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Is GM Turnaround Putin’s Just Desserts?

opel-stop-004.jpgDoes the slashing of the GM deal mean Putin is getting a taste of his own medicine?  This is from Streetwise Professor :

The decision of GM’s board to maintain control of Opel touched off howls of protest from Germany-and Vladimir Putin.  Putin was outraged that GM would act in such a high-handed way.  A deal is a deal, after all-if it works in Russia’s favor.  Putin made heavy hints that Russia would explore legal options.

Cry. Me. A. River.

Actually, the irony here is too rich for words.  Let’s remember the narrative that justified the rough treatment of Shell a few years ago.  When Russia was on its knees, the story goes, opportunistic oil companies exploited Russia’s economic desperation by forcing it to enter into humiliating production sharing agreements that were tilted heavily against the Russians.  In the mid-2000s, the worm had turned, oil prices had risen dramatically, Russia was no longer on its knees, and it redressed the injustices inflicted on it during its time of troubles by forcing Shell (through regulatory thuggery) to tear up the PSAs and sell its interest in Sakhalin at Putin’s price.

Fast forward to 2009.  GM is on its knees.  Russia-with the connivanceof a German government facing re-election-takes advantage of thecompany’s distress to enter into an agreement that it would nevercountenance under other circumstances.  Months later, its hour ofdesperation past, GM reconsiders the deal and tells Putin to pound sand.

Tell us how it feels, Vladimir Vladimirovich.

But note one crucial difference: unlike Shell and Russia, GM had notsigned on the dotted line.  It backed out before it had entered into abinding legal obligation.

An interesting lesson in corporate governance that Putin might well heed.  A board of directors overrules its management.

Read all here.