With investors increasingly risk-averse due to the financial crisis, the idea of a European bond to finance large infrastructure projects of common European interest is coming back in Brussels circles and some national capitals.
A cross-party group of MEPs yesterday (25 September) called on the Commission to take this instrument into consideration as a potential additional source of funding for the EU.
As the financial crisis hits and credit for key EU investments risks drying up, Italian MEPs from the socialist and conservative parties presented a joint document appealing for the use of Eurobonds to fund EU priority projects such as renewable energies, high-speed Internet infrastructure or transport networks.
Mario Mauro MEP (EPP-ED, Vice President of the Parliament) and Gianni Pittella, leader of the Italian socialist delegation, underlined that the Eurobonds would not be directly linked to national budgets. Above all, they argued that it would not rely on obligations to taxpayers but on savers’ voluntary investments.
However, Brussels remains wary on the proposal. Economic commissioner Joaquin Almunia rejected similar suggestions from Italian Finance minister Giulio Tremonti a few months ago, citing lack of support among member states.
In a majority of EU capitals a Eurobond is indeed considered a potential new burden on national budgets. "Who will pay the debt back, if the EU budget is overstretched?" is a recurring question.
Interest from the Commission and the European Investment Bank (EIB)
But the idea found support however from Transport commissioner Antonio Tajani who is seeking fresh money to fund expensive cross-border transport infrastructure, the so-called TEN-T projects.
Together with Philippe Maystadt, the President of the European Investment Bank (EIB), they created a joint working group “with the aim of exploring the possibility of new instruments for the financing of TEN-T projects”, reads a note published after the meeting.
According to the idea promoted by the Italian MEPs, the European Investment Bank (EIB) would manage the securities and the EU budget would guarantee them. The money raised would be spent in the first years of the financial perspectives and paid back with the EU budget in the final stages of the seven-year period. The plan does not foresee extra-charges for the community budget but, according to its promoters, would give more flexibility to make payments, allowing the EU to face emergencies.
MEPs are planning to reach an agreement in the Parliament to present a proposal to the Commission by the end of the year, aiming at introducing the Eurobond instrument during the review of the EU budget, scheduled before end 2009.
A report, to be voted in the Parliament’s Economic Committee, already suggests using Eurobonds to support European growth.