Troika objections to gov’t plans to overhaul defense firms raise specter of layoffs

Plans by the government to overhaul three state-owned companies – Hellenic Defense Systems, mining company Larco and the Hellenic Vehicle Industry (ELVO) – were thrown into disarray Tuesday after troika officials reportedly insisted on a more decisive solution, possibly involving the companies being forced to declare bankruptcy and workers being laid off without compensation.

Shortly after media reports cited an e-mail reportedly sent by troika representatives to Greek government officials, Alternate Defense Minister Fofi Gennimata said the Greek government was preparing its response.

The development caused upheaval among government officials who had been hoping to continue negotiations with troika officials on this and other issues in private ahead of the scheduled high-profile speech by Prime Minister Antonis Samaras at the Thessaloniki International Fair this weekend. Samaras was informed of the e-mail on Monday and discussed the matter with his deputy and coalition partner Evangelos Venizelos on Monday night, sources told Kathimerini Tuesday. A teleconference on the matter is to be held between government officials and representatives of the European Commission in the coming days, the sources said.

Asked to comment by Kathimerini on the affair Tuesday, EC spokesman Simon O’Connor avoided either confirming or refuting reports that all three companies were due to close.

“The MoU requires – and the last review set this as one of the milestones to be completed for September – the adoption of ‘irreversible decisions by August 2013 on the restructuring, involving substantial downsizing, ahead of privatization or on the resolution of ELVO, HDS and Larco, both in compliance with state aid rules, with a view to implementing these decisions by December 2013.’ Discussions are ongoing with the Greek authorities with regard to the fulfillment of this requirement,” O’Connor said.

The matter is expected to dominate talks with troika envoys when they return later this month, with sources close to Samaras saying the government was bracing for “tough negotiations.”

The government is expected to press for the companies to be liquidated while in operation. It is unclear, however, whether the troika will be open to negotiation on this point as the government’s proposed solution would most likely be a costlier for taxpayers. In the event that the companies are forced to declare bankruptcy, it is likely that hundreds of workers would be laid off without compensation

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