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03/12/2016

Regions warn Juncker Plan could overlook small-scale infrastructure

Transport

Regions warn Juncker Plan could overlook small-scale infrastructure

Green MEP Michael Cramer with Committee of the Regions President Markku Markkula.

[Committee of the Regions/Flickr]

EU officials are making noise about the Juncker Plan, which some say might give cash loans more favourably to large infrastructure projects and leave behind small, local proposals.

The European Commission’s investment scheme will be worth a target total of €315 billion set to go primarily into energy, transport and digital infrastructure projects around Europe.

But some officials say the European Investment Bank has too strong a say and won’t pick projects that benefit local communities.

“We have enough money but the Juncker Plan doesn’t change the political will towards smaller projects. There’s more political will for the big projects,” said German MEP Michael Cramer (Greens).

The Commission is setting up an investment committee to rule on the loan applications. The EIB has been processing proposals since earlier this summer.

Projects approved for Juncker Plan funding so far include €50 million in loans to French private equity firm Omnes Capital, to start a renewable energy fund and to Spanish company Abengoa for biotechnology and energy research.

EU and regional officials have questioned the vetting process for the loans.

“We should give the decision for the projects not to the banks but to the parliaments. We know what projects are needed,” Cramer told EurActiv.

“The Juncker Plan is only money, and we know from the EIB that they want the money back.”

Loans from the Commission and the EIB’s European Fund for Strategic Investments (EFSI) are planned to leverage private investment.

>>Read: Regions push for better access to Juncker Plan

‘We’re a bank, we want our money back

During two days of talks with Committee of the Regions members in Luxembourg, EIB officials emphasised that EFSI loans have to draw returns.

“We have a different attitude than member states. We’re a bank, we want our money back,” said Neil Valentine, a manager of the EIB’s transport programmes.

Some regional officials were put off by what they saw as the EIB’s stern dismissal of projects that might not generate quick returns.

Raphael Cattaneo, chair of the Committee of the Regions’ commission for Territorial Cohesion and EU budget, expressed his concern about the EIB’s stance.

“This is the approach of a banker, not the approach of a politician,” he said.

A senior EIB official overseeing EFSI said in Tuesday’s meeting with regional officials that there are no geographical or sector quotas for EFSI loans.

Committee of the Regions President Markku Markkula told EurActiv that there is a lack of political will to invest EU funds in small projects. According to Markkula, the Committee of the Regions will try to increase the number of small projects receiving funds by helping local governments apply for EFSI loans and by sending the EIB recommendations for specific projects.

“Normal city or regional council members around Europe follow a lot of international news but often that means only the big policy issues and they don’t think about what they should do and what they could do with European funding,” he said.

Markkula said the Juncker Plan would be an opportunity to invest in small, cross-border projects that otherwise struggle to catch the attention of government funders.

“These projects that are cross-border, that’s where funding is more complex. We know that in Europe it’s been hard to get help from our funding programmes on this,” Markkula said.

>>Read: Parliament wins on Juncker Plan cuts

Regions eye EU funds for cross-border transport

Regional officials yesterday called for a cash injection into transport networks spanning national borders within Europe.

Cramer suggested a list of mostly short cross-border train routes he said are lacking around Europe. Train connections within each member state can more easily access EU funds, Cramer argued.

The Commission is starting to put aside more of its funds unrelated to the Juncker plan for small, cross-border transport networks. Europe’s regional governments are appealing directly for Commission help on those projects.

Herald Ruijters, head of unit for trans-European networks at the European Commission’s transport directorate (DG MOVE), said, “We have been shrinking allocation to big projects to allocate to smaller ones. Many of them were proposed from the regions. For the first time, we had proposals in this call that came directly from regions via the member states.”

EIB official Neil Valentine said train infrastructure doesn’t have the same revenue potential as airports or roads, making railway projects less attractive for EFSI loans.

Background

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

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.