According to Kathimerini, an email sent to the Finance Ministry by European Commission representative Matthias Mors, and leaked in the Greek media yesterday, referred to the troika’s doubts about the credibility of the government’s plan for overhauling the three firms while they are still in operation. Instead, the troika proposed liquidation for EAS and ELVO and, in Larco’s case, the possible splitting of the firm into two before its attempted sell-off. “The proposed restructuring plans are in our view not viable or realistic,” the e-mail said. “In our view, the option of closure/liquidation must be considered for all three companies,” it added.

Earlier in the day, Finance Minister Yannis Stournaras said the liquidation of the companies over a period of five years would “be more valuable to the state” than bankruptcy. He said the government would try to avert a scenario involving staff being laid off without compensation, claiming that “at least certain parts of the businesses are valuable.”

Enet.gr presented the text of an email sent by the troika to the government rejecting the latter’s proposals to restructure state-owned Hellenic Defence Systems (EAS), Hellenic Vehicles Industry (Elvo) and mining company Larco.

The email was sent my Matthias Mors, the European Commission’s representative in the troika, to the ministries of finance and defence on Monday evening. The email has as follows:

“Thank you very much for forwarding the restructuring plans for the three companies. Please find a detailed reaction from our side with the conclusion that the proposed restructuring plans are in our view not viable or realistic and do not guarantee a sustainable solution from the economic efficiency, budgetary and state aid points of view. In our view, the option of closure/liquidation must be considered for all three companies (as reflected in the language of the MEFP/MoU [Memorandum of Economic and Financial Policies/Memorandum of Understanding] and the public announcement in July). In this context, any liquidation should not be conditional on indemnities going beyond legal requirements or on a redeployment of the work force.

LARCO: Our main concern for LARCO is that in your proposal the tendering processes for the two asset clusters are not fully independent from each other (for the privatisation of the smelter and the mines, respectively), thus involving business continuity without addressing the fundamental state aid concerns (the transaction is structured in such a way that there is a high probability that the same investor will acquire both tendered assets and will thus be liable to pay back the State aid). Moreover, the potential investors are required to maintain employment in an over-staffed organisation that has been loss-making since 2008. This is an objective which is not commensurate with long-term viability of the company and is creating additional financial risks.

The alternatives for the government should be either to sell the asset and expect from the buyer to pay the state aid back (as mentioned in the Almunia-Rehn letter) or to sell separately the Agios Ioanis/Larymna concession and the remaining Larco assets in an unbundled fashion, without giving the investor any specific option to acquire all assets or liquidate them otherwise (if they do not find buyers). In this context, the assessment of the alternatives would be facilitated if you could provide us with pre- and post-restructuring financial accounts.

HDS [Hellenic Defence Systems, EAS]: You are envisaging EUR 144 million of State funds to the military activities that would result from the split between civil and military activities of HDS, additional to the already inherited liabilities from the past. The proposal is basically calling for a rather generous early retirement and exit scheme, which would have implications in terms of fiscal space and the programme. Given the fiscal space constraints and the dependence of the company on domestic orders, we believe that this is not a viable solution and the company should be liquidated. If a case could be made from a national defence objective perspective, this has to involve a substantially downsized/restructured company which is domestically oriented. It has to be seen whether at such lower scale (given lower revenues but possibly high fixed costs) it makes sense from an economic point of view to keep the company on the market or whether one should just to proceed with outright liquidation.

ELVO: The special liquidation plan is more costly compared to bankruptcy. For example, if the company is liquidated EUR 13.5 million are needed for severance payments; however if the company continues to function under special liquidation regime it will need EUR 27.5 million to run operations until the conclusion of the current backlog contracts.

The assumption in your analysis that the shareholder’s losses will stop upon the completion of the backlog contracts and that the company may win further contracts allowing thus the completion of the development plan is not realistic and does not guarantee any security related to the viability and future of the company. In conclusion, we consider that an outright bankruptcy of the company is the most desirable and realistic solution.

We look forward to receiving a new improved version of the restructuring/liquidation plans for the three companies, which take into account our comments/suggestions.

