Greece's creditors failed on Saturday to persuade the leader of the main conservative party to drop his refusal to sign a pledge that he will back austerity measures under a bailout deal aimed at saving the country from financial ruin.
Antonis Samaras, leader of New Democracy, one of three parties in a new national unity coalition struggling to avert a disastrous default, says there is no need to provide a written guarantee because his word can be trusted.
But international lenders, weary of Greece's failure to deliver on fiscal targets during two years of financial crisis, insist on the written statement, fearing its politicians may otherwise try to wriggle out of their commitments, especially with an election likely in February.
Representatives of the European Commission, the European Central Bank and the International Monetary Fund -- the troika which monitors Greek compliance with its rescue deals -- discussed the issue with Samaras in Athens on Saturday.
Regarding the discussion we had with the troika and specifically on the written reassurances, I repeated to them my position on the issue, Samaras told reporters after the talks.
Samaras, a Harvard-educated economist known for his fiery rhetoric, said New Democracy had proven its commitment to the terms of the bailout by backing the coalition led by technocrat Prime Minister Lucas Papademos and its new budget.
Papademos's coalition, which comprises New Democracy, the Socialists of fallen premier George Papandreou and the small far-right LAOS party, won a parliamentary vote of confidence on Wednesday and submitted a draft budget to parliament on Friday.
Samaras's stance potentially puts at risk the next aid tranche for Greece worth 8 billion euros (about $11 billion) that it needs by mid-December to meet debt repayments. Failure would mean default.
The new bailout negotiated last month envisages a further 130 billion euros meant to keep the Mediterranean country of 11 million people financed until 2014.
Political analysts said they expected some face-saving compromise would be found to end the standoff.
One way or another, there will be a way to bypass this problem. I believe there will be a solution that will not force Samaras to give a written commitment, and it will come soon, Costas Panadopoulos, head of pollster ALCO, told Reuters.
PM TO VISIT BRUSSELS
Papademos will pay his first visit to Brussels as premier on Monday and his talks with senior EU officials will prove decisive for clinching a compromise on the written pledge, the Kathimerini daily said, citing unnamed sources.
The 'troika' also met Papandreou on Saturday but he and his party made no comment after the talks.
The leader of LAOS was due to meet the EU and IMF officials on Sunday. In an interview for the Real News weekly to be published on Sunday, LAOS leader George Karatzaferis signaled he would sign the written statement.
Do we need this money or not? If not, we don't sign. But if we do need it and there is no way around this, then we have to see things without egotism or reservations, said Karatzaferis, whose party backs Papademos's coalition.
Samaras agreed to back the coalition in return for early elections that opinion polls suggest he would win, albeit without a majority. In recent days, he has stressed that his support for the cabinet is temporary, pending a February poll.
Support for both Papandreou's PASOK and Samaras's New Democracy, which have dominated Greek politics for decades, has eroded over the past week, opinion polls show.
However, more than two thirds of voters back Papademos, a former central banker who is the sole technocrat in a coalition otherwise made up of party politicians.
Greece's debt troubles over the past two years have turned into a major European crisis that threatens the survival of the euro and the stability of the global economy.
As Greek politicians bickered this week, borrowing costs for much larger euro zone countries such as Italy and Spain were in the danger zone and even France's rose.
The new cabinet's draft budget, expected to be approved in the next few weeks, predicts a fifth year of recession but says a plan to convince Greece's private creditors to take a 50 percent loss on bond holdings could cut the budget deficit by more than a third.
A New Democracy official said the troika also discussed the debt swap plan with Samaras on Saturday.
We discussed the private sector involvement (PSI) with the troika. They told us they are watching the PSI negotiations very closely and they told us we all want this deal to succeed, the party official said.
(Writing by Gareth Jones; Editing by David Stamp and Elizabeth Piper)