Germany’s economy minister said he expected a surge in requests for state aid after Berlin bailed out the automaker Opel, but warned in a press interview yesterday that some companies would go bust.
“I expect a surge in requests for public aid in the weeks and months to come,” Karl-Theodor zu Guttenberg told the business daily Handelsblatt.
Government aid under a special fund worth 115 billion euros (US$160 billion) to help distressed companies has drawn requests from more than 1,300 companies, who have sought credits or loan guarantees worth nearly 5 billion euros, he said.
“Companies will go bankrupt or disappear from the market in this crisis as in previous ones,” the conservative economy minister said. “The state cannot stop this process.”
‘EXCEPTIONAL’
After committing 1.5 billion euros to a plan aimed at saving Opel, which German Chancellor Angela Merkel said was an “exceptional case,” the government turned down retail and tourism group Arcandor, which declared insolvency last week.
The future of more than 40,000 workers at Arcandor, which owns a majority stake in the British travel group Thomas Cook, now depends on solutions being sought with rival retailer Metro.
Jobs at Thomas Cook are not believed to be at risk.
With politicians on the left criticizing the minister’s actions, Guttenberg said in the interview against a “politicization” of the business support fund and its “electoral instrumentalization.”
Germans are scheduled to vote in general elections in late September.
EXAMINATION
EU Industry Commissioner Guenter Verheugen wants a thorough examination of plans to rescue troubled German automaker Opel, which he believes would ultimately benefit Russia, a German daily reported.
“The European Commission cannot allow such a plan to pass automatically, it must examine it from top to bottom,” the German commissioner said in an article in yesterday’s edition of Die Welt.
He said the plan must “truly offer assurances that the business will survive and will be competitive for a length of time.”
Opel was bailed out late last month by a 1.5 billion euro loan from Berlin as well as a promised initial investment of 700 million euros from Canadian auto parts maker Magna, which won the bidding war to take over the struggling firm.
Magna and General Motors, Opel’s parent company which has been bailed out by the US government, have haggled over finalizing their preliminary agreement.
DEAL
Under the proposed deal, GM would keep 35 percent of the company and Opel’s workers would retain 10 percent.
Magna would hold 20 percent, and Russia’s state bank Sberbank, which has joined forces in the deal with troubled Russian car maker GAZ, would have 35 percent.
“So far no investor in the world has come forward to continue the activities of GM Europe without public aid, that [shows] the risk for the business is very high,” Verheugen said.
“The only ones who incur a relatively low risk by participating in General Motors Europe are the Russians,” he said.
“They are going to gain access to more modern technologies and can then build up their own automobile industry, suitable for exports,” he said.
Verheugen said that in the end “the key decisions about the business could not be taken without the approval of the governments in Moscow and Washington.”
ESCALATING TENSIONS: The US called for restraint and meaningful dialogue after Beijing threatened Taiwanese independence advocates with the death sentence The US on Monday condemned China’s “escalatory and destabilizing language and actions” toward Taiwan after Beijing last week announced new guidelines to punish supporters of Taiwanese independence. Asked about the guidelines, which included the death sentence for “diehard” independence advocates, US Department of State spokesman Matthew Miller said: “We strongly condemn the escalatory and destabilizing language and actions from PRC [People’s Republic of China] officials.” “We continue to urge restraint and no unilateral change to the status quo,” he said at the press briefing. The US urges China to “engage in meaningful dialogue with Taiwan,” Miller said, adding that “threats and legal
DEATH THREAT: A MAC official said that it has urged Beijing to avoid creating barriers that would impede exchanges across the Strait, but it continues to do so People should avoid unnecessary travel to China after Beijing issued 22 guidelines allowing its courts to try in absentia and sentence to death “Taiwan independence separatists,” the Mainland Affairs Council (MAC) said yesterday as it raised its travel alert for China, including Hong Kong and Macau, to “orange.” The guidelines published last week “severely threaten the personal safety of Taiwanese traveling to China, Hong Kong and Macau,” MAC Deputy Minister and spokesman Liang Wen-chieh (梁文傑) told a news conference in Taipei. “Following a comprehensive assessment, the government considers it necessary to elevate the travel alert to orange from yellow,” Liang said. Beijing has
Chinese President Xi Jinping (習近平) yesterday said that the Chinese Communist Party was planning and implementing “major” reforms, ahead of a political conclave that is expected to put economic recovery high on the agenda. Chinese policymakers have struggled to reignite growth since late 2022, when restrictions put in place due to the COVID-19 pandemic were lifted. The world’s second-largest economy is beset by a debt crisis in the property sector, persistently low consumption and high unemployment among young people. Policymakers “are planning and implementing major measures to further deepen reform in a comprehensive manner,” Xi said in a speech at the Great Hall
WATER CONCERNS: The CWA encouraged people to conserve water, as fewer typhoons would bring less rain, and the plum rain season brought in only 60% of average rainfall About two to four typhoons are forecast to come close to Taiwan between now and November, the Central Weather Administration (CWA) said yesterday, as it also forecast that extreme heat would persist throughout the week, only dropping by 1°C after Friday. The number of typhoons is slightly lower than the average of three to five, reflecting a weakening El Nino weather pattern and the possibility of a La Nina pattern approaching, CWA Weather Forecast Center Director Chen Yi-liang (陳怡良) told a news conference in Taipei. While typically fewer typhoons develop under such conditions, their routes would be more likely to pass near