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10/12/2016

Member states seek guarantees for Juncker plan contributions

Euro & Finance

Member states seek guarantees for Juncker plan contributions

MEPs are pushing for an EU-wide minimum wage of 60% of the national median.

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Jean-Claude Juncker yesterday presented his investment plan for the European Council’s consideration, using the opportunity to ask for further contributions. On top of numerous criticisms, the question of the distribution of funds has caused divisions within the Council. EurActiv France reports

Although the member states tend to agree on the broad outlines of the Juncker plan, it is proving more difficult to reach a consensus over the fine print.

In an address to the European Parliament on Wednesday, Jean-Claude Juncker called on the states to contribute to the new EIB-controlled fund.

“The impact of the fund will clearly be multiplied if the member states contribute, and I hope to hear announcements at the European Council tomorrow. I want money, not words.”

This appeal does not officially appear on the Council agenda or in the draft conclusions, as French sources cautiously pointed out.

‘Not a donors’ conference’

The launch pad for the Juncker plan is a 21 billion euro fund, consisting of 16 billion euros from the European budget and 5 billion from the European Investment Bank (EIB). The Commission plans to take extra contributions from the member states to supplement this initial 21 billion euro capitalisation, which will be leveraged to create a 15-fold return on the initial investment, according to the European executive, raising 315 billion euros.

“The European summit is not a donors conference,” a European source told EurActiv, adding that the projects selected for funding under the Juncker plan would also be co-financed by national governments.

Deficit discount for co-financed projects?

The French government is hoping for assurances over how their contributions to the fund will be passed through the books. They would like to see all of their contributions, both to the initial capitalisation of the fund, and to the co-financing of projects, excluded from the calculation of their national budget deficit.

This system is unlikely to be supported by the proponents of austerity, including the United Kingdom and the Northern member states, who see it is a loophole for shaking off budgetary restraint.

Risk of side effects

Such a system could bring about the unwelcome side effect of penalising other nationally co-financed projects, such as the cohesion policy, which would face the prospect of being sacrificed to make way for the new, deficit-beneficial Juncker plan projects.

French MEP Pervenche Beres said that “in order to have a real impact, we have to invest in the member states in crisis. We can therefore expect the largest contributions from these member states”.

An even thornier subject is the fair distribution of funds among the recipient countries, which may prove to be a major stumbling block in negotiations.

Funding war

“This raises concerns: On the one hand we had the assurance of receiving funding [via cohesion funds], while now part of it will be used for operations where there is no earmarking,” one source said.

The Connecting Europe Facility and Horizon 2020 projects, for example, will lose 5 billion euros of funding, which will be pumped into the Juncker plan.  

The fund’s management system seems to have been designed to minimise discussion over the distribution of the money. Under the Commission’s proposal, the new EIB fund for the Juncker investment plan will be managed by two committees; one committee of experts and one from the Commission itself.

The UK believes this system should guarantee the efficiency of the fund. They have shown a keen interest in the fund, which will largely be privately financed, and are awaiting clarification on the conditions for the selection of projects. “But we want to be sure that this fund really does use private money,” a British source told EurActiv.

So far Italy, Slovakia Spain and Finland have said they will contribute to the Juncker plan.

>> Read: The Juncker plan: an exercise in federalism and solidarity

Background

The European Fund for Strategic Investments, or Juncker plan, discreetly put together by Commission Vice-President Jyrki Katainen over the last four months, will generate 315 billion euros from a starting capital of 21 billion.

Only a small amount of public money will be used, in order to keep Germany on side. The EIB will provide 5 billion euros, and a further 8 billion will be taken from European funds. 

Further Reading