Could Politics Derail GM Europe Deal?

(page 2 of 2)

Mandelson stressed that it was important that the European Commission "not accept anything that looks like a political fix or any linkage between aid and retention of jobs in any specific plant or country."

Opel Trustee Criticizes German Government's Handling

It wasn't all quiet on the German front either. Over the weekend, newspapers reported that Magna would be cutting more jobs from Germany's Opel plants than had previously been expected—around 4,500 rather than somewhere between 2,500 and 3,000.

Additionally, Dirk Pfeil, one of the trustees that had been working on the Opel Trust, established by the German government to look after Opel's affairs when GM went into bankruptcy, made some negative remarks about the Magna deal. On Saturday Pfeil, who is a member of the opposition Free Democratic Party and a bankruptcy administrator, told an interviewer from radio station Deutschlandfunk that, if he "had known that it would be a political decision rather than an economic one," he would never have had anything to do with it.

Pfeil told Frankfurter Allgemeine on Monday that, according to Magna's plan, over €600 million of the state aid being promised to Opel would be heading straight to Russia, where it would be used to help modernize the aging and outmoded Russian auto industry. "This means that German technology will be going to Russia—which will mean redundancies in Germany at a later date anyway," he said. Pfeil, who was so opposed to the Magna deal that he abstained from the vote on it, also said that he felt the development of Russian markets was being seen in far too positive a light. In remarks that further damned the German government, Pfeil told Bild newspaper that "the sale to Magna is an example of exactly the kind of aggressive industrial politics that Germany is always being criticized for—and rightly so."

Other German politicians were quick to defend the Magna deal. Thomas Schäfer, a member of the German government's Opel Task Force and a representative of the four states in which Opel has plants, told German news agency dpa that Pfeil's comments were "irritating" and incorrect. According to the very detailed contracts, Schäfer said that the transfer of Opel technology to Russia would only be possible with GM's agreement. And this would doubtless be carefully regulated, he explained.

Chancellor Angela Merkel also weighed in on the debate over the weekend. She denied in an interview with Süddeutsche Zeitung on Saturday that Opel was being bailed out with German taxpayers' money. "We don't rescue companies, we are simply giving them a chance to survive the financial crisis," she said.

Whether Merkel's argument washes with the EU commission on competition, which is clearly under pressure from other member states now, remains to be seen. Kroes, the competition commissioner, has already said that state support should not be tied to factory locations.

And according to SPIEGEL, commission staff pouring over the documents that the German government and Magna have sent them have come across a number that could endanger EU approval of the state aid—it indicates that Opel's Antwerp plant is actually more efficient than the German plant in Bochum.

cis—with wires

Provided by Spiegel Online—Read the latest from Europe's largest newsmagazine

Business Exchange

Track and share business topics across the Web.