Athens and Berlin at odds over call for euro referendum

THE POLITICAL drama in Greece took an abrupt turn as its caretaker government said German chancellor Angela Merkel wants the country to hold a referendum on its membership of the euro on the same day as next month’s election.

The government said the chancellor’s suggestion came in a phone call to Greek president Karolos Papoulias from the Group of Eight summit at Camp David, a gathering dominated by the uncertain outlook for Greece and the euro zone. Although Berlin swiftly denied any such intervention in Greece’s febrile election campaign, Dr Merkel’s reported remarks were angrily dismissed across the political spectrum in Athens.

A Greek government statement said the chancellor “conveyed . . . thoughts about the holding of a referendum parallel to the June 17th general elections, with the question on whether Greek citizens desire Greece to remain in the euro zone”. In European circles, this was immediately interpreted as an attempt to change the terms of the political debate in Greece.

With the country already under pressure to implement the EU-IMF plan or leave the single currency, the chancellor’s reported suggestion was read by euro zone officials as an effort to demonstrate that Germany was serious about the possibility of Greece returning to the drachma.

Last night, a German government spokesman insisted Dr Merkel had not suggested Greece hold a referendum. “This is false and we completely dismiss this,” he said.

Greece’s caretaker government said it was not empowered to call such a referendum. Alexis Tsipras, leader of the leftist anti-bailout Syriza group, said the chancellor had become accustomed to addressing Greek leaders as if the country was a protectorate.

Meanwhile, Barack Obama and François Hollande yesterday vowed to seek “a strong growth agenda” at the G8 summit which began with dinner at Camp David last night.

“President Hollande and I agree that this is an issue of extraordinary importance not only to the people of Europe, but also the world economy,” Mr Obama said in the Oval Office after the two men met. He said they looked forward to a “fruitful discussion” with leaders of the other G8 countries – Germany, Britain, Italy, Canada, Japan and Russia – “about how we can manage a responsible approach to fiscal consolidation that is coupled with a strong growth agenda”.

“Growth must be a priority,” Mr Hollande said. In contrast to Dr Merkel’s apparent ambivalence over Greece’s continued participation, he added both he and Mr Obama “believe that Greece must stay in the euro zone”.

Dr Merkel is expected to come under pressure from the US and French leaders at Camp David to accept specific pro-growth policies to prevent Europe’s debt crisis spiralling out of control – for example, the issuance of eurobonds, which would effectively spread debt throughout the Continent.

Mr Obama is trying to shape European commitments to solving the debt crisis, and, at the Nato summit which will follow in Chicago tomorrow and on Monday, commitments to Afghanistan.

The US and French leaders also discussed Mr Hollande’s promise to withdraw French troops from Afghanistan this year, to the consternation of France’s Nato allies. “We will continue to support Afghanistan in a different way,” Mr Hollande said.

This summit marks the first time Mr Obama has invited foreign leaders to Camp David, and is the largest gathering ever held at the presidential retreat in the mountains of western Maryland.

British prime minister David Cameron, who has said the G8 often appeared “out of touch”, said Camp David would give “space for leaders to build the personal relationships that lead to political agreement.”

Decisive action need to save Greece – and the euro: Opinion, page 13