Saturday

25th Mar 2017

Analysis

Doubts hang over EU investment plan's future

  • Motorways can still be built in less well-off countries (Photo: EUobserver)

Questions of why some projects are funded, others not, and whether value for money is being had, linger over plans to extend the Juncker investment plan.

The European Parliament and EU member states are starting to examine a European Commission proposal for an extension of the project, named after commission head Jean-Claude Juncker, but the commission has not presented any proper assessment of how the plan worked in the first year.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

The EU executive only commissioned an evaluation of the plan to private consultancy Ernst & Young to make an independent evaluation, which was published only on Monday (14 November), two months after it proposed the extension.

The report said that the design of the fund was "relevant in the current market and prevailing investment gaps in Europe”, but it questioned the added-value of the projects and their geographical spread, as the richest EU countries had received more support.

Some 92 percent of fund’s portfolio concerns operations in the 15 richest EU countries, with only 8 percent located in the less-developed ones.

The Juncker investment plan was supposed to bring in €315 billion of investment over 2015 to 2017, but the commission now proposes in extending it until 2020, with the aim to raise €500 billion.

The €315 billion do not come directly from the EU budget.

Instead, they are raised through the Juncker fund, also known as the European Fund for Strategic Investments (EFSI), set up at the European Investment Bank (EIB).

The EFSI is supposed to focus on projects with a "higher risk profile", unable to find a financing source.

The EU Court of Auditors, in a report published on 11 November, has questioned the plan efficiency.

"It is still too soon for the economic, social and environmental impacts to be measured or for a conclusion to be drawn as to whether EFSI is achieving its objectives," said Mihails Kozlovs, the member of the court responsible for the opinion.

The Slovak EU presidency, whose task to is to reach a common position between finance ministers on a possible extension of the fund at their next meeting in December, waited for Ernst & Young's report to open talks.

This leaves only a few weeks for national experts to find an agreement.

"I don't understand why we have to rush to find an agreement so quickly since the parliament will need several months to find its position. It doesn't make any sense," a diplomatic source told EUobserver.

The parliament will indeed take longer to decide on the file, with several committees involved in the procedure. MEPs want to draw "in parallel" their own assessment report, according to a parliament source.

Crowding out investors?

There is a real need to assess, in detail, how the plan has worked so far.

The number of projects approved is encouraging, operations approved are expected to trigger a total investment of €138.3 billion, but there are concerns regarding how projects are chosen.

First of all, these projects are not substantially different from other EIB operations.

That means that, instead of attracting new investment, the plan could crowd-out investors from interesting opportunities.

"There are projects such as windmills - it's great, but the EIB was already supporting windmills before the EFSI", Gregory Claeys, from Bruegel, a Brussels-based think tank, told EUobserver.

He said that "the Juncker plan increases the EIB guarantee and therefore its lending volume, but it doesn't change the nature of its activity."

He said that "the investment committee makes a note on each project, which defines its level of risk. It is important to have this information, in order to assess whether the EFSI is taking more risk or not."

Ecological standards

According to a Bankwatch Network report, the EFSI leveraged €1.5 billion for fossil fuel infrastructure, and 68 percent of its transport investment is destined for carbon-intensive projects - despite the EU commitment to the Paris agreement.

"At the same time, the EIB drastically reduced its support to renewable energy through it other financing facilities," Anna Roggenbuck from the Bankwatch NGO said. "The total size of these investments went from €2.8 billion in 2014 to €0.2 billion in 2016."

The commission tried to address these issues when it proposed to extend the plan until 2020.

Under the proposal, the EFSI investment committee must be more transparent and ensure every project approved could not happen without the support of the Juncker plan.

At least 40 percent of EFSI projects will have to include "components that contribute to climate action".

Highly polluting infrastructures such as motorways will be banned, except in less developed countries.

Finally, special attention will be taken regarding geographical distribution in order to fight bias in favour of the richest countries.

Stakeholders remain critical of the proposed changes.

"It goes in the right direction, but does not go far enough," said Roggenbuck, from Bankwatch.

She questioned the fact that polluting projects such as motorways can still be funded if they are built in a less well-off country.

She said there should be more binding targets regarding climate financing.

Roggenbuck wants the commission to live up to its transparency pledge, with an assurance that documents will be published, including the justification for each decision of the investment committee.

Opinion

Europe: Time for a reset

Europe's solution to its problems has left many behind, now is the time for a change of tracks, not to engage in political navel-gazing.

EU ministers approve 'Juncker plan' extension

The agreement to prolong the EU investment plan until 2020 to raise up to €500 billion will have to be confirmed by the parliament amid questions about its impact and functionning.

Stolen Russian billions ended up in EU states

Illicit money flowing out of Russia ended up in almost every single EU state, an investigation has found, posing questions on the integrity of Europe’s banking systems.

Stakeholders' Highlights

  1. European Gaming & Betting Association60 Years Rome Treaty – 60 Years Building an Internal Market
  2. Malta EU 2017New EU Rules to Prevent Terrorism and Give More Rights to Victims Approved
  3. European Jewish Congress"Extremists Still Have Ability and Motivation to Murder in Europe" Says EJC President
  4. European Gaming & Betting AssociationAudiovisual Media Services Directive to Exclude Minors from Gambling Ads
  5. ILGA-EuropeTime for a Reality Check on International Day for the Elimination of Racial Discrimination
  6. UNICEFHuman Cost to Refugee and Migrant Children Mounts Up One Year After EU-Turkey Deal
  7. Malta EU 2017Council Adopts New Rules to Improve Safety of Medical Devices
  8. Nordic Council of MinistersNordic Energy Research: How to Reach 100 Percent Renewable Energy
  9. Party of European SocialistsWe Must Renew Europe for All Europeans
  10. MEP Tomáš ZdechovskýThe European Commission Has Failed in Its Fight Against Food Waste
  11. ILGA-EuropeEP Recognises Discrimination Faced by Trans & Intersex People
  12. Nordic Council of Ministers25 Nordic Bioeconomy Cases for Sustainable Change

Stakeholders' Highlights

  1. European Free AllianceSupporting Artur Mas: Democracy and Freedom Cannot Be Convicted
  2. UNICEFSyria Conflict 6 Years On: Children's Suffering at Its Worst
  3. International Partnership for Human RightsDomestic Violence in Tajikistan: Time to Right the Wrongs
  4. European Trust SummitCorporate Strategy and Public Affairs in a Low-Trust World - Conference 31 May
  5. Malta EU 2017Agreement Reached to Involve Consumers in Financial Services Policymaking
  6. Nordic Council of MinistersNordic Cities Gather Against Violent Extremism & Introduce Nordic Safe Cities
  7. World VisionFears and Dreams of Syria's Children and Their Peers Around the World
  8. Malta EU 2017Maltese Presidency and EP Agree on Visa Liberalisation for Ukraine
  9. Mission of China to the EUEU Window Chinese Government Academic Scholarship 2017/18 - Apply Now
  10. Nordic Council of MinistersNordic Countries Lead the Way on Women's Economic Empowerment
  11. Center for Data InnovationBuilding Smart Cities for Tomorrow's Data Economy – 28 March - Brussels