The Anglo-Irish Agreement
And Republic-backed proposals for the future of Northern Ireland had also received a sharp rebuff by Thatcher, who was not in conciliatory mood having narrowly escaped an IRA bomb attack at the Conservative party conference in Brighton in October 1984.
Nonetheless, the rising political effectiveness of Sinn Fein and the danger of interminable violence if the issue of Northern Ireland remained unresolved led Thatcher and her Irish counterpart Garret FitzGerald to reach an agreement.
The Anglo-Irish Agreement, signed in November 1985, confirmed that Northern Ireland would remain independent of the Republic as long as that was the will of the majority in the north.
But it also gave the Republic a say in the running of the province for the first time, with the setting up of the Intergovernmental Conference to discuss security and political issues.
'Unionist opinion was uniformly horrified, believing that the first steps had been taken towards abandoning the province to a united Ireland.'
The agreement also stated that power could not be devolved back to Northern Ireland unless it enshrined the principle of power sharing.
Reaction was diverse. Sinn Fein and the Republic's opposition party Fianna Fail condemned the agreement for acknowledging that Britain had a legitimate role in Northern Ireland.
Centre-ground nationalists like the SDLP welcomed what they saw as a new and constructive development.
Unionist opinion was uniformly horrified, believing that the first steps had been taken towards abandoning the province to a united Ireland. Huge demonstrations, strikes and marches were held, and all 15 unionist Westminster MPs resigned their seats.
The resulting by-elections actually saw Sinn Fein and Ulster Unionist support fall, with the latter losing a seat to the SDLP. If the intention of the agreement had been to lessen the polarisation of Northern Ireland politics and bolster the constitutional and non-violent SDLP, these were tentative indications that it might be working.
By 1987, unionists had tacitly conceded that their campaign to derail the agreement had failed, and once again began to cooperate with government ministers.
The violence of Northern Ireland's paramilitary groups still had more than a decade to run and the sectarian divide remained as wide as it had ever been.
But the agreement constituted an important staging post on the road to the 1998 Good Friday Agreement, and the eventual cessation of the cycle of internecine murder and reprisals in the province.