Russia Agrees to Financially Support Opel Investments

While Sberbank a few days ago admitted it wants to sell its Opel share to a domestic industrial partner, the Russian government is ready to approve funds for backing local Opel investments, the Russian President Dmitry Medvedev has told German Chancellor Angela Merkel at a G20 summit. According to a record by Reuters, the talks are still in early stages but Russia has once again showed its support for the Magna - Sberbank - Opel deal.

Separately, the European Union will meet to discuss the Opel aid on October 7, with Germany expected to offer 4.5 billion euros. The other countries hosting Opel factories are also expected to contribute to the package.

"What we will do on the 7th of October is to decide on the basis for a decision. The decision will be whether there will be state aid and who is going to pay," EU Industry Commissioner Guenter Verheugen was quoted as saying by Reuters.

The United Kingdom has asked the EU Commission, through the voice of Business secretary Peter Mandelson, to investigate the deal as it might be open to political intervention. Furthermore, the Magna deal could favor Germany as the Canadian - Austrian partsmaker is expected to protect German jobs.

“We do not believe the case has been demonstrated that the current Magna proposal is commercially the most viable plan,” Mandelson wrote in an official letter submitted to European competition chief Neelie Kroes. “Capacity at highly efficient plants in Britain and Spain is planned to be under-utilized, in favor of higher utilization of some of GM's other less-efficient plants.”