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25/09/2016

Commission threatens to loot Erasmus budget to finance Juncker Plan

Social Europe & Jobs

Commission threatens to loot Erasmus budget to finance Juncker Plan

The Erasmus programme may be cut if MEPs do not agree to release funds from Horizon 2020 and the EIM.

[Emka74/shutterstock]

The European Parliament refuses to take funds from existing investment programmes to finance the Juncker Plan. The choice could jeopardise the future of Erasmus and Galileo, according to the Commission. EurActiv France reports

The financial plan laid out by the European Commission to guarantee the European Fund for Strategic Investments (EFSI), the business end of the Juncker Plan, has set legislators on edge in the European Parliament.

MEPs have begun examining the proposed regulation in the parliamentary committees, where more than 2000 amendments have been submitted. This reflects the deep division between the Parliament and the Executive on how the economic rescue plan should be funded.

In total, the EU plans to pour €8 billion into the EFSI, of which €6 billion have already been allocated to the research programme Horizon 2020 (€2.7 billion) and the European Interconnection Mechanism for transport and European networks (€3.3 billion).

>> Read: Juncker Plan financing under scrutiny

In principle, the investment Plan presented by Jean-Claude Juncker in January enjoys the support of a large proportion of MEPs, who hope to adopt and enact it by mid-2015. “We want the fund, and we want it in June,” said the Portuguese rapporteur José Manuel Fernandes (EPP).

Violent opposition

“But there is some very violent opposition between the Commission and the European Parliament, which categorically refuses to accept that the Horizon 2020 and EIM programmes should be damages through the financing of the fund,” French MEP Dominique Riquet (ALDE) explained.

This became very apparent during the parliamentary committees’ examinations of the legislative proposal on 26 March.

>> Read: Member states seek guarantees for Juncker Plan contributions

“We are really concerned, because we are chipping away at chapters of the budget that are already investment programmes,” remarked Philippe Lamberts, a Belgian Green MEP.

Unused resources

To establish the investment fund, MEPs have called on the Commission to explore the margins of the European budget. Making use of budget surpluses and flexibility margins could save the two programmes currently under threat.

Dominique Riquet said, “there are unused resources within the European budget”.

Jean Arthuis, the President of the Budgets Committee, said “Perhaps the member states could demonstrate their confidence [in this fund] by accepting that potential surpluses be used to make a guarantee fund.”

Little room for negotiation

Faced with the MEPs’ demands, the European Commission has entrenched its position. “The Parliament cannot simply sweep aside the financing plan,” a Commission representative commented. They added that the EU did not have “€8 billion to spare”.

A high-ranking Commission civil servant told EurActiv that the use of surpluses, normally returned to the member states at the end of the budget, “would never gain the approval of the Council”.

“We believe the financing option that is on the table to be the most appropriate, and it would be extremely difficult to find an alternative plan,” the Commission representative warned.

“We will rob Peter, yes, not to pay Paul but to buy Peter some better clothes,” our source added, along with the assertion that the 3.5% of the total investment plan fund provided by the MIE “will be much more useful as part of the Juncker Plan, because its impact will be multiplied by 15”. According to the Commission’s calculations, every euro put into the Juncker Plan will in fact mobilise €15 of investment.

>> Read: Rifkin: Juncker Plan not enough to lift Europe’s struggling economy

The logic of the European executive is to make small cuts to programmes with large budgets like the EIM and Horizon 2020. In doing so, they hope the impact will be more reasonable than that of important cuts to programmes with modest budgets.

“The situation is very clear: if you want to shore-up programmes like Horizon and the EIM, the consequences will be considerable cuts to other programmes, like Erasmus. Does the Parliament want to inflict cuts on Erasmus?” our Commission source asked. The Galileo and Fiscalis programmes are also among the possible victims in this scenario.

Blackmail

Accused of “blackmail” by certain MEPs, the Commission put on a brave face after the negotiations with the Parliament. “We are confident that we can reach an agreement in the time we have,” a high-level Commission official told EurActiv.

For this to happen, some of the Commission’s optimism will have to rub off on MEPs, who are determined to leave their mark on the Juncker Plan. “And the Commission cannot adopt its own legislative text,” concluded the German rapporteur Udo Bullmann (S&D).

Background

On 25 November 2014, the European Commission revealed the details of its 315 billion euro investment plan.

In a gesture of solidarity, the money from this plan will largely be used in the south of Europe, in the countries worst affected by the crisis.

>> Read: Juncker's €315bn investment plan unveiled: fifteenfold leverage and solidarity for the south

The idea is to create a new European Fund for Strategic Investments (EFSI), with €5 billion coming from the European Investment Bank 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.

The plan drew questions over the lack of new cash, with some Members of the European Parliament calling it "recycling and re-labelling" of existing programmes.

>> Read: Juncker investment plan draws questions over lack of new cash

Timeline

  • April: Parliamentary Committee vote on proposed regulation
  • June: plenary vote on proposed regulation
  • Mid-2015: New European Fund for Strategic Investments should be operational
  • Mid-2016: Commission to evaluate progress from Juncker plan, including at national government level.

Further Reading