Opel deal - Russian roulette?

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Sitting behind the wheel of his vintage Volga car next to the bearded chief of the Russian Orthodox church, Prime Minister Vladimir Putin wore a proud grin.

Hours earlier Russia's state-controlled Sberbank and automaker GAZ, which makes the Volga, had agreed a deal to save German carmaker Opel from its bankrupt US owner General Motors .

Although the exact business logic remains a mystery, analysts said the media stunt on Saturday with Orthodox Patriarch Kirill revealed what was driving Russia's desire to help save Opel - national pride and politics.

"He was giving a signal that Russia's car industry cannot be ignored," Sergei Udalov, deputy head of the analytics firm Avtostat, said of Putin's drive in the Volga car.

The deal to save the German car maker - which built its first car in 1899 - was sealed early on Saturday, ending weeks of speculation over who still had the resources to buy the company without slashing thousands of jobs.

Russia's state-controlled Sberbank agreed to take a 35% stake in Opel for an undeclared amount in a deal led by Canadian autoparts maker Magna with GM and the German state. Russian car maker GAZ will act as Opel's industrial partner.

"It is more political and geo-political, to consolidate Russia's status as it is seen by the Russia government - as a big player," said Maria Lipman, a political analyst at the Moscow Carnegie Center.

She noted that on the back of a buoyant oil price - which has rebounded to over $60 per barrel after dropping to around $30 at the end of 2008 -- Russia is again seeking to raise its status in Europe.

Eads comparison

Analysts compared the Opel deal to Russia's purchase of a 5 percent stake in European aerospace group EADS in 2006. The crucial difference this time around was that Europe was in no position to resist Russian help for political reasons.

"We've seen this before where large Russian banks work in tandem with the government to achieve a certain strategic goal," said David Nangle, banking analyst at Renaissance Capital in Moscow.

The purchase of the EADS stake by state-controlled VTB, second in size only to Sberbank, overcame initial rejections and political resistance from the European states who control the company.

But with European industries in desperate need of cash, they are much less likely to reject investments from Russia, which still holds hundreds of billions of dollars in currency reserves.

"Russia's reserve funds have gone down but have not been depleted," Lipman from the Carnegie Center said. "And this puts Russia in a different position from other governments."

End game in Gaz's court

GAZ, once the maker of limousines for Soviet officials and bureaucrats, has watched its sales slide by around half since last year. The financial crisis has brought it to the verge of bankruptcy, only avoiding it with government help, analysts said.

But on Monday, Putin said the acquisition of the Opel stake would become an integral part of Russia's strategy for the automotive sector.

Nangle of Renaissance Capital said he thought the Russian Opel stake may eventually pass from the wealthy government-controlled Sberbank onto GAZ, which the government has been trying to support financially, giving the manufacturer modern technology it is accused of lacking and access to overseas markets.

"On the face of it you find very little logic in a large Russian bank taking an equity stake in a loss-making German car manufacturer," he said.

"There could be an end game here where Sberbank takes on the Opel stake, and GAZ ties up Opel and becomes a stronger more profitable entity."

But whatever the end game, it will be closely controlled by Russia's leaders, who are keen to ensure that Russia's image, as much as its industry, is respected in the West.

"That was Putin's message," Udalov from Avtostat said of Saturday's photo shoot. "He's keeping an eye on things ... and nobody is too cool anymore to ride in a GAZ."