By Lefteris Papadimas and Michele Kambas
ATHENS (Reuters) - Greek lawmakers bickered through the night over a new bailout deal to keep the country afloat, only hours before euro zone finance ministers are due to decide on Friday whether to approve the vital aid for Athens.
With the ruling Syriza party apparently heading for a split over the 85 billion euro ($95 billion) program, parliament finally began debating whether to accept the package which demands yet more austerity and economic reform at 3:45 a.m. (0045 GMT), with no vote likely until well after daybreak.
Parliament is expected to approve the agreement with Greece's euro zone and International Monetary Fund creditors by a comfortable margin when it finally votes, since opposition parties have promised to back Prime Minister Alexis Tsipras to ensure that Greece does not return to financial chaos.
Tempers flared with the conservative opposition accusing Finance Minister Euclid Tsakalotos of making "provocative" comments and warning him not to take its support for the deal for granted. "If you want to provoke us - and for us to vote for it - well, you can't have it both ways," New Democracy leader Vangelis Meimarakis said.
Tsipras faces a rebellion within Syriza, with leftist members refusing to accept his promises of tax rises and spending cuts in exchange for fresh loans under Greece's third financial rescue program in five years.
Parliamentary speaker Zoe Konstantopoulou, one of the Syriza hardliners, snubbed a request from Tsipras to speed up handling of the bailout bill so that it can be voted on well before the finance ministers meet in Brussels on Friday.
Instead, she raised a long series of procedural questions and objections which held up proceedings until lawmakers finally voted to conclude the debate at 7 a.m. (0400 GMT) on Friday, after which the vote will be taken.
Once the bill is passed, the euro zone ministers still have to approve the deal for aid to be disbursed before Athens must make a 3.2 billion euro debt payment to the European Central Bank on Aug. 20.
If it defaults on this debt, the ECB is likely to halt emergency funding for Greece's crippled banks.
Athens was forced to close the banks for three weeks and even now capital controls severely limiting withdrawals and payments aboard remain, badly hurting the economy.
TEST OF STRENGTH
Friday's vote will test the strength of the Syriza rebellion, which could raise pressure on Tsipras to call elections as early as September.
The rebels' leader, former energy minister Panagiotis Lafazanis, took a step toward breaking away from Syriza, a coalition of leftist groups which stormed to power in January promising to reverse austerity policies demanded by the euro zone and IMF creditors.
"The fight against the new bailout starts today, by mobilizing people in every corner of the country," said a statement signed by Lafazanis and 11 other Syriza members and posted on the far-left faction's Iskra website.
The statement called for founding a "united movement that will justify people's desire for democracy and social justice", although it did not explicitly call for a new party or a split from Syriza.
The government responded by saying the move "finalizes his decision to choose a different path from that of the government and Syriza".
The rebels insist the government should stand by the promises on which it was elected, to reverse the waves of spending cuts and tax rises which have had a devastating effect on an already weak economy over the past few years.
Even after the Greek vote, the bailout deal faces hurdles. The IMF made clear it would participate in the program only if Europe agreed to ease Greece's huge debt burden.
"The IMF ... will make an assessment of its participation in providing any additional financing to Greece once the steps on the authorities' program and debt relief have been taken," IMF Greece mission chief Delia Velculescu said in a statement.
Tsipras has long argued Greece cannot repay all its debts and demanded a partial write-off. The creditors have agreed to consider the issue only after a review in October of the government's implementation of its side of the deal.
Germany, the biggest contributor to the bailouts, has deep doubts that Athens will deliver on its reform promises and on the wisdom of pouring billions more into the country. It also opposes writing off any Greek debt, although it is open to the idea of extending grace periods before Athens has to start paying interest and principal on its bailout loans.
WINNING OVER DOUBTERS
Apparently trying to win over doubters led by German Finance Minister Wolfgang Schaeuble, the European Commission said the reform package would allow Greece to tackle its remaining economic problems to bring the country back to long-term growth.
Germany's Bild newspaper reported that if the bailout does not win approval on Friday, Greece could get 6.04 billion euros in bridge financing. While Athens opposes such a short-term loan, the money would allow it to avoid defaulting on the ECB debt repayment.
Finland, one of the euro zone countries most skeptical about pouring more aid into Greece, backed the bailout on Thursday. The German parliament has yet to approve it.
(additional reporting by Michele Kambas, Timothy Ahmann, Julia Fioretti, Tina Bellon and Michelle Martin; writing by David Stamp and Deepa Babington; editing by John Stonestreet and Leslie Adler)