More GM-Magna Fallout: What Russia Will Have to Learn

Vladimir Putin is whining, predictably, about the GM board’s decision to terminate the sale of Opel:

"We will have to take into account this style of dealing with partners in the future, though this scornful approach toward partners mainly affects the Europeans, not us,” Putin told a cabinet meeting in Moscow. [nL5471607]

“GM did not warn anyone, did not speak to anyone … despite all the agreements reached and documents signed. Well, I think it is a good lesson.”

Wah, wah, wah. Here’s more:

Prime Minister Vladimir Putin lashed out at General Motors (MTLQQ.PK) on Thursday after a Russian-backed bid to buy carmaker Opel fell through, hinting that there may be repercussions down the road because of GM’s “disregard for its partners.”

“Nobody warned anybody about anything,” Putin said, referring to the surprise decision by the U.S. company not to sell its European unit. State-owned Sberbank and parts maker Magna had made preliminary agreements to buy the European carmaker, with GAZ Group named as a potential industry partner.

“Everyone was notified after the fact, despite the agreements that had been reached and the documents that had been signed, including legal ones,” Putin said.

The board’s ruling “doesn’t harm our interests, but it shows a rather peculiar communication style that our American partners use with their counterparts,” Putin said. “This is a good lesson. … We must take into account this kind of cooperation with our partners in the future,” he said, adding that the decision primarily showed disrespect to GM’s European partners.

“Peculiar communications style.” Priceless.

Putin should recognize that the real lesson here is that the only way Russian companies were in the running for a piece of Opel at all was because of political machinations and a combination of bribery and blackmail (by the Germans, in cahoots with the Russians), rather than a rational economic calculation. While nursing his hurt ego (when somebody says “it doesn’t hurt me” you can bet it really hurts), Putin should consider why the prospect of partnering with Russian firms is so repulsive that it is necessary to rely on such means to prevail.

Here are a couple of other priceless gems from other Russian winners. First, from our old buddy Oleg Deripaska:

The problematic deal with Opel, with its international political overtones, is wrapped up in the “superstitions of the U.S. State Department,” Mr. Deripaska earlier told the Russian press. The State Department has denied Mr. Deripaska a visa to visit the U.S., although he recently visited the country in cooperation with the Federal Bureau of Investigation and met with Detroit executives.

I guess that Detroit meeting was a real success, huh, Oleg? (By the way, it is pretty disgusting that the FBI acted as an intermediary in this way. This whole episode deserves a lot more scrutiny than it has received.) And just where did those superstitions originate? It must be a trial to be so misunderstood.

And here’s the reaction of a United Russia parliamentary official:

“The motivation, it seems to me, is very simple: to keep Opel within the zone of political and economic influence of American business and American politics,” said Oleg Morozov, deputy head speaker in the lower house of Russian parliament for Mr. Putin’s United Russia Party.

The paranoia is so thick you could cut it with a knife.

Until these attitudes are replaced by a more critical appraisal of the reasons for Russian companies’ unattractiveness to potential foreign partners, the country can count on remaining in Putin’s purgatory. Have fun with that.

Comments

[RussianEqui...:]

Any analysis, Sir?

Nov 09 06:22 AM

[TK5656:]

I agree with the previous comment that this post doesn't have much analysis, though I might not have seen the Putin quotes without checking your blog. I would like to see you write on an article I saw recently, probably in NYT, about the criticism of Putin by the Russian Communist Party, and its approval of some of Medvedev's recent comments.

Putin and Russia seem kind of like Mexico under the PRI in the 40s or 50s, or even as late as Echeverria, but with a twist. The PRI was officially "revolutionary" while Putin is still, officially, the protector of capitalism and private property. It would be nice to get some info on how his political act is holding up internally.

Nov 09 12:17 PM

[Alex Filonov:]

GM needs Opel because small and midsize car design has been done there. Other than that, Opel is a mess. Worst European auto company by far.
Putin's reaction is strange. Formally speaking, Sberbank was supposed to be a minority owner, and Magna is not a Russian company. There was something going on under this deal. I'm not sure shadow dealings were the main reason GM scrapped the deal, but they definitely were a factor.

