GM U-turn shocks Berlin and Moscow, angers workers

German leaders were left licking their wounds Wednesday after the U-turn by General Motors (GM) over the sale of its ailing subsidiary Opel triggered "shock and annoyance", as well as concern amongst staff across Europe.

GM's surprise decision, after "hundreds of hours" of top-level negotiations, overshadowed German Chancellor Angela Merkel's historic address to US Congress earlier Tuesday.

Under the terms of the deal, Opel was to be bought by Canadian car parts manufacturer Magna and Russian bank Sberbank, sweetened by a multi-billion-euro German state aid package.

Germany swiftly demanded a refund of the huge credit that saved Opel from bankruptcy in May and was non-committal about whether to offer GM fresh government aid to "save" thousands of jobs at German factories.

Economics Minister Rainer Bruederle called GM's behaviour "entirely unacceptable", while Roland Koch, premier of Hesse state where Opel is headquartered, expressed "shock and annoyance" at Detroit's move.

Foreign Minister Guido Westerwelle was expected to address the issue during his inaugural trip to the US, which he embarked Wednesday.

In Russia, the U-turn also caused great surprise. Dmirty Peskov, a spokesman for Prime Minister Vladimir Putin, was quoted by the Interfax agency as saying the decision had caused "astonishment in Russia and in particular in the Russian government".

Putin had previously been keen about the prospect of Sberbank buying into Opel, seeing it as a unique chance for gaining access to Western technology and in turn helping to revive Russia's stricken automobile industry.

GM accepted German government demands that a 1.5-billion-euro ($2.2-billion) bridging loan be repaid by the end of the month.

An Opel spokeswoman in Frankfurt said the carmaker had only ever called 1.1 billion euros of the credit line, and had already repaid 200 million euros.

GM is expected to draft a fresh restructuring plan of its own to cut costs at Opel, jettison unprofitable models and lay off surplus labour, asking European governments to contribute cash to cushion the blow to workers.

A German Economics Ministry spokeswoman said that any GM request for aid would be given due consideration.

Despite government anger at the Detroit car giant, Germany is unlikely to be able to say "no" now, after insisting all year long how important the carmaker is, analysts said.

Opel's fate filled the German media for much of the year, and the government-brokered rescue package, totalling 4.5 billion euros, bolstered support for Merkel's Christian Democrats ahead of the September general election.

The Detroit decision split labour groups.

The head of Opel's German works' council called protest strikes Thursday and appealed for industrial action across Europe, but GM's decision brought hope to Opel staff in Britain and Poland, where the Magna deal had been seen as favouring German operations.

GM's European subsidiary also has factories in Spain, Belgium and Austria. Just under half of Opel's 54,000 workers are employed in Germany.

In Poland, where Opel has a factory at Gliwice, a union leader said GM's decision meant fewer fears for workers.

Miroslaw Rzezniczek, deputy leader of the Solidarnosc branch in the factory, said staff had perceived a Magna takeover as political interference. Poles also feared that Sberbank's role meant Russian domination.

Spanish Opel employees said they were back to square one, after having negotiated 900 job cuts out of a workforce of 7,500 with Magna. However, Candido Mendez of the Spanish trade union UGT said GM had previously offered a better deal than Magna.

German car industry expert Willi Diez was of the opinion that there was no better Opel owner than its current one. "GM will lead Opel into a good future", Diez said, adding, "Without GM, Opel cannot survive".

Austrian Economics Minister Reinhold Mitterlehner offered GM the same 300-million-euro state guarantees that would have been available for Magna to run Opel's engine plant in Vienna.

The German unions meanwhile withdrew an offer to Magna to forfeit holiday pay and some regular pay to help Opel restructure. They demanded that GM immediately pay 50 million euros to workers, saying it was "in arrears".

Last updated on Nov 4^th, 2009 at 23:10 pm IST--DPA