Greece says cannot exclude clash in EU negotiations

ATHENS (Reuters) - Greece is not seeking a clash with its European partners but cannot exclude one, its finance minister said on the eve of a crucial euro zone finance ministers' meeting to discuss the country's future.

In a defiant speech to parliament ahead of a vote of confidence in the new government later on Tuesday, Yanis Varoufakis heralded the start of Greece's post-bailout period and laid the ground for a potential standoff between Athens and its creditors.

"If you're not willing to even consider a clash, you're not negotiating," Varoufakis said to applause.

"We're not seeking a clash. We will do everything to avoid it. But you're not negotiating if you've ruled it out."

Athens's leftist government says it has no intention of requesting an extension to the 240 billion euro bailout by the European Union and IMF, which expires on Feb. 28. and wants to reverse what it has called "cruel" austerity.

Varoufakis has proposed a six-month transition during which Greece wants to be allowed to issue more short-term treasury bills, run a smaller primary budget surplus and receive European Central Bank profits on Greek bond holdings.

Varoufakis said he believed an agreement would be found with Greece's partners but reiterated that the government would not accept any part of the bailout that increased the country's debt. He said 30 percent of the aid programme was "toxic" and Greece intended to reject it.

"What percentage of the bailout do we accept?" he said. "Zero percent. We won't accept not even one condition which worsens the suffering of the crisis, which increases the percentage of debt."

Euro zone creditors led by Germany, the bloc's main paymaster, first want to see firm commitments to an economic reform programme incorporating policies agreed by the previous conservative-led government.

Earlier on Tuesday, German Finance Minister Wolfgang Schaeuble said he expected to hear something binding from Athens at the Eurogroup and that if Greece did not want a new aid programme "then that's it".

(Reporting by Costas Pitas and Karolina Tagaris; Editing by Robin Pomeroy)