Opel rescue
September 24, 2009
European Union industry ministers met in Brussels on Thursday to discuss Germany's controversial rescue of Opel, amid fears the plan will hurt jobs in other European countries.
Germany defended its state-backed takeover of Opel by Austrian-Canadian automotive group Magna, saying Berlin would shoulder the majority of European job losses.
"What we have done for Opel is good for all Europe (and) is good for Britain and Spain," said German Economy State Minister Peter Hintze at the meeting.
"In absolute terms, Germany is absorbing the greatest number of job losses…more than Britain and Spain combined," he added.
However, British Business Minister Peter Mandelson is not convinced, and expressed his concerns over Magna's purchase of Opel in a letter to EU competition watchdogs.
"We do not believe the case has been demonstrated that the current Magna proposal is commercially the most viable plan," Mandelson wrote in the letter, extracts of which appeared in the Financial Times on Thursday.
In addition, Mandelson called on the EU Commission in Brussels to guarantee "a commercially based outcome rather than one determined by political intervention and subsidies."
Earlier this month General Motors agreed to sell a 55 percent stake in its European subsidiary Opel to Magna and its Russian partner Sberbank - an outcome which the German government had supported.
Berlin has promised up to 4.5 billion euros ($6.6 billion) in loans and credit guarantees to help keep Opel afloat, but many EU ministers are now fearful that the rescue will unfairly protect jobs in Germany at the expense of those in other European countries.
The company employs around 45,000 staff in Europe, with more than 25,000 in Germany. The other Opel plants are in Belgium, Poland, Spain, and Austria. Its sister company Vauxhall is in Britain. Magna has previously said it may slash up to 11,000 jobs in Europe as part of its restructuring plan.
On Wednesday, the EU Commission said it would review Germany's rescue plan to ensure it complies with EU rules.
Despite EU skepticism, German Economy Minister Karl-Theodor zu Guttenberg said he expects the EU to sign-off on the plan.
"We are not expecting a veto from the European Commission," zu Guttenberg said while attending the Frankfurt car show. "I'm hoping for a good European solution."
vj/AFP/dpa/Reuters
Editor: Michael Lawton