Europe needs to mobilise much more than €315 billion to embark in the transformation of its economy, create millions of jobs, create new business opportunities and create a genuine post-carbon society, said Jeremy Rifkin in an interview with EURACTIV.
Speaking ahead of the Momentum for Europe conference, organized by the European Investment Bank in Berlin, the US economic theorist called for greater political engagement.
Structural Funds 2.0
“300 billion is not a lot of money. It is very little money, in fact,” he argued. “What needs to happen is the reprioritisation of investment across Europe. We are talking about hundreds of billions of euros,” he told EURACTIV.
The influential American writer whose best-selling Third Industrial Revolution arguably provided the blueprint for Germany’s transition to a low-carbon economy, and China’s strategic acceptance of climate policy, said that the political mission should be to restructure all European investment funds, way beyond the 300 billion.
“What we need to see is a new vision of how to connect every region of Europe into a new Internet of things, a Third industrial revolution for the 21st century that can actually integrate Europe as a single space and dramatically increase productivity and jobs,” he said.
Every region, for example, gets a certain amount of money through structural funds. But the problem with those funds is that a lot of it is wasted, he argued.
“If you have a cement factory, you may get a project to build a road to nowhere, which doesn’t link up in an intelligent way with the rest of Europe,” he explained. Instead, each region should come up with a plan, a roadmap, for creating a new infrastructure that combines three pillars, each of which interacts with the other to enable the system to operate as a whole.
The system involves new communication technologies to more efficiently manage economic activity; new sources of energy to more efficiently power economic activity; and new modes of transportation to more efficiently move economic activity.
The EU economy is slowing, productivity is waning, and unemployment remains stubbornly high. “EU now finds itself in limbo without a clear vision of the next stage of its journey,” he said.
The Juncker revolution?
So even though the Juncker plan is not fit to purpose, President Juncker has begun to create a new vision for the next stage of the European Journey, the author of the European dream conceded.
The EU owes its success to a forward thinking series of economic and social visions that have motivated member states and the citizenry to continue on a common journey –the Maastricht Treaty, creating a political Union; the introduction of the Euro, the Monetary Union; enlargement, the 20-20-20 goals, to transition into a sustainable low-carbon economy, he said.
“Today, Europe is laying the ground work for the Third Industrial Revolution. The digitalized communication Internet is converging with a digitalized renewable Energy Internet, and a digitalized automated Transportation and Logistics Internet, to create a super-Internet of Things (IoT),” he added, saying that between 2015 and 2020 it will create a high-tech 21st century integrated single market.
Germany, Denmark, France, Italy have already embarked on this new journey. “Merkel gets it, Hollande gets it, Juncker gets it,” he said, adding that ‘many other leaders are getting up to speed but it is really only the beginning.’
They understand that if we don’t do it, we will be stuck and we will implode and fail to move to an integrated Europe.
“If anyone has another plan, I would like to hear it. But I can tell you that in telecoms, cable industry, electricity, consumer electronics, transport, construction, all these sectors are ready to go. They see the opportunities of the Internet of Things that will connect everyone in Europe,” he added.
Germany shows the way
In December, Germany passed far-reaching energy policy resolutions, whose central elements consist of plans to introduce tax incentives for energy-related building renovations, to top up the CO2 building renovation programme and to boost competitive tendering for energy-saving projects with hundreds of millions in planned annual financing.
All in all, financing measures and corresponding private investments would amount to a total investment volume of €70-80 billion.
“They have committed 80 billions to the energy internet, so people can generate their own energy and get off fossil fuels. That’s a lot of money for the first 4 years. And they have now committed to the driverless logistics internet,” Rifkin noted.
Such a revolution has also geo-stratetgic benefits, as China is also embarking on the same path. This opens up the prospect of joint collaboration with China in the creation of a single integrated economic space across the Eurasian landmass.
In recent months, President Xi Jinping has called for a new high-tech Eurasian Silk Road Economic Belt to connect the Eurasian land mass in a seamless integrated market from Shangai to the Irish Sea.
“We are beginning to see the possibility of a digital Pangaea across Eurasia,” Rifkin added.
Rifkin is conscious however that anything could go wrong: cataclysmic events, poor leadership, bad luck.
“But if we can get this right, we may see the coming together (over 30 or 40 years) of something new; a single Eurasian commercial and political space. And hopefully that will extend to the other regions of the world as well,” he stressed.
“I want to be absolutely clear that this is only the beginning of the conversation, this is a big struggle, a very long haul, but we are seeing a new generation of leaders in China and Europe that understand this idea. They are beginning to create this new vision of a digital Europe and a digital Eurasia,” he concluded.
The Juncker Plan – unveiled late last year – aims to create a new European Fund for Strategic Investments (EFSI), with €5 billion coming from the European Investment Bank (EIB) and an €8 billion guarantee from existing EU funds designed to secure a contribution of €16 billion in total from the institutions.
The €8 billion guarantee will come over a three-year period from the Connecting Europe Facility (€3.3 billion); Europe’s research programme Horizon 2020 (€2.7 billion) and so-called “budget margin”, or unused funds, worth €2 billion.
The resulting EFSI fund totalling €21 billion is expected to generate €240 billion for long-term investments and €75 billion for SMEs and mid-cap firms over the period 2015-2017.
This fifteenfold multiplication from the initial investment to the final amount is to be achieved through a series of leverage methods, according to the EU executive.
- 2-3 March: Momentum for Europe
- By mid-2015: new European Fund for Strategic Investments to be operational
- By mid-2016: Commission will review progress of the Juncker Plan including at the level of Heads of State and Government
European Investment Bank: Conference Momentum for Europe
European Investment Bank: Investment and Investment Finance in Europe in 2015
European Commission: An Investment Plan for Europe (26 November 2014)
European Commission: EU launches Investment Offensive to boost jobs and growth (26 November 2014)