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September 1, 2009

OPEL UPDATE: EU warns Germany on aid

The European Union has reminded the German government that any state aid for GM's Opel subsidiary could not be conditional on saving German jobs.

The European Union has reminded the German government that any state aid for GM’s Opel subsidiary could not be conditional on saving German jobs.

Such state aid “cannot be subject to additional non-commercial conditions concerning the location of investments and on the geographic distribution of restructuring measures,” EU Commission spokesman Ton Van Lierop said.

“While the EU should aim to keep as many people as possible in jobs, national aid measures within this framework must not affect the freedom of manufacturers to develop their activities in the internal market,” he said.

His comments reinforced those made by EU commissioners for enterprise and industry, competition and employment in May.

German foreign minister Frank-Walter Steinmeier told a Sunday newspaper that “German taxpayers’ money is given only for a scheme which keeps all four of Opel’s German sites open and offers them a good future.”

Berlin has said that it favours the bid by Canadian auto parts maker Magna, along with Russian privately-owned autobuilder GAZ and state-owned lender Sberbank, to take over Opel, which includes Vauxhall in Britain and employs 50,000 people, half of them in Germany.

But GM is said to favour the bid by Belgium-based investment company RHJ International.

German chancellor Angela Merkel, facing elections at the end of the month, said last week that she hoped for progress on the future of Opel “at the latest” before a GM board meeting on 8-9 September.

Both Magna and RHJ want to slash around 10,000 jobs at Opel but Merkel and the state governments where Opel has factories prefer Magna because less of the cuts would occur in Germany than under RHJ’s proposals.

The EU warning added a new twist to the negotiations since Steinmeier, who will run against Angela Merkel next month for the chancellorship, said at the weekend that the state will take part in the rescue of Opel only if German interests are considered.

Meanwhile, Der Speigel reported that GM wants Sberbank and GAZ excluded from the Magna consortium without saying where the information came from.

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