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euros in state aid to support the sale of General Motors' loss-making
European unit Opel/Vauxhall. In a preliminary deal announced in
Berlin with great fanfare on September 10, GM is selling a 55-per
cent stake to Canadian auto parts maker Magna and Russian state-owned
lender Sberbank. Chancellor Angela Merkel's government, keen to
safeguard the jobs of Opel's 25,000 German employees, half the total,
agreed to sweeten the deal with 4.5 billion euros' ($6.6b) worth of
public money. Merkel, Forbes magazine's most powerful woman on the
planet for four years running, was eager to secure a rescue before
elections on September 27. She duly won a second term. The
financing was contingent, however, on other European governments
where Opel has plants, such as Britain, Spain, Poland and Belgium,
stepping up to the plate and providing their own taxpayers' money
too. But instead, the deal has been met with grumbling, with these
countries unwilling to stump up cash for a deal that they see as only
guaranteeing German jobs and keeping German plants up and running.
With Opel losing money fast, dependent on a market where too many
cars are being made for too few customers, Magna is reported to be
looking to take around 10,500 workers off the payroll. British
prime minister Gordon Brown's government, which has a far tougher
re-election battle than Merkel waiting for it next year, has made
clear that it is not amused. Peter Mandelson, British business
secretary, told the Financial Times in Seoul last Thursday he could
not 'sign off' on the deal in its current form, citing 'shortcomings'
identified in an independent auditors' report. Britain, where
Vauxhall employs 4,700 people, is ready to provide 400 million euros
in loan guarantees, but first wants assurances that two plants in
Luton and Ellesmere Port remain open, the FT said. Spain, where
Opel employs 7,000 people in Zaragoza province, has also been up in
arms, with industry minister Miguel Sebastian boycotting a European
meeting on Opel in Berlin on Friday.
