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Greek Finance Minister Yanis Varoufakis, left, walks next his Italian counterpart Pier Carlo Padoan during a meeting in Rome, February 3, 2015. Varoufakis is visiting Rome as part of a drive to build support for a new agreement on Greece's debt.REMO CASILLI/Reuters

The duel between Greece's new anti-austerity government and its pro-austerity paymasters in Brussels, Frankfurt and Berlin is so far following a predictable script despite of all its drama.

The opening chapter saw strong, even aggressive, statements by both sides. Last week, Greek Prime Minister Alexis Tsipras and Finance Minister Yanis Varoufakis demanded the end of austerity and a debt writeoff.

This week, though, the Syriza party took a step back, abandoning its call for a writeoff, and replacing it with a proposal for debt payments linked to economic growth. The apparent moderation of demands pushed up the European and Greek markets Tuesday as investors took the view that Greece just might avoid a prolonged and damaging standoff.

The third chapter could see a compromise that might spare the Greek banks from deep trouble and keep Greece within the euro zone. But reaching that compromise could take weeks or months, if it comes at all. On Tuesday, German Chancellor Angela Merkel hinted she is open to proposals from the radical left Syriza government.

"The Greek government is still working on its position," Ms. Merkel said in Berlin. "That's more than understandable considering the government has been in office for a few days. We're waiting for recommendations and then we'll go into talks."

The talks may not go smoothly. Economists said Mr .Varoufakis's proposal for growth-linked bond payments had its attractions but probably would not fly in Germany, even though a similar financial structure played a small role in the restructuring of Greece's privately held bonds.

Megan Greene, chief economist in Boston for Manulife Asset Management, said in a interview that "quantitative easing was a hard sell in Germany and this would be even harder. There is also a lot of cynicism about Greece's performance. Germans see a big risk that Greece will not grow."

A European official, who could not be identified by name because he is close to Greece's bailout program, agreed that the European Union, which has provided €195-billion ($278-billion) in bailout loans to Greece since 2010, probably would consider the gross domestic product-linked bonds a non-starter.

"Bonds like this wouldn't save Greece any money now," he said. "The real issues are that Greece is running out money and that it needs to get its economy going with real reforms. So why expend energy on a small issue like this?"

Continued funding is a crucial issue for Greece. The European Central Bank could cut the Greek banks' emergency liquidity injections unless Greece agrees to an extension to its current bailout program, which expires at the end of February.

Mr. Tsipras's anti-austerity road show landed in Rome Tuesday to drum up support for a new deal with international creditors that would provide Greece with some fiscal flexibility. He and Mr. Varoufakis had hit Paris and London before arriving in Rome, delivering the message that they are not seeking a war with the sponsors of Greece's bailouts.

In Rome, Mr. Tsipras met Italian Prime Minister Matteo Renzi and Mr. Varoufakis met with Finance Minister Pier Carlo Padoan. Mr. Trispras and Mr. Varoufakis were treated to a sympathetic reception because Italy is also struggling under an enormous debt load and is resistant to more tax hikes and spending cuts, the hallmarks of austerity. The main Italian opposition parties advocate exodus from the euro, although Mr. Renzi, like the new Greek government, supports euro membership.

In their London visit on Monday, Mr. Varoufakis called for a "menu of debt swaps," according to the Financial Times, not outright debt "haircuts" that would see the writeoff of much of the European Union portion of Greece's bailout loans.

As of December, Greece's total debt was about €317-billion, according to the French bank Société Générale, of which €195-billion was owed to the EU. A debt swap would see some or all of those EU loans traded for loans whose payments are linked to rises or falls in GDP.