Medvedev Meets Merkel To Back The Magna Bid

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Russian President Dmitry Medvedev met German Chancellor Angela Merkel in the Black Sea town of Sochi yesterday to discuss carmaker Opel and other industrial projects ahead of the German elections, where jobs will be the central issue.

Medvedev’s priority was to cement a deal in which Russia’s largest lender, state bank Sberbank, in a consortium with Canadian automaker Magna would buy a stake in GM Europe, which includes Germany’s Opel and the UK’s GM plants.

Magna’s main rival is Belgium-based investor RHJ International, but Merkel stated on Tuesday that she is prepared to intervene personally in favour of the Canadian company.

She told RTL TV: ‘I have a clear preference for Magna and want to make that clear again. If it is necessary, I will join in of course.’

A Kremlin official told the Russian media yesterday that the two leaders were likely to ‘consider terms on which a deal advantageous for both Russia and Germany’s economic and social spheres can be concluded.’

On Thursday, Magna said the Opel bid details had been finalised and an agreement in principle made with GM.

General Motors, which has also been considering a bid by Belgian investment group RHJ International, is waiting to see what cash guarantees the German government agrees to put up before accepting Magna as a partner.

A deal with Magna will see the bulk of the 10,000 expected redundancies fall on the GM plant in Belgium and GM’s UK plants.

The German Federal and states governments are not prepared to financially guarantee a deal with the RHJ International alternative.

Another key point at the talks in Sochi was the Nord Stream gas project.

The six-billion-euro pipeline, being built jointly by Russia and Germany under the Baltic Sea, is designed to eventually pump 55 billion cubic metres of Siberian gas per year to western Europe, bypassing traditional transit nations.

Merkel and Medvedev also discussed Russian investment in financially ailing German firms like the Wadan dockyards and the Dresden-based Qimonda chipmaker.