Best regards, Matthias”

In summary: “After the February 2012 agreement on a Second Economic Adjustment Programme and the large-scale debt restructuring operation in March 2012, a period of extreme uncertainty surrounded the implementation of the programme. With Greece facing a very stark choice, a three-party coalition emerged from the 17 June elections with the mandate to secure Greece’s future in the euro area, and hence to implement the economic adjustment programme resolutely. However, given the substantial delays accumulated after the double electoral cycle, the overall implementation of the second programme remained partial for a long period. Nonetheless, there has been a significant catching-up over the past few months. With the recent crucial decisions and the extent of the commitments under the new Memorandum of Understanding (MoU), Greece has revamped its reform effort and fulfilled important conditions. The reform effort must continue, in order to address the challenges Greece faces.

The extreme uncertainty about the Greek developments impacted the economy, even beyond Greece, and this still affects the programme looking forward. Since early-2010, Greece has achieved a very substantial fiscal adjustment. The performance in implementing structural fiscal reforms however has been mixed.

The fiscal targets for 2013-16 have had to be revised to take into account the deeper and longer- than-expected recession. To achieve the revised medium-term fiscal targets, the MTFS 2013-2016 sets out a very large, front-loaded and mostly expenditure-based fiscal consolidation. A long-overdue income tax reform aimed at enlarging the tax base and simplifying the tax system is also being finalised.

On fiscal structural reforms, the government has revamped its efforts through a comprehensive reform programme. Significant action has already been taken to reform the Greek labour market and further efforts are being made to reform severance payments and minimum wages. Privatisation proceeds have been disappointing so far, but the privatisation process has regained some momentum since September 2012. While significant progress has been made in a number of respects, the banking sector situation remains fragile.

The outlook for the sustainability of Greek government debt has worsened compared to March 2012 when the second programme was concluded, mainly on account of a deteriorated macro-economic situation and delays in programme implementation. The international assistance loans disbursed so far to Greece amount to EUR 148.6 billion. Implementation risks to the programme remain considerable. The Commission services recommend disbursement of EFSF funds, broadly corresponding to the planned second, third and fourth tranches of the second programme, conditional on continued implementation of the commitments undertaken by the Greek authorities as specified in the revised MEFP and MoU.”

Voters face a stark dilemma as Conservative New Democracy and leftist SYRIZA are competing neck and neck for first place in the elections, offering opposite views on how to cope with the country’s economic crisis.

New Democracy wants to stick with Greece’s pledges for further cutbacks and reforms, although with revisions, and the International Monetary Fund so Greece can continue to receive bailout loans to repay its public debt and cover some of its spending.

SYRIZA has vowed to rip up Greece’s bailout agreements, also known as memorandum, and cancel the austerity measures, which have included deep spending cuts, as well as tax hikes and tough pension and salary cuts.

The last opinion polls published before a two-week pre-election ban showed the radical left Syriza party of Alexis Tsipras running neck and neck with the conservative New Democracy party of Antonis Samaras, which would grant the winning party an extra 50 seats in Parliament vital for forming a coalition government. Neither party is likely to win an outright majority.

Meanwhile, European leaders also weighed in on Saturday, urging Greeks to vote with their heads, Kathimerini writes.

The bailout would not be renegotiated, said Angela Merkel, Germany’s chancellor, whose country’s wealth is necssary to support  its weaker partners in the eurozone, urging Greeks to sticks to their bailout commitments.

“That’s why it’s so important that the Greek elections preferably lead to a result in which those that will form a future government say: ‘yes, we will stick to the agreements’,” Merkel told a party conference of her Christian Democrats, Al Jazeera reports.

Jean-Claude Juncker, the head of the group of eurozone finance ministers and prime minister of Luxembourg, warned there would be serious effects if SYRIZA secured victory.

Sunday’s vote is a rerun of a May 6 election that produced stalemate. No party is expected to win enough votes to secure a majority in parliament.

The first round of exit polls is due as soon as voting ends at 7 p.m. A second round of exit polls is expected about an hour later, according to Kathimerini. 

