The Juncker Plan is an opportunity to generate much-needed growth in the EU, but its real benefits may be greatly exaggerated, and many issues must be clarified before it can be rolled out, writes Victor Negrescu.
Victor Negrescu is a Romanian MEP in the Socialists and Democrats Group.
There have been many debates recently on the virtues of the Juncker Plan. While the Plan promises to increase investment in Europe, to boost the competitiveness of the European economy and to create jobs, many observers are sceptical about the virtues of the initiative. Moreover, the Plan does not address the real problems of European citizens, and risks creating additional difficulties with long-term consequences. The problems that lie at the heart of the plan are severe enough to impact on the legitimacy of the European project altogether.
Personally, I am a supporter of all programs and projects designed to reinforce Europe and replace austerity with economy-stimulating measures. But as a former entrepreneur and as an MEP I have to raise several questions that express my worries regarding not the “why” of the plan, but more the “how”.
First, how is this plan stimulating the economy, manufacturers or SMEs? How can a company apply for funds, and how can an entrepreneur use them? How is entrepreneurship stimulated if the states are playing the middle role between the Investment Fund and the beneficiaries? I recall that the main problem of the European economy is the lack of private financing and of a direct contact between entrepreneurs and capital.
There is no doubt that the plan directly favours large corporations, instead of offering its support to SMEs. In spite of the effects of the economic crisis, it is the major actors who have managed to weather the tide of the economic and financial meltdown. However, numerous SMEs have fallen on hard times, while unemployment, especially youth unemployment, has peaked. The Juncker Plan offers little opportunity for these actors, which are vital for the success and competitiveness of the European economy.
Second, how is this fund useful in resolving the problem of EU competitiveness? Are we going to finance the salaries or the skills-training of employees? Innovation without education is impossible. Europe is not only lacking jobs, it has a true deficit in skills.
Third, how is the bureaucratic structure going to select projects and how is it going to work? Who is going to decide and who is going to be responsible for the potential failure of projects? In the European bureaucratic bubble very few succeed. A mechanism designed to reduce inequality should be introduced to enable the less developed regions and SME’s to actually attract these funds. This brings me to the issue of economic gaps between Europe’s regions. The European dynamics of the past couple of months have been interpreted on numerous occasions as a “clash” between Northern and Southern Europe. We often hear about divides between the newer members of the EU and the “founding core” or about the gulf that separates the large states from the smaller nations. While these narratives are not a powerful explanatory tool, they manage to describe very fittingly an ideological wedge driven between European partners. The Juncker plan does not mean to address this issue. On the contrary, the institutional structure of the plan – the voting rights within the European Fund for Strategic Investments’ leading committee – are proportional to the size of the country.
Fourth, the plan is based on heavily unrealistic assumptions. The plan envisages a multiplying effect of 15, whereas optimistic estimates for similar initiatives are content with a threefold increase. At the same time, I found it hardly fitting that the Plan lacks clear rules and transparency procedures insofar as funding is concerned. What the EU doesn’t need now, when eurosceptic actors are winding up their discourse, is another initiative lacking transparency and clear procedures.
Last, but not least, I find it highly disturbing that the funding for this risky plan might come at the expense of genuinely important European initiatives, such as Horizon 2020 and the Youth Guarantee, programs that bring EU societies together, stimulate youth employment and raise solidarity between EU citizens.
I am for the European Fund for Strategic Investments but I am against the lack of true debate and true reflection on the methodology of the plan’s implementation. The regulation report in the European Parliament is, in my opinion, a simple toy given to the members of the Parliament while, in reality, the big game is taking place behind closed doors.
I agree with President Jean-Claude Juncker when he says this fund can be a huge opportunity for Europe and maybe one of the last chances to show that Europe can generate growth. But I am also for more transparency and interaction with civil society and the private sector, especially producers and manufacturers. Together we can make this European Fund work, because it has to be a European solution embraced and understood by everyone. Therefore I express my concerns but also my desire to be involved in the EFSI in order to make it more efficient and better understood.