Opel talks

German Finance Minister Peer Steinbrueck confirmed the decision early on Saturday morning after marathon talks in Berlin between top German politicians, US government officials and representatives from both General Motors and Magna.

The plan aims to rescue GM's European subsidiaries from the US carmaker's anticipated bankruptcy. Magna has said it will slash some 10,000 jobs across Europe, including 2,500 in Germany.

The German government is expected to provide a 1.5 billion euro bridging loan for the Magna takeover bid.

Talks to secure the future of Opel had taken a bad turn in recent days. Negotiations between the German government, General Motors, Magna and Fiat, which had run from Wednesday evening into the wee hours of Thursday, ended acrimoniously and without result. Friday began with the news that Fiat was rescinding its offer. Monday's probable GM bankruptcy filing was looming large.

So, it was with some relief that German Economics Minister Karl-Theodor zu Guttenberg came to the press before the meeting in the chancellery with a positive development.

"Magna has made a new presentation," he said. "They're in negotiations with GM, and we are inspecting the offer as well. That's not to say that we'll come to a decision today – it's a plan that we'll have to submit to some scrutiny, and should look over carefully."

Deciding factor

The deal first came to light in media reports indicating that Magna and GM had come to a tentative agreement late Friday. A deciding factor in closing the deal was said to be whether the parties could get a green light from Berlin in order to secure the 1.5-billion-euro bridging loan.

The initial details of Magna's offer were not made public, but German Vice-Chancellor Frank-Walter Steinmeier reportedly brokered the deal in meetings between Magna and GM.

The sticking point in negotiations on Wednesday and Thursday was a last-minute request from GM for 300 million euros worth of new help in covering debts. It was a request that drove Fiat from the negotiating table. CEO Sergio Marchionne said it was "unreasonable to provide Opel with emergency funds while the government decides the timing and conditions of that financing," adding that it would expose his company to "unnecessary and unwarranted" risks.

Political math

The unexpected new 300-million-euro request upset German government representatives, as well. The North Rhine-Westphalia State Premier called the negotiating tactic "unacceptable," and Guttenberg, the German Economics Minister, said he was strictly against providing any funds to GM until a deal has been finalized.

"The goal of the Americans is to get as much money as they can from the Europeans," Guttenberg said. "My goal is to prevent German taxpayers' money from flowing to the United States."

Another politician, Roland Koch, who is premier of the German state where Opel is headquartered, said, however, that for him, such hardball tactics reinforced how valuable Opel was. He said an appraisal of GM's assets six months ago showed its European operations comprised nearly half of the company's worth, and Berlin shouldn't expect the Americans to give it away.

"We can't expect charity," said Koch. "There's nobody over there who's looking out for Europe. It's simply in the concrete economic interest of GM to try and maintain a footprint in Europe. But, we do expect them to attempt to keep to our timetable."

Unease in Brussels

That Germany has its own timetable and plan for Opel, and that it is hoping to enforce it, has ruffled a few feathers in Brussels, where European Commission President Jose Manuel Barroso presided over a discussion about the future of Opel on Friday.

Belgium, in particular, is upset that it has been left out of the decision-making process. It believes Berlin is looking after the future of its Opel plants, and is going to show less concern for those in Belgium and elsewhere in Europe.

German Deputy Economics Minister Peter Hintze, who represented Guttenberg in the discussions in the Belgian capital, tried to allay their concerns, saying the German government was pursuing "a European strategy," and that any forthcoming financing from the German government could be spent on any work site in Europe.

"What we are doing will have a positive effect for all of Europe," he said.

Author: Matt Hermann

Editor: Rick Demarest