Nov 09 12:30 PM

[tripleblack:]

Fun read. I would agree, NOT an analytical piece, but fun all the same. Sometimes just gaining a little insight into the psyche of the operator on the other side is more interesting than dry numbers.

Nov 09 12:53 PM

[ValueInvestor:]

I can't believe he's saying this stuff after all the natural gas bribery, blackmail and extortion the Russians have done to the Europeans.

Nov 09 03:02 PM

[History Buf...:]

ValueInvestor is absolutely right, for Putin to whine about this after all the crooked dealing that has been going on in Russia the last few years is the pot calling the kettle black! Anyone remember all the machinations going on with BP's half ownership share in TNK?

Of course, considering Putin's background in the KGB, maybe I should expect nothing but lies, hypocrisy and disinformation from him.

Of course, it's not like we have free markets in the US either ...

Nov 09 04:14 PM

[a. palmer jr.:]

Maybe the US should re-think her practice of bailing out bankrupt and crumbling communist countries.

Nov 09 10:52 PM

[Leo Zimmer:]

Your article (and it's not the only one) reaks of sadistic pleasure you seem to derive from a deal gone wrong. Of course, the game was rigged, and Russians and Germans sat cosily together. GM spoiled the party to Putin's and Merkel's embarassment. It would be much more useful if you tried to write on the mechanics of the deal and the reasons it failed. Unfortunately, your preference to populist approach in coverage deprives readers from peaking into some fascinating layers of Euro-Russian realtionships and business.

Nov 09 11:34 PM

[Osterix:]

To: Leo I have been following the Opel soap opera since day one because I am interested in Magna. I think you are seeing sinister plots and conspiracies where there is just a simple situation. 1) The Russians want to own a piece of a western auto manufacturer so they can have access to first class technology. 2) Magna is owned by one man who has always wanted to be a full auto manufacture instead of a parts supplier. 3) The German government was willing to put up over a billion in loan guarantees to keep jobs in Germany and the Magna/Russian deal would have kept the most jobs in Germany. 4) It was GM who queered the deal at the last minute. The Germans were shocked and furious. A lot more than Putin. GM pulled out at the last minute without warning because with the US goverment bailout it no longer had to sell Opel, and as noted by another commenter, GM needs the technology that Opel has. It may make crummy cars but its engine and other technologies are ahead of anything in Detroit. Osterix

Nov 10 01:22 AM

[La Marque:]

Opel is a drain on GM. GM needs less brands and more organic growth with its American brands. It is the worst European auto company because of mismanagement. Opels are not exported to North American because they are uncompetitive. GM has small car expertise with its Korean unit and it is competitive.


On Nov 09 12:30 PM Alex Filonov wrote:

> GM needs Opel because small and midsize car design has been done
> there. Other than that, Opel is a mess. Worst European auto company
> by far.

Nov 10 10:35 AM

[Leo Zimmer:]

To Osterix: You have painted the right picture, thank you. I wish the writer used your brushes...

Nov 10 11:42 PM

[DrBenway:]

I had a misfortune of driving Opel on my recent trip to Europe. What a POS of a car! I doubt that Opel can be profitable: you can buy slightly better cheap junk from WV or get a real car from BMW or Mercedes.

There are few sympathetic parties in the whole deal. GM has not learned its lesson and still wants to keep the scarps of its decaying and bankrupt empire. (I would take my words back if it manages to sell Opel to some other sucker.) Germany wants to protect its overpaid union jobs at the expense of its other less-politically connected taxpayers. Putin just wants a part of GM to please his ego and stick it to the hated Yankees (which seems the primary obsessions of an average Russian of late.)

And who the f*** is Magna? Is it another Penske that bailed on Saturn at the last second?

All I can say when Opel dies, humanity and progress as a whole wins!

Nov 12 04:57 PM

[BeachRider:]

Wholesale slaughter of GM/Opel technology is misguided. GM really does have some intellectual property and manufacturing technology that others lack. The GM/Opel management were REALLY awful, though. GM's biggest problems were its corporate misgovernance.

Historically mixing Russian business needs with German jobs hasn't been a good deal for the Germans. Perhaps the Germans are making noises, just to save their Russian relationship. It has to be that Germany would expect Opel to last longer with American ownership versus Russian Ownership.

Nov 16 01:57 PM