Thursday May 28, 11:29 AM
Germany blames US after Opel rescue talks collapse
By Simon Sturdee
BERLIN (AFP) - Talks aimed at saving General Motors Europe's Opel unit broke down amid acrimony between Germany and the United States on Thursday as fears mounted for tens of thousands of jobs across Europe.
The marathon negotiations were aimed at finding a suitable buyer for GM (NYSE: GM - news) 's struggling European operations, with the German government willing to offer billions of euros (dollars) in loan guarantees to any potential investor.
But at the last minute, GM and the US government said they needed an extra 300 million euros in temporary loans from the German government to keep Opel afloat, a tactic slammed by German Finance Minister Peer Steinbrueck as scandalous.
Speaking to reporters in the early morning, Steinbrueck said: "We were unpleasantly surprised when this new demand came out of the blue at 8:00pm local time (1800GMT). We found that pretty scandalous."
"GM again confronted us with new figures," said Economy Minister Karl-Theodor zu Guttenberg, adding that the US government "could have made more of an effort" with its choice of representative at the discussions.
"We have made a fresh request to the US Treasury and we expect a response before Friday," he said, calling Washington's input so far "marginal, to put it politely."
Steinbrueck also said that he did not want German government money to go "outside Europe's borders."
Roland Koch, the influential premier of the state of Hesse, where Opel's headquarters are situated, said the Americans had not provided sufficient guarantees that Germany would get its temporary loans back.
Speaking on local radio station "hr info," Koch said: "What the Americans are doing here is not acceptable. They are ignoring the situation in Europe and are trying to push through their own agenda."
A new round of talks is scheduled for Friday as Berlin races against time to find a preferred bidder ahead of GM's likely bankruptcy on June 1. Declaring Opel insolvent is also still an option, said zu Guttenberg.
In a key development on Wednesday, GM transferred assets and patents to Opel in a bid to keep them safe in the event of a GM bankruptcy.
Two bidders, Italian car giant Fiat (Milan: F.MI - news) and Canadian auto parts maker Magna International, remained in the race after a third bidder, Brussels-based investment firm RHJ International (Brussels: RHJI.BR - news) pulled out during the talks.
Magna's offer is still seen as the front runner, with unions and centre-left Social Democrat members of the governing coalition backing it.
It has teamed up with Russia's top bank, state-controlled Sberbank, for a bid that would see precious metals tycoon Oleg Deripaska's truck company GAZ making Opel vehicles in Russia.
For its part, Fiat wants to combine General Motors' European and Latin American operations with Chrysler (Xetra: 710000 - news) , in which it has secured a 20-percent stake, to create the world's second largest automaker after Toyota of Japan.
Merkel is under pressure from all sides to find a way to break the deadlock, with some 25,000 German jobs at stake just four months before the country goes to the polls.
Berlin also came under fire from other European countries on Wednesday with Britain and Belgium pressing Germany not to strike a deal that would protect German workers at the expense of employees elsewhere.
The European Commission in Brussels called for a meeting of European finance and industry ministers on the issue "as soon as possible."
55,000 people Europe-wide, including around 7,000 in Spain, 4,700 in Britain at Vauxhall, 4,000 in Sweden at Saab (Stockholm: SAABB.ST - news) , 3,600 in Poland, 2,600 in Belgium and 1,800 in Italy.
Although the final decision on the fate of GM's European operations lies with the company itself and the US government, Germany has a key role to play as it is stumping up a good deal of the cash to keep the factories going.
An eleventh-hour "expression of interest" by a Chinese firm, Beijing Automotive Industry Holding, was still under consideration, but German officials made clear the Chinese offer was not a formal bid and that their focus was on Magna and Fiat.
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