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Government aid to Magna-led Opel draws European scrutiny
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10:36, September 15, 2009

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Germany's plan to provide 4.5 billion euros ($6.5 billion) in state aid to Opel yesterday threatened to spark a political storm across Europe over where the carmaker was likely to cut plants and jobs.

Britain said European regulators should ensure that the takeover of Opel by Canadian automotive supplier Magna and its Russian allies did not favor workers in German plants over those in other European countries that host GM factories.

"I think it is important to say that the (European) Commission should not accept anything that looks like a political fix or any linkage between aid and retention of jobs in any specific plant or country," British Business Secretary Peter Mandelson told BBC radio.

Kris Peeters, the premier of the Belgian region of Flanders that is home to Opel's Antwerp plant, was to hold talks with EU Industry Commissioner Guenter Verheugen.

Verheugen and Competition Commissioner Neelie Kroes were also due to address a European Parliament debate on Opel aid.

Former Belgian Prime Minister Guy Verhofstadt told Reuters at the weekend he had asked European Commission President Jose Manuel Barroso to ensure the deal was fair to other countries such as Belgium and Britain.

US automaker General Motors agreed last week to sell a 55 percent stake in Opel to Magna and Russia's Sberbank, bowing to Berlin's wishes after months of tough talks.

Chancellor Angela Merkel's government, worried about potential job losses before an election on Sept 27, had openly backed Magna over rival RHJ, a financial investor.

Berlin hopes Magna's automotive expertise will help save jobs at Opel. Half its 50,000 staff are based in Germany.

Magna plans to cut Opel's workforce by around one fifth and could close plants in Antwerp and Luton in Britain if it cannot find ways to absorb their spare capacity. It has said it would keep all four Opel plants in Germany running.

Germany ringfenced and propped up Opel with a 1.5 billion euro bridge loan in May to ensure it did not get swept into GM's brief bankruptcy proceedings.

The federal and state governments are ready to provide another 4.5 billion in aid once the Magna deal closes by the end of November. It will then ask other European countries such as Britain, Belgium and Spain to share the costs.

Hundreds of millions of euros in German state aid planned for carmaker Opel is earmarked for operations in Russia, an Opel trustee with reservations about the project was quoted as saying in a newspaper interview.

Source:China Daily



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