The World from Berlin 'The Idea of State Aid to Opel Is Absurd'

GM Europe was deeply disappointed when the German Economy Minister ruled out giving state aid to Opel on Wednesday. Just hours later, however, Chancellor Merkel said that the last word had not been spoken on the issue, launching the latest spat between the two coalition partners.

Chancellor Angela Merkel with FDP leader Guido Westerwelle (r.) and Economy Minister Rainer Brüderle.

Chancellor Angela Merkel with FDP leader Guido Westerwelle (r.) and Economy Minister Rainer Brüderle.

It's hard to keep track of the many points that divide rather than unite Germany's coalition partners. The automaker Opel has become a new focus of their squabbling this week, and the question as to whether German taxpayers should be digging into their pockets to help the US-owned company.

On Wednesday, Economy Minister Rainer Brüderle, a member of the pro-business Free Democrats (FDP) -- Chancellor Angela Merkel's junior coalition partner -- seemed to lay down the law on state aid to Opel. He announced that the company, a subsidiary of US giant General Motors, could not expect any loan guarantees from the so-called Germany Fund, set up to help firms hit by the economic crisis.

But just a few hours later, Merkel, who heads the conservative Christian Democrats, seemed to call her minister's authority into question, saying "the last word had not been spoken" on aid for the company, which employs 25,000 people in Germany. She said she would be meeting with the governors of the four states that are home to the Opel factories on Thursday to look at alternative ways to help the company.

"In the talks with the governors I will do everything so that those employees who have made every effort to keep Opel going will receive any possible aid and support that we have at our disposal," she said.

General Motors had asked Germany for a loan guarantee of €1.1 billion ($1.3 billion) to help it restructure the company. Last October the Detroit auto giant unexpectedly pulled the rug from under a deal carefully brokered by Merkel to sell Opel to the Canadian auto parts supplier Magna. At the time she had been prepared to finance the deal with €4.5 billion in German state loan guarantees.

After hearing of Brüderle's comments on Wednesday, GM Europe boss Nick Reilly said that the company was "naturally very disappointed. … We've spent a long time answering many, many hundreds of questions being reviewed by many, many committees," he told reporters. "I don't particularly understand the reasons why," he said, adding that he would speak to GM about possible other funding options.

Brüderle's decision came just 48 hours after Berlin announced a huge austerity program, aimed at reducing public spending by €80 billion over the next four years, something leading FDP politicians were quick to point out on Thursday.

"We cannot on the one hand make saving appeals to the German people and at the same time come to the aid of a company that has a liquidity of €10 billion," said Otto Fricke, budget spokesman for the FDP parliamentary group said. The party's deputy floor leader, Patrick Döring, lashed out at Merkel. "I find the reaction of the chancellor and the governors difficult to understand," he told Reuters, saying that a bid to find another way of providing state aid had "nothing to do with responsible economic policy."

On Thursday German newspapers mull the latest spat in Berlin's cranky coalition and most argue in favor of Brüderle's decision.

The center-left Süddeutsche Zeitung writes:

"Opel cannot receive money from the Germany Fund because it is only intended for companies that have run into difficulties as a result of the economic crisis. That Economy Minister Rainer Brüderle did not make an exception here is the good news, even if the 25,000 Opel workers might not like to hear it. However, the bad news for Brüderle is that just two hours after his decision the chancellor affronted him in public. Angela Merkel now wants to look for other forms of public aid, along with the states."

"Brüderle was always against loan guarantees for the automakers -- and rightly so. Opel had problems long before the crisis. The auto industry is plagued by the fact that too many cars are rolling off the conveyor belts. State aid would only delay an adjustment of the market and put other manufacturers at a disadvantage. And no one can guarantee that the state money won't go to waste and that Opel factories would not close anyway in a few years."

"Brüderle is, therefore, both a winner and a loser after this decision. A winner because he has stuck to his guns and not allowed the Germany Fund to provide the money. And a loser because the chancellor is circumventing him and looking to release money elsewhere. If Merkel had actually insisted that the money come from the fund, then Brüderle would have had no choice but to resign. However, the last thing the chancellor needs at the moment is another resignation."

The left-leaning Die Tageszeitung writes:

"After months of stalemate this would have been the worst possible moment for giving aid to Opel. Right after its savings package, the government would be facing questions about how it could introduce sweeping cuts to welfare, parental pay and other social services and then a few days later throw a huge part of the money saved at an automaker that is not sustainable."

"The fact that parent company GM made a profit in the first quarter of $865 million, and that it has plenty of liquidity, makes the idea of state aid to Opel absurd. Nevertheless, the state governors with Opel factories are beating at the door of the Chancellery. It is good that the FDP and its brilliant Economy Minister Brüderle has taken a stand against the Opel billions. There could actually be a historic decision against an auto company, in the car stronghold of Germany, and against the naked blackmailing by General Motors."

The center-right Frankfurter Allgemeine Zeitung writes:

"Brüderle's decision is neither good nor bad … it is simply right. Opel was already in trouble before the economic crisis and it belongs to General Motors, which decided to keep it as a subsidiary. That is where questions about its future should be addressed -- the German taxpayers have nothing to do with it. Thursday will show how much value is placed on the minister's vote. The summit at the Chancellery is not just a stress test for Opel but also another one for the coalition partners."

-- Siobhán Dowling


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