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EUROPE

EU unlikely to challenge Opel deal

The European Commission may have its doubts that a Berlin-backed plan to save Opel is legal but it is unlikely to challenge the deal for fears it would only drive the automaker into bankruptcy, observers said on Tuesday.

EU unlikely to challenge Opel deal
Photo: DPA

Parent company General Motors (GM) announced last month it would sell a 55-percent stake in Opel to Canadian auto parts maker Magna, with Germany providing €4.5 billion in state aid to support the deal.

Since then questions have been raised that the package could violate EU competition rules. Belgium and Britain, where Opel also has production sites, complain it would unfairly favour saving German jobs.

But Rudi Kennes, the deputy head of GM Europe’s works council, told AFP that he thought it was unlikely that Brussels would scupper the deal at this late stage.

“At the end of the day I don’t think they will start over,” he said. “On the 1st of November, Germany can ask for its money back. This could mean bankruptcy,” the union leader warned.

GM is expected to ink the deal with Magna this week and Kennes believes US executives will not consider pulling out.

“GM has more than enough problems of its own,” he said, referring to its recent restructuring in the United States.

But according to a report in the Wall Street Journal on Monday, General Motors is weighing up other options if the sale to the Canadian parts maker does collapse.

“While the automaker continues to prefer a sale to Magna, GM executives are prepared to move to its Plan B if that deal should fall through,” the newspaper said, citing people familiar with the matter.

With 25,000 people employed by Opel in Germany, Chancellor Angela Merkel is known to be reluctant to reopen negotiations on the sale after intensively lobbying in favour of Magna.

“There is no need to question decisions that have already been taken,” said German government spokesman Ulrich Wilhelm on Monday.

EU Competition Commissioner Neelie Kroes, however, has questioned the use of German public aid to support the transaction, saying there were “significant indications” that it was contingent on Magna winning the bidding for Opel.

Berlin rebuffed those claims, writing to GM and Opel explaining that the aid would be available irrespective of which investor acquired the brand, European Commission spokesman Jonathan Todd told reporters on Monday.

Todd said the Commission was yet to receive “the precise details concerning the financial arrangements” from the German government.

Frank Schwope, an automotive analyst with German bank NordLB, told AFP that the way that the sale has been conducted was “bizarre”.

“Other bidders such as RHJ International and (Chinese automaker) BAIC were ignored. In principle, that breaches European law,” he said.

Schwope said that he still expects EU regulators to give Magna the green light to buy Opel.

If they failed to do so, “Brussels would make itself very unpopular,” he explained. “A new delay would put Opel in danger.”

Meanwhile, German media on Monday showed little concern that the deal could collapse.

“The European Commission has done its job. Whether those words are followed by action, that is another story,” the Frankfurter Allgemeine Zeitung wrote in an editorial.

The newspaper questioned whether Commission president Jose Manuel Barroso had the appetite to battle it out with the German government over the sale.

“If the Commission had accepted the deal without saying a word, we would have been no longer able to take it seriously (in its role) as the guardian of free competition in Europe,” wrote the Financial Times Deutschland.

“(Nevertheless) it is clear that it is not industrial common sense that lies behind Opel’s reorganisation plan but rather the political will to save as many German jobs as possible,” the financial daily concluded.

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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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