Government business resumes today amid increasing tension between the Taoiseach, Mr Ahern, and Mr Michael Smith over his efforts to resist demotion from the Cabinet in next month's reshuffle.
A Cabinet meeting on Wednesday will be the scene of the first face-to-face encounter between Mr Ahern and Mr Smith since sources close to him questioned the Taoiseach's strategy of signalling the September reshuffle up to a year ago.
The Minister for Defence maintained pressure on Mr Ahern yesterday by indicating he would bring plans for a Defence Forces bond scheme to Cabinet next month.
The public would be invited to use their savings from the SSIA scheme to invest in such a bond for a guaranteed State return, with the money raised being used to buy equipment for the army and the navy.
The Minister's spokesman said last night that Mr Smith hoped to be in a position to make an announcement about this matter early next month.
Only days after Mr Smith said in public that he would not retire voluntarily from Cabinet, such a proposal suggests the Minister has long-term plans for his portfolio.
While Mr Ahern has made no public comment on Mr Smith's opposition to any move to remove him from Cabinet, he is expected to speak to reporters this week, and will inevitably be asked about the Minister's stance.
The Cabinet meeting will be the first since July. With Ministers returning this week after the summer holidays, the meeting will be among the last of the current Cabinet.
The outgoing Minister for Finance, Mr McCreevy, who is Mr Smith's strongest ally in Cabinet, will be present at the meeting. With the reshuffle due before the end of next month, the meeting will be one of his last before his departure to the European Commission.
The return to work comes ahead of a special meeting of the Fianna Fáil parliamentary party in Co Cork next Monday and Tuesday. Designed to set the political agenda for the party before the resumption of the Dáil on September 29th, it will be dominated by the reshuffle.
The Fianna Fáil get-together follows the initial meeting last Friday of an internal group reviewing the party's structures.
While the group will not have final recommendations for the Co Cork meeting, sources said the reform principles agreed on Friday would include the decentralisation of the party's head office in Mount Street, and the establishment of regional offices.
The group will ask for the recruitment of additional head office staff, and recommend a "bottom up" recruitment drive.
Ministers will be asked to chair public meetings in their areas, while cumainn will be asked to organise a monthly canvass of each ward in each constituency.
The Fianna Fáil meeting will be followed by similar meetings of the other parties in which they will prepare for the new Dáil term in the light of their results in the European and local elections.
Mr McCreevy returns to Merrion Street today after his holidays. He is expected to concentrate in the coming weeks on assembling his team for his new position in Brussels, where he will take up the post of Commissioner for the Internal Market and Services in November.
Among the items for immediate Cabinet discussion will be future ownership of Aer Lingus.
While no decision will be made before the end of the month, the Minister for Transport, Mr Brennan, is expected to circulate a paper on the ownership options by Goldman Sachs, which is due early this week.
