Tuesday

25th Jun 2019

Final talks on Juncker plan extension

  • The investment is to be extended until 2020 with an increased capacity, from €315 billion to €500 billion. (Photo: European Commission)

The European Parliament, member states and the European Commission on Wednesday (31 May) started the final negotiations on the future of the European Fund for Strategic Investment (EFSI), also called the Juncker investment plan.

The goal is to extend the scheme until 2020, with an increased capacity – from €315 billion to €500 billion.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

The fund, which is managed by the European Investment Bank (EIB), has capital of €21 billion. The money is used for viable but risky projects, in order to help raise private capital up to the €315 billion capacity. The extension will bring this capital amount up to €33.5 billion.

The Juncker plan, initially launched in 2015, has already approved some €37 billion in real projects, which are expected to trigger close to €200 billion in further private investment.

That means that 62 percent of the objective have been met. "This is a good news, it means the EFSI is on track," the fund's managing director, Wilhelm Molterer, told EUobserver.

The extension until 2020 "should be done quickly," insisted Molterer, who wants to give "a clear signal of stability" to businesses that wish to submit projects.

The critics

As member states and the EU parliament agree on the fund's capacity and lifetime, discussions will focus on its functioning – for instance, how projects are chosen, how information about them is disclosed, and how they are being distributed between countries and regions.

The new EFSI rules could put more emphasis on eastern EU member states – which benefited less from the fund – and on projects dedicated to fight climate change. This follows critiques that have been repeatedly voiced by NGOs last year.

The EU commission also proposed to enhance the so-called additionality of EFSI-supported projects. EFSI should not replace already existing funds, but instead it is meant to support projects that cannot find any sources of financing on the market.

However, a study from the Bruegel think tank last year showed that EFSI-supported projects have the same risk profile as other EIB projects. The European court of Auditors also raised doubts over the additionality of the supported projects.

EU parliament and member states also agree that EFSI has to be more transparent. The fund will be required to publish the criteria it relies on to assess which projects should be supported or not.

But the parliament also asked to receive, under "strict confidentiality requirements", "commercially sensitive decisions" regarding all projects applying for support. This would allow MEPs to check carefully whether the principle of additionality is met.

This provision could be a problem, as the EIB is very careful regarding commercially sensitive data. "Everybody should be extremely careful with this sensitive information," insisted Molterer.

The future

Discussions on the Juncker plan's extension raise the question of whether it will be enough to re-start investment on a continent that is still recovering from the financial crisis.

"The Juncker plan has been presented has the answer against the crisis, but that was misleading – it couldn't restart investment on its own," Eulalia Rubio, senior research fellow at the Jacques Delors Institute, told EUobserver.

"The real obstacle to investment is the fact that the economy is weak," she said.

In its latest economic forecasts, published early May, the commission noted that "investment growth seems to have slightly strengthened through the end of 2016, but is not expected to rise markedly" in the coming months.

In the talks that started on Wednesday, the parliament has also asked for the commission to be tasked with proposing a "comprehensive investment scheme", in order to ensure that EU support for investment doesn't stop after 2020.

The wording is vague and leaves options other than a new extension of EFSI. "It does not have to be an EFSI 3.0, neither a similar mechanism," said one parliament source. "But there is a need to have something to address that."

"I think everyone agrees that there is a need for something in the longer-term," French MEP Dominique Riquet told Euobserver.

Riquet, who chairs the long-term investment and reindustrialisation intergroup, an informal group of MEPs, noted however that "the obligation to bring forward such a plan, might be more problematic" to member states.

"EFSI is an instrument that would work for the post-2020 period," EFSI's chief, Molterer, argued.

Any future scheme, however, would require a commitment for the post-2020 EU budget, which is financed by member states.

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.

Analysis

Doubts hang over EU investment plan's future

Questions of value for money and a lack of transparency complicate adding almost €200 billion more and extending the Juncker investment plan to 2020.

Investigation

EU bank accused of muzzling watchdog

An ongoing review of the the European Investment Bank's "complaints mechanism" could make the oversight branch less independent and less effective.

News in Brief

  1. EU to sign free trade deal with Vietnam
  2. EU funding of air traffic control 'largely unnecessary'
  3. Share trading ban looms as Swiss row with EU escalates
  4. Cooperation needed on Brexit, says Johnson
  5. Europe hit by record breaking June heat wave
  6. Liberal split complicates talks on new Spanish government
  7. Italy unravels massive European VAT carousel fraud
  8. Venezuelans cause spike in EU asylum bids

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues
  2. Nordic Council of MinistersNo evidence that social media are harmful to young people
  3. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021
  4. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  5. Nordic Council of MinistersEducation gets refugees into work
  6. Counter BalanceSign the petition to help reform the EU’s Bank
  7. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  8. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  9. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  10. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  11. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  12. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate

Latest News

  1. EU parliament gives extra time for leaders on top jobs
  2. Europe's rights watchdog lifts Russia sanctions
  3. EU-Vietnam trade deal a bad day for workers' rights
  4. EU 'special envoy' going to US plan for Palestine
  5. Polish judicial reforms broke EU law, court says
  6. EU study: no evidence of 'East vs West' food discrimination
  7. Russia tried to stir up Irish troubles, US think tank says
  8. Babis unmoved by EU scam allegations

Stakeholders' Highlights

  1. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  2. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  3. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  4. Nordic Council of MinistersNordic commitment to driving global gender equality
  5. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  6. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  7. Nordic Council of MinistersNordic talks on parental leave at the UN
  8. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  9. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  10. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  11. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  12. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson

Join EUobserver

Support quality EU news

Join us