Paul Taylor is a Reuters columnist. The opinions expressed are his own.

Euro zone countries say they have agreed on how to help Greece if it needs assistance to cope with its massive debt mountain, but the opaque and tentative arrangement is full of unanswered questions.

A joint statement by finance ministers of 16 nations that share the single currency was meant to convince financial markets that Athens can count on tangible support, if needed, beyond the verbal backing offered by EU leaders in February.

But the wording was so ambiguous and short on detail that it is hardly surprising the risk premium investors charge for holding Greek debt rather than benchmark German bonds barely blinked on Tuesday, holding at more than 300 basis points.

"(The Eurogroup) clarified the technical modalities enabling a decision on coordinated action and which could be activated swiftly in the case of need," ministers said in a statement issued late on Monday.

They still seem to be hoping such "constructive ambiguity", combined with praise for Greece's tough austerity measures, will be enough to talk down Greek borrowing costs without forcing them to dip into taxpayers' pockets for a bailout.

The language appeared deliberately vague, both to avoid a market test of the solidity of the arrangement and perhaps to avoid angering German voters who strongly oppose any bailout for Greeks, who enjoy earlier retirement and bigger pensions.

The risk is that ministers are setting up a game of chicken with the markets, with a highly uncertain outcome.

No sooner was the ink dry than the chairman of euro zone finance ministers Jean-Claude Juncker said only a decision from European Union leaders could set the mechanism in motion, while Germany, Europe's main paymaster, said it did not expect any such decision at the next summit on March 25-26.

Italy's Giulio Tremonti, supported for the first time by a German government source, said recourse to International Monetary Fund lending should not be ruled out. That flies in the face of political efforts to solve the problem within the euro family.

AID PREMIUM

Greece says it cannot go on borrowing at 6.25 percent or more and expects to be able to borrow at the same rates as other euro zone countries, despite the fact that its debt pile, at 120 percent of national output, is twice the EU reference level.

The euro zone statement effectively squelched that hope, making clear any aid would come at a hefty premium and on draconian conditions to serve as a deterrent.

"The objective would not be to provide financing at average euro area interest rates, but to safeguard financial stability in the euro area as a whole," the ministers said.

"The proposals would ... provide strong incentives to return to markets as soon as possible."

Since EU leaders keep stressing that Greece has not asked for financial help, the implication is that Athens would have to make a formal request to activate the mechanism.

However it leaves several key questions about any financial rescue unanswered:

* Would euro zone assistance be triggered only if Greece were unable to meet its immediate funding needs -- some 20 billion euros to refinance between April 20 and end-May -- on the financial markets, or if it deemed the cost too high?
* Who would determine the appropriate rate at which to lend money to Greece and how?
* How much aid would be made available? Greece's total borrowing requirement for this year is 53 billion euros, of which about 13 billion have been raised so far.
* Would euro zone countries provide bilateral loans or create a stand-by facility for Greece along IMF lines and disburse aid in tranches subject to reciprocal spending cuts and restructuring measures?

Eurogroup chairman Jean-Claude Juncker would only say that aid would not be in the form of loan guarantees, presumably because that would breach the so-called "no bailout" clause in the EU treaty.

In the absence of answers to these questions, everything now hinges on whether the spread on Greek paper falls by mid-April.

Athens got a small boost on Tuesday when credit ratings agency Standard & Poor's ended a downgrade review of Greece by affirming its BBB+/A-2 rating, although it said the longer-term outlook on the rating remained negative.

S&P praised the government's recent deficit reduction measures but questioned whether the Greeks would be able to stay the multi-year course of painful fiscal consolidation.

Moody's is the last of the major credit watchdogs to give Greece an A rating, which means Greek paper is eligible collateral for European Central Bank refinancing operations.

If the rating slipped to B grade, Greek government bonds would no longer be accepted when the ECB reverts to pre-crisis rules at the end of this year, although ECB governing council member Axel Weber said last week that cut-off might be replaced by a sliding scale on which the central bank would lend against lower-grade collateral while taking a higher "haircut", or risk margin.