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September 14, 2009

OPEL AFTERMATH: Trustee’s Russia fear over state aid

An Opel trustee fears that hundreds of millions of euros in German state aid intended for Opel is earmarked for operations in Russia.

An Opel trustee fears that hundreds of millions of euros in German state aid intended for Opel is earmarked for operations in Russia.

Dirk Pfeil told Frankfurt Allgemeine Zeiting that over EUR600m (US$876m) of the EUR4.5bn German government aid will be used to modernise the Russian automotive industry, according to the Magna plan.

He fears German expertise and jobs will be transferred to Russia. General Motors agreed last week to sell a 55% stake in Opel to Canadian supplier Magna International and Russia’s state lender Sberbank. Russia’s second largest domestic automaker GAZ is an industrial partner.

The Opel Trust – set up by Germany to oversee a 65% stake in Opel and keep it from being sucked into GM’s brief bankruptcy proceedings – approved the sale when Pfeil abstained in a vote despite misgivings about the transaction.

State aid to Opel is a hot topic amid concerns that German jobs and plants may get preferred treatment over other countries in Europe such as Britain and Belgium that also host GM factories.

Magna and its Russian partners propose cutting around 10,000 jobs in Europe in a drive to restore the company to profit from 2011. Half of Opel’s 50,000 staff work in Germany.

The Frankfurter Allgemeine Sonntagszeitung quoted a Magna spokesman as saying around 10,500 jobs would now go in all, of which 4,500 would be in Germany. Two thirds of the cuts would target assembly line workers and the rest white collar staff.

Separately Handelsblatt reported that Russian prime minister Vladimir Putin wanted his country’s engagement in the rescue of Opel to be the first of many large-scale cooperation projects with Europe.

Putin told reporters: “This precisely defined procedure could be the prototype for other projects.” He added that Russia was prepared to work together with Europe in aerospace projects such as military transport planes and antiaircraft missile technology, saying: “cooperation builds mutual trust, and that is the most important in security issues.”

Magna co-chief says EUR600m claim “not correct”

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