GM's About-Face On Opel Provokes Anger In Germany, Russia

German Chancellor Angela Merkel was just finishing her successful trip to Washington when the bombshell dropped.

General Motors (GM), which emerged from bankruptcy just four months ago following a reorganization overseen by the U.S. government, said it had decided to keep its German Opel brand, and not sell it to a consortium consisting of the Canadian auto-parts supplier Magna, and Russia's Sberbank.

Considering the political capital Merkel has invested in clinching the Magna-Sberbank deal, GM's about-face dealt a heavy blow.

She told reporters flying home with her that she hoped President Barack Obama knew nothing of GM's intentions when they met at the White House on November 2. If he did know, and said nothing, she would consider that as having an impact on bilateral relations.

GM's 12-member board of directors, 10 of whom were appointed by the Obama administration after Washington took an ownership stake in the company, publicly announced the move a little later the same day.

It negates seven months of negotiations with Magna-Sberbank, during which Merkel's government supplied a $2.2 billion bridge loan to keep Opel afloat for the present, and had agreed to supply billions more to the consortium in the future.

German Economy Minister Rainer Bruederle said the state now wanted this money back from GM. "We will the get the taxpayers' money back," he said. "The taxpayers have a right to it."

Putin: 'Scornful' U.S. Approach

In Moscow, Russian Prime Minister Vladimir Putin said GM's last-minute change of mind highlighted the "scornful" approach of U.S. businesses when dealing with their partners.

Putin said GM's "refusal to complete this deal does not harm our interests, but it shows that U.S. businesses have a rather peculiar culture of dealing with their partners."

He said Moscow would take a lesson from the experience, but added that the government would continue to support GM projects in Russia. GM's Chevrolet is the top-selling foreign brand in Russia, which is seen as a huge growth market for auto sales.

On November 4, Putin called the decision "astonishing," and said the consortium must go to court to test its legality.

He suggested that GM possibly has no further right to control Opel's actions, insofar as that company was placed in the hands of a management trust, to avoid it being involved in GM's bankruptcy proceedings.

Putin said Russia had been willing to share the risk of buying into Opel because of the prospect of investment in the Russian auto industry, as well as a major boost through technology transfer.

Noting this, car industry analysts questioned the wisdom of GM's decision to agree to Opel's request that it be sold off in the first place.

Opel is one of Europe's top-selling brands, and has vast experience in the technology of fuel-efficient autos -- expertise GM itself will need as it develops a range of more efficient cars for its home market.

Warning strikes were beginning on November 5 at all four German Opel plants, where workers are angry at the prospect of heavier job losses in Germany under GM's restructuring than would have been the case under Magna.

Union leader Klaus Franz said stoppages will spread from there to the company's plants across the whole of Europe.

compiled from agency reports