Slovenia finance minister sees another drawn-out Greek drama

LONDON (Reuters) - Haggling over Greece's latest round of debt relief is likely to run down close to the wire again, Slovenia's finance minister said on Thursday, and he called for the cost of the aid to be more evenly shared.

Unusually smooth talks between Greece and its fellow euro zone members on Monday have sparked hopes that a deal might be possible at a meeting on May 24. But Dusan Mramor told Reuters it could end up being a familiarly drawn-out affair.

"There are certain possibilities that we could have a deal (at a May 24 Eurogroup meeting) concerning the package," Mramor said, referring to Greece's promises on previously agreed measures and for 'contingency' plans in case things go off track.

"The bigger question though is debt reprofiling or restructuring, and there I think it will take much more time."

Greece needs to reach a deal so that it can receive more bailout cash to cover debt repayments maturing in June and July.

Slovenia is in one of the most sensitive positions regarding the Greek debt relief talks. As a share of annual economic output it provides more to the Athens bailout pot than any other euro zone member.

It also needs to borrow to fund its share of the money and is paying as much as 4.5 percentage points more on that debt than Greece is paying for the actual bailout loans.

"This for Slovenia of course is a problem," Mramor said. "We want countries of the Eurogroup to have a similar exposure expressed as (a proportion of) GDP."

"We want solidarity (with Greece) but solidarity should be shared equally."

One related concern is that more hard-fought late-night talks over Greece could look like bad PR for Europe just as Britain votes on its membership of the larger European Union.

Like almost all other European policymakers, Mramor said he wanted Britain to stay in the bloc. "The UK belongs to Europe and Europe belongs to the UK," he said.

SCHENGEN SHAKES

Another major European concern he has is the possible breakdown of the EU's borderless travel arrangement, Schengen, as a result of the millions of refugees that have flooded in from Syria and other troubled states.

The European Commission approved a six-month extension of controls in several parts of the Schengen area last week.

He said measures taken recently such as the deal with Turkey to take back refugees had hopefully reduced the threat to Schengen. But he agreed with the Italian economy minister's view that a collapse of Schengen would be more "destructive" than a euro zone crisis.

"There is no question that is would be extremely costly. There are different estimates, but all these estimates are just huge. Austria alone has said $6 billion euros I think," Mramor added.

"So I understand Pier Carlo (Padoan). For Italy which is a big exporter, these hours standing on the border is just a nightmare for the businesses."

On Slovenia, he added that it was on course to cut its budget deficit to 2.2 percent of GDP this year from 2.9 percent in 2015, although there could be additional costs for the government if a high level court rules a recent bail-in was unlawful.

(Reporting by Marc Jones; Editing by Hugh Lawson)