GM’s Sale Of Opel Roils Europe

The GM bankruptcy or anticipated bankruptcy (it’s supposed to be announced at 8 AM tomorrow) is actually moving along pretty smoothly in this country. Not so in Europe where the sale of its Opel subsidiary is roiling governments.

A quick recap. After it looked like Fiat had the inside track on Opel a consortium of a Russian government owned bank, an auto parts manufacturer GM and the employees of Opel ended up being the buyers. Magna International (20% interest), the parts manufacturer and an Austrian-Canadian owned company, Sberbank (35% interest), the Russian government owned bank, GM (35% interest) and Opel employees (10% interest) are going to be the new owners. The German government is putting up 4.5 billion euros in loan guarantees and bridge loans to get the whole thing off the ground.

That’s where the problems in Germany crop up. A conservative member of German Chancellor Angela Merkel’s cabinet has been raising holy hell about the loans. He contends that the company should have been put into receivership and then brought back out at far less cost. This is of a piece with the mentality of the Germans throughout the economic crisis. They have been highly reluctant to dedicate state funds towards fiscal stimulus or bailouts, preferring instead to hew to their conservative fiscal philosophies.

In Italy, politicians are having a hissy fit about Fiat losing the deal and falling all over themselves to point fingers and assess blame. Meanwhile, European countries in which Opel maintains manufacturing facilities are sweating out the fate of those factories. The fear is the Russians will use their leverage to close European facilities and move the manufacturing operations to Russia. Germany has an agreement that prohibits Russia from doing that to them but that agreement extends no further.

Ironic isn’t it that in the supposedly most free market of all — the U.S. — the effective nationalization of a major slice of the economy elicits very little turmoil while the Europeans are running around in circles over a small piece of the pie. Draw your own conclusions.

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