The first “safe” estimate based on actual votes counted is due at about 9.30 p.m.

On 21 February 2012, the Eurogroup agreed on a second economic adjustment programme for Greece. The implementation of the economic policies outlined in the Memorandum of Understanding on Specific Policy Conditionality will contribute to reduce the Greek public debt to 117% of GDP by 2020. It was agreed that the official sector financing of the programme would amount to EUR 130 billion until 2014, additional to the amounts committed in the first financing programme.

The release of the tranches is based on compliance with quantitative performance criteria and a positive evaluation of progress made with respect to the policy criteria laid down in Council Decision 2011/734/EU of 12 July 2011 (as amended on 8 November 2011 and 13 March 2012) and the Memorandum of Understanding setting the economic policy conditionality, which was signed on 14 March 2012.

On 19 March 2012, the first instalment (EUR 5.9 billion) of the first tranche (EUR 14.5 billion) of the new financing programme was paid by the EFSF to Greece. Greece also received EUR 1.6 billion from the IMF. By May 2012, Greece has received EUR 147.5 billion from official financing under the first and the second programme.

On 18 April 2012, the Commission adopted a communication on ‘Growth for Greece’ highlighting the positive impact that full and effective implementation of the economic adjustment programme can have by laying the foundations for growth, investment and social renewal. This Communication identifies ways to maximise the impact of early deliverables through swift actions and EU support.

The economic crisis and subsequent fiscal consolidation measures have had an impact on the ability of Greece to achieve the Europe 2020 goals, especially the socially oriented ones. Nevertheless, the structural reforms, particularly those in the labour market, the liberalisation of several sectors and a number of measures to improve the business environment, will help promote competition, spur productivity, increase employment and reduce production costs, thus contributing to an increase in employment and limiting poverty and social exclusion in the medium term. Despite the economic crisis, Greece has continued to work towards achieving the environmental goals of Europe 2020.

A strategic re-programming of the Structural Funds is underway, with a focus on support to youth employment and competitiveness (in particular SME’s). The new measures strengthen actions in the areas of employment passport, training and professional qualifications and access to finance for Small and Medium Enterprises.

Greece has made a number of commitments under the Euro Plus Pact. The commitments, and the implementation of the commitments presented in 2011, relate to fostering employment, improving competitiveness, enhancing sustainability of public finances and reinforcing financial stability.

The illusion that Greece can go forward through this oxymoron constitutes the SYRIZA vote.

Traditionally, the European left rhetoric in Greece has been more left than about Europe. Pure leftish arguments that most Greeks loathe in terms of their consequences on the real economy and people’s individualism have been the main reason Tsipras’ party remained for nearly a decade close to the 3% Parliament threshold, marking in a few votes the difference between political obscurity and House representation.

Dissatisfied, indignant Greek voters were up for grabs throughout the last two years, coming from different political parties, sharing the same anti-MoU feeling. SYRIZA leader managed to utilise a clever strategy, adopting centre-left arguments that sounded positive even to ND voters who were orphaned when Samaras vehemently shifted towards the right. On the 6th of May 37% of PASOK and 13% of ND voters subscribed to Tsipras’ rhetoric, once again proving that in Greece, voters do not pay attention to programmatic documents and political intentions. Admittedly so, no one ever imagined that SYRIZA could turn into a government partner.

A series of factors led to the destruction of the centre-right. The damage for ND began when party leadership decided to vote against the first MoU in 2010, alienating the centrist vote, instead of staying in the pragmatist side of politics, pushing for changes and innovative, reformist alternatives, especially when George Papandreou adopted the easy way out, namely milking salary earners and pensioners.

