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21st Oct 2021

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Eurobonds could steer the EU out of crisis, regions chief says

One way to revive the European economy without burdening national budgets would be to set up eurobonds and use them to finance pan-European transport networks and broadband connections, the head of EU's regional assembly said in an interview.

One month into her office, Mercedes Bresso has great ambitions for the Committee of the Regions (CoR), a consultative body of the EU whose main task is to check that the bloc's new laws and regulations deal only with issues which cannot be solved at national, regional or local level.

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  • Mercedes Bresso describes herself as a 'federalist' (Photo: Committee of the Regions)

A convinced federalist, the Italian politician is a staunch supporter of the idea of setting up eurobonds.

"The EU is asking member states to have tough stability plans that are very difficult to achieve. But via eurobonds, we could finance infrastructure in Europe, railroads, broadband connections, and take the pressure off from the national budgets," Ms Bresso said in a recent interview with EUobserver.

Currently the EU is only financing cross-border connections in so-called pan-European transport networks, she noted, calling this a "minimal contribution," especially since it is in the EU's interest to have well-functioning, good quality railways and highways.

According to estimates by the European Commission, traffic between member states is expected to double by 2020 and the investment required to complete and modernise "a true trans-European network" amounts to some €500 billion from 2007 to 2020.

"So why not finance the whole corridor with European bonds?" Ms Bresso said. "And then have an EU agency, not the member states, as owner of the infrastructure. In this way, the financing of the debt would be made available by the revenues in renting out the infrastructure."

Developing such transport and communication networks is essential for regions and cities, in order to boost investments and employment, she added.

"We need development policies, not only restrictive ones otherwise we'll have deflation and GDP decrease at a moment when Asian and South-American countries are developing very quickly."

The Italian Socialist admitted that her "federalist" ideas might not be palatable for national governments, but expressed her conviction that some sort of "common projects" are needed at EU level in order to generate revenue.

This is particularly the case with EU's so-called 2020 agenda, adopted by heads of state and government last month and aimed at boosting employment, competitiveness and economic growth, she explained: "The 2020 agenda has to be financed by something, member states have no money."

Asked if she feared a reduction of regional administrations amid budget-cutting measures, since several German politicians have floated the idea of merging some of the country's 16 regions, Ms Bresso said "when you have a crisis, you sometimes have crazy ideas how to save money."

"Certainly, it is possible that in certain states you have an excessive number of provinces and regions. But democracy at local level is essential."

Herself a former president of the Italian region of Piedmont, Ms Bresso had to experience local democracy at work in March when she lost the elections by 9,000 votes against a candidate from the far-right Northern League.

She subsequently had to step down from her post as president of the CoR, only two months into her mandate.

Once her membership of the CoR was re-defined as a simple regional deputy from Piedmont, Ms Bresso was re-elected president of the CoR on 9 June, her aides saying that she has a "clear political mandate" to run the institution.

Commission fast-tracks EU 'project bonds' to spur growth

The EU commission on Wednesday proposed that "project bonds" worth €230 million be kicked off next year instead of 2014, so as to help investments in transport, energy and broadband connections as national budgets are drained of cash.

EU to link regional funds to strict deficit rules

The EU commission on Thursday proposed that from 2014 on, the bloc's structural funds be linked to strict budget deficit rules under the new economic governance legislation. Regional representatives and MEPs have criticsed the move.

Rehn questions political appetite for eurobonds

EU monetary affairs commissioner Olli Rehn has questioned whether euro countries are really prepared to accept the loss of national fiscal power that would come with the introduction of eurobonds - deemed by many as the principle means of exiting the eurozone debt crisis.

Brussels sees no serious opposition to eurobonds

The European Commission has launched a polemic on eurobonds - a proposal that eurozone countries should guarantee one another's debt, taking member states into uncharted territory in terms of solidarity and trust.

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