Referendum hint by Merkel fuels debate [UPDATE]

Greece’s caretaker Prime Minister Panayiotis Pikrammenos on Saturday sought to curb speculation about the purported suggestion by German Chancellor Angela Merkel that Greece hold a referendum, in parallel to June 17 elections, to gauge the extent to which its people want to remain in the euro zone.

“This issue was exhausted yesterday,» Pikrammenos told reporters during a break between meeting his ministers. «What is important now, and what we need to focus our attention on, is the EU leaders’ summit on Wednesday,» he said.

Meanwhile Finance Ministry sources indicated that the idea of a referendum being held in Greece had not been broached during the latest Ecofin summit attended by former Minister Filippos Sachinidis.

Officials in Merkel’s office insisted that the chancellor had not proposed a referendum during a telephone conversation with Greek President Karolos Papoulias on Friday. Sources indicate that the idea had merely been touched upon in discussions and not presented as proposal.

A statement issued late Friday by government spokesman Dimitris Tsiodras noted that Merkel had ?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 statement added however that holding such a referendum does not fall within the powers of the country?s caretaker government.

The news rankled party leaders on Friday. 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.

The uproar over Merkel?s supposed intervention came as speculation about Greece?s future in the eurozone peaked. A senior European official indicated on Friday that the European Commission and European Central Bank are working on fallback scenarios for a possible Greek euro exit — a report promptly refuted by both the EC and ECB — 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.

US President Barack Obama and French President Francois Hollande both expressed their conviction late Friday that action must be taken to ensure Greece remains in the eurozone.