Thursday

11th Aug 2022

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

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe 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.

Almost two-thirds of Europe in danger of drought

Data released by the European Drought Observatory show 60 percent of Europe and the United Kingdom is currently in a state of drought, with farming, homes and industry being affected. Drought conditions have also led to an increase in wildfires.

Brazil pitches itself as answer to Ukraine war food shortages

Brazilian president Jair Bolsonaro is pitching his Latin American country as the answer to the world food crisis following the war in Ukraine. The traditional wheat importer has now exported three million tonnes of the grain so far in 2022.

Opinion

Exploiting the Ukraine crisis for Big Business

From food policy to climate change, corporate lobbyists are exploiting the Ukraine crisis to try to slash legislation that gets in the way of profit. But this is only making things worse.

News in Brief

  1. Sweden overtakes France as EU's top power exporter
  2. Italy's far-right star in European charm offensive
  3. Another migrant tragedy claims 50 lives in Greek waters
  4. Russia hits area near town with 120 rockets, says Ukraine
  5. UN expects more ships to get Ukrainian grain out
  6. Greece to end bailout-era oversight
  7. Denmark to train Ukrainian soldiers in urban warfare
  8. Russian helicopter flies into Estonia's airspace

Stakeholders' Highlights

  1. EFBWW – EFBH – FETBBConstruction workers can check wages and working conditions in 36 countries
  2. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online
  3. European Centre for Press and Media FreedomEuropean Anti-SLAPP Conference 2022
  4. Nordic Council of MinistersNordic ministers write to EU about new food labelling
  5. Nordic Council of MinistersEmerging journalists from the Nordics and Canada report the facts of the climate crisis
  6. Council of the EUEU: new rules on corporate sustainability reporting

Latest News

  1. Russian coal embargo kicks in, as EU energy bills surge
  2. Only Western unity can stop Iran hostage-diplomacy
  3. Kosovo PM warns of renewed conflict with Serbia
  4. EU Commission shrugs off Polish threats on rule-of-law
  5. EU urged to stop issuing tourist visas to Russians
  6. Russia puts EU in nuclear-energy paradox
  7. Almost two-thirds of Europe in danger of drought
  8. West needs to counter Russia in Africa, but how?

Join EUobserver

Support quality EU news

Join us