Greece dissolves parliament

Greece confirmed that it would hold a repeat general election in June. The annoucement came as President Karolos Papoulias dissolved the short-lived parliament on Saturday.

"We are calling a general election for June 17. The new parliament will convene on June 28, Thursday," said a statement from the parliament's press office.

The June elections are meant to end political deadlock in the financially strapped nation. Elections earlier this month failed to produce a majority government, and political parties were unable to form a ruling coalition.

The May 6 election led to a hung parliament divided on Greece’s 130 billion euro ($165.6 billion) international bailout.

Panagiotis Pikramenos, the head of the Council of State, was appointed on Wednesday to lead a 16-member caretaker cabinet to see Greece through to the June election.

The need for a new election has caused uncertainty and reignited fears that Greece may be forced out of the eurozone.

Bristling with anger

Saturday’s announcement comes just a day after Greek politicians responded angrily to an alleged suggestion by German Chancellor Angela Merkel that a referendum should be held asking whether Greeks want to stay in the eurozone.

The office of the caretaker prime minister reportedly said 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."

Merkel has denied the widespread reports that she suggested a referendum on the eurozone should be held at the same time as parliamentary elections.

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

Greek politicians rejected the suggestion angrily, with many noting that it was inappropriate to interfere in domestic affairs.

"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 the inconclusive May 6 polls.

A lot rides on vote

The interim prime minister, meanwhile, seemed determined to move forward.

"The issue with Merkel is over and we now look forward to the next meeting in Brussels on May 23," said Pikramenos.

Until now, Merkel has insisted that Greece must stick to the austerity terms in the bailout deal or risk losing access to debt funding, which would effectively force Greece out of the eurozone.

But calls for the focus to be rebalanced towards growth have increased.

It is becoming clear that the June 17 polls are becoming a straight vote on Greek acceptance of the bailout deal and its continued place in the eurozone.

In the meantime, fears that the new poll might not be able to produce a viable government committed to the bailout are negatively affecting global markets.

tm/ccp (AFP, dpa, Reuters)