Aug. 28 (Bloomberg) -- The Spanish government said today it wouldn’t rule out giving financial aid to General Motors Co.’s Opel unit even if the U.S. carmaker decides to keep the European division.

Prime Minister Jose Luis Rodriguez Zapatero said Spain is “following intensely” the negotiations on a possible sale of Opel. Asked whether Spain would still offer aid if GM decides not to sell Opel, Zapatero said his government is “ready to give help to different alternatives for Opel and GM in Spain.”

Zapatero, speaking to reporters today in Madrid, said any decision on financing would depend on the “viability” of a rescue plan.

Germany, which has provided 1.5 billion euros ($2.2 billion) in loans to keep Opel afloat, is pushing GM to accept a bid by a group led by Magna International Inc. The U.S. carmaker’s board, which failed to decide on a buyer last week, is considering all options, including rejecting two pending bids and keeping Ruesselsheim, Germany-based Opel as a wholly owned subsidiary, a person familiar with the discussions has said.

Opel employs about 7,000 workers in Spain, the most employees outside Germany. Opel assembled 29 percent of the 1.5 million vehicles it produced last year at its plant in Zaragoza, where it makes the Corsa compact, Meriva minivan, and Combo van.

Tom Wilkinson, a GM spokesman, declined to comment on Opel’s status.

Pressure on GM

German Chancellor Angela Merkel’s coalition is maintaining pressure on GM to back Aurora, Ontario-based Magna, whose offer is financed by Russia’s OAO Sberbank, before Sept. 27 elections. John Smith, GM’s chief negotiator, has said a rival bid by Brussels-based investor RHJ International SA was “simpler” to implement because it doesn’t involve intellectual property issues in Russia.

In an Aug. 25 interview with ZDF television, German Economy Minister Karl-Theodor zu Guttenberg questioned how GM, which emerged from bankruptcy July 10 and is controlled by the U.S. Treasury, would raise the money needed to keep Opel in business.

Opel and its sister brand Vauxhall also have operations in the U.K. and Poland, among the larger nations that may be asked to contribute aid for the carmaker’s restructuring.

GM’s Needs

GM said in February it needed 3.3 billion euros for a plan to close plants and trim workers to return Opel to profit. Of GM Europe’s 55,000 workers, about 25,000 are in Germany.

Guttenberg said this week that Opel had drawn down 1.05 billion euros of the short-term loans offered by the federal and state governments.

If a deal is delayed until after German elections, talks with the new government aren’t likely to begin until late October, according to Fred Irwin, chairman of the German government-backed trust created to facilitate a sale. A “drop- dead date” for a deal is mid-January, when Opel will probably run out of funds, Irwin said an Aug 25 interview.

Spain is suffering its worst recession in six decades and contraction may continue next year, the Organization for Economic Cooperation and Development forecast on June 24. The economy will contract 4.2 percent this year and 0.9 percent in 2010, which would make it the worst performer of the 30 OECD nations next year after Hungary and Ireland, the Paris-based group said.

Zapatero has put in place spending plans worth 2.3 percent of GDP to revive the economy. Spain’s budget deficit will swell to 9.5 percent of GDP this year, the government forecasts. The widening deficit prompted Standard & Poor’s to cut Spain’s top AAA credit rating in January.

To contact the reporter on this story: Javier Marquina at jmarquina@bloomberg.net

Last Updated: August 28, 2009 14:08 EDT