When GM backed out of its deal to sell Opel, so that it could suck up the promised state aid from Germany, I said that they were snatching defeat from the jaws of victory.

Well, they are now seeing blowback from this decision.

The German government is demanding that GM put significant resources into Opel, resources that it really doesn’t have, before it will make any state aid available:

Germany wants General Motors Co. to increase its contribution to the Opel unit’s reorganization before considering whether to provide state aid, according to two people familiar with the matter.

Economy Minister Rainer Bruederle is using a two-day U.S. visit, which includes a meeting with Treasury Secretary Timothy F. Geithner in Washington, to express that view, said the people, who declined to be identified because the discussions are confidential. GM has said it will provide 600 million euros ($836 million) for Opel’s restructuring and ask for as much as 2.7 billion euros from European governments.

I said that the result of the decision would be labor unrest, consumer disgust, and hostility on the part of German authorities.

You can’t go wrong betting on the managerial incompetence of GM.