* Greek extension marks start of four-month ordeal
* Far-left minister defies govt stance on privatisations
* Syriza lawmakers say time to show public it can govern
* Detailing reform plan risks rifts within Syriza (Recasts)
By Deepa Babington and Angeliki Koutantou
ATHENS, Feb 25 (Reuters) - A prominent Greek minister defied his government’s pledge to press on with some state asset sales, revealing the first open dissent within Prime Minister Alexis Tsipras’s coalition and highlighting the tightrope that the leftist premier must walk.
After weeks of euphoric declarations that Greece’s bailout and accompanying austerity were “dead”, Tsipras was forced to capitulate under threat of national bankruptcy last week and accept another four months of the EU/IMF programme.
The 40-year-old untested Greek leader has nevertheless sought to play the deal with the euro zone as a victory and has so far avoided a major backlash or protests.
But the first crack in his left-right coalition appeared on Wednesday when Energy Minister Panagiotis Lafazanis said Athens would scrap the privatisation of power producer PPC and power grid operator ADMIE, a day after Greece wrote to lenders promising not to halt sales that are underway.
Lafazanis represents the radical left wing of the ruling Syriza party that could bring down the government if it opted to rebel. There are no signs of this yet and he has so far backed down from his rhetoric on other issues after talks with the rest of the party.
Neverthelesss, Tsipras must somehow keep Lafazanis on side while implementing unpopular measures demanded by European and International Monetary Fund lenders in the coming months.
Tsipras has to sell two diametrically opposite messages simultaneously: telling lenders he is not straying from the rigid austerity underpinning the bailout while convincing his own party ranks and Greeks that it is on the way out.
“The situation is still difficult. We’re going to be judged by our ability to govern and not only our competence to negotiate,” Tsipras told Syriza lawmakers at a closed-door meeting, according to a government official. “We have to quickly proceed with the implementation of our programme.”
Much will depend on whether Tsipras can at least hand out some tokens, such as free food stamps for the poor or avoiding home foreclosures, to his weary electorate to show that Greece has at least won some flexibility.
Underscoring the point, one Syriza lawmaker who declined to be named said: “Until now we have only been negotiating, now we need to govern.”
A reform plan Greece presented on Tuesday to the euro zone was couched in language allowing it some room for welfare outlays or other measures as long as it did not burden the budget, but that plan must now be spelled out in greater detail and approved by the end of April. Crucially, unpopular measures may have to be voted in to ensure Greece continues to receive aid, raising the prospect of some Syriza lawmakers refusing to back them.
“Everybody including people within Syriza are waiting to see how this is practically going to work,” said Costas Panagopoulos of the Alco polling agency. “Are they going to ask for permission on everything? Are they going to take instructions from abroad like before the elections?”
So far the public has overwhelmingly supported Tsipras in the negotiations, and the real challenge remains keeping his own party - and the fiercely anti-bailout Independent Greeks party, his coalition ally - behind him, Panagopoulos said.
Initial reactions from creditors - including the European Central Bank and IMF - suggest they will not make it any easier for Tsipras. The IMF said Greece’s reform plan for the next four months lacked detail, especially on issues such as value-added tax and pensions, which are both areas where Athens is keen to avoid making concessions that go against election pledges.
The European Central Bank, which has kept Greek banks on a tight funding leash while talks continued in recent weeks, warned that some of the commitments outlined by Athens differed from those in its bailout. In a veiled attack on plans to introduce easier terms for debt-ridden Greeks, the ECB also urged Athens to “stabilise the payment culture”.
Adding pressure, German Finance Minister Wolfgang Schaeuble has said Greece will get no new funds until it successfully completes its bailout programme. Greece is fast running out of money and the finance minister acknowledged on Wednesday that it will struggle to make upcoming debt payments.
The demands of standing by promises while cash coffers are emptying risk putting more than just Syriza veterans such as Lafazanis in an untenable position.
Among those in an unenviable position is Finance Minister Yanis Varoufakis, the economics professor who railed against the bailout for years as “toxic” and “catastrophic” and a “Ponzi scheme” but must now draw up measures included in the hated bailout for his government to implement.
Varoufakis has ruffled feathers among euro zone policymakers with his brash style and attracted as much attention for his casual sartorial style as his rhetoric. In the latest jab, he played down talk of a rift with Schaeuble by hailing his “greatest respect” for the powerful minister: “When he speaks, I enjoy listening to him and disagreeing with him.”
Despite Tsipras himself picking up the phone to negotiate during talks among euro zone finance ministers, Panagopoulos of Alco pollsters said Varoufakis’s departure was unlikely if only because it would be considered a big defeat for the government at a crucial time.
“Varoufakis is going to remain, he’s not only a minister but he’s a symbol,” said Panagopoulos. (Additional reporting by Lefteris Papadimas and Costas Pitas; editing by David Stamp)