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American auto manufacturer General Motors (GM) agreed Sept. 10 to sell its European unit Opel to Canadian auto parts manufacturer Magna International, an offer financed by Russian state-owned bank Sberbank. Bloomberg reported that Magna and GM resolved contentious issues regarding GM's intellectual property rights in the past two weeks, particularly as they pertain to Opel cars being produced in Russia in the future. From the beginning, Germany, and specifically German Chancellor Angela Merkel, has preferred and lobbied hard for the Canadian-Russian offer over a rival offer from Belgian investment firm RHJ International. Berlin used government loan guarantees worth 4.5 billion euros ($6.5 billion) to bolster the bid and refused to do the same for the RHJ International offer.

GM's acceptance of the Magna bid is a vindication for Merkel, who will be able to claim only two weeks before the general elections that her hard-nosed negotiations in the deal saved up to 25,000 of Opel's German-based jobs. However, the sour taste in the U.S.-German relationship will remain, despite GM's reversal.

The Opel drama has become symbolic of the uneasiness in German-U.S. relations. GM, owned by the U.S. government since its bankruptcy, initially refused to sell Opel to the Magna-Sberbank bid despite the German government's insistence on the deal. Part of the logic was GM's worry that Opel's small car know-how, something the American manufacturers sorely lack, would pass to a potential North American rival, Magna, and also to Russia's GAZ, Magna's partner. The other reason was that GM still hoped to retain Opel once it recovered and therefore hoped that the RHJ bid would allow it to repurchase the German auto manufacturer it has owned since 1929, once RHJ sufficiently culled Opel's staff and operations in Europe.

This latter point was not only unacceptable for the German government, but also insulting for Merkel, who has been planning for general elections on Sept. 27. Her rival in the elections, and current partner in the grand coalition, the Social Democratic Party (SPD), had made Opel a campaign issue early on and Merkel needed a successful resolution to neutralize it. The German government therefore played hardball and told GM not to count on any German government loans to help sustain the RHJ bid like it offered for Magna and Sberbank. For Berlin, the Magna bid was superior because it guaranteed that more German jobs would be saved, while putting non-German GM Europe jobs at risk.

With GM's willingness to sell Opel to the Canadian-Russian bidder, Merkel finally has her way. However, it will not escape her scrutiny that the U.S. government, which owns post-bailout GM, did not make any real effort to help her so close to her election and that the issue dragged on until two weeks before elections. This only adds to the most recent spat between the United States and Germany, which involved U.S. military officers on the ground in Afghanistan criticizing a German military officer who called in a U.S. airstrike in Kanduz against militants that may have cost dozens of civilian lives. Merkel's poll numbers have dropped significantly since the incident in Afghanistan, threatening her ability to extricate herself from the grand coalition with the SPD.

With Germany reasserting its independence and growing economically and politically closer to Russia, STRATFOR will keep a close eye on the developing U.S.-German relationship in Merkel's second term. It is unlikely that she will forget Washington's lack of understanding.