After a strenuous negotiating process, on Wednesday (24 June) MEPs validated the European Fund for Strategic Investments, taking the EU one step closer to the launch of the Juncker Investment Plan. EURACTIV France reports.
Members of the European Parliament adopted the legislation that will establish the European Fund for Strategic Investments (EFSI) on Wednesday 24 June. This fund will serve as the foundation upon which the €315 billion Juncker Plan will be built.
Presented by Jean-Claude Juncker in January this year, the investment plan is designed to stimulate €315 billion of investment in the European Union, and will primarily support innovative projects that would otherwise struggle to attract funding.
EFSI, the financial basis of the plan, will comprise €16 billion in guarantees from Brussels and €5 billion from the European Investment Bank. The Commission expects to leverage this €21 billion in public money to lift €315 billion of investment capital.
“We welcome Jean-Claude Juncker’s proposals, which are a step in the right direction. Even if the member states were initially hesitant to join this fund, it will enable job creation and offers opportunities for SMEs,” German MEP and rapporteur Udo Bullman (S&D) said in the lead-up to the vote.
This vote marks the end of several months of heated debate between the European institutions over the objectives, governance and financing of the investment plan. The stakes are high, with EU officials and MEPs alike pinning their hopes for the re-launch of the European economy on the plan.
End of the power struggle
The adoption of the EFSI regulation also draws the power struggle between the Parliament and the European Commission to a close.
While support for the Juncker Plan is broadly shared, the consultation process revealed major disagreements over how it should be realised. One major criticism from MEPs concerned the reallotment of €6 billion already earmarked for the research programme Horizon 2020 (€2.7 billion) and the European Interconnection Mechanism (€3.3 billion), allocated to investments in transport and European networks.
For members of the European Parliament, this was an unacceptable contradiction. But they finally managed to negotiate an adjustment to the deal, to impact less heavily on the existing funds.
“Thanks to the two rapporteurs, who were formidable negotiators, we have achieved concrete results in record time. We are creating a better investment climate in Europe,” said Jyrki Katainen, the European Commission Vice-President for Investment.
But the hard-won concessions have not silenced all the Juncker Plan’s critics. French Green MEP Pascal Durand said “I would support a real investment plan that tackles unemployment and climate change. The Juncker Plan is not an investment plan, it’s a communication plan.”
The European executive had hoped to leave the earmarking of the Juncker Plan open-ended in order to avoid rigidity and ensure that funds are used to benefit strategic projects. But this was also a source of discontent in the hemicycle.
“We have made gains on urban mobility and the thermal renovation of buildings, but clearly this Juncker Plan is still too weak. Even our proposal to allocate €5 billion to a European energy saving plan was judged ‘too political’,” French MEP Karima Delli said.
Xavier Sol, director of Counter Balance, said, “President Juncker promised targeted investments into sustainable sectors that could create jobs, but in the text approved today there is nothing that can guarantee this. The regulation we have now is a blank cheque for the European Investment Bank to carry on with business as usual. The fund’s regulation doesn’t include the necessary accountability mechanisms towards Europeans and the Parliament. Technocrats will decide which projects to support and these will have significant impacts on people and their environment.”
British Conservative MEP Richard Ashworth said “This fund could work and encourage risk averse potential investors to put their money into Europe’s economy. There is money out there, but it is not being invested in growing Europe’s economy. We were clear that no extra taxpayers’ money could be used for this fund so all financing had to be found from existing budgets. We have made significant improvements to the plan throughout the talks with EU governments, ensuring that crucial frontline research projects were protected, and that investment decisions were made on a commercial basis rather than dominated by politics."
Markus Trilling, EU funds campaigner for Bankwatch and Friends of the Earth Europe, said, “The EFSI is an example of how the EU budget is being used to guarantee safe investments for the private sector while the public bears the risk. To increase the effectiveness of the investment fund and make sure it invests in projects that are future proof, the EIB needs a climate policy to guide its action on green energy. Investing in energy efficiency and renewable energy sources is where the smart money is at.”
S&D Group vice-president and negotiator on the industry, energy and research committee, Kathleen van Brempt, said, "We made sure that the EFSI will fund investment for the future and not from the past. We pushed for the introduction of clear guidelines and criteria for the selection of projects. We don’t want to see new airports. We want investments linked to the European Union’s priorities in the field of climate change or energy efficiency for instance."
On 25 November 2014, the 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.
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, making 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 an exercise in "recycling and re-labelling" existing programmes.
- 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.