Germany's Schaeuble casts doubt on chance of Greek bailout success

By Caroline Copley and Michael Nienaber

BERLIN (Reuters) - German Finance Minister Wolfgang Schaeuble questioned whether Greece will ever get a third bailout program on Thursday, a day after the Greek parliament passed a package of stringent measures required to open negotiations on financial aid.

His skeptical comments came as senior conservatives tried to drum up support for an aid-for-reforms deal with Greece ahead of a vote in parliament to give Berlin the green light to start negotiations on a third multi-billion euro bailout program.

Chancellor Angela Merkel is likely to get the mandate from the Bundestag lower house of parliament on Friday -- thanks in part to support from her Social Democrat (SPD) junior coalition partners and some opposition parties.

But she faces a revolt within her own conservative ranks where an increasing number of lawmakers doubt that Athens will implement reforms and can one day stand on its own feet again.

Schaeuble said he would submit a request to parliament to vote on opening talks, but it would be hard to make Greece's debt sustainable without writing some of it off -- an idea Berlin considers to be illegal.

"We will now see in the negotiations whether there is even a way to get to a new program taking into account (Greece's) financing needs, which have risen incredibly," Schaeuble told Deutschlandfunk radio.

The International Monetary Fund is leading calls for a deep reduction in Greece's debt but Germany, the biggest contributor to the euro zone's bailout funds, has ruled one out.

Schaeuble, who has raised the idea that Greece take a "time-out" from the euro zone, said a haircut would be incompatible with the currency union's rules. "But this would perhaps be the better way for Greece," he said.

The proposal for a temporary 'Grexit' has already caused ructions in Merkel's ruling coalition, upsetting some senior Social Democrats.

SPD budget expert Carsten Schneider accused Schaeuble in Germany's Handelsblatt newspaper of trying to undermine the Greek deal reached by Merkel.

GROWING 'NO' CAMP

"I strongly recommend to my friends in the party and parliamentary group to officially vote in favor of starting negotiations," Horst Seehofer, head of Merkel's sister party, the Christian Social Union (CSU), told the Sueddeutsche Zeitung.

Gerda Hasselfeldt, CSU parliamentary floor leader, said the conditions for further aid for Greece were stricter now and there would be more control mechanisms.

After four hours of debate among CSU lawmakers, only a handful of rebels had openly voiced objections to the deal, participants told Reuters.

Still, not everyone was convinced. Detlef Seif, a deputy spokesman for European affairs in parliament for Merkel's Christian Democrats (CDU), told Reuters he would for the first time vote against further aid for Greece.

"I don't see that the stability of the euro zone as a whole is in danger. And the sustainability of Greece's debt isn't given either," he said, adding that the number of lawmakers rebelling against the official party line would probably rise.

At a vote on an extension of the second bailout in February, a record number of conservative dissenters showed growing impatience with the anti-austerity government in Athens.

In addition to 29 'no' votes from Merkel's camp, 109 from the some 310 conservative lawmakers signed statements saying they had reservations.

(Editing by Clarence Fernandez and Anna Willard)

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