Germany floats Greek referendum on reform, others doubt timing

Mon May 11, 2015 2:37pm EDT
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By Renee Maltezou and Robin Emmott

BRUSSELS (Reuters) - EU paymaster Germany suggested on Monday that Greece might need a referendum to approve painful economic reforms on which its creditors are insisting, but Athens said it had no such plan for now and others warned a vote could delay vital aid.

Greece calmed immediate fears of a default by making a crucial 750 million euro payment to the International Monetary Fund a day early. But Finance Minister Yanis Varoufakis said the liquidity situation was "terribly urgent" and a deal to release further funds was needed in the next couple of weeks.

Euro zone finance ministers welcomed some progress in slow-moving talks on a cash-for-reform deal between Athens and the IMF, the European Commission and the European Central Bank but said more work was needed to each a deal.

"We acknowledged that more time and effort are needed to bridge the gaps on the remaining open issues," they said in a short statement after spending barely an hour on a progress review on the negotiations behind held among senior officials.

They remain far apart on pension cuts, easing layoffs in the private sector and over budget targets for this year and next.

Euro zone governments have previously opposed a referendum, saying there is no time and it could destabilize financial markets and trigger a run on struggling Greek banks.

When former Prime Minister George Papandreou surprised EU partners by proposing a plebiscite in 2011 at the height of the euro zone debt crisis, he was summoned to emergency talks with leaders of France and Germany and told bluntly to drop the idea.

But with Greece's leftist-led government refusing to budge on unpopular reforms that run counter to its electoral mandate, German Finance Minister Wolfgang Schaeuble said securing public backing for the necessary sacrifices might be useful.   Continued...

People make their way past a small European Union flag on Constitution (Syntagma) Square, with the parliament building seen in the background, in Athens May 11, 2015.  REUTERS/Alkis Konstantinidis