Commission fast-tracks EU 'project bonds' to spur growth
-
The Vasco da Gama bridge in Portugal: Investments in large-scale infrastructure projects are being hit by the crisis (Photo: F H Mira)
The EU commission on Wednesday (19 October) proposed that "project bonds" worth €230 million be kicked off next year instead of in 2014, so as to help investments in transport, energy and broadband connections as national budgets are drained of cash.
In anticipation of a "Connecting Europe" package of initiatives worth €50 billion from 2014 on - if member states agree - the project bonds will be loan guarantees managed by the European Investment Bank (EIB) to help construction companies or governments in financing large-scale infrastructure projects.
Join EUobserver today
Become an expert on Europe
Get instant access to all articles — and 20 years of archives. 14-day free trial.
Choose your plan
... or subscribe as a group
Don't miss out on
Our exclusive news stories and investigations. Influential. Investigative. Independent.
Why join?
Watch our founder Lisbeth Kirk explain the reasons in this 30-second video.
Already a member?
"What we are doing is advancing something foreseen only from 2014 on, precisely because in the current economic circumstances it's important to use some financial instruments at EU level," commission chief Jose Manuel Barroso said during a press conference.
The pilot phase is supposed to focus on five-10 projects already "at a relatively developed stage of bidding or requiring refinancing after the construction phase" in the sectors of transport, energy and broadband. EIB and EU financing combined, the €230 million re-distributed from transport and innovation budgets are "expected to mobilise investments of up to €4.6 billion," he said.
Asked how he would ensure that member states do not push for their national pet projects to be funded under this scheme, Barroso said he "trusted" the EIB's long-standing expertise in selecting projects that make sense from a European point of views.
With a line-up of three commissioners each presenting the benefits of such large-scale investments in transport, energy and broadband, Barroso's call for investments and growth-oriented policies comes three days ahead of a key summit aimed at finding solutions to the deepening sovereign debt crisis and after worldwide protests against austerity and bank bail-outs.
"Today's project bonds launch is a welcome and overdue step in the right direction. It is right to start a pilot phase now rather than wait until 2014 to mobilise private investment," Guy Verhofstadt, the leader of the Liberal group in the European Parliament and a supporter of EU-driven investments said in a statement.
Economists however poured some cold water on the initiative.
"It's the famous drop of water on a very hot stone," Carsten Brzeski, a senior economist with ING bank told this website. Even as investment-stimulating measures are "a good thing in principle, they will never be big enough to restore growth," he said.
Brzeski also dismissed Barroso's theory that EU funds can be used to ease up Greece's lending problems.
"These are such minor steps that they won't matter. Either you need a Marshall-plan from rich countries or some large-scale private initiatives, but EU funds will never be enough," he said.
