Opel crisis puts Merkel in a predicament

General Motors's fight to stay alive is creating a storm in Germany, with the fate of Opel putting Chancellor Angela Merkel between a rock and a hard place six months before elections.

Opel crisis puts Merkel in a predicament
In or out, Angie? Photo: DPA

The conservative Merkel, in power since 2005, has two choices: spending billions of euros in taxpayers’ money on rescuing GM’s German unit, or letting Opel fail and putting 26,000 people out of work.

GM Europe leaders were in Berlin on Monday to argue their case with Economy Minister Karl-Theodor zu Guttenberg, presenting him with a restructuring proposal that includes €3.3 billion ($4.2 billion) in public aid.

The bailout, which could come in the form of state-backed loan guarantees or even a partial nationalisation, would see Opel stand on its own two feet and survive as a separate entity – whatever happens to its parent company.

GM said last month it could need up to another €22.6 billion in US government loans to survive the economic downturn and announced plans to slash 47,000 jobs worldwide in a last-ditch attempt to survive.

Slammed by the global recession, the once-mighty Detroit giant posted a loss for 2008 of more than €30 billion, bringing the tally from the last four years to a whopping €86.6 billion.

GM also owns Saab, Cadillac and Chevrolet and operates plants in Belgium, Spain and Britain – the latter under the Vauxhall brand. Some of the aid that it is seeking would come from these countries.

But Germany, Europe’s biggest economy, is where GM has its main operations, with Opel accounting for nearly half of GM’s 55,600 employees in Europe – operations which Opel says are viable.

Ironically, GM bought Opel, a German industrial icon since the 19th century, at another time when the global economy was in dire straights – in 1929, the year of the Wall Street crash.

Merkel, whose country, like the United States, is highly dependent on the automobile industry for jobs and exports, is not just faced with problems at Opel.

Some 750,000 people in Europe work in the struggling auto sector, not just for car makers like BMW or Volkswagen, but for parts makers like Bosch or Continental and other related sectors.

With many of these companies reporting plunging sales, laying off workers, stopping production and warning on profits, Berlin is coming under pressure to help not just Opel but others too.

And it is not just automakers. Other sectors are feeling the pinch as Germany heads into its worst recession since World War II and as banks remain tight-fisted about lending cash.

“There are plenty of small firms that would never have the idea, even in their dreams, to go to Merkel with their money problems,” Kai Carstensen, chief economist at the Ifo instititute in Munich, told AFP. “It would be unjust to say ‘Opel can have something but not the others’,” Carstensen said.

By helping Opel, the government would leave itself open to accusations of “throwing its economic principles overboard,” said Christian Dreger from the DIW economic research institute in Berlin.

But September 27’s election is looming ever larger on the horizon, and the need to win votes and secure a second term may trump Merkel’s commitment to free-market economics.

Her CDU/CSU party is currently in a “grand coalition” with the centre-left Social Democrats, and in September both want to end this unhappy marriage and form a government with a party more to their liking.

Merkel’s personal popularity rating is high but the same cannot be said of her party, whose rank and file are appalled by the prospect of nationalisations.

“She remains very popular as chancellor, but for her party the CDU this is a catastrophe,” believes Manfred Guellner, director of the Forsa polling institute.


Sleep, seaside, potato soup: What will Merkel do next?

 After 16 years in charge of Europe's biggest economy, the first thing Angela Merkel wants to do when she retires from politics is take "a little nap". But what about after that?

Outgoing German Chancellor Angela Merkel briefly closes her eyes and smiles at a 2018 press conference in Berlin.
Outgoing German Chancellor Angela Merkel briefly closes her eyes at a 2018 press conference in Berlin. Aside from plans to take "a little nap" after retiring this week, she hasn't given much away about what she might do next. Tobias SCHWARZ / AFP

The veteran chancellor has been tight-lipped about what she will do after handing over the reins to her successor Olaf Scholz on December 8th.

During her four terms in office, 67-year-old Merkel was often described as the most powerful woman in the world — but she hinted recently that she will not miss being in charge.

“I will understand very quickly that all this is now someone else’s responsibility. And I think I’m going to like that situation a lot,” she said during a trip to Washington this summer.

Famous for her stamina and her ability to remain fresh after all-night meetings, Merkel once said she can store sleep like a camel stores water.

But when asked about her retirement in Washington, she replied: “Maybe I’ll try to read something, then my eyes will start to close because I’m tired, so I’ll take a little nap, and then we’ll see where I show up.”

READ ALSO: ‘Eternal’ chancellor: Germany’s Merkel to hand over power
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‘See what happens’
First elected as an MP in 1990, just after German reunification, Merkel recently suggested she had never had time to stop and reflect on what else she might like to do.

“I have never had a normal working day and… I have naturally stopped asking myself what interests me most outside politics,” she told an audience during a joint interview with Nigerian writer Chimamanda Ngozi Adichie.

“As I have reached the age of 67, I don’t have an infinite amount of time left. This means that I want to think carefully about what I want to do in the next phase of my life,” she said.

“Do I want to write, do I want to speak, do I want to go hiking, do I want to stay at home, do I want to see the world? I’ve decided to just do nothing to begin with and see what happens.”

Merkel’s predecessors have not stayed quiet for long. Helmut Schmidt, who left the chancellery in 1982, became co-editor of the weekly newspaper Die Zeit and a popular commentator on political life.

Helmut Kohl set up his own consultancy firm and Gerhard Schroeder became a lobbyist, taking a controversial position as chairman of the board of the Russian oil giant Rosneft.

German writer David Safier has imagined a more eccentric future for Merkel, penning a crime novel called Miss Merkel: Mord in der Uckermark  that sees her tempted out of retirement to investigate a mysterious murder.

German Chancellor Angela Merkel forms her trademark hand gesture, the so-called “Merkel-Raute” (known in English as the Merkel rhombus, Merkel diamond or Triangle of Power). (Photo by Tobias SCHWARZ / AFP)

Planting vegetables
Merkel may wish to spend more time with her husband Joachim Sauer in Hohenwalde, near Templin in the former East Germany where she grew up, and where she has a holiday home that she retreats to when she’s weary.

Among the leisure activities she may undertake there is vegetable, and especially, potato planting, something that she once told Bunte magazine in an interview in 2013 that she enjoyed doing.

She is also known to be a fan of the volcanic island of D’Ischia, especially the remote seaside village of Sant’Angelo.

Merkel was captured on a smartphone video this week browsing the footwear in a Berlin sportswear store, leading to speculation that she may be planning something active.

Or the former scientist could embark on a speaking tour of the countless universities from Seoul to Tel Aviv that have awarded her honorary doctorates.

Merkel is set to receive a monthly pension of around 15,000 euros ($16,900) in her retirement, according to a calculation by the German Taxpayers’ Association.

But she has never been one for lavish spending, living in a fourth-floor apartment in Berlin and often doing her own grocery shopping.

In 2014, she even took Chinese Premier Li Keqiang to her favourite supermarket in Berlin after a bilateral meeting.

So perhaps she will simply spend some quiet nights in sipping her beloved white wine and whipping up the dish she once declared as her favourite, a “really good potato soup”.