GM’s decision to keep Opel has left Germany fuming

AFTER General Motors’ dramatic U-turn on November 3rd over the sale of its European subsidiary, Opel/Vauxhall, its chief executive, Fritz Henderson, came to Germany this week to begin repairing relations with Angela Merkel’s government and with the country’s angry unions. Both have little option other than to come to terms with GM’s decision not to sell a majority stake in the unit to Magna International, an Austrian-Canadian car parts maker, and Russia’s Sberbank. But they are still furious with the Americans. Jurgen Ruttgers, the prime minister of North-Rhine Westphalia, caught the popular mood by describing GM’s change of heart as “the ugly face of turbo-capitalism.”

The German government’s frustration is understandable, but it has only itself to blame. With an election looming, it far too blatantly suggested that the €4.5 billion ($6.8 billion) worth of restructuring loans it was willing to make available was exclusively for Magna/Sberbank because it alone was promising not to close factories in Germany. That meant some 10,000 redundancies would fall disproportionately heavily elsewhere in Europe. When other governments complained about such an obvious breach of competition rules, the European Commission stepped in. The Germans were forced to write to GM on October 17th assuring it that the aid was available to any investor with a viable plan for restoring Opel to health. …