The European Investment Bank is trying to cool local governments’ scepticism over the Juncker Plan, an investment strategy that EU officials hope will pump €315 billion into infrastructure projects around the EU by 2017.
Representatives of local governments from across Europe banded together at a Committee of the Regions meeting at the European Investment Bank (EIB) yesterday (1 September) to parse out the new investment programme.
The scheme will use European Commission funds and cash loans from the EIB’s European Fund for Strategic Investment (EFSI) to take on higher risk than usual in an effort to attract private investment to small and medium-scale projects.
But some Committee of the Regions members say there’s too much red tape keeping local governments from accessing the funds.
EIB officials tried yesterday to dispel that concern and persuade wary regional leaders that applying for the money is easy.
“We had the same fear and we still have a fear it will actually develop into a bureaucratic process,” said Christoph Kuhn, a senior EIB official who’s overseeing EFSI.
“But to apply for an EFSI loan you do not need a form or any formal application like for a grant. It’s a very informal process. Promoters approach us even by phone and we have a very unbureaucratic exchange of information by mail. We look at the project and we play back our feedback very quickly,” he said.
“The decision making is what it is but it’s designed in a way that the client will not feel much of the investment committee.”
The European Commission is setting up an independent investment committee to decide on applications for EFSI funding.
Kuhn named transport, broadband internet and energy infrastructure as focus areas for the programme.
Questioned by a Committee of the Regions member on whether the Juncker plan oversteps regional governments in deciding who gets funds, EIB projects director Christopher Hurst said, “We’re assuming that these projects have gone through the democratic process and consultation on the local level.”
The Committee of the Regions warned earlier this year that the Juncker Plan might suck money out of EU cohesion funds. The EFSI regulation that was rubberstamped by the European Council and Parliament in June specifies that public money put into the Juncker Plan is separate from EU cohesion funds that benefit regions.
Committee of the Regions President Markku Markkula called yesterday for the Juncker Plan to channel funds towards local, small-scale projects. But he said there are still barriers that keep small businesses and local governments from finding the new EU investment funds.
“Accessibility to financial instruments, especially for small projects, is still an issue for many regions and cities in the EU,” Markkula said, calling for more assistance to help local authorities apply for EFSI money.
EURACTIV reported in July that France thus far had the most projects approved for Juncker Plan funding.
Deputy mayor of Luxembourg city Simone Beissel told EURACTIV the lighter EFSI application process will make it easier for companies to access funds.
“All the Luxembourg firms complain when they want to introduce some project to get European financing,” Beissel said.
Beissel also echoed a concern voiced by other Committee of the Regions members over the investment target of €315 billion, which she called too high.
“And by 2017 to get this €315 billion? I really wish them luck because that’s tomorrow. You see the length of the procedures and even if it is less formal, all the controls must be done to get the guarantees of the bank,” she said.
Luxembourg is applying for funding through the Juncker Plan for energy and transport projects, including parking spaces across the French border that could relieve traffic congestion for cross-border commuters.
The Juncker Plan – unveiled late last year – aims to create a new European Fund for Strategic Investments (EFSI), with €5 billion coming from the European Investment Bank (EIB) and an €8 billion guarantee from existing EU funds designed to secure 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.
This fifteenfold multiplication from the initial investment to the final amount is to be achieved through a series of leverage methods, according to the EU executive.
>> Read: Juncker Plan cleared for take-off