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EUROPEAN UNION

Germany rejects EU complaints about Opel aid

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.

Germany rejects EU complaints about Opel aid
Peter Hintze addresses the press. Photo: DPA

“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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EUROPEAN UNION

The Euro celebrates its 20th anniversary

The euro on Saturday marked 20 years since people began to use the single European currency, overcoming initial doubts, price concerns and a debt crisis to spread across the region.

The Euro celebrates its 20th anniversary
The Euro is projected onto the walls of the European Central Bank in Brussels. Photo: Daniel Rolund/AFP

European Commission chief Ursula von der Leyen called the euro “a true symbol for the strength of Europe” while European Central Bank President Christine Lagarde described it as “a beacon of stability and solidity around the world”.

Euro banknotes and coins came into circulation in 12 countries on January 1, 2002, greeted by a mix of enthusiasm and scepticism from citizens who had to trade in their Deutsche marks, French francs, pesetas and liras.

The euro is now used by 340 million people in 19 nations, from Ireland to Germany to Slovakia. Bulgaria, Croatia and Romania are next in line to join the eurozone — though people are divided over the benefits of abandoning their national currencies.

European Council President Charles Michel argued it was necessary to leverage the euro to back up the EU’s goals of fighting climate change and leading on digital innovation. He added that it was “vital” work on a banking union and a capital markets
union be completed.

The idea of creating the euro first emerged in the 1970s as a way to deepen European integration, make trade simpler between member nations and give the continent a currency to compete with the mighty US dollar.

Officials credit the euro with helping Europe avoid economic catastrophe during the coronavirus pandemic.

“Clearly, Europe and the euro have become inseparable,” Lagarde wrote in a blog post. “For young Europeans… it must be almost impossible to imagine Europe without it.”

In the euro’s initial days, consumers were concerned it caused prices to rise as countries converted to the new currency. Though some products — such as coffee at cafes — slightly increased as businesses rounded up their conversions, official statistics have shown that the euro has brought more stable inflation.

Dearer goods have not increased in price, and even dropped in some cases. Nevertheless, the belief that the euro has made everything more expensive persists.

New look

The red, blue and orange banknotes were designed to look the same everywhere, with illustrations of generic Gothic, Romanesque and Renaissance architecture to ensure no country was represented over the others.

In December, the ECB said the bills were ready for a makeover, announcing a design and consultation process with help from the public. A decision is expected in 2024.

“After 20 years, it’s time to review the look of our banknotes to make them more relatable to Europeans of all ages and backgrounds,” Lagarde said.

Euro banknotes are “here to stay”, she said, although the ECB is also considering creating a digital euro in step with other central banks around the globe.

While the dollar still reigns supreme across the globe, the euro is now the world’s second most-used currency, accounting for 20 percent of global foreign exchange reserves compared to 60 percent for the US greenback.

Von der Leyen, in a video statement, said: “We are the biggest player in the world trade and nearly half of this trade takes place in euros.”

‘Valuable lessons’

The eurozone faced an existential threat a decade ago when it was rocked by a debt crisis that began in Greece and spread to other countries. Greece, Ireland, Portugal, Spain and Cyprus were saved through bailouts in return for austerity measures, and the euro stepped back from the brink.

Members of the Eurogroup of finance ministers said in a joint article they learned “valuable lessons” from that experience that enabled their euro-using nations to swiftly respond to fall-out from the coronavirus pandemic.

As the Covid crisis savaged economies, EU countries rolled out huge stimulus programmes while the ECB deployed a huge bond-buying scheme to keep borrowing costs low.

Yanis Varoufakis, now leader of the DiEM 25 party who resigned as Greek finance minister during the debt crisis, remains a sharp critic of the euro. Varoufakis told the Democracy in Europe Movement 25 website that the euro may seem to make sense in calm periods because borrowing costs are lower and there are no exchange rates.

But retaining a nation’s currency is like “automobile assurance,” he said, as people do not know its value until there is a road accident. In fact, he charged, the euro increases the risk of having an accident.

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