Twelve months ago, Italy's then prime minister Mario Monti emerged into the Brussels dawn after another round of bad-tempered summit talks. In Monti's account, EU leaders had faced down German chancellor Angela Merkel with a decisive leap forward to solve the euro crisis.
The "vicious circle" between bank and sovereign debt, the link that pulled Ireland into the abyss, would be severed.
Taoiseach Enda Kenny was jubilant, saying this heralded very good news indeed for Ireland.
The leaders had revolved to examine the Irish banks "with a view to further improving the sustainability of the well-performing adjustment programme". The hope was that would lead the ESM bailout fund take stakes in Allied Irish Banks and the Bank of Ireland.
Germany and Merkel had lost, her many critics said, and common sense had won. But the optimistic haze soon lifted as talk turned to the strings attached by the chancellor.
The leaders are still arguing over the conditions Merkel sought for the new “banking union”. The game has changed, but not as anticipated.
Incremental progress has been achieved to lay the regulatory foundations for the banking union. Only yesterday, finance ministers settled on new rules to minimise taxpayers’ exposure to future bank collapses.
However, the notion of compensation for governments saddled with the debts of the present crisis remains a distant dream.
The idea is still in play. The ESM's new rulebook contains a specific reference to retroactive aid. Agreement though on this most contentious topic remains elusive – and Europe expects Ireland to exit the bailout without a deal for AIB and the Bank of Ireland. In short, the pernicious connection between Ireland's sovereign and banking debts remains intact.
Three forces are at work. First, the sting of the debt crisis has largely dissipated since the European Central Bank decided to buy sovereign bonds in unlimited quantities to save the single currency.
Second is the reluctance of Merkel and like-minded leaders in Finland, the Netherlands and Austria to accept the mutualisation of national banking debts by the ESM.
Third is the progress achieved by Ireland itself in the drive to regain full access to private debt markets. The steadfast execution of the bailout programme is crucial, as are concessions such as scrapping of the Anglo Irish Bank promissory note scheme and the extension of the maturities on European rescue loans.
The result is that EU leaders have been content to seek block-by-block progress towards the banking union in which direct bank rescues by the ESM might ultimately be contemplated. This is a far cry from a seismic intervention to sever immediately the loop between sovereign and bank debt. At the same time, no-one believes the leaders have put the crisis behind them definitively.
Amid crippling recession and the quest for economic growth, vulnerability abounds. Rampant uncertainty over the fate of Greece, the risk of repeat flare-ups in Italy, Spain and Cyprus and another round of bank stress tests next year all herald danger.
If it is only when the crisis has been at its worst that the leaders have moved, there has been little enough in the past 12 months to push them to the brink again.
One year on, the Taoiseach’s demand for swift bank rescues by the ESM meets the response in Berlin and beyond that Ireland doesn’t really need such help.
Having delivered a successful EU presidency, Kenny must be hoping that this will stand to Ireland’s credit when the leaders finally confront the question of retroactive bank aid. With an election in Germany only three months away, the discussion is not imminent.
