Merkel Floats Idea Of Greek Referendum On Euro Membership

German Chancellor Angela Merkel has proposed that Greece hold a referendum on its membership in the euro zone in tandem with the snap parliamentary elections scheduled for June 17, BBC News reported.

A representative of the Athens government said Merkel brought up the idea during a Friday morning phone call with Greek President Karolos Papoulias. In that conversation, Merkel also urged Papoulias to create a functioning government and to put an end to the impasse that threatens to shatter Greece’s finances and push it out of the euro zone.

We're awaiting the results of these elections, and it's the wish of all European partners and the [German] government that a government capable of taking decisions in Greece should be formed as quickly as possible after the elections, Georg Steiner, a representative of Germany's government, said in a statement.

Meanwhile, French President Francois Hollande met Friday with U.S. President Barack Obama in Washington before the Group of 8 summit this weekend to discuss, among other things, the euro-zone debt crisis.

Hollande and Obama both favor Europe scaling back austerity initiatives and focusing on growth, which sets them at direct odds with Merkel and many other senior European officials. Hollande will also confer with British Prime Minister David Cameron -- another austerity hawk who endorsed Nicolas Sarkozy in French presidential elections and who declined to meet with the Socialist Hollande during the French campaign.

Meanwhile, as Greece prepares for what could be yet another indecisive national election, former Prime Minister Lucas Papademos warned his countrymen of catastrophe if Greeks voted to reject austerity and the euro-zone bailouts.

We are, once again, at a critical crossroads, Papademos wrote in his formal resignation letter. At a time when many countries, including in our neighborhood, are working hard to win a place in the [European Union,] it would be tragic if we went in the opposite direction.

Papademos’ views may actually be getting some traction from a Greek populace that increasingly dreads the thought of leaving the euro.

In recent days, the center-rightist, pro-austerity New Democracy party has edged ahead of the leftist, anti-austerity Syriza party in one opinion poll, The poll showed New Democracy with 26.1 percent of the vote and Syriza with 23.7 percent. (In the May 6 elections, New Democracy also finished first, while Syriza surprisingly placed second.)

Alexis Tsipras, the leader of Syriza, said his opponents are trying to demonize his party.

“This scaremongering is being generated by political forces playing with fire and by speculators playing speculative games,” Tsipras said following a meeting with European Parliament President Martin Schulz, according to the Telegraph in London. “I expressed my conviction that Greece is, and must remain, an equal member of the euro area with obligations but also the rights that accrue to it from its membership.”

Panagiotis Pikrammenos, the new caretaker prime minister in Athens, urged his fellow Greeks to unite in their efforts against their financial crisis.

We must not forget that all of Europe is watching us,” Pikrammenos said. “We must all work to steer the country to a safe harbor. I would like this government to set an example of a different type of behavior, which the Greek people, who have been severely tested, will be able to respect.