"We are doing exactly what we promised a year ago," European commissioner for competition Neelie Kroes said on Wednesday as she eagerly announced her approval of billions of euros in state aid to ING, Lloyds and KBC on the condition that the three banks will sell off major assets.

As always Kroes' statement was brilliant in its content as well as its timing. On content: by forcing three governments to drastically reform their state-owned banks, she proved everybody wrong who claimed a year ago she would never be able to enforce European state aid rules in times of crisis. It was also brilliantly timed: at that very moment the Dutch government was considering supporting her for a second term as Commissioner.

Vintage Kroes

Kroes (68) did get a call from Dutch prime minister Jan Peter Balkenende, informing her that she was on the list of candidates to be the next European Commissioner for the Netherlands. With Balkenende's own future as the new EU president in the balance, his second trump card is an important portfolio in the European Commission. If he fails to get either, Balkenende will have some explaining to in the Dutch parliament.

Balkenende really wanted someone from the governing Christian Democrat or Labour party to be the new Commissioner. But when Kroes, who belongs to the opposition right-wing liberal party VVD, suggested that she was being passed over "for party-political reasons", it immediately prompted calls to let her stay on. This was vintage Kroes. Citizens set up petitions for her; newspapers begged the government to let her stay; public opinion was mobilised. Balkenende was highly irritated, but he cannot afford to ignore this.

Commission president José Manuel Barroso also wants Kroes to get a second term, even if he thinks she is often promoting herself a bit too cleverly. He didn't like it when Kroes co-signed an open letter to the Financial Times this week, asking for more women at the European top – that’s why other female Commissioners declined to sign. But Barroso badly needs more women on his Commission, and Kroes is one of his best Commissioners. Together with Spaniard Joaquín Almunia (economic and monetary affairs) she has become the core of his crisis team.

With a little help from Barroso

Regardless of the stories about Barroso's lack of political backbone, he has always defended Kroes when she did battle with the member states. "When Kroes rebuked French president Nicolas Sarkozy in February because he had promised car manufacturers state aid on the condition that there would be no lay-offs in France," a Commission official recalled, "Sarko was cursing Barroso, not Kroes. Barroso backed her on this; he thought she was doing a good job."

Kroes' five years in office can be divided into two parts: before and after the Lehman Brothers bankruptcy in September 2008. The first four years were a learning process. She started out weakish because the European parliament had grilled her about her ties to certain companies, and her presumed ties to a suspect real estate developer called Paarlberg. Then she had to build up technical knowledge of the issues, and find her place in European decision making.

Her job as Commissioner for competition was to make sure that companies didn't form illegal cartels or otherwise distorted the free competition rules that are at the heart of the European unification process. She had mergers and acquisitions investigated; her dawn inspection teams raided pharmaceutical and chemical companies. She was tough and principled, but she mainly continued the policies implemented by her predecessors Van Miert and Monti.

Improvising

Then came the crisis. Suddenly Kroes' office was flooded with state bailouts of the banks, leading to huge political conflicts. Kroes had to cook up a political strategy. In the past year she has mainly had to improvise. She honestly believes she played a key part in saving the internal market from collapse. That's why she initially wouldn't consider any other portfolio than competition: she fears everything could fall apart if someone else takes over.

After Lehman Brothers collapsed, European bank supervisors decided governments had to bail out the banks. They wanted existing EU state aid rules, prohibiting this, to be put on ice. High officials from the national finance ministries discussed this; Kroes' staff members had no official seat in those platforms.

"Kroes was faced with a choice," a lawyer says. "She could have rigorously applied the state aid rules. Then national governments would have trampled her. That would have been the end of the internal market. Or she could temporarily relax the rules for the banks because of their special significance for the economy. She knew bailouts were going to happen in any case. By allowing them under certain conditions, she was able to keep her hold on them, which allowed her to tighten the rules again later."

Just call Kroes

Kroes had to fight to get her way in the Commission. The Legal department found her 'patchwork' irreconcilable with European law. Others called on her to be more lenient.

Her opening came in October last year when Ireland suddenly started guaranteeing bank accounts for the full amount. People all over Europe opened accounts with Irish banks, which hurt the business of other banks in Europe. Angry ministers phoned Kroes : she had to do something. She was the one in charge of free competition.

Kroes managed to convince Dublin to go for common solutions to keep the EU from turning into a jungle. They all worked out a common guarantee system. Other governments too began to realise that special crisis state aid rules for banks were better than no rules at all. This made Kroes' first temporary guideline possible: state aid was allowed, on the condition that there was a viable restructuring plan based on commercial, not political reasoning, and that a date was set for the state to withdraw.

Improvising, using her social intelligence – according to her staff Kroes is good at that. "She always anticipates what the other side is thinking – bank CEOs or ministers – and then bases our strategy on that. It gave me the creeps sometimes. But I admit: her intuition was infallible."

Calling Merkel's bluff

And so she criticised German chancellor Angela Merkel for her state aid to Opel, which came with political conditions. Kroes knew Opel was too sick to survive a long thorough investigation, so she couldn't stop GM from selling Opel to Magna outright. She took a gamble.

Kroes asked the Germans for a written guarantee that state aid would have been given to anyone who promised to restructure Opel, regardless of any promises made about German employment. Berlin complied.

This was far from the truth, but now GM had it in writing that it too was entitled to German state aid. It blew off the sale to Magna. Kroes' bluff worked: she stopped the sale to Magna without hurting Opel in the process. If the sale had gone through she would have been in serious political trouble; now Merkel was.

Kroes fought with Swedish finance minister Anders Borg, with Dutch finance minister Wouter Bos, French finance minister Christine Lagarde and many others. There were furious phone calls, or stone silence when she wanted information about capital injections for the banks. It made for dramatic TV footage, which she sometimes enjoyed. "If you want to keep your friends, you shouldn't do this job," she said.

Her predecessor Karel Van Miert said just before he died in June: "You can't judge her as long as governments are saying they'll obey her; you can only judge her when they do obey her." That moment is now. Nine banks are being reorganised, including Wednesday's three. Kroes said: "Twenty-eight more to go. I hope to get to all of them."

But Barroso wants his commissioners to rotate portfolios. Rumour has it he wants to let Kroes and Almunia switch places, or give her the internal market portfolio instead. That's why on Wednesday Kroes, for the first time, and very deliberately, said she would consider "another economic portfolio". She was smiling when she said it. It wouldn't be her first gamble.