Ireland is hoping to capitalise on any deal to increase the firepower of the euro zone's rescue fund on Wednesday to reduce its own debt burden, Prime Minister Enda Kenny told the country's parliament.
Ireland is positioning itself as the euro zone's recovery story and is anxious to ensure higher private sector losses on Greek debt do not spook sentiment towards Irish bonds.
We don't want to see the hard-won progress we have made undermined by events beyond our control, Kenny said in a speech ahead of his departure for an EU summit in Brussels.
We remain vulnerable to negative developments and .. there is a shared interest in ensuring that we are adequately protected.
Prospects for a comprehensive deal to resolve the euro zone debt crisis at Wednesday's summit appeared dim, with disagreements remaining on critical aspects of a potential agreement, including how to give the EFSF bailout fund greater firepower.
International investors have warmed to Ireland in recent months after Dublin, piggybacking on a worsening Greek crisis, won concessions amounting to around 1 billion euros (870 million pounds) annually on the cost of its bailout loans.
Kenny wants to build on those gains by reducing the cost of financing the country's bank bailout, which has seen nearly 63 billion euros in state funds poured into five lenders, by possibly tapping an enlarged EFSF for cheaper loans to refinance the bank-related debts.
A July summit of euro zone leaders agreed the EFSF would be able to participate in bank recapitalisations and also buy sovereign bonds in the secondary market, which could also offer Ireland the opportunity to refinance its debt, improving its funding profile and helping it to exit its bailout programme.
We will continue to seek improvements in relation to the legacy costs that have been incurred by the state in rescuing the banking system, Kenny said.
The deal to boost the capacity of the EFSF, which we hope to reach in today's discussions, may also offer further opportunities from which we can benefit.
Ireland's 85 billion euro EU-IMF bailout runs out at the end of 2013 and in order to exit its programme, Dublin will need to raise 12 billion euros to meet a bond redemption in January 2014, on top of a need to borrow 9.5 billion euros to cover the government deficit for 2014.
If Ireland was to tap the EFSF to help redeem the January 2014 bond redemption it would soothe concerns about the country's funding programme and help it to issue medium-term debt for the first time since 2009.
Opposition lawmakers have called on Kenny to follow Greece and impose writedowns on the country's sovereign debt but he ruled that out yet again, saying such a route meant a decade of harsh austerity for the Greeks.
What is being done for Greece - including the steps that will need to be taken to make its debt sustainable - reflect a uniquely difficult situation, he said.
I cannot say it often enough or strongly enough; we will not be going down the same road.
Kenny said there was enough flexibility in the euro zone's existing instruments to deal with the crisis immediately without resorting to treaty changes.
After an opinion poll showed that the Irish electorate was likely to reject any attempt to extend the European Union's powers, Kenny added that he would await a report due back in December about the possibility of limited treaty change.
Of the discussions that I heard on Sunday and that I participated in 90 percent of that can be dealt without any treaty change, Kenny said.
(Additional reporting by Padraic Halpin; Editing by John Stonestreet/Anna Willard)