Euro zone finance ministers dropped plans on Tuesday for a special face-to-face meeting on Greece's new international bailout, saying political party chiefs in Athens had failed to provide the required commitment to reform.
A source familiar with negotiations on Greece's 130 billion euro (108 billion pound) rescue also said conservative leader Antonis Samaras had yet to sign a commitment to implement the deeply unpopular package - a condition set by the EU/IMF lenders who are weary of broken Greek promises on economic reform and budget cuts.
Ministers in the Eurogroup had been expected to gather in Brussels on Wednesday for a meeting which, if all had gone to plan, would have approved the bailout and saved Greece from a messy bankruptcy next month.
However, with the European Union's patience with Greece close to breaking point, Eurogroup Chairman Jean-Claude Juncker said the ministers would hold only a telephone conference call before a regular meeting already scheduled for February 20.
Juncker said he was awaiting written undertakings from Greek party leaders on pushing through with the austerity package of pay, pension and job cuts - which parliament passed early on Monday as rioters torched dozens of buildings in central Athens.
I did not yet receive the required political assurances from the leaders of the Greek coalition parties on the implementation of the programme, he said in a statement.
The source said in Athens that the problem lay with Samaras, who argues that austerity demanded by the EU and IMF is only deepening Greece's recession and who has proved reluctant in the past to sign similar written undertakings.
So far Samaras has not given a letter of commitment and this is a problem, the source told Reuters on condition of anonymity. Samaras' New Democracy party declined comment.
A government source said Samaras would provide the undertaking on Wednesday morning. If he does, he will be sticking to a pattern among Greek politicians of working right up to deadlines or beyond, infuriating the European Union.
TIME RUNNING OUT
Time is running out. Athens needs rescue funds to avoid a disorderly default when 14.5 billion euros in debt repayments fall due on March 20.
The EU/IMF lenders fear the programme of pension, pay and job cuts will not be implemented following elections which are expected in April, and have therefore demanded the signed personal commitments from the leaders of both parties in the current coalition of Prime Minister Lucas Papademos.
Even before Juncker scaled down Wednesday's Eurogroup talks, the Netherlands expressed doubt that the ministers would sign off on the bailout deal, Greece's second since 2010.
There is indeed a very small chance there will be final approval tomorrow because I think we should have everything clear on paper, said Dutch Finance Minister Jan Kees de Jager,
Speaking on RTL 7 TV, he made clear his government would accept no half-measures from Athens.
We ... don't give an inch. We have said we want everything, a complete package, he said. If we don't have that clear we, as the Netherlands, cannot agree with the package.
With New Democracy well ahead in opinion polls, Samaras is frontrunner to become the next prime minister. When parliament debated the austerity package he indicated that he would try to renegotiate the terms of the bailout, further sowing doubt in the minds of European leaders.
A separate source at the PASOK socialist party, the other coalition party, said its leader George Papandreou had already provided a signed undertaking which Finance Minister Evangelos Venizelos had been due to take to the Brussels meeting.
Greece's cabinet negotiated into the late evening on solving the other hitch with Brussels, a 325 million euro hole in the 3.3 billion euros of extra budget cuts which the government has promised for this year.
Juncker said this required more talks with the troika of Greece's EU and IMF lenders.
It has appeared that further technical work between Greece and the troika is needed in a number of areas, including the closure of the fiscal gap of 325 million euros in 2012 and the debt sustainability analysis, he added.
On Tuesday, the cabinet considered further cuts to defence spending and public sector salaries, government sources said.
The EU and International Monetary Fund 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.
Two government sources, who declined to be named, said the cabinet was considering trimming the defence budget, already cut by 300 million in the austerity bill, and bringing forward public sector salary cuts.
The punishing austerity measures are fuelling social turmoil in Greece, where unemployment hit a high of 20.9 percent in November and half of young Greeks are jobless.
The country posted yet more dire economic figures on Tuesday, with flash estimates showing GDP shrank 7 percent in the fourth quarter of 2011 after a 5 percent contraction in Q3.
Earlier, there had been some signs of encouragement. The European Central Bank said it could use profits from its holdings of Greek bonds to help restructure the country's debt.
They could use it to contribute to the sustainability of Greek debt, ECB Executive Board member Benoit Coeure said in an interview with the French daily Liberation.
But even as all sides pushed to seal the deal, there was a growing sense that even the latest bailout, Greece's second since 2010, might only delay the inevitable - bankruptcy and exit from the single currency.
It might be something which would allow Greece also to get a new start ... to create an economy that can create jobs, Luxembourg Finance Minister Luc Frieden said on Monday.
Asked if the euro zone could survive a Greek bankruptcy, German Finance Minister Wolfgang Schaeuble said on Monday: We are better prepared than we were two years ago.
(Additional reporting by Renee Maltezou; Writing by David Stamp; Editing by Giles Elgood)
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