Troika Says Defense Industries Must Go

September 3, 2013 By Andy Dabilis - greekreporter.com

Greece’s proposal to overhaul three state-owned companies, Hellenic Defense Systems (EAS), mining company Larco and the Hellenic Vehicle Industry (ELVO) instead of privatizing or closing them has been rejected by the debt-stricken country’s partners and creditors.

The Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) wants Greece to sell off state enterprises to reduce a still-staggering $390 billion debt but Prime Minister Antonis Samaras was hoping to keep control of the defense contractors in state hands.

Media reports cited an email said to have been sent by Troika officials to the Greek Finance Ministry on Sept. 2 citing the proposal. There was no immediate response from the government.

Responding to a question by Kathimerini, EU 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 fulfilment of this requirement,” O’Connor said.

The Greek proposal regarding the country’s defense industries was based on a liquidation while in operation scheme, a division between military and other factories as well as early retirement incentives for staff members. Finance Ministry sources said that the Troika wasn’t convinced about an overhaul but might consider more arguments.

The plans regarding the EAS, ELVO and Larco overhaul are a prerequisite for Greece to receive a new, one billion euro tranche of bailout aid scheduled to be releases in early October.