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A Greek and a tangled EU flag flutter atop Greece's Financial Ministry in Athens, Greece June 24, 2016 after Britain voted to leave the European Union in the Brexit referendum. REUTERS/Yannis Behrakis


BRUSSELS (Reuters) - Greece is withholding its support for the Rome declaration, in which 27 European Union nations on Saturday are to chart the EU's course after Britain leaves, in protest at reforms its lenders are seeking from it in exchange for new loans, officials said.

Athens's lenders are the other euro zone governments, who are also trying to get the International Monetary Fund on board. The Fund says it will join the latest Greek bailout only if Athens reforms its pension and taxation systems and its labour market more to modernise its economy and make the public finances sustainable.

But after implementing austerity policies for years, the new round of reforms will be politically very difficult for the Greeks to swallow, and the government in Athens argues that they are not necessary.

Greek officials say they cannot sign the Rome declaration on values shared by the EU unless it clearly protects labour rights.

"They asked for one extra paragraph on social dimension. But politically they linked it to the ongoing negotiations with creditors," one EU official with insight into the issue said.

A draft of the declaration says that EU leaders will work towards a Union which promotes economic and social progress as well as cohesion and convergence, taking into account the variety of social models and the key role of social partners.

"They said it's difficult for them to celebrate in Rome while one of the non-European institutions is pursuing policy that has significant effects on the Greek economy," the EU official said.

Officials representing the IMF and the euro zone lenders as well as the Greek government will be negotiating a compromise on the reforms in the coming days in Brussels, but positions remain far apart and are unlikely to be reconciled by Saturday.

"They're going to use this (Rome declaration) as a negotiating tool," a second official said, adding that Athens was hoping European lenders would help them fight the IMF's reform demands in exchange for Greece's support for the declaration.

A Greek government official denied Athens intended to block the treaty and said it was making suggestions as part of a dialogue on the issue.

"The Greek government, in the framework of the preparatory discussions ahead of the anniversary Summit, underlined the need for the Rome declaration to be enriched in order to highlight the importance of the European Social Model, which includes the protection of workers," a Greek government document said.

The issue will now have to be escalated higher up than the reform negotiators, the first official said, because the senior officials who negotiate the wording of the declaration, called sherpas, will not meet again before the summit on Saturday.

"It's now going to be decided at the top level. The sherpas are not meeting again so there will be lots of phone calls made at the top level, maybe offering some concessions to Greece," the official said.

(Reporting By Gabriela Baczynska, Alastair Macdonald, Tom Koerkemeier and Jan Strupczewski in Brussels and Renee Maltezou in Athens; Editing by Hugh Lawson)

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