The Government insists it won't be snubbing Sweden by taking the Irish embassy out of Stockholm -- despite recommendations to close some embassies abroad.
Sweden's foreign minister Carl Bildt announced that Sweden's embassy in Dublin is to close in August, causing shockwaves here.
But the Department of Foreign Affairs says it will not close the Irish embassy in Stockholm -- despite the McCarthy report recommendations last year to close some of its embassies.
The department feared that any closure of an Irish embassy abroad would cause offence.
And it says it is refusing to get involved in a 'tit-for-tat' war despite the Swedish snub.
A department spokesperson said: "There are no plans to close the Irish Embassy in Stockholm.
"We're not commenting on [the closure of the Swedish embassy]. It's a matter for Sweden how it handles its operations in other countries."
An Bord Snip Nua recommended a reduction in the number of Irish embassies from 76 to 55, and it even went so far as to say that the embassy buildings should be sold off.
The Department of Foreign Affairs is now working on a bid to save 20 of our overseas diplomatic missions from closure, which would save the taxpayer an estimated €14m each year.
"The department has decided against closing missions in our EU partner countries but we are looking at a lighter model and may reduce the size and cost of some of these missions."
The "lighter" model will include a reduction in staff numbers, according to one department source, along with a downsizing on the high-ranking positions.
"The department is looking at reducing staff in a number of missions and filling positions at a lower level.
"At the minute most ambassadors are working at the level of assistant secretaries, and it's a question of moving them to the more middle-ranking positions such as principal officer and assistant principals."
The department says it is currently in discussions with the Department of Finance in connection with the budget for the embassies abroad.
The DFA's spokesperson explained: "We feel it's important to have someone on the ground in each EU country, as they all have a direct say in what happens in Ireland through their position on the EU Council and a permanent diplomatic presence is the best means of influencing our partners' opinions at all levels -- government, parliament and public opinion."