War Of Nerves Marks Newest Round Of Greek Debt Talks

ATHENS/BRUSSELS, July 28 (Reuters) - Conflicting statements and denials flew between Athens and Brussels on Tuesday in a war of nerves highlighting the depth of mutual mistrust over a new round of negotiations on an 86 billion euro bailout that started this week.

Any hope of a fresh start in fraught relations between Greece's leftist government, purged of its most radical members, and the institutions representing its creditors, appeared to be dashed by the flurry of assertions and rebuttals.

Differences included the pace and conduct of bailout talks, whether or not Greece needs to enact further laws before a deal, the reopening of the Athens stock exchange, and the activities of former finance minister Yanis Varoufakis, who continues to heap abuse on the creditors in his blog.

The two sides couldn't even agree on when the talks began.

A Greek Finance Ministry official said the heads of the European Commission and International Monetary Fund delegations would arrive on Wednesday for talks on a third bailout program to keep Greece afloat in the euro zone. Technical negotiations would be wrapped up by Friday, with "follow up" discussions over the weekend under exceptional circumstances, he said.

"Both sides aim to reach a deal as soon as possible," the official said.

European Commission officials said European mission chiefs were already on the ground and talks had begun on Monday. But they made clear the creditors would not be stampeded into a rushed agreement without detailed reform commitments in writing.

Commission spokeswoman Mina Andreeva said there was "no fixed deadline" for the conclusion of a Memorandum of Understanding, and if all parties kept to commitments made at a July 13 euro summit, "an agreement by the second fortnight of August is possible."

Greek officials were at pains to play down what they see as the humiliating and intrusive aspects of the talks - access to ministries, the right to examine accounts and question civil servants, and the visible presence of the negotiators in Athens.

The Finance Ministry official said there had been no organizational issues and all discussions were taking place at the institutions' residence. When required, creditors' representatives had met with Greek officials at the Bank of Greece and the State General Accounting Office.

EU officials said security and logistical issues had delayed the start of the talks, originally planned for last Friday.

Also hanging over the talks is the growing disarray within Prime Minister Alexis Tsipras's Syriza party, whose policy-setting central committee will meet on Thursday to decide whether to hold an emergency congress in September to overhaul the party or hold a referendum on the way forward.

In a sign of the deepening rift within the party, three far-left members of the 11 officials on Syriza's political committee that met on Tuesday demanded the government break off negotiations with EU/IMF creditors and return to its anti-bailout roots.

Panagiotis Lafazanis, the leader of the far-left Left Platform wing of Syriza, also stepped up his attack against the pro-bailout Greek establishment, saying they were trying to "criminalize" any alternative to the bailout.

A day earlier, Lafazanis pledged in a defiant public speech that those who voted "No" to the bailout in a referendum this month would not be forgotten.

MORE REFORMS

On the negotiations front, the Greek official said suggestions that Greece needed to pass further reform legislation before a bailout deal were not justified by the euro summit statement or subsequent exchanges.

However, euro zone officials made clear that Athens must enact measures to curb early retirement and close tax loopholes for farmers before any new aid is disbursed. Greece needs more finance by Aug. 20, when it owes a 3.5 billion euro payment to the European Central Bank.

When Tsipras' radical leftist Syriza movement won power in January, it initially sought to scrap the previous bailout, reverse austerity measures demanded by the creditors and exclude the IMF from any future talks.

When negotiations on further aid eventually began, they were moved to Brussels, with no access to Greek ministries. Tsipras kept trying to escalate the talks to a political level to avoid detailed technical documents setting out reform obligations.

Also hanging over the new talks is the legacy of Varoufakis, whom Tsipras sidelined in the final phase of the talks before accepting even more stringent bailout terms this month.

The Marxist academic resigned after Tsipras rejected his proposals for radical steps to create a parallel payment system to get around the closure of Greek banks and the imposition of capital controls on June 28.

But he continues to create problems for the premier by denouncing the bailout agreement and accusing the creditors of having treated Greece like a colony.

EU Commission spokeswoman Andreeva denied as "false and unfounded" allegations by Varoufakis that the creditors had taken control of the Finance Ministry's general secretariat for public revenue.

He made the charge in explaining why he had devised a covert system for hacking into citizens' tax codes.

"The Commission and the IMF only provide technical assistance to the tax administration, but certainly do not control the secretary general for public revenues," Andreeva said. "Alleging that the troika would be controlling the secretary general for public revenues is simply not true."

A Greek government official stressed that Varoufakis' plan had never been carried out, and no laws had been broken.

(Additional reporting by Angeliki Koutantou and Deepa Babington, Writing by Paul Taylor; Editing by Janet Lawrence)

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