May 31, 2009 / 1:48 PM / 9 years ago

Tensions rise in Merkel's coalition over Opel rescue

* German deal to rescue Opel criticised by some

* Economy Minister opposed rescue, offered to resign

* Conservatives fear more handouts

By Erik Kirschbaum

BERLIN, May 31 (Reuters) - A government-orchestrated rescue of struggling carmaker Opel has opened divisions in Chancellor Angela Merkel’s conservative alliance only four months before Germany’s federal election.

The 11th-hour deal to save Opel from the looming bankruptcy of U.S. parent General Motors was agreed in Merkel’s chancellery in the early hours of Saturday after her grand coalition steamrolled the objections of her conservative Economy Minister.

Karl-Theodor zu Guttenberg, 37, offered to resign as Economy Minister after conservative ally Merkel and her cabinet ignored his opposition to a deal with Canadian auto parts group Magna, GM and the U.S. government to separate Opel and its 50,000 European workers from a GM bankruptcy filing expected on Monday.

Guttenberg’s lonely resistance was applauded by his Bavarian Christian Social Union party (CSU) and the pro-business wing of Merkel’s Christian Democrats (CDU) on Sunday. They fear support for Opel will only invite more companies to seek state handouts.

But the centre-left Social Democrats (SPD), who share power with Merkel’s CDU/CSU in the grand coalition, pounced on the intransigence of Guttenberg, who in defiance of Merkel continued to tout his preference to let Opel rescue itself via insolvency.

“The threat is the state can be blackmailed if it is overly generous with help even once,” a still unconvinced Guttenberg told the Welt am Sonntag newspaper on Sunday.

Michael Fuchs, head of the CDU business wing in parliament, cheered Guttenberg’s rebellion and criticised the deal to help Opel with state-backed loans and loan guarantees worth 4.5 billion euros. Merkel, eager to avert mass job losses before the election, had made clear insolvency was not an option.

“With the Opel rescue we’re throwing taxpayer money out the window with a sort of ‘free-beer-for-everyone’ mentality,” Fuchs said. “It doesn’t work. We must stop trying to save companies.”

FIRMS QUEUE FOR AID

Stricken retailer Arcandor has already put its hand out to the government. More than 1,100 companies are now queuing for state aid, the Frankfurter Allgemeine Sonntagszeitung reported.

The government is offering 115 billion euros in support for firms hurt by the global economic crisis via its “Germany Fund”.

Ahead of the Sept. 27 election, Merkel’s CDU/CSU lead the SPD and its candidate, Foreign Minister Frank-Walter Steinmeier, by a wide margin of about 36-to-26 percent in opinion polls.

But due to complex coalition arithmetic, the CDU/CSU could possibly win the election but lose power if they fall short of a majority with their preferred partners, the Free Democrats (on 14 percent), or fail to form another loveless grand coalition.

SPD chairman Franz Muentefering criticised Guttenberg for foot-dragging over the Opel rescue efforts all along.

“We were pushing from the very start to find a way to save Opel while some conservatives kept looking for reasons why Opel shouldn’t be saved,” he said. “We’re going to examine the role some individuals played and at the CDU/CSU aversion to help.”

Steinmeier added: “It’s not good enough to just stand in front of the microphones and point out the risks with Opel. It’s far more important to work towards minimising those risks.”

Merkel and some other CDU leaders squarely backed rescue efforts but that may boomerang. She has already disappointed the conservative base often by nudging the CDU towards the centre to usurp SPD positions on key issues.

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