The DUP has quit its campaign to have the Union flag flown at the Cenotaph in the grounds of Belfast City Hall.
A heavy police presence surrounded the building where around a dozen loyalist protesters had gathered, although no trouble broke out.
Amid heated exchanges inside, unionists described the original decision to restrict the flying of the Union flag at City Hall as “a bottle of poison thrown into the well of goodwill in this city”.
A compromise proposal from the DUP’s Lee Reynolds had sought to see the Union flag fly at the Cenotaph.
The proposal was rejected last month by the council’s Policy and Resources Committee.
But the momentum was taken out of the plan after the Royal British Legion said it did not want to see the Cenotaph politicised.
No vote was taken on the issue at last night’s monthly meeting.
Mr Reynolds told councillors his alternative proposal “will not progress”.
And he described the original motion — supported by Sinn Fein, the SDLP and Alliance — on December 3 as “vindictive”.
“It has put the clock back in good relations in the city by a decade,” he said.
“The flexibilities, the adjustments, the mutual room for manoeuvre that developed in this city has effectively disappeared,” he said.
“By that decision a bottle of poison was thrown into the well of goodwill in this city.”
Mr Reynolds said the alternative proposal “will not progress”.
“However, its failure means the problem remains.”
He said they had attempted to talk with the SDLP to move the issue forward.
“The gap between our positions could not be bridged but they did at least accept the problem existed. All that means is that we are still left with a problem.”
He said the DUP will pursue the complaint about the process with the Equality Commission.
Sinn Fein’s Tom Hartley said the Cenotaph should be treated with dignity and respect.
“In every sense the Cenotaph should sit above the political complication that we find in Belfast City Hall. It is a special place,” he said.
“Our group are supporting the minute as it stands.”
The SDLP’s Tim Attwood said they recognised the decision to remove the flag had a negative impact on the city.
“We do recognise it has hurt many people — it hurt the business community,” he said.
But he added: “The Cenotaph as a symbol of reconciliation has the potential to bring us together and unite people of this city.”
Alliance councillor Maire Hendron criticised the DUP for “playing politics with remembrance”.
“This move is clearly about keeping the flag debate on the agenda, but in doing this the DUP has proved it is prepared to play politics with remembrance,” she said.
“Changing how the flag flies at the Cenotaph is not only against equality advice, but is also against the wishes of the Royal British Legion (RBL) which made it clear it does not want the Cenotaph politicised during a recent City Hall consultation.”
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Unionists were outraged by the move on December 3 to restrict the flying of the Union flag at City Hall. Belfast City Council’s decision led to weeks of street protests, illegal parades, rioting, intimidation and threats to politicians.
More than £20m has been spent policing the loyalist backlash, which caused disruption and lost trade over the Christmas period.