German politicians seethed and unions tore up a deal to cut costs in protest at General Motors' completely unacceptable decision not to sell Opel, its European unit, after months of painstaking talks.

Labor leader Klaus Franz rescinded hundreds of millions of euros in cost concessions that workers agreed to on condition that Opel was bought by Magna, the Canadian group the Berlin government had long favored as buyer.

General Motors' behavior toward workers is completely unacceptable, German Economy Minister Rainer Bruederle told reporters the morning after GM's shock news. General Motors' behavior toward Germany is completely unacceptable.

Germany viewed Magna and its Russian partner Sberbank as most likely to preserve as many German jobs and plants as possible.

Half of Opel's 50,000 staff are based in Germany.

General Motors' behavior shows the ugly face of turbo-capitalism. That is completely unacceptable, said Juergen Ruettgers, premier of the state of North Rhine-Westphalia, home to Opel's Bochum plant, which is seen at risk of closure.

GM Europe will now revert to a reorganization plan that envisions chopping fixed costs at Opel by 30 percent, a spokeswoman said.

Failure to reach the needed restructuring would result in the operation becoming insolvent, an unnecessary and undesirable outcome for all involved, GM Europe said.

She declined to say what that could mean in terms of job losses and plant closures, but German staff feared the worst.

I don't know what is going to happen here in Bochum if Magna does not take it over, said one Opel worker arriving for an early shift at the plant.

Another Opel worker accused GM of betraying its workers.

This arises from the mentality of American capitalism. They used to make treaties with the Indians and then quickly break them, he told a German radio interviewer.

In Spain, union spokesman Jose Juan Arceiz said workers would try to negotiate a deal with GM as they had with Magna.


GM abandoned the Opel sale on Tuesday, saying improving business conditions and the strategic importance of Opel had prompted the move by its board of directors.

The decision left open the question of how GM will finance its plan to restructure Opel, the backbone of its operations in Europe and a key source of global technology for mid-sized cars.

The spokeswoman said GM would repay a 1.5 billion euro ($2.21 billion) bridge loan due at the end of November if Berlin requested this. The loan helped save Opel from being sucked into its U.S. parent's brief dip into bankruptcy this year.

GM Europe has said it was counting on European loan guarantees to provide the bulk of the financing it needs to overhaul Opel.

Officials in Berlin, which had originally planned to provide 4.5 billion euros in upfront aid for the Russian-backed Magna bid, focused on getting back the bridge loan rather than providing fresh financing.

In Brussels, a spokesman for European Competition Commissioner Neelie Kroes noted that the Commission's role was only to verify that any aid complied with EU rules, adding: The Commission can't force member states to give state aid.

British Business Secretary Peter Mandelson said he wanted quick talks with GM to see how the new plan would affect jobs, including at its British Vauxhall plants. Countries with Opel plants including Germany, Britain, Spain and Belgium were originally expected to provide the state aid for the rescue of loss-making Opel. GM said it expected that restructuring Opel on its own would cost about 3 billion euros.


German officials who asked not to be named said the decision came as a total surprise to Chancellor Angela Merkel and her advisers during a visit to Washington, where Merkel addressed a joint session of Congress.

GM Chief Executive Fritz Henderson broke the news to her delegation during Merkel's meeting in Washington with the heads of the World Bank and IMF shortly before she returned to Berlin.

Senior German officials said the Opel issue did not come up when Merkel met U.S. President Barack Obama on Tuesday.

Opel put the best face on its parent's change of heart.

The GM board of directors' decision brings clarity for Opel/Vauxhall, it said in a brief statement on Wednesday.

Labor leader Franz said workers would not go along with GM's blackmail of European governments and staff. Protests were planned across Europe on Thursday.

GM's board had opted to sell a 55 percent stake in the loss-making Opel unit to Magna and Sberbank after seven months of talks, which had included a competing bid from Brussels-listed RHJ International.

(Additional reporting by Reuters bureaus around the world, editing by Will Waterman)