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  • Government Motors and Foreign Political Entanglements

    The Obama Administration’s claims that General Motors — the federally-owned auto manufacturer — is independent from political entanglements is once again being tested, this time with an international twist. The issue is what to do with Opel, GM’s German-based European subsidiary (as well as the smaller, British-based Vauxhal). Last week, GM CEO Fritz Henderson presented to the GM board a plan to sell the two firms to a Canadian-Russian consortium. Surprisingly, however, GM’s board rejected the plan, asking Henderson to consider other options. Those option include GM keeping Opel, or accepting a competing offer from a U.S. private equity firm.

    The non-decision has set political sparks flying in Berlin. Chancellor Angela Merkel’s government, facing a close election next month, has been pushing hard for the Canadian-Russian deal, even promising $6.4 billion in loans to sweeten the deal. The fear is that under a U.S.-owned GM, German jobs at Opel would be at risk. Ownership by an American private equity firm, in German eyes, would be even worse.

    The situation has set off a tizzy of international politicking, with the German foreign minister raising the issue directly with Secretary of State Hillary Clinton on Saturday. The Obama Administration, to its credit, has so far resisted the urge to get involved in the imbroglio, saying the decision is up to GM’s board. But its a no-win situation for U.S. diplomats. The slightest hint of an opinion by Administration officials — intended or not — could affect the decision, or perceptions of it. Even absolute neutrality may come at a political cost, causing diplomatic headaches with Germany, and perhaps Russia and Canada to boot.

    U.S. officials no doubt hope the whole issue will go away. But the fact is that — as long as the government is the majority shareholder — it won’t. Ownership comes at a cost.

    Posted in Economics [slideshow_deploy]

    7 Responses to Government Motors and Foreign Political Entanglements

    1. Linda Carlsbad, CA says:

      This is the outcome of our government taking over a private company. Of course the White House has a say in this, give me a break. They are running GM's board. How stupid do they think foreign governments are? They need to sell GM back to the private investors.

    2. Cheri, Marysville, C says:

      I love the complexities of life!

      Forgive them lord for they know not what they do…or do they?

    3. Lynn B. DeSpain says:

      The "YUGO" was a Government produced vehicle also! Odd name, just as Obamamama is odd also.


    4. Lynn B. DeSpain says:

      The "YUGO" was a Government produced vehicle also! Odd name, just as Obamamama is odd too.


    5. Bob, Portland, OR says:

      Lynn, his real name is Ojama, because he tries to force (Jam) his will on us.

    6. randy,sa tx says:

      gm boards are probably run by unions. good for them

    7. Rubicon, Southcentra says:

      Seems to me a famous man once said, the ten most terrifying words in our language are……….

      "I'm from the government & I'm here to help you!"

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