has produced retaliatory violence that poses a new threat to the faltering peace process.

Mo Mowlam, Britain's Northern Ireland secretary, is facing severe questioning of her policy of easing conditions inside the Maze prison in the hopes that it would encourage politicians on both sides to continue the peace process.

On Saturday, Dr. Mowlam's "confidence building" strategy suffered a severe blow.

Republican gunmen held in Belfast's supposedly maximum-security Maze prison left their cells, climbed onto the roof, and shot dead a leading Protestant terrorist prisoner in the courtyard below.

The murder of Billy Wright, head of the Loyalist Volunteer Force (LVF), a violent renegade group, triggered the tit-for-tat killing of a former republican prisoner outside a hotel by loyalist gunmen. Three other people were wounded in the attack.

Yesterday, the LVF confirmed that the hotel shooting had been in retaliation for Wright's murder and threatened more reprisals.

A clearly alarmed Mowlam urged both sides in the bitter sectarian struggle to show restraint, saying yesterday that "Northern Ireland is going through a testing and dangerous phase."

President Clinton also condemned the Christmas-season killing. A White House statement said it "makes no sense at a time when the people of Northern Ireland have real reasons for rejoicing at the prospects for peace and prosperity in the coming year."

Mowlam faced embarrassing questions about lax security at the Maze prison that had made it possible for members of the Irish National Liberation Army (INLA) to obtain weapons and kill Wright, also known as "King Rat."

The INLA is a breakaway faction of the Irish Republican Army and has not joined the IRA cease-fire.

Ken Maginnis, security spokesman for the Ulster Unionist Party, Northern Ireland's largest political party, demanded Mowlam's immediate resignation, claiming she had been allowing inmates to "manipulate the entire prison system" at the Maze. The Northern Ireland secretary said calls for her resignation were "inappropriate, unhelpful, and premature."

It seems certain, however, that she will remain under heavy pressure to tighten up conditions for paramilitary prisoners at the Maze and other jails.

Guards at the prison confirm that there have been no cell searches since July. Each terrorist faction virtually controls its own wing of the prison.

Mr. Maginnis said "cursory inspections" of people visiting prisoners must have enabled the two guns used to shoot Wright to be smuggled into the Maze.

As part of Mowlam's policy, some 160 terrorists from both sides of the sectarian struggle are on leave from the Maze and are staying with relatives and friends for the Christmas holiday.

Last weekend's events underlined British government concern that the peace process is in danger of being derailed by violence.

Shortly before Christmas, Mowlam conceded that the process was going through "a difficult period."

The current IRA cease-fire comes up for renewal in March. The British and Irish governments have said they will hold referendums in May on the future of Northern Ireland if politicians have made no substantial progress in the peace talks, which are due to resume next month.