Thursday

5th May 2016

Barroso fights to keep investment pot in EU budget

  • Let's get connected, says the commission. Member states have yet to be convinced however (Photo: European Commission)

The European Commission has started banging the drum for new €50bn pot of money that it says will reinvigorate Europe's economy amid fears that penny-counting member states will give it the chop.

With just weeks to go until EU leaders are supposed to decide on the bloc's budget for 2014-2020, commission president Jose Manuel Barroso urged member states to be open to the 'Connecting Europe Facility' (CEF), an investment pot for joining up transport, digital and energy networks.

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"There is a difficulty in Europe about new ideas," Barroso said Tuesday (2 October) and urged business - which is largely in favour of the idea - to "make your voices heard."

Member states are due to decide on the EU budget at a special summit in November. The EU commission last year proposed increasing spending by 5 percent to €971.52 billion over the seven-year period. But the negotiations have thrown up two main camps - richer states who want to chop the proposed budget and poorer countries who want to maintain regional aid. Diplomats suggest a compromise may be found by reducing the CEF.

The countries in favour of Cohesion Policy (regional funding) and agricultural policy are "very well organised" said Barroso admitting that "there is not yet a team CEF."

Arguing the case, he noted some are always in favour of paying out for national projects but will not sign the cheques for cross-border plans. "This is why we need the European dimension," he said, adding the geopolitical arguments of the importance making Europe self-reliant in energy and "making Europe large and influential" in the world.

Business leaders at Tuesday's commission-organised conference kept their arguments practical.

Leif Johansson, chair of mobile phone giant Ericsson, said his and other large companies were "keenly aware" of which member states had integrated energy network and which do not.

Linking up the "patchwork" transport system so that it is easier to get goods from A to B in the EU would be his second priority.

"I like very much that this project is purely business-focussed," said Maciej Witucki, President of Telekomunikacja Polska. He said that while local governments - who often get money through the EU's regional aid - are good at building local roads and water pipes they "can't do" fibre networks for high-speed internet connections.

The €50bn the commission is proposing is a tiny amount when compared to the total needed - Europe's core transport network will alone require €250bn in investment. Other money will have to come from the private sector, member states and the European Investment Bank.

But sometimes EU support is enough to kick-start the process.

Dermot Byrne, Chief Executive of Eirgrid an Irish energy company, noted that receiving €110m in EU money for setting up Eirgrid sparked a chain of other investors.

EU money made it seem like it was a "project of significance" and this gave other lenders "confidence."

EU transport commissioner Siim Kallas, - whose dossier stands to benefit most (€31.7bn) from the proposed €50bn pot - tried to put the numbers in perspective.

The European Commission approved state aid to the tune of €4.5 trillion for financial institutions between 2008 and 2011, he said.

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