German economics minister Rainer Bruderle might be forgiven for permitting himself a wry smile this afternoon (16 June).
Today’s news Opel is to unilaterally withdraw all applications for loan guarantees – although sudden and unexpected in its abruptness – will give the minister quiet satisfaction.
Apparently riven with tension at the heart of its coalition – the two big beasts of the German government – liberal Bruderle and Christian Democrat chancellor Angela Merkel – have exposed fundamental differences of approach to providing financial assistance.
Naturally inclined not to have politicians sticking their beaks into private companies’ business, Bruderle has held out and held out against granting EUR1.3bn (US$1.6bn) in loan guarantees to Opel.
Merkel, on the other hand, is heading an administration staring at a significant amount of social unrest – in common with much of Europe – as a result of unpopular budgetary decisions.
But Opel employs vast amounts of people both directly and through the supply chain and is worth significant political capital. It was deemed worth underwriting by the chancellor, who, having been thwarted by her finance minister, encouraged the Länder [regional states] to become involved.
Bruderle remained impassive in the face of major pressure and a head of steam grew in Germany that as Opel’s parent GM was starting to enjoy healthier performance, it should be the one to fund any European restructuring.
A couple of lines from GM today indicate the economics minister has won the day. “It has been decided to fund the requirements internally. GM’s recently improved financial strength has also been a catalyst for making this decision,” noted the automaker.
Bruderle doesn’t appear the sort to crow but he might allow himself a small feeling of vindication.
Such battles form part of everyday coalition life – a situation the new UK government of orange and blue hues may about be about to discover.
And of course GM’s decision today allows the UK off a tricky hook. Widespread talk was of referring its own EUR330m loan guarantee to Vauxhall back to the treasury for further scrutiny.
The US giant has spared it the trouble. In the shootout it seems GM has blinked first.