Merkel's hint at referendum makes waves

As speculation about Greece’s future in the eurozone reached fever pitch, German Chancellor Angela Merkel on Friday reportedly suggested to President Karolos Papoulias the possibility of a referendum being held, in parallel with general elections scheduled for June 17, to assess the extent to which Greeks want to remain in the single currency bloc.

Merkel “conveyed some thoughts” about a possible referendum during a telephone conversation with Papoulias in which she emphasized Europe’s determination to help Greece emerge from the crisis, the new government spokesman Dimitris Tsiodras said in a statement. The statement added however that holding such a referendum does not fall within the powers of the country’s caretaker government.

The news of the German chancellor’s purported overture -- which a spokesman for Merkel refuted -- clearly rankled Greek party leaders.

The leader of the Coalition of the Radical Left (SYRIZA), Alexis Tsipras, accused Merkel of treating Greece like a “protectorate.”Conservative New Democracy chief Antonis Samaras, for his part, said, “The Greek people do not need a referendum to prove their choice to stay in the eurozone.” Socialist PASOK stated that “referendums fall exclusively within the competencies of the government and the Greek Parliament and not the EU or other member states.” Former PASOK leader and ex-Premier George Papandreou had proposed just such a referendum in October, provoking the anger of Merkel and other EU leaders and, soon after, the collapse of his Socialist government.

In her conversation with Papoulias, Merkel said the Union was willing to boost policies to revive growth and reduce unemployment across the bloc. She also reportedly urged the president to do everything possible to ensure the emergence of a stable Greek government as soon as possible.

The furore over Merkel’s supposed intervention came as speculation about Greece’s future in the eurozone peaked.

A senior European official indicated that the European Commission and European Central Bank are working on fallback scenarios for a possible Greek euro exit while the country’s debt problems were said to be topping the agenda of talks at the annual G8 summit of the world’s most powerful leaders.

The assertion by EU Trade Commissioner Karel De Gucht appeared to be the first time an EU official has acknowledged the existence of contingency plans for a possible Greek withdrawal from the euro. “A year and a half ago there maybe was a risk of a domino effect,” De Gucht told Belgian newspaper De Standaard, referring to the threat of Greece leaving the euro. “But today there are in the European Central Bank, as well as in the Commission, services working on emergency scenarios if Greece shouldn’t make it,” he said, adding that “a Greek exit does not mean the end of the euro, as some claim.”

The comments by De Gucht were quickly shot down by the EC and ECB. European Economic and Monetary Affairs Commissioner Olli Rehn stated that a Greek exit “is not a scenario we are preparing for.” “We are working to keep Greece inside the euro area,” he said. An ECB official said the central bank “would not join an opportunistic debate regarding scenarios of Greece exiting the euro.”

German Finance Minister Wolfgang Schaeuble stopped short of refuting these scenarios. “Our citizens expect us to be prepared for everything,” Schaeuble said, adding that although he remained in favor of Greece staying in the euro, it would have to honor its commitments to creditors in order to do so.

European Parliament President Martin Schulz, during a visit to Athens, was more diplomatic, stressing the importance of growth-oriented measures but also the need for Greece to honor its commitments to foreign creditors. 

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