Instead of staying in the game, dealing with hardcore politics, ND leadership ordered party people to hit the streets, miserably antagonizing leftist unionists who used to rally for a living. The lack of mainstream political agenda left the centre-right with no alternative than to start pushing for snap elections through nihilism and imitations of leftish activism tactics. A few years later, when PASOK and George Papandreou succumbed to the huge social and political pressure and Lucas Papademos took over, ND had to give in and sign the MoU II, to avoid taking the blame for the country’s collapse. Then, after the expulsion of a group of MPs who remained hooked to the populist view, to massage their constituencies, the party lost the popular vote that followed Panos Kammenos in a daring, albeit fruitless quest towards the patriotic right. On May 6, ND reached the bottom of the centre-right dynamics, in a down-curve that began from 45.3% in 2004, to 41.8% in 2007, down to 33.5% in 2009 to a humiliating 18.8% in 2012.

PASOK, on the other hand is trying to survive the 13.2% result (from almost 44% in 2009), putting together all sorts of party casts, while pushing older executives to step down with decency. The centre-left party has suffered the Papandreou administration that failed to tame PASOK’s populist soul. However, what was not clearly foreseen back then was that after its victory against George, the populist mass was determined to seek for the next best roof in the socialist neighborhood, namely Alexis Tsipras.

This is not surprising, since PASOK has always been a formation of different people of unclear ideological background, united by their common thirst for power and the benefits that stemmed out of it.

In the prosperity years, generous budgets of all sorts kept everyone focused on the primary task, i.e. to maintain control of the state apparatus and burse. As soon as the money run out, the horde scattered, following separate roots. These days, SYRIZA leadership is the next best option that resembles the old, populist PASOK; even some of the old Andreas Papandreou’s charisma, some say. At the same time, SYRIZA is the only harbor for those who continue to see the state as a milking cow.

Considering also that, despite the drama, Greece is still at the beginning of a long reformist journey, statists opposing this path like to think they have a chance to stop it. They are assisted by a significant number of middle and lower class households, which are hit by the austerity measures and hope to minimize their losses, by scraping the MoU recipe.

Most of the aforementioned groups see their degrading -and to a great extent corrupted- fields of work, or protected professions or black economy transactions gravely threatened by the reform process.

On June 17, the same groups are preparing to vote against their future. In the minds of Europeans, this is a mindless vote. But for those who understand the Greek psyche, it is a last attempt to rescue an old, degraded and widely spread micro world, seconds before its violent descent down the steepest cliff of the country’s modern economic history.

Dr. Demetris Kamaras is the Editor of AlYunaniya.com

Referring to the possibility Greece exiting the Eurozone, Tsipras said: “I don’t believe that we will have a benefit if Greece goes back to the drachma. I don’t believe that because Eurozone will be in a big disaster… At the same time, we don’t want to go back to drachmas because, in Greece, we will have the poor people to have drachmas and the rich people to buy everything with euro… This is not good evolution for society and for the people… the majority of the people need to be in the safe…”

When asked what he would do as president, Tsipras said, “First of all, we will cancel all these austerity measures…. We believe that this crisis is not a Greek crisis but a European crisis. And we will try to find a common solution – about the role of ECB, about the Europe bonds, about the negotiation of the public debt of all the European countries.”

According to the official transcript, Tsipras stressed: “We will cancel the memorandum. And then we will go to renegotiate, in a European level, about a common way to go out of this crisis… This crisis is not a Greek crisis, but a European crisis. And we will try to find a common solution… That’s our position.”

Asked if he could foresee partners in that negotiation, Tsirpras was optimistic: “We think we will find partners…. We will have the same problem with Italy, with Spain, with Portugal, and also with Ireland and also in the central Europe.”

SYRIZA leader who was handed the mandate by Karolos Papoulias on tuesday has three days to form a government, vowed to rip up the nation’s bailout agreement with its debtors and cancel all austerity measures. This  prompted a strong reaction from PASOK and New Democracy, which made it clear that there could be no consencus reached. The SYRIZA president asked Mr. Venizelos and Samaras to send letters to the EU and the IMF whereby they will withdraw their memorandum commitments, Ta Nea reported.

In his upcoming talks to explore whether he will be able to form a  coalition with parties of the left and parties representing , the 38 year old head of SYRIZA laid out the five points that will be the focus of discussions including:

-Immediate cancellation of the measures of the memorandum and especially pension and salary cuts

-Cancellation of laws that eliminate basic labor rights

-immediate abolition of a law granting MPs immunity from prosecution, reform of the electoral law and a general reform of the political system.

