Spain and Britain have refused to lend money to General Motors' European division Opel, which was acquired by Canadian vehicle parts maker Magna International last month.

Chancellor Angella Merkel is reported to have pushed on the US administration to lean on GM to do the deal with Magna, rather than Fiat. Last month, GM finally announced that it had chosen Magna International, a Canadian vehicle parts group, which would take a 55-per cent stake in Opel and Vauxhall.  erman

Under the deal, Magna will own 22.5 per cent of Opel along with consortium partner Sberbank, the Russian state-owned lender, who will own another 22.5 per cent, with GM retaining a 35-per cent stake while Opel employees would hold 10 per cent.

The deal came after months of intense bidding from Fiat, RHJ International and Chinese carmaker BAIC.

The Ontario-based Magna was not the favourite to acquire Opel initially until the German government, in a bid to save jobs in Germany said that the Magna proposal was far superior to the others.

Magna's offer was more beneficial to Opel employees in Germany since the Canadian company said that it would not shut any of the four German plants, which employs 25,000 people out of Opel's 50,000 workers employed in Europe.

In order to protect jobs in Germany, chancellor Angela Merkel, pumped in €1.5 billion following GM's bankruptcy filing in June.

With an eye on the 27 September elections in Germany, Merkel went all out to back Magna's bid and even offered €3.5 billion state loan to fund the acquisition.

The deal, brokered by Berlin in its favour and against all European state aid rules, is dependent upon the Magna consortium securing €4.5 billion of loans and credit guarantees from Germany, the UK, Spain and Belgium, where Opel has its operations.

Opel's headquarter and its largest ogf its four plants in Germany is in Rüsselsheim in Germany, while its other European plants are in Spain, in Antwerp  in Belgium, Poland and a Vauxhall plant in the UK.

Spain, the UK and Belgium fear that Magna will shift jobs to Germany as a condition for the aid provided by Merkel.

The Spanish government has said that it will not give a €4.5-billion aid package for Adam Opel GmbH to Magna and is reported to be even boycotting the European ministers meeting in Berlin today called by Germany to share the aid between the European countries where Opel operates.

Under Magna's new plan, 10,500 workers at GM across Europe will face the axe. The UK believes that the Vauxhall will stand to lose about 30 per cent of its workforce.

Business secretary, Lord Mandelson had severely criticised the takeover of Opel by Magna and had also warned about  the ''subsidy war'' unleashed by Germany.

In a letter to the EU competition commissioner Neelie Kroes after the GM's announcement that it had chosen Magna as the successful bidder for Opel, Mandelson had written ''We do not believe that the present Magna offer is the best available plan.'' According to him, Magna was sacrificing highly efficient plants in the UK and Spain in favour of less profitable plants in Germany.

Mandelson has referred to data from GM, which had compared efficiency of workers in its Opel plants in Europe.

According to GM, workers in Opel's Saragossa plant in Spain, need on average 19.5 hours to produce a car, 23.2 hours in the UK, 24.4 hours in Bochum and 33.1 hours at Ruesselsheim plants in Germany.

The tough talking, no-nonsense Kroes has now stepped in and has asked whether Germany has offered an aid-for-jobs offer to Magna.

In a letter to ministers, where Opel has its plants, Kroes said, "State funding is meant to tackle problems due to the economic and financial crisis, and cannot be used to impose political constraints concerning the location of production activities within the EU."

With Kroes stepping in, the whole deal appears to be in trouble if European Commission finds that Germany has overstepped the EU rules by offering aid to the Magna consortium to acquire Opel in order to safeguard jobs in Germany.