German Politicians Spar Over Aid To Carmaker Opel

Michael Fuchs said Opel`s insolvency looked unavoidable and spoke against state support, warning any German aid would wind up flowing to GM.

Germany's ruling conservatives wrangled at the weekend over how far the government should go to rescue General Motors's unit Opel, with some politicians arguing the carmaker should be left to fend for itself.

Michael Fuchs, an influential parliamentary leader in Chancellor Angela Merkel's Christian Democrats (CDU), said Opel's insolvency looked unavoidable and spoke against state support, warning any German aid would wind up flowing to GM.

With GM's European brands near collapse in the wake of the global crisis, Baden-Wuerttemberg state premier Guenther Oettinger said state support for Opel could give the carmaker an unfair competitive advantage against other car manufacturers.

But other conservatives, especially CDU leaders in states where Opel plants are located, spoke out in favour of a rescue of Opel, which has been making cars in Germany since 1899.

"If we all stick together, we'll find a solution," said Juergen Ruettgers, state premier of North Rhine-Westphalia.

Merkel, who faces an election in September, has said her government is waiting to see what plans Opel presents in the coming days before deciding how to help. In November she said the government was ready to guarantee loans for Opel.

Finance Minister Peer Steinbrueck, a leader in the Social Democrats (SPD) who share power with Merkel's CDU, told ARD TV he would rather see the state rescue Opel than let it fail.

"We're talking about 25,000 to 26,000 workers and their families," said Steinbrueck, also from North Rhine-Westphalia.

"Even if you discount the families, which is cynical enough, then these people who lose their jobs will cost the state -- that's me and you as taxpayers -- 2 to 3 billion euros. Doesn't it make more sense to help them keep their jobs?"

Opel, the first European carmaker to seek a government bailout since the crisis began, originally sought to guarantee loans of about 1 billion euros for 2009.

But a source at the carmaker told Reuters on Friday the group now needs 3.3 billion euros ($4.15 billion) to keep afloat through to the end of 2011.

RETURN OF COMMUNIST STATE?

The government has already given 87 billion euros in state guarantees to struggling bank, Hypo Real Estate, and support for the plan to aid the carmaker has fallen.

Opel, once Germany's biggest carmaker, has been hit by weak demand and its woes aggravated by troubles at its U.S. parent.

"If the state helps Opel now, then it will have to help BMW tomorrow, and then Daimler the next day and all the car parts suppliers," said Hans-Olaf Henkel, a former president of the German BDI industry federation and IBM Europe chief executive.

"And overnight, before we even noticed what hit us, we will have brought back Communist East Germany," he told German radio.

Fuchs, a respected guardian of small business interests in Merkel's CDU, told the Berliner Zeitung newspaper:

"An insolvency at Opel cannot be avoided. The state should not try to prevent an insolvency with loans. The funds would end up in the United States. We cannot vote to support anything like that."

Conservative Economy Minister Karl-Theodor zu Guttenberg and Foreign Minister Frank-Walter Steinmeier (SPD) have avoided making clear commitments to helping Opel.