By Lefteris Papadimas and John O'Donnell
ATHENS/BRUSSELS (Reuters) - Prospects of a deal on a second international bailout for Greece rose on Wednesday when euro zone finance ministers were summoned to talks in Brussels while Greek political leaders met to approve a tough reform and austerity program.
Eurogroup chairman Jean-Claude Juncker invited ministers from the 17-nation single currency area to meet on Thursday evening and the International Monetary Fund said managing director Christine Lagarde would also attend.
They are expected to examine a complex package involving a 130 billion euro EU/IMF rescue and a bond swap with private creditors, which hinges on Athens accepting conditions that require big cuts in many Greeks' living standards.
Juncker went ahead and called the meeting even though leaders of the three Greek coalition parties were still discussing with Prime Minister Lucas Papademos the terms of a rescue package to avoid a chaotic default in March that would send wider tremors around the world economy.
International lenders are demanding that the leaders of the conservative New Democracy party, PASOK socialists and far-right LAOS commit themselves in writing to implement the program of pay and pension cuts, structural and administrative reforms.
After a series of delays, the leaders finally received a 15-page document on Wednesday morning laying out the principles of the bailout and its conditions, a party official told Reuters. Attached were a further 30 or so pages laying out how the program will be implemented.
The plan involves cutting the minimum wage by about 20-22 percent, a government official said. It also gives political leaders the option of cutting pensions over 1,200 euros by up to 20 percent or cutting supplementary pensions by 15 percent on average or a combination of cuts in both main and supplementary pensions, the official said.
NEW BONDS FOR OLD
Other elements of the deal have been gradually slotting in place, including a bond swap with private creditors to ease Greece's debt burden by reducing the value of government bonds held by banks and insurers.
The new bonds would have an average interest rate of around 3.5 percent, said state NET TV, but creditors will have to swallow a 70 percent cut in the value of their debt holdings.
German Deputy Finance Minister Thomas Steffen said in Berlin the bond swap offer to private creditors could be made as early as next week.
He voiced exasperation at Greece's failure to implement economic and fiscal reforms since the debt crisis erupted two years ago, saying governance remained below European standards.
"I believe we can say today that we have made little progress on Greece since 2010, worryingly little progress," Steffen said.
With banks and insurers having mostly agreed to take a hefty writedown, Athens and the commercial banks are urging the European Central Bank to forego profits on its Greek bond holdings to help cut the debt to a sustainable level.
But ECB policymakers are still divided on what contribution the bank could make to a restructuring of Greek debt, two euro zone monetary policy sources said.
While the ECB has ruled out joining private creditors in voluntarily accepting losses on its Greek bonds, it could provide indirect relief by renouncing profits from bonds it bought at below face value.
The ECB's 23-member Governing Council, which holds a regular monthly meeting on Thursday, has yet to agree a position. Some policymakers are reluctant to share the burden for fear of easing pressure on Athens to agree spending cuts. There are also concerns about avoiding setting a precedent for other countries.
"There is no agreement yet. Some people on the Council still oppose this," said one monetary policy source, adding that ECB President Mario Draghi had not yet revealed his position.
"As far as I know no formal decision has been made, although of course it is one of the things we could theoretically agree to," a second source said.
Facing elections possibly as early as April, Greek leaders have been loath to accept the lenders' tough conditions.
An opinion poll on Wednesday showed that PASOK, which ruled Greece until Papandreou's government collapsed last November, has most to fear from elections. The monthly survey by Public Issue for Kathimerini newspaper showed support for PASOK had collapsed to eight percent from the nearly 44 percent it commanded when it returned to power in 2009.
One Greek news website wrote an open letter to Papademos on Wednesday demanding that he "end this water torture."
"Greeks cannot any longer stand this torment of constant insecurity that is destroying the country and hurting our national dignity," it said. "The prime minister must end this endless bargaining that demeans the country and its citizens."
Euro zone officials say the full package must be agreed with Greece and approved by the euro zone, ECB and IMF before February 15 so that complex legal paperwork can be completed in time to avoid a bond redemption deadline on March 20.
(Additional reporting by Ingrid Melander and Harry Papachristou in Athens and Paul Carrel in Frankfurt; Writing by David Stamp and Deepa Babington; editing by Elizabeth Piper/Mike Peacock)
