TAOISEACH Enda Kenny won back some ground in the battle to share the burden of bailing out our banks yesterday in Brussels.
The Taoiseach used high level meetings in Brussels to push the case for a deal on our €64bn bank debt - despite fears Germany and other rich countries could block a deal.
The comments from the Commission President comes amid growing concerns that Ireland could be left to pick up the full €64bn cost of rescuing banks here, despite a June promise from European leaders to examine the Irish case.
Mr Kenny said the decision to allow the eurozone's permanent bailout fund to directly recapitalise banks after the creation of a euro-wide banking supervisor isn't up for interpretation.
Europe's "politicians made a clear, unequivocal decision" at their June 29 summit about a direct bank recapitalisation facility for the European Stability Mechanism, Mr Kenny added after a meeting with European Commission officials in Brussels.
Last month Germany, Holland, Austria and Finland, questioned whether "legacy" bank problems should be covered by the European Stability Mechanism.
Commission President Jose Manuel Barroso said: "This is a question of credibility for the European states and all the member states," Mr Barroso said as he praised the work that the Government and the Irish people had done in reducing the budget deficit.
"While there is still much to be done, and we know real sacrifices are being made, Ireland's return to the bond markets this summer proves that hard work is starting to pay off," Mr Barroso added.
Mr Kenny said he was very grateful for the "steadfast support" from the Commission. He warned the EU would be punished for any back-sliding or stepping away from the agreement to break the link between bank debt and national debt.
"This is about credibility, this is about confidence, this is about demonstrating to the citizens of Europe that when the council makes decisions in their interests, they are followed through," he said.
Irish negotiators are seeking help to slash the cost of bailing out Irish banks. If the ESM is not used, the Government is expected to fall back on a plan to stretch the time allowed to pay off the €30bn cost of rescuing Anglo Irish Bank over a period of up to 40 years.
European science commissioner Maire Geoghegan Quinn said there is now a clear expectation of a deal that would make Ireland's bailout programme more sustainable.
That falls short of the cost of rescuing the lenders, but is twice the €12bn or so value the state currently places on the shares.
The statistics agency Eurostat believes the bank stakes have a "long-term economic value" of €15.9bn.
While hopes of a bank deal dominated yesterday's meetings in Brussels, the broader discussions focused on the forthcoming Irish EU presidency.
On the agenda for that is responsibility for dealing with CAP reform for farmers, a European-wide guarantee of training for unemployed young people and the proposed joint supervision of all European banks.
Junior Minister for European Affairs, Lucinda Creighton, has been chairing a group to organise the 1,600 meetings to be held over the six-month presidency. And she said she was confident it would be a success.
"A good presidency is absolutely dependent on good planning," she said.