By on May 6, 2010

It’s tough to be a European car maker with a governmental sugar daddy. First you have to make nice with your sugar daddy, and commit unspeakable acts until he shakes loose a few hundred million Euro. Then, the prudes from Brussels shoot the stipend down. Your sugar daddy can say: “Darling, I tried.” He then can go on with the business of bailing out Mediterranean states. So it happened with Renault. So it might happen with Opel.

Renault, 15 percent owned by the French government, received a €100m loan from their governmental shareholder. Supposedly for a good cause: The production of electric cars.

After a careful inspection of the note, the protectors of fair competition in Brussels found what they were looking for: A clause that requires that within two years, Renault has to buy 70 percent of the parts from French suppliers.

“Aha!” said Joaquin Almunia, EU competition commissar in Brussels, and sent a strongly worded note to Paris. Such clauses collide with EU rules, reminds us Das Autohaus. But why should the French help a French company, if the money goes to a parts maker in Slovenia?

“Rules are rules,” says Almunia, and he will “closely monitor” whether the rules are adhered to.

France is a repeat offender. 2009, the French government tried to link loans for PSA and Renault with keeping jobs in France. Brussels showed the yellow card, and Nicolas Sarkozy watered the clause down to a “moral obligation.”

And why are we going through the arcana of EU rules? Just imagine what happens if and when Opel should get bailed out. Every country will carefully write a “keep the jobs at home clause into the loan agreement, as it already happened in the UK.

Then, Brussels will shoot it down. All European sugar daddies will say “we tried our best, darling.” Then, they will turn their attention to more pressing problems.

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6 Comments on “Brussels Has Issues With Government Loan To Renault. A Lecture For Opel?...”

  • avatar

    Europe needs to fish or cut bait. Either have a real, enforceable federal republic along the American/Brazilian/Canadian models, or end the Euro experiment.

  • avatar

    Moral clause? Do like the wording. Dunno.

    BTW when will elections be over in Germany. By then some of the posturing should go away and we’ll get to see what will really happen.

  • avatar
    Tricky Dicky

    BDB – you don’t understand European politics. You can not have a model that strongly imposes a single direction when there is no underlying unity of support. There are too many opt-outs, too many cultures. The EU makes inter-dependence possible through lots of compromising. Strong single directions tend to also have significant disadvantages which minorities are forced to accept (and in the long term, the strong direction is normally reversed as people realise all the damage it actually caused). So the EU tends towards stability and moderation (which is perfectly acceptable in a post-Nazi war-torn world huh?).

    I think the point of this story is, there will be no real political appetite for supporting Opel with German taxpayer money. CEO Whiteacre gets his wish (“We’ll do it without any help from Mrs.Merkel”).
    FromBrazil: the elections in Germany are only in one State (AFAIK)out of 16 in Germany and will take place on Sunday.

    • 0 avatar

      Look, all I know is that you can’t have a real currency union until you have a true federal union.

      Does the EU want to be a real federal nation (like America, Brazil, Canada, India) or some loose association like the United Nations? If it’s the latter, they shouldn’t try to have a united currency, or crises like Greece will happen on a regular basis.

      For example, California has big debt problems and it is many, many times larger relative to the USA economy than Greece is to the EU economy, but it didn’t bring the whole country down. In fact, we are recovering in spite of them. Why? Because the federal government has real political and fiscal power here, not the mere illusion of it.

      If you cannot support, as you say, a “model that strongly imposes a single direction” you shouldn’t have a single currency. Be a loose association, like a cross between NAFTA and the UN instead.

  • avatar

    Ha, France funds the bureaucrauts in Brussels and thus excempt from the rules. What the french will do is note Brussels objection and then carry on. Without France and Germany the EU collapses, everyone knows this.

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