Germany defends contested aid to Opel

25th September 2009, Comments 0 comments

Regulators are probing claims of a political carve-up in the Opel sale, with Belgium -- which risks seeing its factory closed -- joined by Britain, Poland and Spain in raising concerns.

Brussels -- The German government on Thursday defended controversial state aid to car maker Opel against a series of complaints, saying Germany would bear the brunt of European job losses.

"What we have done for Opel is good for all Europe (and) is good for Britain and Spain," said Peter Hintze, a junior economy minister in Chancellor Angela Merkel's coalition government.

"In absolute terms, Germany is absorbing the greatest number of job losses ... more than Britain and Spain combined," he added, as he arrived for meetings with European Union counterparts in Brussels.

Regulators are probing claims of a political carve-up in the Opel sale, with Belgium -- which risks seeing its factory closed -- joined by Britain, Poland and Spain in raising concerns at the talks.

Hintze said Berlin's offer of 4.5 billion euros (6.6 billion dollars) of state aid to Opel's planned new owners, Canadian auto parts group Magna International and Russia's Sberbank, would also give Opel's British sister company Vauxhall "a future."

According to details leaked to German media, Magna is poised to slash around 11,000 jobs from around 45,000 in Europe, including roughly 4,000 from some 25,000 in Germany.

Britain's Business Secretary Peter Mandelson -- a former EU trade commissioner -- has written to Competition Commissioner Neelie Kroes decrying "political intervention."

There are 4,700 workers at two plants under Opel's Vauxhall operations.

His comments came three days ahead of a German general election in which polls give Merkel a solid lead.

Germany has already extended a bridging loan worth 1.5 billion euros to keep Opel going until the takeover is completed but has also issued loan guarantees worth another three billion euros.

But Hintze also referred to September 15 talks with EU partners on joint financing plans.

He said Berlin wants "an equitable distribution of the load" and called for each country with Opel plants to contribute "proportionate to the economic weight of that state" and taking into account its total salary bill or employee numbers.

European Commission vice-president Guenter Verheugen said inspectors would examine not only German state aid, but incentives from "all those countries implicated."

Verheugen said officials would meet with the governments of those countries on October 7 to discuss Magna's plans, adding that those talks would form "the basis" of the commission's decision.

Hintze vowed that his government would respond to the commission "over the next fortnight."

Berlin is aiming for EU approval for completion of the sale by November 30.

A commission spokesman said its scrutiny would be thorough regardless of complaints.

"Will Mandelson's letter make any difference...? No, because we are doing it already," the spokesman said.

Thousands of car workers and supporters, including hundreds from Germany, protested on Wednesday at the Antwerp factory in northern Belgium where some 2,500 workers are threatened with the dole.

General Motors chief executive Fritz Henderson, whose board named Magna as preferred buyers, was quoted this week by a German automobile magazine as saying that "Antwerp is an option" for closure.

Hintze added that of all GM Europe's sites, the chances were "less favourable" for the Flanders site from the start, but stressed that the decision "is one for the company, not for the governments concerned."

Hintze's boss, German Economy Minister Karl-Theodor zu Guttenberg, was quoted by Dow Jones Newswires as saying Berlin was "not expecting a veto" to be the outcome of the EU deliberations.

"I'm hoping for a good European solution," he added during a visit to the Frankfurt Motor Show.

Sophie Estienne/AFP/Expatica

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