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Under the terms of the deal, shares in Opel will be divided as follows: Sberbank and GM will each have 35 percent; Magna, 20 percent; and Opel employees will have 10 percent. Russian automaker GAZ, will be an industrial partner.    
 
In 2005, as part of the strategy to revive the domestic production of cars, then Russian President Vladimir Putin introduced favorable terms which sought to decrease foreign screwdriver production and encourage deeper industrial assembly that would involve higher levels of investment, localization, technology development and more jobs. Putin's new, more favorable terms made Russia a "promised land" for car manufacturers in light of the oversaturation of Western automobile markets.  Between August 2005 and November 2007, 22 investment agreements with foreign car makers and 46 memoranda with component manufacturers were executed as leading global automobile manufacturers, including GM, rushed to Russia to take advantage of the oil-backed prosperity and high consumption levels. Many built factories there - GM's plant, located near St Petersburg - was built in 2008.  Car sales boomed - 31.4 percent of Russian consumer expenditure was spent on cars in 2007, compared to 7.3 percent in 2006.
 
However, this prosperity came to a halt with the global economic crisis in 2008. Russian manufacturers like AutoVAZ and GAZ were hit the hardest and had to shorten their working week and even temporarily stop production. Putin tried to save Russia's automotive industry by raising tariffs on imported cars and parts, which drew protests from the far eastern part of the country, which depends on Japanese auto imports.  Putin, however, ignored the protests and promised more money to domestic car makers.  
 
Although the long-term implications of the economic crisis for the Russian auto industry are still unclear, the Opel sale answers the needs of several key players.  The Russian government via Sberbank gets access to world-class technology, part of a broad strategy to develop the domestic auto industry.  Further, GAZ will build Opel models; Magna becomes a full-fledged car manufacturer and receives access to the Russian market; the German government saves jobs; Opel gets a much needed cash injection; and GM will have one less issue to worry about as it deals with its own bankruptcy.  However, there are obstacles to the happy ending. 
 
Volkswagen, one of Magna's largest parts supply clients, balked at the idea of Magna becoming a full-fledged car maker, arguing that the competition for technology is tough and a relationship between an Original Equipment Manufacturer (OEM) and a supplier implies a lot of trust. 
 
Magna's consortium will invest EUR700 million in Opel, but its ambition to take over 20 percent of the Russian market might be unrealistic. There is a possibility that Sberbank will consider selling its shares if Magna's attempt to use Opel as a springboard into the Russian market - as well as the Russian government's plan to expand the market - fails.  As the economic crisis continues, the market for acquisitions heats up. 
 
The global automotive industry has been consolidating for decades - by the end of the 20th century, only a few OEMs survived the race. The current economic crisis is intensifying consolidation activities, as exemplified by Fiat's CEO Sergio Marchionne who plans to build an auto empire combining its core business with that of Chrysler and GM. However, the aggressive behavior of Fiat, Magna, and the Russian government as they fight over the assets of the failing US auto giants comes as a surprise since China has been recently repeatedly referred to as the future automotive power.  One would assume that the Chinese would march West, swallowing one fallen American manufacturer after another. However, there has been minimal activity by the Chinese. The explanation could lie in the fact that the Opel deal managed to meet the combined political and economic interests of the US, Germany, Canada, and Russia together with reinforcing transatlantic relations. At present, there seems to be no place for the Chinese in this scenario.  It is hard to imagine Russia becoming an automotive empire in the near future, but one cannot escape noticing the political will and persistence of the Russian government to take this route. In this case, where there is a will, there may be a way.

Irina Aervitz, Ph.D. in political science, is the vice president of the Federal News Service in Washington, DC. She is also an adjunct faculty at George Mason University, where she teaches Global Affairs.

 Related Materials from the Atlantic Community:

• Jens F. Laurson & George A. Pieler: State-Backed Opel Deal Poses Threat to Free Markets
• Christoph Suess: As Wheels Come Off GM, Opel Goes it Alone
• Soyen Park: The Legacy of the Financial Crisis Awaits us in 2020