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President Dmitry Medvedev walking with German Chancellor Angela Merkel at his residence in Sochi on Friday.
German Chancellor Angela Merkel on Friday welcomed Russian investment into Opel, chipmakers Infineon and Qimonda and a shipyard in Germany, whose recovering economy won praise from President Dmitry Medvedev.
The two leaders met for cordial one-day talks at Medvedev’s summer residence in the Black Sea resort of Sochi, and the only public criticism came during a final news conference when Merkel condemned a series of killings of human rights activists in Chechnya. Medvedev ordered Chechen President Ramzan Kadyrov to bring the killers to justice. (Story, Page 2.)
At the news conference, Merkel reiterated her support for Magna-Sberbank’s bid for Opel and said she and Medvedev had discussed “a strategic partnership in the field of electronics,” namely investments into Infineon Technologies and “probably” Qimonda.
“All of these are projects that have emerged from somewhat difficult economic situations amid the crisis and are offering opportunities for more intensive cooperation based on the win-win principle that will benefit both sides,” Merkel said, according to a Russian transcript posted on the Kremlin’s web site.
Asked by a reporter whether supporting Germany’s economy would harm Russia’s during the crisis, Medvedev said the crisis had brought down prices, so “now is the time to make investments.”
“We should invest money in areas where we do not yet have sufficient economic activities, for example, investments into companies like Infineon or Qimonda or the acquisition of Opel,” Medvedev said. “They are investments in high technology companies, and the high-tech industry is precisely what we are lacking and what could really help us improve the structure of our economy, thereby helping us be better protected for future crises.”
Merkel said negotiations over Opel, which employs 25,000 people in Germany, were in a “decisive phase,” but could not say how long it would take to reach an agreement.
Magna and Sberbank offered a revised bid to Opel’s parent company, General Motors, on Thursday, but the U.S. carmaker indicated Friday that the process might be far from completion. “There is more to consider and more to do before an agreement for Opel is reached,” GM’s chief negotiator for the sale, vice president John Smith, wrote on his blog.
One holdup to the deal was a demand by Magna for rights to Opel’s intellectual property, but Magna agreed to make Opel cars under a licensing agreement under the revised bid, Kommersant reported Friday.
Hammering out licensing agreements would further delay the sale and add several million dollars to the already “enormous” sum of 500 million euros offered by Magna and Sberbank, said Yelena Sakhnova, an analyst with VTB Capital. On top of that, it will cost Magna an extra $100 to $300 for each car that it produces under license, she said.
“It seems like nobody really wants this agreement, but the government has an obsessive idea and they are realizing it,” she said, referring to Magna’s partners Sberbank and GAZ.
Sberbank is an unwilling investor that will be stuck with the Opel stake, unable to sell it to GAZ, whose financial position is “catastrophic,” and GAZ is the unwilling partner because it does not work in the passenger car segment, Sakhnova said.
But Sergei Mikheyev, an analyst at the Center for Political Technologies, said the Russian government was unlikely to willingly make a bad investment. “In terms of political image, it would not look very good to do this during a financial crisis,” Mikheyev said.
Medvedev and Merkel also discussed the possible sale of a stake in Infineon to Sistema, a holding company headed by billionaire Vladimir Yevtushenkov.
Both companies said they were aware of discussions between the German and Russian governments about their possible cooperation but added that they were not involved in the talks.
The Russian and German leaders gave no details about their talks about Qimonda, a maker of dynamic random access memory that is owned by Infineon and filed for bankruptcy earlier this year.
High technology is a field that Medvedev hopes to turn into a motor of the Russian economy, and Russian companies need the modern technology that it could offer.
Russia could also benefit from the technology offered by Germany’s fifth-largest shipyard, Wadan Yards, which recently declared bankruptcy and has a debt of 90 million euros.
Merkel noted that Gazprom director and former Energy Minister Igor Yusufov had expressed an interest in buying the shipyard and said Germany would help him “if there is a way.”
Medvedev said both governments were monitoring negotiations but were not involved since they were between private investors.
Medvedev congratulated Merkel on the news earlier in the week that Germany’s economy had emerged from recession.
“Without doubt, this is the result of the continuous efforts of the German government,” Medvedev said. “We should think about how, by strengthening our bilateral strategic and economic ties, we could help our economies, and therefore our people, to overcome this global crisis.”
