Swedish car rescue plan in a dilemma

Swedish Industry Minister Maud Olofsson will be facing a tough parliamentary question session on Tuesday, Dec. 16, when the opposition Socialist Party demands to hear a clearer verdict on the bailout of SEK28 billion earlier promised to the car manufacturing industry. It is a question of whether the coalition government is going to pursue said bailout or is simply misleading the industry and the Swedish people.

"If it shows that the government's crisis package is not actually SEK28 billion as promised, then it is serious", says Tomas Eneroth, spokesman for the Socialist Party Industry Committee. He wants to see the bailout papers on Olofsson's table.

Last Thursday, Dec. 11 the coalition government through Finance Minister Anders Borg and Industry Minister Olofsson, presented the rescue package for the car industry which consists of a SEK28 billion financial injection.
The billions from the European Investment Bank (EIB) can not be loaned directly to either SaaB or Volvo since they are both owned by the American company Ford or GM, and not either to Opel in Germany. The problem is that they are under a common financial system with their respective US owners.

"It would mean that if (these car companies) were given the rescue money at this time and GM or Ford declares bankruptcy, the money would simply disappear into a black hole, without a cent left. This is a huge amount for Europe and even if both US companies were to survive, they could announce that they will develop new car technologies in Detroit, for which European taxpayers will not be too happy to get involved in, much less pay for," said Lars Holmquist, European car sub-contractor.

Holmquist believes that the Swedish government would want to build a new company, something of a Swedish car development type, with the state as primary owner and thereafter place the multi-billion rescue money into this new organisation designed to develop new technologies such as petrol-saving engines and hybrids. Then later, Saab and Volvo could be allowed to use these technologies to meet the present demand for environment-friendly vehicles. In this way, the Americans could not lay hands on the rescue money but could later avail of the results of the research.

As far as the EIB rescue money is concerned, the SEK20 billion is earmarked for the European car industry for 2009. The money will not be paid during a one year term but within a period of four years up to 2012. It is hoped that with several car manufacturers needing financial help, the amount promised by EIB will be increased accordingly.
(Translated and edited from Dagens Nyheter, 14 Dec. 2008)