GM, Opel, US, Germany, Russia, & Iran

Calendar November 5, 2009 | Posted by Michael S. Langston

In a story that might have more than it appears, GM announced it will not go through with a deal it announced in early summer to sell their German division Opel.

The story really first appears as the auto company bail-out was in full swing in the US.  GM had pushed a reorganization plan that cut jobs in all countries.  With German Chancellor Angela Merkel getting pressure due to the global economic crisis and facing a re-election, Opel became more important than first assumed (@BusinessWeek):

….On Tuesday, though, German Chancellor Angela Merkel said Opel was not a “system-critical” corporation. “There are system-critical financial institutions,” she told her conservative party’s parliamentary group, according to the Rheinische Post newspaper. “But there are no system-critical industrial firms.” It was Merkel’s indirect way of saying that Opel is less important to Germany than its crisis-stricken banks. Her statements were intended to counter earlier comments made by the head of the left-leaning Social Democratic Party that Opel was indeed “system relevant.” She added, however, that Opel should be given a chance to survive and that like all companies, it has the “right to apply for state aid.”…

It not only became more important, but Chancellor Merkel started treating it as imperative to re-election (@France24.c0m):

Just five weeks before German elections, leading politicians are putting pressure on General Motors and the US authorities to choose a candidate to take over GM’s troubled Opel unit. Angela Merkel has called for an urgent decision….

As the German government and GM Opel executives worked hard to save as many jobs as possible, they looked for potential investors.  They had competing bids, but finally accepted a bid from Canadian auto-parts manufacturer Magna, using money from the Russians (@Bloomberg):

May 30 (Bloomberg) — German Chancellor Angela Merkel’s government chose Magna International Inc. as the buyer for General Motors Corp.’s Opel and confirmed a financing plan aimed at helping the money-losing unit avert insolvency….

…German state leaders and labor representatives have said repeatedly since bids were submitted on May 20 that they favor Magna’s offer, which includes as much as 700 million euros in investments in partnership with Russia’s OAO Sberbank. The plan also foresees a linkup with OAO GAZ, which said today it could produce 180,000 Opel cars a year at its main Russian site….

Now the simple truth is, that while Russia does have money, it has its own economic problems that would generally preclude it from loaning hundreds of millions of dollars for a fading industry.

But Russia’s decisions highlights aims that are well beyond helping GM’s European division.  Their goal was to use the split in US-German relations caused by, among other things, inflamed rhetoric from Ms. Merkel blaming US mismanagement on Opel’s problems, to increase its international influence.  It also lined up with Russia’s continued movement towards setting itself up as a competing power to the US and expand its control in the former Eastern bloc countries & Europe.

We can see Russia doing this in many ways, including Opel, but none as clearly as Russia countering any attempts from the US and other nations to help with sanctions on Iran (@USAToday):

MOSCOW (AP) — Russian Foreign Minister Sergey Lavrov said Tuesday that the threat of sanctions against Iran would be counterproductive, resisting U.S. efforts to win agreement for measures if Iran fails to prove its nuclear program is peaceful….

Russia has even gone so far as to state they will continue shipping fuel and anything else Iran needs if UN sanctions were passed.  Meeting with US Secretary of State Hillary Clinton, Russia called any discussion or implementation of new sanctions to be “counterproductive”.

So Russia sees it’s relationship with Iran as a point of leverage to use against the US while it tries to expand its influence throughout the former Soviet Bloc and Eastern Europe, while the US sees Iran as a potential source of instability in the middle east.  Sure, the US has no desire to see Iran with nuclear weapons, but Iran does not have the technology to end with a weapon capable of really harming the US anytime soon (probably two decades away).

So the US’s main desire now is to protect allies within the region and minimize Iran’s potential at gaining enough power to potentially affect world oil supplies other than it’s won & the US needs Russia’s help.  Indeed, the decision to remove a missile defense shield from Poland and Czechoslovakia was likely a carrot dangled towards Russia to increase their cooperation.

Enter GM & Opel and GM’s recent decision to forgo the sale (@NYTimes):

DETROIT — The new board of General Motors reversed course Tuesday on the planned sale of its Opel division in Europe and decided that G.M. would retain and reorganize the business itself….

Now, it’s completely possible all this is just many, many coincidences, but with President Obama’s administration hand picking GM’s board, and the international decisions we know of – there’s likely much more here than first meets the eye.

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