UPDATE 4-Greece battles to salvage bailout package
* Conservative leader Samaras says signs austerity
commitment
* Euro zone finance ministers conference call due 1600 GMT
* EU studies delay of parts of bailout - EU sources
(Adds possibility of delaying elements of bailout, market
moves)
By Dina Kyriakidou and Renee Maltezou
ATHENS, Feb 15 (Reuters) - Greece's leaders battled to
salvage a new 130-billion-euro ($170 billion) EU/IMF bailout on
Wednesday, rejecting doubts over their commitment to a punishing
austeritypackage just hours before a conference call of euro
zone finance ministers.
But with mistrust of Athens high, several EU sources told
Reuters that finance officials in the 17-state currency union
were studying whether it was possible to delaypart or all of
the rescue deal while still avoiding a disorderly default - news
which pushed safe haven German Bund futures to session highs.
[ID:nL5E8DF7KC]
Finance Minister Evangelos Venizelos insisted that Greece
would have clarified alloutstanding issues on a
3.3-billion-euro package of cuts in time for a euro zone call
scheduled for 1600 GMT, attacking critics in the zone for
"playing with fire".
Greece's conservative party leader Antonis Samaras, widely
tipped as thecountry's next prime minister, pledged in writing
that if elected he would stick to an agreed programme of welfare
and job cuts that triggered riots in central Athens this week.
"If New Democracy wins the next election in Greece, we will
remaincommitted to the programme's objectives, targets and key
policies," Samaras wrote.
But Samaras, who leads voter surveys ahead of an election
that could come as early as April, insisted the fast-shrinking
Greek economy must also be kickstartedinto life and reserved
the right to adapt details of the package accordingly.
"Prioritising recovery along with the other objectives will
only make the programme more effective and the adjustment effort
more successful. Therefore ... policymodifications might be
required to guarantee the full programme's implementation," he
said in the letter to Greece's international lenders.
Greece has said it must initiate a debt swap deal with
private sector bondholders by Friday to meet aMarch 20 deadline
for 14.5 billion euros in debt repayments. It was hoping to have
the euro zone's backing for its second bailout this week.
But EU sources said some in the euro zone doubted the
commitment of Greece's leaders to austerity, andqueried whether
it would be enough to bring Greece's debt-to-GDP ratio down from
160 percent now to a target of 120 percent by 2020.
"There are proposals to delay the Greek package or to split
it, so that an immediate default is avoided, but noteverything
is committed to," one official briefed on preparations for a
euro zone finance ministers call later in the day told Reuters.
"They'll discuss the options," he said, adding: "There is
pressure from several countries to hold off untilthere is a
concrete commitment from Greece, which may not come until after
they've held elections." [ID:nL5E8DF2K2]
Samaras' belated commitment to honour the austerity plan may
put that plan on the back burner.
The euro fell to its lowestin more than a week against the
dollar and March Bund futures <FGBLH2> rose by as much as 60
ticks on the day to 139.12 after the Reuters report. The
contract was last up 33 ticks up at 138.85.
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Factbox on the austerity bill [ID:nL5E8DB001]
For story on prospects for more unrest [ID:nL5E8DD2HA]
Other stories on euro zone crisis[ID:nL5E7LR1WL]
Euro zone crisis in graphics
Reuters - Euro zone debt crisis in graphics
Interactive timeline
Latest News Timeline | Reuters.co.uk
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"PLAYING WITH FIRE"
Venizelos earlier insisted there were "only a few remaining
issues" to be resolved on the package of wage, pension and
public sector job cuts lashed out at Greece's doubters.
"There are now powers in Europe who are obviously playing
with fire because they believe ... that not all requirements
will be met, and who may even want Greece out of the euro zone,"
he told reporters in Athens.
Rioters torched buildings across Athens late on Sunday as
Greek lawmakers passed the austerity bill, of which around 325
million euros of cuts still need to be identified.
But after a series of broken promises since Athens was first
bailed out in May 2010, trust is in short supply.
"When you look at the internal political discussions in
Greece and the opinion polls, then you have to ask who will
really guarantee after the elections ... that Greece will stand
by what we are now agreeing with Greece," German Finance
Minister Wolfgang Schaeuble told SWR2 radio.
"I am also not yetsure that all political parties in Greece
are aware of their responsibility for the difficult situation
their country is in," Schaeuble said, adding the EU remained
committed to helping Greece if it honoured its promises.
While the outcome ofWednesday's conference call hangs in
the balance, European Central Bank board member Joerg Asmussen
said approval by the Eurogroup at regular talks next Monday
would allow a sovereign debt swap to be completed in time.
"If the Eurogroup (of eurozone finance ministers) is able
to make a positive political decision next Monday, the bond swap
with voluntary PSI (private sector involvement) can immediately
begin and be completed in time," he told Reuters.
He further said in an emailedinterview that while the ECB
cannot contribute directly to the new Greek package, it could
pass any profits from its sovereign bond purchases on to central
banks in euro-zone states, which could then use it for Greece.
ALL EYES ON SAMARAS
Doubt had focused on Samaras, a strong critic of the
austerity measures. He voted for the spending cuts but says the
new round of austerity could plunge the country, already in its
fifth year of recession, into an even bigger slump.
"It'strue we are asking the Greeks for some extremely
painful sacrifices and I understand their anger, but Greece has
made many errors in its past," French Foreign Minister Alain
Juppe told France Info radio on Wednesday.
"It (the bailout) must beconcluded because if Greece went
bankrupt and left the euro zone, the chaos would be even worse
for the Greek people and very bad news for the euro zone."
The EU and IMF want Greece to account for every cent of
budget cuts before they approve the rescue, which includes a
bond swap, cutting the real value of private sector investors'
bond holdings by some 70 percent.
But Greece's downward economic spiral has accelerated,
making it even harder to cut its mountainous debt. Data on
Tuesdayshowed that the economy shrank by seven percent
year-on-year in the fourth quarter of last year, even more than
the five percent contraction of the third quarter.
Greece is well on its way to suffering one of the biggest
slumps of modern history. Output has contracted 16 percent from
its peak in 2008 and the cuts will inevitably make that worse.
Prime Minister Lucas Papademos has said that failure to back
the bailout would consign Greece to economic catastrophe.
But with many Greeks suffering huge cuts in their living
standards and young people burning and wrecking almost 100
Athens buildings in one night on Sunday, some people believe the
catastrophe is already under way.
($1 = 0.7616 euros)
(Additional reporting HarryPapachristou and Lefteris Papadimas
in Athens, and bureaus in Paris, London, Brussels and Berlin;
Writing by Mark John)