After overnight marathon talks at German Chancellor Angela Merkel's office, a deal to salvage German auto-maker Opel was stricken early Saturday morning.
The agreement was reached among the German federal government, Opel's parent company General Motors (GM), Canadian auto parts maker Magna and the U.S. Ministry of Finance.
It includes three key points -- the German government approves Magna's takeover of Opel, Opel will be put under the care of a trustee, and the German government will provide a 1.5-billion-euro (2.1 billion-U.S. dollar) bridging loan to Opel.
The deal has finally cleared the way to save the century-old brand since Opel sent SOS message to the German government last year following GM's awful situations.
Good news for employers
The 25,000 Opel employees in Germany will be the first to breathe the sigh of relief.
As Germany is the birth place of Opel, Berlin has long emphasized job retaining in pursuing the salvage strategy.
The Opel workers also held rallies early this year, demanding swift government actions to save their jobs.
In their speeches in Opel plants, both Merkel and Vice-Chancellor Frank-Walter Steinmeier pledged efforts to ensure continued employment for Opel workers.
Spur to German car industry
Founded by German engineer Adam Opel in 1863, the firm began making automobiles in 1899. Although it became a GM subsidiary since 1929, Germans still regard it a national brand.
In fact, Opel has become the flagship of the country's auto industry, which has been hit hard by the global economic downturn since last year.
According to the German Federal Statistical Office, German auto exports slumped by 20 percent year-on-year in the fourth quarter of 2008, sending thunderous alarm to Berlin and the industry.
During last Christmas and the New Year, car-making giants like BMW, Daimler-Benz and Volkswagen announced temporary halt of their production lines. One factory of Daimler-Benz near Stuttgart even shut up production for five weeks.
Earlier this year, Berlin announced a stimulus policy for the car industry, stipulating that consumers would get a refund of 2,500 euros (around 3,200 dollars) for each car if they replace their old cars aged nine years or above.
The policy has been proved effective and Merkel's government announced it will last until the end of this year.
Saturday's deal is widely believed to be part of Berlin's efforts to save its auto sector, which analysts said will help boost confidence in this pillar industry.
Political wrestling
The Opel deal also witnessed a wrestling between Germany's two main political parties, the Christian Democratic Union (CDU) headed by Merkel and the Social Democratic Party of Germany (SPD) led by Steinmeier, before the upcoming general election in September.
"Neither of the main parties can afford to let Opel go under and they will make sure that doesn't happen," said Dietmar Herz, a professor of politics at Erfurt University. "It has the potential to become a very emotional election issue."
When Opel first asked for bridging loan from German government last year, it had been denied by Merkel's government.
Merkel's challenger Steinmeier, who lags Merkel in opinion polls, held a series of tub-thumping speeches at Opel plants to raise his profile and enlist the support of unions for the election.
Merkel responded by touring the Opel plants, when she assured the employers she would strive to retain their jobs.
Steinmeier also raised the possibility of the state taking a stake in Opel, an option Merkel's conservatives oppose.
Diminished U.S. influence
Under Saturday's deal, GM will lose its 80-year control of Opel, which also reflected dwindling U.S. economic influence in Europe and elsewhere.
Eighty years ago during the Great Depression, Opel was acquired by GM and has since become a subsidiary of the once biggest auto-maker in the world.
Now, the trend seems to go in the opposite direction. The current global economic downturn, one of the most severe since the Great Depression, has driven GM into bankruptcy.
In the Opel negotiations among Berlin, Washington and GM over the past six months, GM had requested a much bigger bridging loan rather than the 1.5 billion euros (around 2.1 billion dollars) finally provided by the German government.
German Finance Minister Peer Steinbrueck said after the deal that there would be no additional financing from the German government, adding that Berlin will not be subject to any "extortion."
(Xinhua News Agency May 31, 2009)
