Germany rejects EU complaints about Opel aid

Germany rejects EU complaints about Opel aid
Peter Hintze addresses the press. Photo: DPA
The German government on Thursday defended controversial state aid to car maker Opel against complaints by Britain and other European countries, saying Germany would bear the brunt of recently announced job losses.

“What we have done for Opel is good for all Europe (and) is good for Britain and Spain,” said Peter Hintze, a deputy economy minister in Chancellor Angela Merkel’s coalition government.

“In absolute terms, Germany is absorbing the greatest number of job losses… more than Britain and Spain combined,” he added as he arrived for meetings with European Union counterparts in Brussels.

EU regulators are probing claims of a political carve-up in the Opel sale, following a complaint by Britain to EU competition watchdogs over the state aid.

Hintze’s comments came three days ahead of a German general election in which polls give Merkel a solid lead.

He said Berlin’s offer of €4.5 billion of state aid to Opel’s planned new owners, Canadian auto parts group Magna and Russia’s Sberbank, would also give Opel’s British sister company Vauxhall “a future.”

According to details leaked to German media on Tuesday, Magna is poised to slash around 11,000 jobs out of around 45,000 in Europe, including roughly 4,000 out of some 25,000 in Germany and closing one factory in Belgium.

National and local Flemish authorities in the northern Belgian city of Antwerp have expressed their anger, with Spain also raising concerns and fears over job losses extending also to Poland.

Britain has 4,700 workers at two plants under Opel’s Vauxhall operations.

And Britain’s Business Secretary Peter Mandelson – a former EU trade commissioner – has written to Competition Commissioner Neelie Kroes arguing that Magna’s plans for Opel’s restructuring were too expensive and susceptible to “political intervention.”

But Hintze also referred to September 15 talks with EU partners at which participants agreed, according to his ministry, to explore joint financing plans.

He said Berlin wants “an equitable distribution of the load” and called for each country with Opel plants to contribute to the overall pot “proportionate to the economic weight of that state” and taking into account its total salary bill or employee numbers.

Germany has already extended a bridging loan worth €1.5 billion to keep Opel going until the takeover is completed, but has also issued loan guarantees worth another €3 billion.

Hintze said he would try to persuade colleagues from other countries that decisions reached by Berlin were taken on “purely economic grounds.”

Vowing his government would respond to the commission’s requests for details surrounding the aid and any attached conditions “over the next fortnight,” he said Berlin aimed for EU approval for completion of the sale by November 30.

European Commission vice-president Günter Verheugen said inspectors would examine not only German state aid, but incentives from “all those countries implicated.” And a Commission spokesman said formal objections from individual countries would make no difference to the thoroughness of its scrutiny to ensure compliance with state aid rules against political interference.

“Will Mandelson’s letter make any difference…? No, because we are doing it already,” the spokesman said.

Thousands of car workers and supporters, including hundreds from Germany, staged a protest on Wednesday at the threatened Opel factory in Antwerp, where some 2,500 workers are threatened with losing their jobs.

General Motors chief executive Fritz Henderson, whose board named Magna as preferred buyers, was quoted this week by a German automobile magazine as saying that “Antwerp is an option” for closure.

Hintze added that of all GM Europe’s sites, the chances were “less favourable” for Antwerp from the start, but stressed that the decision “is one for the company, not for the governments concerned.”

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