As vote looms, Germany welcomes Russian investment

1st June 2009, Comments 0 comments

The bid is being bankrolled by Russia's state-owned Sberbank, which would gain a 35 percent stake in Opel.

Berlin -- Germany is relying in no small part on Russian capital to save one of its major employers, the carmaker Opel, an unprecedented move driven by one reason -- an approaching general election.

Finance Minister Peer Steinbrueck announced over the weekend that Canadian auto parts maker Magna International would take over Opel from General Motors, which is expected to file for bankruptcy protection in the United States on Monday.

The bid is being bankrolled by Russia's state-owned Sberbank, which would gain a 35 percent stake in Opel.

"Money doesn't smell at election time," said Andrew Wilson of the European Council of Foreign Relations.

With the September 27 general election rapidly approaching, safeguarding as many of the 25,000 jobs at Opel as possible has become a priority for the government of Chancellor Angela Merkel.

No Russian company has ever been invited to step in to rescue a company in Germany, which remains suspicious of foreign investors.

Since 2008 the German government has the right to veto any purchase of a stake 25 percent or more in German companies by funds linked to foreign governments.

In 2007 it quashed interest by the Russian conglomerate Sistema in a tie-up with Deutsche Telekom, Europe's biggest telecommunications operator.

But the case of Opel is fundamentally different, said Hans-Henning Schroeder of the German Institute for International and Security Affairs.

"Opel is certainly a strategic enterprise, but it is only one of four German automakers and is neither the biggest nor most important," Schroeder said.

"The most important thing as elections approach is the jobs -- and if Sberbank is ready to inject the money, one is inclined to accept."

Sberbank is bankrolling Magna's bid, which forsees investing 700 million euros into Opel.

Under the deal it would get a 35 percent stake in Opel, more than the 20 percent stake that Magna would obtain, and the same as General Motors will retain in the company. Opel's employees will own the remaining 10 percent.

"In this case, any offer of assistance would be welcome," Wilson said.

Russian investors are already present in several sectors of the German economy, including energy and shipbuilding.

Trade has become important for the two countries. Germany -- widely regarded as the locomotive of Europe's economy -- has become increasing dependent on Russian gas.

Russia in turn has become the biggest market for German exports, which are important in the country's efforts at economic modernisation.

According to Schroeder, Berlin was interested in Sberbank becoming a long-term investor in Opel.

The deal also coincides with the interests of the Kremlin, which wants to save domestic carmakers from foreign competition.

Under the plans Opel will tie-up with Russia's number-two carmaker, GAZ.

Citing sources close to the deal, Russian business daily Vedomosti has reported that the consortium would aim to produce 180,000 Opel cars at GAZ's Nizhny Novgorod plant, which was recently retooled by Manga.


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