Jean-Claude Juncker's 300 billion plan. How it works ?
(BRUSSELS2) Today, in Strasbourg, Jean-Claude Juncker is presenting the “flagship project” of the new European Commission, an “Investment Plan” to finance various large-scale projects throughout Europe. The bet is bold. How can this happen?
Why this plan? « Europe suffers from an investment deficit”, we plead to the Commission. " Foreign investments have fallen by 15% since the crisis. And they haven't been back since." explains an expert on the matter. We must restart the machine and restore investor confidence. It is also a question of giving another face to Europe than that of the bogeyman, on budgetary rigor.
How it works ? It is the European Investment Bank, a public bank in the European sphere, which will serve as operator. A Fund for strategic investment will be created there specifically, to collect funds and reinvest them. Brussels hopes to mobilize 300 billion euros, or even more.
Where will the money come from? It is the same mechanics as for a mortgage. The European budget makes a direct contribution, with a few Member States, of just over 20 billion euros. And he intends to raise the remainder in the financial markets. With one billion euros, depending on the project, we can raise between 6 and 20 billion euros, depending on the case “, explains a European expert.
Where will the European contribution come from? The money injected by Europe will be "raked" in several already existing programs: research (Europe 2020), SMEs (Cosme program), transport (Connecting facilies).
Why not use only public money? Quite simply because no one has 300 billion euros to put on the table immediately. The EIB has an advantage, it can borrow. What the European Commission cannot do. And it benefits from Triple A. Which allows it to have very advantageous conditions on the markets.
How will the projects be chosen? It is the experts of the European Investment Bank who will choose the projects by drawing from a list of "major projects" already defined. A list has been drawn up, negotiated between the European Commission and the Member States, for the period 2014-2020.
What are the risks of this method? We must avoid having too strict criteria for selecting projects. This would not allow a real investment. In the past, the envelope available for loans has not always been spent.
What are the consequences for the future? This method transforms the European budget. Public money becomes a financial lever to develop additional financial capacity and not only to grant subsidies. Which can pose a risk. Some States - such as the United Kingdom, always quick to seize the slightest opportunity to reduce European resources - could use this "experimentation" as a pretext to abolish the European Commission's "subsidizing" function and thus reduce the European budget for the Structural Funds in the next programming period (after 2020), or even before, during the mid-term evaluation of the current programming.
Nicolas GROS-VERHEYDE.
extended version of an article published this morning in Ouest-France
