Germany's Gabriel open to Greek referendum with caveats

BERLIN - German Vice Chancellor Sigmar Gabriel said on Saturday that a proposal from the Greek government for a referendum on austerity demands should not be dismissed out of hand, though it was vital that voters had a clear deal on which to vote.

In an interview with Deutschlandfunk radio, Gabriel said such a referendum would only make sense if voters in Greece got the chance to cast their ballots on the European Union's offer for aid linked to reforms.

"We'd be well advised not to dismiss this suggestion from Herr Tsipras out of hand and say 'that's just a trick'," Gabriel said. "But rather if the questions are clearly framed... then that could make sense."

Greek Prime Minister Alexis Tsipras called a referendum on austerity demands from foreign creditors earlier on Saturday, rejecting an "ultimatum" from lenders and putting a deal that could determine Greece's future in Europe to a popular vote.

The surprise call marked a dramatic twist in the five-month negotiations between Greece and its lenders, plunging the cash-strapped nation into uncharted waters and risking a default and capital controls as hopes for an aid agreement faded.

Gabriel, also Economy Minister and head of the centre-left Social Democrat (SPD), said he did not know if the terms of an agreement to vote on had been worked out yet. Only a concrete agreement would be worth holding a referendum on, he said.

"The referendum would only make sense if that what Europe is offering is put up to a vote," Gabriel said. "And Europe is offering Greece a lot." He said it would be unacceptable if Tsipras wanted the European Union to send him 20 or 30 billion euros of rescue funds but without any conditions.

"That's why he has to ask his people if they want the rescue funds, a double-digit billion euro figure, in exchange for sticking to certain measures that will lead to Greece recovering step for step."

After a week of acrimonious talks in Brussels, Tsipras dismissed lenders' proposals as "blackmail" before flying to Athens to huddle with ministers.

After midnight, he appeared on television to announce plans for a referendum on July 5.