* Euro zone proposal looks at delaying bailout
* Package could be put off until after Greek elections
* Central goal remains to move ahead in coming days
By Luke Baker and Jan Strupczewski
BRUSSELS, Feb 15 Euro zone finance
officials are examining ways of delaying parts or even all of
the second bailout programme for Greece while still avoiding a
disorderly default, several EU sources said on Wednesday.
Delays could possibly last until after the country holds
elections expected in April, they said
While most of the elements of the package, which will total
130 billion euros, are in place, euro zone finance ministers are
not satisfied that Greece's political leaders are sufficiently
committed to the deal, which requires Athens to make further
spending cuts and introduce deeply unpopular labour reforms.
It is also not clear that Greece's debt-to-GDP ratio, which
currently stands at around 160 percent, will be cut to 120
percent by 2020 via the agreement, as demanded by the 'troika'
of the European Commission, IMF and European Central Bank.
"There are proposals to delay the Greek package or to split
it, so that an immediate default is avoided, but not everything
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 until there is a
concrete commitment from Greece, which may not come until after
they've held elections."
Germany, Finland and the Netherlands are the countries
pushing to delay the package, two other officials said, with
Germany the most adamant and suggesting that final approval
should only be granted after new elections are held.
Under the proposal, a debt swap agreement between Greece and
private sector holders of Greek bonds, which aims to cut Athens'
debt burden by 100 billion euros via the private sector taking a
nominal 50 percent loss, could go ahead in the coming weeks,
with the process beginning in around a week's time.
If successfully completed, the swap would allow Greece to
avoid missing a 14.5 billion euro bond redemption payment on
March 20. If Athens misses that payment, or the terms of the
payment are not altered, it will be in default.
Around 30 billion euros of the 130 billion euro package is
made up of "sweetners" to be paid to private-sector investors to
encourage them to take part in the swap.
That portion of the package would have to be raised and paid
out, and there would also need to be support of around 30
billion euros to recapitalise Greek banks, but the bulk of the
funds would not be signed off on.
Data from Athens on Tuesday showed the economy shrank 7.0
percent in the fourth quarter of 2011 on an annualised basis,
making it all the harder for Greece to meet the target. One
official estimated that Greece's debt-to-GDP ratio may only fall
to 140 percent by 2020 given the latest figures.
Euro zone finance ministers will hold a conference call from
1600 GMT to discuss how to proceed. The call replaces a
face-to-face meeting, which was cancelled late on Tuesday
because Greece had not provided sufficient commitments from its
side and not all the paperwork was in place.
Asked whether the package could be split, a spokesman for the
European Commission said it was not decided.
"Up until now in the discussions, this has always been
treated as an entire package," Amadeu Altafaj, spokesman on
economic and monetary affairs told reporters, adding
specifically on the private-sector portion:
"Up until now, that's never been separated out. Now what
will happen tonight, I don't know, I can't preempt that. But
that's certainly the logic we've been following so far."
NOT UNTIL APRIL
One major problem with splitting the package is whether
private holders of Greek bonds would be willing to sign up to a
swap if Greece's financing - which makes up the bulk of the
second package - is not in place, since that would mean the
state might not be able to meet future bond payments.
As a result, one euro zone source said it was possible that
the entire second package - the private sector portion and the
remainder - could be delayed until after Greek elections, when
everyone hopes for greater clarity and commitment.
"This would mean we have to pay the 14.5 billion euros on
March 20, which would be a total waste," said the euro zone
source, who took part in discussions among deputy heads of euro
zone finance ministries on Tuesday.
"But there is still money left from the first programme so
we could do it," they said, referring to Greece's first, 110
billion euro bailout programme, agreed in May 2010. "This would
mean that the talks on the second programme, including PSI
(private sector involvement), which is part of the package,
would be moved until there is a new Greek government in place."
The frustration expressed by Germany, the Netherlands and
others - reflected in the proposal to delay the rescue package -
is in part designed to put political pressure on Athens. But
officials say it is also genuine and a sign that patience is
wearing thin after two years of trying to sort out Greece.
For now, the central aim of euro zone finance ministers
remains to push ahead with the second package as agreed last
October - which would mean signing off on PSI in the coming
week, possibly at a Eurogroup meeting set for Monday.