Report: Germans in turmoil over Opel aid as neighbours offer cash

Nov 21, 2009, 16:36 GMT

Berlin - The new German coalition government led by Chancellor Angela Merkel is in turmoil over the issue of state aid for Opel, while other EU states with Opel factories have pledged more than a billion euros (1.49 billion dollars), a magazine report said Saturday.

The news magazine Der Spiegel said that ahead of a visit by new General Motors Europe chief Nick Reilly to Brussels Monday, Spain, Britain, and Belgium have offered between 300 and 500 million euros each to help bring the Opel back to profitability.

According to the report, Britain has said aid of some 400 million euros was feasible, Spain has said it would find a similar amount, Belgium bid some 500 million euros, and Poland has offered tax incentives.

However on Saturday German Economy Minister Rainer Bruederle, of the liberal Free Democrats, repeated his opposition to offering GM government money for Opel.

This month Detroit-based GM controversially reversed its decision to sell Opel, and has said that it needs some 3.3 billion dollars in European state aid to fix the carmaker based in the western German town of Ruesselsheim.

Opel employs some 50,000 people in Europe, half of them in Germany. GM has voiced its intention to cut around 10,000 jobs across the firm.

The FDP's opposition to state money for Opel however has brought the party into conflict with Merkel's CDU. In the German state of Nordrhein-Westfalen, CDU state premier Juergen Ruettgers faces an election next May, and has urged state money to be spent to save jobs at the Opel plant in Bochum.

Bruederle told the German Press Agency dpa on Saturday that 'it is in the interests of all the (EU) states involved to avoid a subsidy war.'

On Monday Reilly is due to meet with EU economy ministers and EU Industry Commissioner Guenther Verheugen, who is known to be against state help for Opel.

Earlier this year the German government came in for criticism by the European Commission for offering financial assistance to Opel's erstwhile buyer Magna, because it would have involved fewer job losses specifically in Germany.

Verheugen told Spiegel that 'state aid is an intervention in the market and, for that reason, ruled out. Exceptions can be agreed with the commission - as long as they are not connected with political preconditions. You can't connect it with the keeping of jobs in a particular location,' he said.