Mr. Guttenberg Goes to Washington: German Minister's Mission to Save Opel

Germany's Economy Minister Karl-Theodor zu Guttenberg is in the United States in an attempt to save struggling carmaker Opel. He wants both the US government and Opel's parent company General Motors to help dispel Berlin's concerns about a plan to rescue Opel.

Germany's Economy Minister Karl-Theodor zu Guttenberg has crossed the Atlantic in a bid to save Opel, the German subsidiary of troubled US carmaker General Motors. The minister is holding a series of talks on Monday and Tuesday with leading bankers, politicians and the GM management to clarify outstanding concerns in Berlin about the long-term viability of the German automobile manufacturer.

German Economy Minister Karl-Theodor zu Guttenberg, seen here in Berlin on Sunday before taking off for the US, is on a mission to save Opel.
DPA

German Economy Minister Karl-Theodor zu Guttenberg, seen here in Berlin on Sunday before taking off for the US, is on a mission to save Opel.

The German government was unconvinced by the rescue plan GM Europe submitted earlier this month, arguing that it left too many questions unanswered. The plan envisages spinning off Opel and the UK-based Vauxhall into a new subsidiary, which it says would require €3.3 billion ($4.2 billion) in state aid to be viable.

On Sunday before leaving for the United States, Guttenberg said "I hope GM and the US government will be ready to shed some light on the issue." One of the main concerns the minister will address is the ownership of patents and other intellectual property that Opel would need to continue operating. He will also sound out the willingness of GM and the US government to actually let go of Opel.

German Chancellor Angela Merkel is reluctant to throw such a huge amount of money at a company unless it stands a good chance of surviving the current downturn, which has severely affected the automotive sector. In particular, Berlin wants to avoid any state aid being somehow funnelled across the Atlantic to prop up Opel's troubled parent company.

The Obama administration's auto task force has until March 31 to determine whether GM and Chrysler are commercially viable. The companies received a $17.4 billion bailout last December and are now looking for another $22 billion.

The German government has made it clear that it is not interested in taking a direct stake in Opel and would like to see some third-party investor step into the breach. On Sunday, Chancellor Merkel, speaking on Deutschlandfunk radio, said: "If we can find an investor who makes clear he sees positive prospects for Opel in a European network, we will be able to see whether we can help with normal government instruments, such as guarantees."

Berlin is reported to be already talking to potential investors. "There are interested parties -- some serious, some not so serious," a member of Guttenberg's delegation said on Sunday in New York. However, investors are said to be put off by the fact that parent company GM does not seem to have a viable long-term business model.

Guttenberg will hold talks in New York on Monday with the heads of the investment banks Morgan Stanley, JP Morgan and Goldman Sachs, before meeting GM Chief Executive Rick Wagoner. On Tuesday he heads to Washington to meet with US Treasury Secretary Timothy Geithner and with Larry Summers, economics adviser to President Barack Obama.

Some differences have emerged in Germany's already fractious grand coalition over the issue of Opel. While Merkel's Christian Democrats (CDU) are largely more cautious about using government money to rescue a company the chancellor argues is not "system critical," the governors of the four German states where Opel factories are based, as well as Merkel's coalition partners the Social Democrats (SPD), are more vocal about protecting the 50,000 jobs that could be at stake if Opel and its suppliers were to fold.

On Sunday, Foreign Minister Frank-Walter Steinmeier, Merkel's SPD challenger in September's general election, pressed for a speedy decision on whether to bail out Opel. Speaking on the ARD TV channel, Steinmeier said that it was uncertain how long Opel's liquidity would last, concluding that "haste is what is required now."

Meanwhile, Roland Koch, the governor of the state of Hesse where Opel has its headquarters, has said that he had come up with his own plan for saving Opel. "My conception would be the creation of a new, European Opel in which a private investor takes a stake in addition to the current parent company, General Motors," Koch told SPIEGEL in an interview.

He proposed that if an investor could not find a bank to finance the investment, then the state and federal governments would step in with guarantees for the first two or three years. "He would have to bear the risk later," Koch, a member of Merkel's CDU, said. "We would just be building a bridge for him."

-- smd with wire reports

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