German Economics Minister Karl Theodor zu Guttenberg reportedly offered to resign after Chancellor Angela Merkel and her cabinet ignored his opposition to a government bridging loan for Opel as part of a deal to save the German carmaker from the looming bankruptcy of its US parent, General Motors.

Guttenberg renewed his criticism in Germany's Sunday press, telling the Welt am Sonntag newspaper that the government was making itself vulnerable by acting in a protectionist manner.

"The threat is the state can be blackmailed if it is overly generous with help even once," Guttenberg said.

Under the terms of the government-sponsored deal, the bridge loan will prevent Opel from going insolvent before Canadian-Austrian car parts manufacturer Magna, with the help of it Russian backers, takes over GM's European operations.

Free beer for everyone?

The leader of Guttenberg's Christian Social Union (CSU), Horst Seehofer, supported the economics minister in his stance, saying that the Opel rescue sets an unfortunate precedent. Seehofer said that plenty of business leaders in his state of Bavaria were also in need of financial backing.

"How can I explain to these people that the government will help out in one case, but not in others," Seehofer asked assembled journalists in the Bavarian city of Augsburg.

Michael Fuchs, who heads up the business wing of Chancellor Merkel's Christian Democrats, was even more critical in an interview with Welt am Sonntag.

"With the Opel rescue we're throwing taxpayer money out of the window with a sort of free- beer-for-everyone mentality," Fuchs said. "That's not acceptable. We must stop trying to save companies."

German states pledge money to Opel rescue

North Rhine-Westphalia and Hesse, two of the four German states where Opel factories are based, became on Sunday the first to pledge money towards the government bridge-loan.

Hesse promised 447 million euros - almost as much as the 500 million offered by Magna - towards keeping Opel and the rest of GM Europe in business. North Rhine-Westphalia offered a further 150 million, but asked for guarantees of job security in the Opel plant in its city of Bochum in return.

"The time of uncertainty is over," North Rhine-Westphalia premier Juergen Ruettgers said on Sunday.

Berlin also offered a further 4.5 billion euros in loan guarantees for Opel, which currently loses an estimated three million euros per day.

GM Europe employs around 55,000 people and around 10,000 of these jobs look set to be axed under the Magna takeover plan. Of the 26,000 employees that Opel has in Germany, at least 2,000 are likely to lose their jobs.

SPD ready to spend more

Foreign Minister Frank Walter Steinmeier took a more positive view on the Opel rescue, and criticized Guttenberg for his negative attitude.

The Social Democratic leader, who will be campaigning against Chancellor Merkel in general elections later this year, said that politicians shouldn't just discuss the risks of the deal in public.

"What's really important," he told the Bild am Sonntag newspaper, "is finding ways to minimize the risks of a government rescue plan, during those important negotiations which take place away from the [TV] cameras and the microphones."

In the same interview, Steinmeier addressed the fate of another struggling German company that is reaching out for government funds. Arcandor, the parent of the Karstadt chain of department stores, is calling for help from Berlin. The company says that it has major debts to pay in the middle of June, and that it needs help to do so.

Steinmeier said that up to 50,000 jobs around Germany could be lost, unless the government acts to help Arcandor. So far, however, the Christian Democrats have not advocated a move to help the company.

The government in Berlin is offering a total of 115 billion euros in support for firms hurt by the global economic crisis, as part of its economic stimulus package. That money, however, is only meant to help companies that are otherwise healthy and is not meant to prolong the downfall of an ailing business. Deciding which companies are worthy of government support is already looking like a major issue in Germany's 2009 election campaign.

The Frankfurter Allgemeine Sonntagszeitung said that over 1,100 German companies had already appealed for state aid.

msh/Reuters/dpa

Editor: Toma Tasovac