BERLIN (AFP) — Top German politicians said on Thursday they were confident of striking a deal to safeguard the future of General Motors' Opel unit even after talks over it with Washington broke down in acrimony.
Chancellor Angela Merkel was to hold further negotiations Friday afternoon with the US government, GM and the two bidders still in the race to snap up a stake in Opel: Italian car giant Fiat and Canadian auto parts maker Magna.
"I am very confident" that a deal can be reached, said foreign minister and vice-chancellor Frank-Walter Steinmeier on Thursday, adding that he would call his US counterpart, Secretary of State Hillary Clinton, to discuss the issue.
Finance Minister Peer Steinbrueck also said he was sure that a solution could be found to secure GM's European operations and tens of thousands of jobs across Europe.
The marathon talks, aimed at finding a suitable buyer for Opel and a financing structure for temporary loans from the German government, collapsed when the US side suddenly upped their demand for loans by 300 million euros (416 million dollars).
The surprise about-turn prompted furious reactions, with Steinbrueck slamming the US negotiating tactics as "scandalous" and Economy Minister Karl-Theodor zu Guttenberg saying the talks were "at times absurd."
Roland Koch, the influential premier of the state of Hesse, where Opel's headquarters are situated, said the Americans had not provided sufficient guarantees that Germany would get its temporary loans back.
Speaking on local radio, Koch said: "What the Americans are doing here is not acceptable. They are ignoring the situation in Europe and are trying to push through their own agenda."
Opel's powerful works council described the breakdown in talks as a "bitter setback" and accused GM of treating Opel as a "chip in the poker game of their own insolvency."
"Europe is not a gamblers' casino," the council said.
The negotiators are racing against a June 1 deadline set by US President Barack Obama's administration for General Motors to come up with a rescue plan or be forced into bankruptcy like Chrysler before it.
In a key development on Wednesday, GM transferred assets and patents to Opel in a bid to keep them safe in the event of a GM bankruptcy.
And in a dramatic eleventh-hour move on Thursday, a proposed bankruptcy reorganisation plan was unveiled, which would give the US government a 72.5 percent stake in General Motors, a regulatory filing showed.
The two bidders Fiat and Magna remained in the race after a third bidder, Brussels-based investment firm RHJ International, pulled out during the talks.
Magna's offer, backed by Russia's state-owned bank Sberbank, is still seen as the front runner, with unions and centre-left Social Democrat members of the governing coalition backing it.
The Canadian firm has also promised to come up with the 300 million euros in additional funds, a move welcomed by German authorities.
For its part, Fiat wants to combine General Motors' European and Latin American operations with Chrysler, in which it has secured a 20-percent stake, to create the world's second largest automaker after Japan's Toyota.
Chancellor Angela Merkel is under pressure from all sides to find a way to break the deadlock, with some 25,000 German jobs at stake just four months before the country goes to the polls.
Berlin has also come under fire from other European countries with Britain and Belgium pressing Germany not to protect their workers at the expense of employees elsewhere.
GM employs 55,000 people Europe-wide, including around 7,000 in Spain, 4,700 in Britain at Vauxhall, 4,000 in Sweden at Saab, 3,600 in Poland, 2,600 in Belgium and 1,800 in Italy.
Although the final decision on the fate of GM's European operations lies with Detroit and Washington, Germany has a key role to play as it will provide billions of euros in loan guarantees to a suitable bidder.
Christoph Stuermer from Global Insight said he was confident a deal would be thrashed out on Friday and added Fiat would have to match Magna's offer to provide the missing 300 million euros.
"I think first everyone needs to get a good night's sleep... then Opel will be allowed to fall safely into the cushion," he said.
"But then Opel still needs to be put a little on its own feet. That hasn't been achieved and that's not going to be acheived by Friday," he added.
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