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Founding of Fianna Fáil

After the IRA dumped their arms rather than surrender them or continue a now fruitless war, de Valera returned to political methods. In 1924, he was arrested in Newry for "illegally entering Northern Ireland" and held in solitary confinement for a month in Crumlin Road Gaol, Belfast.

During this time, de Valera came to believe that abstentionism was not a workable tactic in the long term. He now believed that a better course would be to try to gain power and turn the Free State from a constitutional monarchy into a republic. He tried to convince Sinn Féin to accept this new line. However, a vote to accept the Free State Constitution (contingent on the abolition of the Oath of Allegiance) narrowly failed. Soon afterwards, de Valera resigned from Sinn Féin and seriously considered leaving politics.

However, one of his colleagues, Seán Lemass, convinced de Valera to found a new republican party. In March 1926, with Lemass, Constance Markievicz and others, de Valera formed a new party, Fianna Fáil (The Warriors of Destiny), a party that was to dominate 20th-century Irish politics. While Sinn Féin still held to an abstentionist line, Fianna Fáil was dedicated to republicanising the Free State from within if it gained power.

Having attracted most of Sinn Féin's branches due to Lemass' organisational skill, the new party made swift electoral gains in the general election on 9 June 1927. In the process, it took much of Sinn Féin's previous support, winning 44 seats to Sinn Féin's five. It refused to take the Oath of Allegiance (portrayed by opponents as an 'Oath of Allegiance to the Crown' but actually an Oath of Allegiance to the Irish Free State with a secondary promise of fidelity to the King in his role in the Treaty settlement).

The oath was largely the work of Collins and based on three sources: British oaths in the dominions, the oath of the Irish Republican Brotherhood and a draft oath prepared by de Valera in his proposed treaty alternative, "Document No. 2". De Valera began a legal case to challenge the requirement that members of his party take the Oath, but the assassination of the Vice-President of the Executive Council (deputy prime minister) Kevin O'Higgins on 10 July 1927 led the Executive Council under W. T. Cosgrave to introduce a Bill on 20 July requiring all Dáil candidates to promise on oath that if they were elected they would take the Oath of Allegiance. Forced into a corner, and faced with the option of staying outside politics forever or taking the oath and entering, de Valera and his TDs took the Oath of Allegiance on 12 August 1927, though de Valera himself described the Oath as "an empty political formula".

De Valera never organised Fianna Fáil in Northern Ireland and it was not until 7 December 2007 that Fianna Fáil was registered there by the UK Electoral Commission.