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TheStreet Open House

Greece: Germany's Merkel Suggests Euro Referendum

Stocks in this article: NBG

NICHOLAS PAPHITIS

ATHENS, Greece (AP) â¿¿ Germany's chancellor apparently waded into Greece's choppy political waters on Friday, when Athens said Angela Merkel suggested that the country should hold a referendum on the euro together with next month's national elections.

Berlin first refused to comment and then denied that Merkel had floated the idea during a phone conversation with Greek President Karolos Papoulias. The alleged proposal ruffled feathers across Greece's deeply fragmented political spectrum, with parties saying it was an unwarranted intervention in domestic affairs at a particularly sensitive time.

Merkel's comments were first referred to by Greek government spokesman Dimitris Tsiodras, who said in a statement: "(Merkel) also conveyed to the President thoughts on holding a referendum along with the elections, with the question of to what extent Greek citizens wish to remain in the eurozone."

Crisis-afflicted Greece is set to hold elections on June 17 to end a political deadlock after a previous vote on May 6 produced a hung Parliament, with the country's future in the eurozone potentially at stake.

Edgy markets and analysts fear a victory by parties opposed to austerity commitments could spur bailout creditors to stop the flow of rescue loans. Many argue that this would cause such widespread misery that Greece would ultimately have to abandon the 17-member currency union, jolting the global economy.

Tsiodras said a referendum was "obviously" out of the question, as it falls outside the jurisdiction of Greece's newly-appointed caretaker government.

But a German government spokeswoman said reports on the alleged referendum proposal "are inaccurate." She said the conversation between Merkel and Papoulias â¿¿ a fluent German speaker â¿¿ was confidential.

The spokeswoman, who spoke late Friday after consulting with the Chancellor's office, cannot be named in line with government policy.

Relations between the two countries have been turbulent over the two and a half years of Greece's acute financial crisis, which led to Athens being kept solvent by international rescue loans since May 2010.

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