Pressure applied

The German government is feeling pressure to back the loan guarantee package for Opel, not from the struggling automaker itself, or its parent company GM, but rather from the government of Thuringia, where one of four Opel factories in Germany is located.

When it comes to Opel, however, the mood in Berlin is decidedly cool, with several leading politicians strictly against federal support of the loan guarantees.

Michael Fuchs, deputy head of Chancellor Merkel's conservative faction in parliament, said it would be "ridiculous" for Germany to provide the 1.1 billion euros ($1.36 billion) to GM, since the company had now returned to profitability.

"I don't see how German taxpayers can be asked to help subsidize Opel," Fuchs said Wednesday on German public television, adding that "the Americans have to solve their own problems now."

"Otherwise German car companies like VW, Mercedes or BMW could also be knocking at our door for help. They have had tough times, too."

Restructuring doesn't mean rescuing

In political circles, the Opel debate - which extends back to April of last year - has centered on whether German taxpayers should be forced to shoulder the struggling General Motors subsidiary.

But according to Christoph Stuermer, a market analyst for the IHS Global Insight organization, the loan guarantees in question have nothing to do with any rescue of the company.

"Generally speaking, it isn't the job of politics to save companies or run businesses, but it is the job of politics to provide the framework for companies to run their businesses," Stuermer told Deutsche Welle.

"In the case of Opel, the discussion about GM receiving free money should focus much more on how to create an equal chance for the company to restructure itself enough to become a successfully operating European company."

A tale of two Opels

Stuermer went on to explain that government subsidies are no "new thing" for all kinds of companies in Germany, even highly profitable ones.

"Opel certainly would not be the first German company to receive government subsidies. Take other industries for example: microchips, wind power, solar power. Tons of government money was pumped into all these. Why shouldn't we do the same for an auto factory?"

Stuermer also dismissed the notion that GM is freeloading off Germany, inasmuch as the company has taken real strides to create an economically sound concept.

He said Germany was well aware that it was dealing with a new GM, which cannot be compared to the company that led Berlin through the fiasco of selling its European arm last spring, only to rescind its intentions just months later.

"The company that ran Opel into the ground no longer exists. GM and Opel have a new set of owners and managers now, and a completely new strategy. This is something you can be sure the German government has looked into."

Thuringia makes first pledge

The loan guarantees are to be shared between the federal government in Berlin and the states where Germany's Opel factories are located, Hessen, North-Rhine Westphalia, Rhineland Palatinate, and Thuringia.

The economics minister of Thuringia, Michael Machnig, called it a "complete joke" that the federal government was hesitating to approve the guarantees, after his state government pledged its share of over 27 million euros on Tuesday.

"You can't tell [the people] that it took only days to pass through billions of euros in aid for Greece, but that you need over a year to approve a much smaller sum to save one of the country's most important companies," Machnig said.

This assurance was echoed in North-Rhine Westphalia. The leader of the Social Democrats in the state, Hannelore Kraft, said her party would guarantee 80 million euros in loans.

"Rhineland Palatinate and Thuringia have created the conditions to help Opel through the crisis," she said. "North-Rhine Westphalia must now follow their lead."

Meanwhile, German Economics Minister Rainer Bruederle said in Brussels on Tuesday that a federal decision would come soon, but not before "the end of May or the beginning of June."

Bruederle said Germany was still waiting on EU approval of the funds, adding that "this is a decision that we can't just make on a whim."

Author: Gabriel Borrud
Editor: Rob Turner