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September 18, 2009

OPEL: Berlin defends state aid as UK complains

German chancellor Angela Merkel has defended her government's decision to aid Opel, sparking accusations of protectionism.

German chancellor Angela Merkel has defended her government’s decision to aid Opel, sparking accusations of protectionism.

“We are naturally determined to resolve the remaining problems in a spirit of European equality,” Merkel said, officially opening the Frankfurt motor show ahead of the public days.

“If we had not intervened with a bridging loan when General Motors (GM) declared bankruptcy, many Europeans would have been in trouble. It was mutually beneficial,” she said.

“Europe must not let Berlin pay for job cuts to go elsewhere,” the Financial Times thundered as it looked increasingly likely Belgium would lose the GM Europe plant in Antwerp and there were growing doubts over the long-term future of one of two UK Vauxhall factories.

Belgium has asked European leaders to examine the deal and might file a complaint with the European Commission, AFP reported.

Prime minister Herman Van Rompuy has raised the issue with Merkel.

“I explained to her the feelings and active fears being expressed in Belgium,” he said.

In Spain, where a demonstration is planned near the Opel plant in Zaragoza, industry minister Miguel Sebastian said: “We always felt… that Magna was not the best alternative.”

Successful Opel majority shareholding bidder Magna hopes to ink a final deal as early as October and  wants to dump 10,500 of the 50,000 jobs at Opel and Vauxhall, including 4,000 in Germany, while pledging not to shut down any German plants.

Opel boss Hans Demant retorted: “There are lots of people who are giving their opinion at the moment, and most have no idea what they are talking about.”

Meanwhile, Britain’s business minister has called on the European Commission to ensure German aid to Opel does not spark a “subsidy war”.

Peter Mandelson told the Financial Times the European Commission should “refuse to accept plant closures and restructuring that reflect the size of the cheque-book rather than commercial considerations.”

“State aid rules are probably our most important check against a subsidy war between governments pressured to protect jobs during a recession,” Mandelson added.

Aides to the secretary told the paper he wanted to send a “clear warning” to Brussels that Britain would fight to prevent any deal that allocates Magna’s job cuts on the basis of state aid.

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