Greece Starts Drive To Sell New Debt Deal To Doubting Europe

(Reuters) - Greece's leftist government on Sunday began its drive to persuade a skeptical Europe to accept a new debt agreement while it starts to roll back on austerity measures imposed under its existing bailout agreement.

After a turbulent first week in office, the new government has made clear it wants to end the existing arrangement with the European Union, the European Central Bank and International Monetary Fund "troika" when its aid deadline expires on Feb. 28.

Instead, Prime Minister Alexis Tsipras wants to agree a bridging deal with the troika while a new agreement is negotiated to reduce Greece's unmanageable public debt burden of more than 175 percent of its economic output is worked out.

Finance Minister Yanis Varoufakis, who spoke to U.S. Treasury Secretary Jack Lew on Friday, is due to kick off a diplomatic offensive in Paris on Sunday, where he meets French counterpart Michel Sapin and Economy Minister Emmanuel Macron. He goes to London to see British Finance Minister George Osborne on Monday and travels to Rome on Tuesday.

Before the meeting Sapin repeated that Greece could not expect its partners to accept a straight debt write off. But he left the door open to other options that could include giving Athens more time for repayment.

"No we will not annul, we can discuss, we can delay, we can reduce its weight, but not annul," he told Canal Plus television. He meets Varoufakis at 5 p.m. local time (1100 ET) before a joint statement to media at 6.30 p.m.

Tsipras himself is due this week in Rome and Paris, the two major capitals where his hopes for a sympathetic hearing are highest given French and Italian calls for an easing in rigid euro zone budget austerity.

He is also due to meet European Commission President Jean-Claude Juncker but has yet to say if and when he might meet German Chancellor Angela Merkel or Finance Minister Wolfgang Schaeuble who refuse to consider any writedown of Greek debt.

MINIMUM WAGE HIKE

At home, where Greeks have seen poverty and hardship reach levels unmatched anywhere else in western Europe, the government has wasted little time in making clear it intends to respect its election promises to end years of harsh austerity.

It has halted a series of privatizations it says amount to a disposal of strategic national assets at fire-sale prices and has announced plans to reinstate thousands of public sector workers laid off by the last government.

On Sunday, Labor Minister Panos Skourletis said the government would restore collective bargaining and raise the minimum wage - cut to 586 euros ($660) from 751 euros a month under the 2012 bailout agreement.

Tsipras is expected to give more detail when he lays out his program in parliament in the next few days. Skourletis said the government would discuss the minimum wage plans with unions and employers before moving ahead.

European partners, including the head of the euro zone finance ministers' group Jeroen Dijsselbloem, have already made clear they doubt the Tsipras government can meet its election pledges while keeping public finances on track.

Varoufakis caused consternation on Friday when he said that Greece would no longer cooperate with troika monitors in Athens overseeing the bailout accord.

Nikos Chountis, the deputy foreign minister responsible for European affairs said Athens wanted to talk to European leaders and the IMF directly.

"Therefore we will not have discussions with the technocrats," he told Greek radio, noting that it was "insulting" to be dealing with lower-ranking officials.

Pressure on the government to reach a deal stepped up on Saturday when Erkki Liikanen, a member of the ECB's policymaking Governing Council, said that funding for Greece's banks could dry up if Athens does not remain in a program.

The banking sector, which has seen heavy outflows of deposits during the political turbulence of the past few weeks and a plunge in banking stocks since last Sunday's election, is one of the most vulnerable points of the system.

On Sunday, the junior partner in Tsipras' coalition said he would propose a tax amnesty on undeclared funds brought back into the Greek banking system in a bid to reverse the rising tide of funds fleeing the country.

(Additional reporting by Renee Maltezou in Athens and Geert De Clercq in Paris; Writing by James Mackenzie; Editing by Louise Ireland)