Greece bridles at Merkel referendum suggestion

Greek political leaders reacted angrily on Saturday to a suggestion, attributed to German Chancellor Angela Merkel, that the country hold a referendum on euro membership alongside an election next month.

The chancellor's move -- despite a denial by Berlin -- went down badly with leaders sensitive to any comments from Germany, which has insisted that Athens stick to tough austerity measures agreed in return for a massive EU-IMF bailout.

"The Greek people have no need for a referendum to demonstrate their choice for the euro, they have already made enough costly sacrifices to show that," said Antonis Samaras, leader of the conservative New Democracy party which won inconclusive May 6 polls.

Merkel's suggestion, "above all coming in the run-up to the election, is regrettable and unacceptable," Samaras said in a statement. "The Greek people has the right to respect from its (European) partners."

The office of the caretaker prime minister said on Friday that Merkel "conveyed thoughts (to the president) on holding a referendum alongside the election, on the question of whether Greek citizens wish to remain in the eurozone."

The suggestion was turned down, a statement said, because the caretaker government only has the authority to organise the new polls, expected June 17.

Berlin bluntly denied any such move.

"The information reported that the chancellor had suggested a referendum to the Greek President Carolos Papoulias is wrong," a Merkel spokeswoman said.

Alexis Tsipras, leader of the radical left Syriza party which came second in the May 6 vote on a campaign against the austerity policies, alluded to Germany's wartime record in Greece, a hugely sensitive and controversial period.

"Madame Merkel is used to talking to Greek political leaders as if she was addressing a protectorate," Tsipras said.

"Greeks are going to give a definitive answer (in the upcoming polls) and are going to put an end to the policies of austerity and submission, they will open the way for progressive forces across Europe," he added.

The leader of the socialist Pasok party, which along with New Democracy backed the EU-IMF accord and suffered accordingly on May 6, said only the Greek parliament and government had the authority to call a referendum.

"The question for Greece is not whether it stays in the euro or not, but whether it can get out of the crisis," Evangelos Venizelos said.

Greek newspapers were even more critical -- "Merkel Ultimatum," was the pro-Socialist Ta Nea front page headline.

"It's a Merkel Bomb for a euro referendum, an unprecedented political intervention which makes things worse," wrote Eleftheros Typos on the right, while financial daily Naftemporiki also spoke of a "political bomb."

The Merkel imbroglio comes at a bad time, with the chancellor in Washington for G8 talks hosted by US President Barack Obama who has shown himself more sympathetic to the need for growth than austerity as Greece tops the agenda.

Obama said Friday he supported Greece staying in the eurozone, a region of "extraordinary importance" not only for Europe but also for the global economy.

Up to now, Merkel has insisted that Greece must stick to the austerity terms in the bailout deal or risk losing access to debt funding -- effectively forcing it out of the eurozone.

But in recent months, calls for the focus to be rebalanced towards growth have increased, with new French President Francois Hollande winning office earlier this month on a pledge for change.

Despite the brickbats, it is also clear that in effect the June 17 polls are fast becoming a straight vote on Greek acceptance of the bailout deal and its continued place in the eurozone.

After recent polls put Syriza in the lead, a survey Friday showed the race narrowing, giving New Democracy 23.1 percent of the vote, up from the 18.85 percent it won on May 6, with Syriza on 21 percent, up from 16.8 percent.

Fears that the new poll might not be able to produce a viable government committed to the bailout have roiled global markets and snared Spain where the government is struggling to stabilise its stricken banking system.

"Time is clearly running out," London-based analysts Capital Economics warned in a note over Greece's continued political paralysis.

"If the government does not meet the conditions required to receive the next tranche of the bailout, it could run out of money before the end of the summer."

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