MEPs are working on a common resolution to push the European Council and European Commission to adopt EU bonds as an alternative financial resource to fund key European projects, Joseph Daul, head of the centre-right EPP-ED Group in the European Parliament, told EURACTIV in an interview.
As the credit crunch and recession continue to grip the European Union, Brussels decision-makers are desperate to find alternative ways of circulating money to kick-start economic recovery. For many, EU bonds represent a viable means of tackling the current crisis and increasing the funding capacities of the EU.
The idea of using EU bonds to finance the European budget was first launched by former European Commission President Jacques Delors in 1993. The last Commission president, Romano Prodi, backed the idea as well. But most member states were opposed, fearing it would ultimately increase their expenditure on the Community budget. Indeed, securities must be backed by capital, which in the case of EU bonds would mean the Community budget itself.
On the other hand, EU bonds provide an instrument to raise money easily during a period of tight credit. They offer the advantage of relying on free decisions by investors and savers rather than imposing measures on taxpayers. Bonds would therefore radically change the way the EU projects are funded.
The concept of EU bonds was re-launched earlier in September by an unusual coalition of Italian MEPs. Centre-right EPP-ED MEP Mario Mauro (vice-president of the Parliament) and his colleague Gianni Pittella (leader of the Italian Socialist delegation) made a joint appeal for EU bonds to fund European projects. They have begun to collect signatures in view of a possible resolution in 2009 (EURACTIV 25/09/08).
The idea has found support from different circles. It received the backing of Eurogropu President Jean-Claude Juncker last November (EURACTIV 19/11/08), while the Socialists have called for EU bonds on several occasions. “Member states should discuss the possibility of the EU issuing Eurobonds to invest in European projects,” said Socialist MEP Pervenche Berès, chairwoman of the Parliament’s powerful economic and monetary affairs committee.
Joseph Daul, leader of the centre-right EPP-ED Group in the Parliament, echoed these remarks during the plenary session in Strasbourg in November. He later confirmed and clarified his line in an interview with EURACTIV.
However, EU bonds do not enjoy unanimous support. The Commission has shown little enthusiasm for the idea, citing a lack of support in the Council. This week, the European Central Bank President Jean-Claude Trichet made clear during a hearing in the Parliament in Brussels that he did not support the idea: “We are not ourselves in favour of issuing securities. We consider it is good that each particular state has its own refinancing and its own way of being on the market.”