German minister: Juncker’s investment package likely to ‘backfire’

Baden-Wuerttemberg's Minister of Europe Peter Friedrich. [Kai Hockenjos, LRA Ortenaukreis]

The projects Germany is pursuing within the framework of the European Commission’s €315 billion Investment offensive include outdated ideas and dead ends, says Peter Friedrich, Baden-Wuerttemberg’s Minister for Europe. The list, he says, urgently needs a general reworking, otherwise regions and municipalities will lose out.

Peter Friedrich hails from Germany’s Social Democratic Party (SPD) and has been Baden-Wuerttemberg’s Minister for the Federal Council, Europe and International Affairs since May 2011. He spoke with EURACTIV Germany’s Dario Sarmadi.

The German government has sent a list with almost 60 projects to Brussels. With the help of the European Fund for Strategic Investments (EFSI), it hopes to boost investments in Germany with €90 billion. Are the right projects on the list?

In my view, it is missing stringent hand-writing with clear priorities, with a clear “yes” to future technologies and infrastructure. Instead, the German catalogue is guided by the motto: “We will mention everything that we were not able to achieve at the national level and will now attempt to get aid from EU funds.” That is not a strategic selection of projects with the highest possible growth effect.

Which concrete examples demonstrate this?

One example is the Rhine river bridge near Karlsruhe, which is controversially discussed here. But a concrete start date for construction is still far off. Another example is the third takeoff and landing strip at the Munich airport. Citizens there stopped construction by means of a referendum. So there is a whole slew of controversial projects we are far from ready for, where additional EU funds would pay off.

Which sector comes out short in the German government’s plans?

Research facilities, energy infrastructure and renewables are some examples. I do not see much there. Meanwhile, we have a considerable need for expansion in the energy infrastructure that should also go hand-in-hand with the EU’s declared goal of risk diversification.

So that means Germany is simply passing up the chance for a boost in growth?

This could really backfire. The EU is taking money from other EU funds like Horizon 2020, and putting it in the new investment fund. That means we are missing money in important places. If we invest in outdated ideas instead of in the future, then the EFSI will become a hindrance to growth.

But wasn’t the region of Baden-Wuerttemberg asked what should be included on the project list?

We were not contacted at all. The German Federal Finance Ministry did not even seek agreement from all the federal ministries. And certainly not from the regions and municipalities, which often carry out these projects. That was not a good start. Now, there is still no dialogue – not even with investors who, after all, are supposed to contribute money. It is disastrous that the Federal Government does not even include those who will later have to implement the projects. In this way the risk is very high that the EFSI may become a pointless invention.

But when asked by EURACTIV, the Ministries expressed the desire to approach the regions and municipalities. Have you heard anything about this?

I have no knowledge that any form of structured approach exists in this regard.

Besides the energy infrastructure, which projects would be particularly important for Baden-Wuerttemberg?

We have a whole row of projects, in which industry has a significant interest. The Federal Government did in fact indicate one in Brussels: the cross-border X-Gigawatt-Project. It is about the next generation of solar modules in the three high-tech countries Germany, France and Switzerland. Another area is the dismantling and disposal of nuclear plants, that is a growing market worldwide. But to do this we must sit down at the same table with investors.

Why don’t you just meet with investors?

We are lacking concrete framework conditions from the German government and the EU. We cannot just invite investors when we do not even know how we can feed this into the procedure.

Do you actually believe the EFSI’s financing mechanism works?

I have my doubts that we will be able to achieve the multiplier effect of 1:15. But first it must be determined, where there are appropriate business models. We have several road construction projects on the list. As in many other areas, there is no functioning public-private partnership model where the investor receives a sufficient return on his investment. In that case, he is hardly likely to invest.

A large part of German investments, over €20 billion, are supposed to go to the expansion of broadband – also in undersupplied parts of the Franco-German border. Are you also affected by that?

We are strongly pushing broadband expansion at home. Now we already have good coverage, even at the Franco-German border along the Rhine river. We also have large computing centres there and modern data infrastructure. But if you ask me, undersupplied areas in Germany’s rural regions will hardly benefit from the EFSI, at least in the current regulatory situation. Private providers are already demanding connection guarantees before investing in certain regions. That will be difficult in sparsely populated areas.

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