The unionist demand that the Union flag be permanently displayed on Belfast City Hall is the main sticking point in the Haass talks following the reaction to the latest draft proposals from the US team.
The issue is proving the most intractable of the three main talks areas of parading, emblems and dealing with the past, and now the whole issue of flag-flying is not expected to be resolved.
Unionists last night said that a redraft of earlier proposals they deemed unacceptable had, if anything, worsened, with the DUP claiming "silly things" had been included and the UUP saying the talks were "going backwards".
Sinn Fein also admitted there were obstacles.
The Haass document is in the form of an agreement to be signed by all five Executive parties and this means that each one of them has a veto on any firm statement.
As a result, ambitious proposals to handle flag-flying in the 11 new councils which will be elected in May have been removed in the latest draft of the Haass proposals, which were emailed to parties yesterday afternoon.
The timetable for resolving the remaining issues has already been reset from yesterday evening to December 31.
The original Haass document had suggested designated days for all councils – nationalist as well as unionist – as a default position which could only be changed by a weighted majority.
This has now been removed, according to sources who have seen the current draft document.
Right up to lunchtime yesterday the Haass team were sent submissions from the parties.
Unionists insisted that if designated days are adopted for other councils Belfast should be the exception and that the Union flag should fly there constantly.
They also drew the line at suggestions that the flying of the tricolour over Stormont during some State and official visits by the Irish Government should be considered by the Assembly Commission, a committee responsible for the running of the Stormont Estate.
The other major change in the document is in relation to the past.
Proposals for a Troubles museum or for the development of the Maze site have been deleted.
"Earlier versions mentioned institutions that help educate the next generation about the past or create a venue for conversations on the Maze development.
"People haven't been able to agree on a way to tackle those issues so there is not much about them in the new document," one source involved in the talks said.
Even with these changes, largely as a result of unionist pressure, the unionist parties were still not signing up to the new draft.
Jeffrey Donaldson of the DUP said there were still "silly things" in it, while the UUP said it was in some ways worse than what had gone before.
Despite these criticisms, talks participants were privately hopeful of agreement on parading and other aspects of the past.
Proposals for a revamped Parades Commission, now divided into a Public Events Facilitation Body and a Public Events Authority, are largely unchanged.
Another two-tier body for dealing with the past, one tier of which would carry out investigations and the second tier of which could offer targeted immunity at the request of victims seeking information, are also intact.
This gives hope that the Haass team will resolve most of the past issues and all of parading issues.
In an email to parties, Dr Haass and his co-chair Professor Meghan O'Sullivan have reminded parties that the deadline for talks is the end of the year.
It is understood that they are prepared to continue talking until December 31 if necessary, taking only a brief break for Christmas, and to produce a further draft if that is considered helpful.
A decision on how long to continue will be taken after a round- table discussion between the parties.
What's in the latest draft: how the proposals are evolving in the search for consensus
By Brian Rowan
On the issue of parades, protests and commemoration, two new bodies are proposed: The Political and Cultural Expression Facilitation Office and The Authority for Public Events Adjudication, which will have seven members including a chairperson. A third tier appeals section is no longer contained in the document.
Proposals on the past include: an Historical Investigations Unit which will be led by a trusted figure with relevant investigation/legal experience and an Independent Commission for Information Retrieval (ICIR). There is a proposal for this body to be able to offer limited immunity.
The latest document produced by the Haass team also reads: "After the ICIR has had time to gather a sufficient body of information – we estimate three to five years – its director, supported by the staff, will convene an advisory group of eight-10 widely respected experts on the conflict in Northern Ireland to review a summary of what has been compiled and assess what, if any, patterns or themes can be gleaned from the information provided."
On flags, the Belfast Telegraph has been told that the proposal that the tricolour should fly during stipulated official Irish visits is not in the latest draft. There is, however, no advance on the position of the Union flag being displayed on designated days.
There is also a proposal for an applications and permit process linked to the display of flags and emblems in public spaces.
Parties see more obstacles than common ground
By Noel McAdam
All the parties involved in the Haass talks have misgivings about what is on offer with the process currently in turmoil.
The first plenary session of the five parties – DUP, UUP, Sinn Fein, SDLP and Alliance – will now take place after which a decision will be taken on the next steps. The strongest likelihood is that the parties will remain locked in talks over the weekend.
Despite a bilateral meeting between DUP and Sinn Fein – who between them have sufficient votes in the Assembly to make a deal stick – there was no sign of substantial progress after the new draft was emailed to the five parties at around 3pm yesterday.
DUP lead negotiator Jeffrey Donaldson said his party regarded the latest document as another draft and – repeating the warning of his party leader Peter Robinson on Monday – said it could not recommend support for any of the three key areas at present.
The Lagan Valley MP said that while some progress had been made, there were "silly things" which would have to be changed.
Ulster Unionist leader Mike Nesbitt, who refused to take questions from reporters, again echoed Margaret Thatcher's famous 'out out out' response to Irish Government proposals in the 1980s: "We are a long way yet from in, in, in or yes, yes, yes to these issues.
"A lot of people have been taking credit in the last couple of days for having items removed from the first draft of the document, so it is very surprising to see some of the things that are in this draft.
"We need to know who put them in and why, because we don't see them as being for the benefit of the people of Northern Ireland.
"It may take a little bit longer, but if it does, it's worth the effort and we're up for that," he said.
Sinn Fein minister Caral Ni Chuilin said: "There are many obstacles.
"I am not going into them, which will not come as any surprise to you, but Sinn Fein believes that, with goodwill, an agreement can be reached."
SDLP former minister Alex Attwood said he believed the latest paper from Dr Haass represented the "best possible thinking" and it was now up to the parties to "very quickly" make up their minds.
He said Dr Haass and Ms O'Sullivan had now delivered their "best possible advice" to the parties who, while they should not rush to judgment, needed to decide "where we go from here".
"The process suffered earlier this week from people rushing to judgment. People should apply ambition and hope," he added.
Alliance MP Naomi Long said: "It's now time for the parties to match that hard work with our own hard work, and also with our own commitment to deliver an agreement."