GM's U-turn on Opel sale angers Germany, Russia

By Angelika Gruber and Gernot Heller

FRANKFURT/BERLIN (Reuters) - German and Russian leaders seethed and unions tore up a deal to cut costs in protest at General Motors' "completely unacceptable" decision to keep Opel, its European unit, after months of talks.

Labor leader Klaus Franz rescinded hundreds of millions of euros in cost concessions that workers agreed to on condition that Opel was bought by Magna, the Russian-backed Canadian group long backed as buyer by Berlin and Moscow.

"General Motors' behavior toward workers is completely unacceptable," German Economy Minister Rainer Bruederle told reporters the morning after GM's shock news, adding: "General Motors' behavior toward Germany is completely unacceptable."

In Moscow, Russian Prime Minister Vladimir Putin hinted the battle for carmaker Opel was not over, saying it was the German trust overseeing Opel, not the board of General Motors, which should decide any further steps.

Germany viewed Magna and Russian partner Sberbank as most likely to preserve as many German jobs and plants as possible. Half of Opel's 50,000 staff are based in Germany.

"General Motors' behavior shows the ugly face of turbo-capitalism," said Juergen Ruettgers, premier of the state of North Rhine-Westphalia, home to an Opel plant in Bochum which is seen at risk of closure.

GM Europe will now revert to a reorganization plan that envisages chopping fixed costs at Opel by 30 percent, a spokeswoman said.

"Failure to reach the needed restructuring would result in the operation becoming insolvent, an unnecessary and undesirable outcome for all involved," GM Europe said.