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EUROPEAN UNION

Merkel expects ‘thank you’ as GM repays loans

German Chancellor Angela Merkel said on Tuesday she was expecting a "thank-you letter" from General Motors after the US firm paid Berlin back for huge loans to keep its Opel unit afloat.

Merkel expects 'thank you' as GM repays loans
A thank you this big? Photo: DPA

“I can tell you that the last funds (received by) General Motors have been paid back, which means that the Opel operation has not cost the German taxpayer a cent,” Merkel said in a speech in Berlin.

She added that she expected “a comprehensive thank-you letter from General Motors in a few years” and defended her decision to offer the €1.5-billion ($2.2-billion) loan to the Detroit-based car giant, saying: “It was absolutely right … to build a bridge.”

The loan was due to be repaid by November 30.

GM agreed in September to sell a majority stake in Opel, which includes Vauxhall in Britain, to Canadian auto parts maker Magna and Russian state-owned lender Sberbank. But it later pulled a handbrake turn on the deal, deciding instead to keep the loss-making unit and restructure itself, with the loss of around 10,000 jobs across Europe.

It has not yet said where the jobs will be cut and which plants will be closed, leaving GM’s 50,000 employees across Europe fearing for their jobs.

The U-turn infuriated Germany and Merkel, who had invested a lot of political capital in the Magna deal.

Germany had offered €4.5 billion worth of state aid for the deal, including the €1.5-billion loan and €3 billion in state loan guarantees.

The news was all the more embarrassing for Merkel as it broke during her recent official visit to the United States.

However, in a boost for Merkel and German Opel employees, GM Europe’s interim head Nick Reilly said earlier Tuesday the firm expected to keep open its plant in Bochum in western Germany.

The plant, employing almost 5,200 people near Essen will remain “an important location in the future,” Reilly said after talks with the premier of the German state of North Rhine-Westphalia where the site is located.

Reilly was due to hold further talks with regional leaders later Tuesday as he continued a tour around key European countries with Opel factories.

Astra and Zafira cars are assembled at the Bochum plant, which also makes axles and gearboxes, according to Opel. It is one of four Opel plants in Germany, employing between them around 25,000 people.

GM is poised soon to present concrete plans for Opel and is seeking €3.3 billion in financing from European governments.

News magazine Der Spiegel said the company had received offers of €400 million from Britain and between €300 million and €400 million from Spain, as well

as proposed tax breaks from Poland.

Following a meeting of top finance ministry officials and GM executives in Brussels on Monday, the European Commission said that nations affected had decided not to make formal commitments before a further meeting on December 4.

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EUROPEAN UNION

The Euro celebrates its 20th anniversary

The euro on Saturday marked 20 years since people began to use the single European currency, overcoming initial doubts, price concerns and a debt crisis to spread across the region.

The Euro celebrates its 20th anniversary
The Euro is projected onto the walls of the European Central Bank in Brussels. Photo: Daniel Rolund/AFP

European Commission chief Ursula von der Leyen called the euro “a true symbol for the strength of Europe” while European Central Bank President Christine Lagarde described it as “a beacon of stability and solidity around the world”.

Euro banknotes and coins came into circulation in 12 countries on January 1, 2002, greeted by a mix of enthusiasm and scepticism from citizens who had to trade in their Deutsche marks, French francs, pesetas and liras.

The euro is now used by 340 million people in 19 nations, from Ireland to Germany to Slovakia. Bulgaria, Croatia and Romania are next in line to join the eurozone — though people are divided over the benefits of abandoning their national currencies.

European Council President Charles Michel argued it was necessary to leverage the euro to back up the EU’s goals of fighting climate change and leading on digital innovation. He added that it was “vital” work on a banking union and a capital markets
union be completed.

The idea of creating the euro first emerged in the 1970s as a way to deepen European integration, make trade simpler between member nations and give the continent a currency to compete with the mighty US dollar.

Officials credit the euro with helping Europe avoid economic catastrophe during the coronavirus pandemic.

“Clearly, Europe and the euro have become inseparable,” Lagarde wrote in a blog post. “For young Europeans… it must be almost impossible to imagine Europe without it.”

In the euro’s initial days, consumers were concerned it caused prices to rise as countries converted to the new currency. Though some products — such as coffee at cafes — slightly increased as businesses rounded up their conversions, official statistics have shown that the euro has brought more stable inflation.

Dearer goods have not increased in price, and even dropped in some cases. Nevertheless, the belief that the euro has made everything more expensive persists.

New look

The red, blue and orange banknotes were designed to look the same everywhere, with illustrations of generic Gothic, Romanesque and Renaissance architecture to ensure no country was represented over the others.

In December, the ECB said the bills were ready for a makeover, announcing a design and consultation process with help from the public. A decision is expected in 2024.

“After 20 years, it’s time to review the look of our banknotes to make them more relatable to Europeans of all ages and backgrounds,” Lagarde said.

Euro banknotes are “here to stay”, she said, although the ECB is also considering creating a digital euro in step with other central banks around the globe.

While the dollar still reigns supreme across the globe, the euro is now the world’s second most-used currency, accounting for 20 percent of global foreign exchange reserves compared to 60 percent for the US greenback.

Von der Leyen, in a video statement, said: “We are the biggest player in the world trade and nearly half of this trade takes place in euros.”

‘Valuable lessons’

The eurozone faced an existential threat a decade ago when it was rocked by a debt crisis that began in Greece and spread to other countries. Greece, Ireland, Portugal, Spain and Cyprus were saved through bailouts in return for austerity measures, and the euro stepped back from the brink.

Members of the Eurogroup of finance ministers said in a joint article they learned “valuable lessons” from that experience that enabled their euro-using nations to swiftly respond to fall-out from the coronavirus pandemic.

As the Covid crisis savaged economies, EU countries rolled out huge stimulus programmes while the ECB deployed a huge bond-buying scheme to keep borrowing costs low.

Yanis Varoufakis, now leader of the DiEM 25 party who resigned as Greek finance minister during the debt crisis, remains a sharp critic of the euro. Varoufakis told the Democracy in Europe Movement 25 website that the euro may seem to make sense in calm periods because borrowing costs are lower and there are no exchange rates.

But retaining a nation’s currency is like “automobile assurance,” he said, as people do not know its value until there is a road accident. In fact, he charged, the euro increases the risk of having an accident.

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