-Investigation the banking system. He asked for BlackRock’s report to be publicized

- Setting up of an international auditing committee to investigate the causes of Greece’s public deficit

SYRIZA won an unprecedented 16.78 percent of the vote on Sunday but would still need the support of either ND or PASOK to form a majority government. It has the option of forming an administration with just 120 MPs rather than 151 but the government would need to pass a vote of confidence, according to Katihmerni.

Prospects show that Tsipras will be unable to reach any agreement by Thursday, leading to PASOK taking over the mandate to form a government. After that, Papoulias will call in the party leaders to try to reach a deal. If that fails, new elections will be called.

This is clearly reflected in the campaigns of the two major parties that focused on branding techniques, putting the two politicians in the middle of their messaging systems. As specialists in both parties missed the opportunity to offset austerity measures by suggesting policies that could improve every daily life of citizens, so did campaign managers who decided to focus on ‘governmentability’ and ignore simple solutions that citizens could keep in their minds when they will approach the ballot box.

In this respect, current election campaigns seem to aim at the survival of the old, presenting parties engaged in a crisis-generated power game. They focus on party leaders, instead of issues and they still use old tools to deal with an unprecedented situation. What’s more, they continue to resist modernisation of party structure and culture.

Analysing the persuasion system adopted during the pre-election period, certain things are more than evident; for instance: bespoke solutions for citizens’ real problems remain absent from the campaigns of major parties; moreover, analysis of policies misses anecdotes and case studies, and has no reference to specific results.

Campaigns tend to focus more on the need for a mandate, instead of adopting honest and engaging approach. “Give me strength to change everything”, says ND leader Antonis Samaras, echoing the exact wording of George Papandreou in 2009. Furthermore, the mobilisation of voters is still attempted through open rallies, whereas populism and conspiracy theories thrived.

According to experienced pollsters, the situation three days before the elections has not changed as compared with the trends explored before the ban of the opinion polls. There are no differences in the election trends. There is a large figure of undecided voters, around 30%, of whom only a third feel they have to choose between the two major parties. The bulk majority is still looking for a small party to cast their votes; and this time, their options are many.

Strong government or non-governance? Pollsters agree that the two major parties have failed to push this dilemma to voters. ND and PASOK need at least 38% of the cumulative vote to secure 151 seats in Parliament. If they fail to reach this minimum, conventional thinking says a real political crisis could follow that might lead to the deconstruction of political parties, leadership change and a period of turmoil. Only one opinion poll company supports this scenario so far.

In a closed session today, an experienced pollster described the following scenario: New Democracy wins the election and Samaras is handed the mandate; when he asks Venizelos for PASOK party’s support to form a coalition, the Socialists veto the Samaras Premiership. Then the mandate changes hands and Venizelos asks ND for support, suggesting a third person from the centre-right field to lead the government. This person’s identity could raise some interesting speculation. All sorts of negotiations depend on the dynamics that will be formulated by the difference between ND and PASOK and the performance of the smaller parties.

Pollsters agree also that a third political force should emerge to support a coalition between ND and PASOK. As an analyst put it, “one of the most bizarre things in this election is the lack of cooperation between Drasi (Stephanos Manos) and Democratic Alliance (Dora Bakoyannis). If an agreement was reached, they would surely have entered Parliament and would constitute an effective arbitrator in a ND-PASOK government scheme, much better than the role LAOS played in the Papademos government.

On May 6, two distinct electorate bodies in terms of age will appear over the ballot box. 75% of people under 45 of age will vote elsewhere but the two major parties, next to 40% of the people over the age of 50 that are expected to do the same.

This attitude more or less connotes the future of major political parties in Greece. It is no different than that of the newspaper readers that grow old with their favorite newspapers and when they die, are not replaced, since the next generation is already online.

The 2-party system seems unable to survive May 6^thwith dignity. Unless they decide to change the way they practice politics.

Dr. Demetris Kamaras is the Editor of AlYunaniya.com