Thousands of European workers rally against sale of GM's Opel

Members of the European Union and workers throughout Europe are rallying against Germany for its role in a deal between US automotive giant General Motors and a Canadian-Russian consortium that is expected to cause job losses in Spain, the United Kingdom, and Belgium.

The protests – combined with threats of strikes – have put Berlin on the defensive, facing accusations that it acted improperly to favor German workers.

On Wednesday, thousands of Opel workers poured into Antwerp, Belgium, for a noisy demonstration at a plant that produces the company's Astra model, which is facing deep job cuts.

Under the terms of a deal announced earlier this month, GM agreed to sell its Germany-based Opel unit, which employs 55,000 workers in Europe, to Magna International, a Canadian auto-parts company, and Sberbank, the largest bank in Russia.

Just weeks before national elections, German Chancellor Angela Merkel intervened directly to favor the Magna-Sberbank bid over rivals, after they indicated they would try to preserve jobs. Most of Opel's workers are based in Germany.

But the deal was also contingent on Opel and GM restructuring auto plants around Europe. Some workers would have to end up on the chopping block. In recent days, it has emerged that, while there will be some job losses in Germany, the large majority of 11,000 cuts will take place in Spain, the United Kingdom, and Belgium.

Politicians in Belgium allege the Antwerp plant is more profitable than a German counterpart that has been spared, and are seeking an investigation if Germany sweetened the Magna deal in exchange for a promise to protect German jobs.

The European Union's competition committee is now looking into Germany's role in the deal to determine if Berlin's lobbying broke EU antitrust regulations. Some of Germany's European partners are also growing uncomfortable with its tilt toward Moscow.

Deep Russian and German ties

Business ties between Germany and Russia already run very deep. Russia is Germany's top trade partner, and will be its primary energy supplier once a natural gas pipeline which connects the two is completed sometime in the next decade.

This relationship has troubled many EU members, who are wary of Russia's re-emergence in the last decade and would prefer that Germany, as Europe's largest economy, do business with other member states.

"Germany believes a closer economic relationship binds Russia to the European Union," says Mitchell Orenstein, a professor at Johns Hopkins School of Advanced International Studies in Washington. But many in Europe "are much more concerned about that kind of integration approach and find [themselves] more in conflict with Russia and more reluctant to see it as an essential partner."

Workers in the three countries facing the deepest layoffs have staged massive rallies, threatening strikes that would effectively shut down Opel if jobs are lost or plants are closed. More than 15,000 protested the cuts in Spain this past weekend, while labor unions in the United Kingdom and Belgium are threatening similar actions.

German officials said the government had not acted improperly. "Germany has just as little interest in a state aid competition or a dispute over jobs as our European partners," Germany's Economy minister, Karl-Theodor zu Guttenberg, told a German newspaper yesterday.

But the deal has also drawn some criticism here in Germany over Russia's role in the sale.

Sberbank has close ties to the Kremlin, and officials in Moscow also lobbied for the Magna consortium. Under the terms of the deal, Russian automaker GAZ will take over Opel's operations in Russia.

Mr. Orenstein says a lot of the criticism is misplaced. He says that Germany's backing of Russia as a partner in the deal was simply a sound business decision.

"Russia is one of the highest-growth markets for cars, as opposed to Europe, where growth is predicted to be smaller,' he says. 'That's why Opel can benefit from this relationship."

Will General Motors sale of Opel help Russia achieve its goal of becoming a major automaker?