BILL Clinton raised the stakes in the Northern Ireland peace campaign yesterday by insisting the stark choice in the referendum vote on Friday lay between economic prosperity or the prospect of international oblivion.

In an unprecedented interview on the Frost programme, the US President appealed to the people of Northern Ireland to think of their children, and their children's future, when they approached the ballot box.

Sitting beside Prime Minister Tony Blair, he seductively pleaded with the electorate, saying: ''I went there in December, 1995. I remember the looks on the faces of the people, especially the young folk - the schoolchildren I spoke with, both Protestant and Catholic children.

''I would like to ask the voters to imagine what will happen if they vote no, and what do they really have to lose by voting yes, by giving this a chance ... nothing. They have a great deal to lose by walking away.''

He stopped short of dangling millions of dollars in front of the voters as the reward for a Yes vote, but implicitly that was the message. He repeated that ''peace and prosperity'' go together, a view later endorsed by a joint declaration from the G8 countries.

The communique said: ''While acknowledging that it presents challenges to all parties, we hope it will achieve the widest possible support, not only as a basis for political stability and peace but also as an opportunity for economic development and prosperity for all Northern Ireland's people.''

The referendum's importance was emphasised by the Moderator of the Presbyterian Church of Ireland who said in Edinburgh it would be ''a defining moment'' in the nation's history.

At the General Assembly of the Church of Scotland, the Rt Rev Samuel Hutchinson said: ''We watch with interest as Scotland takes her first step down the road to devolution. In turn, we thank you for the prayerful concern you have shown for the problems that have affected Northern Ireland for the last 30 years. This week we come to a defining moment in our long and tangled history as our people in Northern Ireland and in the Irish Republic vote in Friday's referendum.''

Mr Clinton, reinforcing the likelihood of huge scale investment, declared: ''I can tell you that the wave of elation that will sweep the friends of Ireland in the United States should this be accepted will be enormous and there will be a lot more willingness to get involved here and try to help build a future.'' Mr Blair and Italian Premier Romano Prodi have agreed that the next UK-Italian summit will take place in Belfast.

Mr Blair will go back to Ireland on Wednesday to campaign for aYes vote for the Good Friday agreement: he ruled out any prospect of renegotiations if there was a No vote.

He said: ''It would be fundamentally wrong to say that to people. We would be in a situation where it wouldn't be the status quo where there is quite a lot of hope about and people feel they are making progress. The one thing I have learned in this whole process is that if it doesn't go forward, it goes backwards. It never stays in the same place.''

Mr Blair also met Colin and Wendy Parry whose 12 year-old son Tim was killed in the Warrington bombing tragedy in 1993, and who have since vigorously campaigned for peace and reconciliation in Northern Ireland.

The Prime Minister told the

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couple how he hoped it would be noticed in Ulster that people like them who had lost loved ones were working so hard to promote peace.

Mr Parry, who is going to Belfast this week to campaign for a Yes vote, presented the Prime Minister with two copies of the biography of his son, one for Mr Blair himself and the other for President Clinton.

Neither the Prime Minister nor the President tried to play down the difficulties that lay in the way of peace, but Mr Clinton appealed to the people in Northern Ireland to have faith.

He quoted Yitzak Rabin who spoke to him before he signed the agreement between Israel and the PLO. Mr Rabin said: ''You know I have spent my life as a soldier, I have killed a lot of these people and they have killed a lot of my people.

''But, Mr President, you don't make peace with your friends: you make peace and then you make friends.''

Mr Blair, who will spend three days campaigning to reassure the wavering Unionist vote, gave an absolute commitment that nobody involved in the twin strategy of the ballot box and the gun would be allowed to sit in office. He was equally adamant that decommissioning would be a factor.

Meantime, as Northern Ireland headed towards Friday's knife-edge vote, Army bomb disposal experts blew up a 500lb bomb found in the centre of Armagh City. Locals raised the alarm late on Saturday night when they became suspicious of a white Toyota which turned out to have been stolen in Dublin last month.

On the County Fermanagh border, two mortar bombs and 150lbs of explosives were made safe by the Army. Fringe republicans opposed to the peace deal were presumed involved in the failed attacks.

In Dublin, police were last night holding a man after the shooting of a Sinn Fein activist and his son in a Catholic church. He was being questioned by detectives after Larry O'Toole and his 26 year-old son were injured in the attack by a gunman during a First Communion service in St Joseph's church, Ballymun.

Mr O'Toole, a leading Sinn Fein figure, is thought to have been singled out because of his strong stance against the local drugs trade rather than because of his political activities.

q Several London newspapers yesterday reported claims that Syria paid the IRA #2m to assassinate Lord Mountbatten in 1979. The allegation came from IRA defector Sean O'Callaghan, whose memoirs are being serialised.