Putin slams GM over Opel reversal

November 6, 2009

, MOSCOW, Nov 6 – Russian Prime Minister Vladimir Putin slammed US auto giant GM on Thursday for its "disdainful" decision to cancel the sale of its European unit Opel to a Canadian-Russian consortium.

"The last-minute withdrawal from the completion of this deal does not harm our interests, but to put it mildly, it reflects our American partners\’ peculiar way of dealing with their counterparts," Putin said.

"This is a lesson, and we will need to take this approach in dealing with partners into account in the future," Putin said at a government meeting.

"This disdainful attitude toward one\’s partners — and in this case that applies mainly to the Europeans, not to us — is worth keeping in mind in the future."

GM had given its preliminary agreement in September to a deal under which it would have sold a 55-percent stake in Opel to a consortium uniting Russian state-owned bank Sberbank and Canadian auto parts maker Magna International.

But earlier this week GM announced it was no longer planning to sell Opel, citing an improved business environment.

"GM did not warn anybody, did not discuss anything with anybody, but simply presented everyone with this fact, despite all the earlier agreements that had been reached and documents signed, some of a legal nature," Putin said.

The Opel deal had been touted by Russian officials, including Putin himself, as a way to boost Russia\’s economic integration with Europe and to bring Western expertise to the struggling Russian auto industry.

There had also been speculation that the deal could have led to the transfer of technology to GAZ, Russia\’s second-largest car manufacturer.

GM\’s reversal sparked outrage in Germany, where it is feared that thousands of Opel workers will lose their jobs and where the move has been seen as a slap in the face to Chancellor Angela Merkel.

Merkel\’s government had spent months negotiating a deal to rescue Opel, around half of whose 55,000-strong workforce is in Germany.

Criticism has also been directed at US President Barack Obama, since the US government owns a 60 percent stake in GM as part of a reorganisation plan established when the carmaker filed for bankruptcy protection in June.

But the White House said it had nothing to do with GM\’s decision, saying it was not involved in the carmaker\’s day-to-day business operations.

The collapse of the Opel deal struck a blow to Kremlin plans to modernise Russia\’s economy by teaming up with major foreign firms, said Chris Weafer, chief strategist for UralSib investment bank in Moscow.

Both Putin and President Dmitry Medvedev "have consistently stated that the best way for Russia\’s strategic industries to improve is via relationships with established international peers," Weafer wrote in a note to investors.

"A successful deal with Opel would have possibly cleared the way for many more strategic partnerships for Russia\’s large corporations," he added.

Russia, which had Europe\’s fastest-growing car market before the global economic crisis, has been struggling to prop up its ailing domestic auto industry as sales have plummeted over the past year.

Separately, Putin said that the government would budget 38 billion rubles (1.3 billion dollars, 878.6 million euros) to cover the debts of Russia\’s largest carmaker, Avtovaz, which is 25-percent owned by France\’s Renault.

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