Strasbourg, 19/04/2012 (Agence Europe) - The European Parliament has just given its agreement to allow Greece to relaunch major infrastructure projects blocked due to a lack of cash, and nervousness on the part of banks and private investors. Greece will be able to use money from the European Regional Development Fund not committed in 2012-2013 as a guarantee to cover a proportion of the risks associated with private loans.
Sharing of risks for growth. It is therefore a risk-sharing instrument, between the European Commission and the European Investment Bank (EIB) or other financial institutions that the Parliament approved this Thursday 19 April at its plenary session. In her report, which was adopted by a vast majority (504 to 78, with 79 abstentions), Danuta Hübner (EPP, Poland) sought to “increase the Commission's proposal, which was created in cavalier fashion, and improve it to better respond to expectations”. Hübner, who chairs the parliamentary regional development committee, introduced an upper limit of 10% of the total of national allocations the 2007-2013 (ERDF and cohesion fund together), and a limit of four months for the Commission to decide whether it can accept the request. The first priority is to get out of crisis: “Austerity packages in the economies which have been hardest hit by the crisis have not generated growth due to dysfunctioning within the banking sectors and fears of excessive risks. This means that there is an urgent need to make available EIB loans and guarantees to allow the private sector to get on board projects to bring growth and employment”.
Not taking account of the environment. Although all the countries receiving financial assistance from the EU (Ireland, Portugal and Romania) can make a request to take advantage of this mechanism, Hübner did not hide the fact that “when preparing this proposal, everybody had Greece in mind” and, in particular, the relaunch of toll road projects stalled due to a lack of funding. This left the Greens somewhat confused: “Regrettably, it is anticipated that a significant proportion of the projects in Greece which will receive support from this instrument are major non-sustainable infrastructure projects, such as motorways”, said Nikos Chrysogelos (Greens/EFA, Greece), and Greens spokesperson on regional policy Elisabeth Schroedter (Germany) stressed that “the mechanism proposed will certainly help the countries in crisis to absorb European structural funds”, but that there is “no sense in using public money for projects which are not sustainable, either from an economic or an environmental point of view”.
Leverage effect and implementation this year. The President of the European Commission, José Manuel Barroso, mainly sees the potential leverage effect: “In Greece for example, €1.5 billion will help to generate at least €2.25 billion for loans or guarantees for infrastructure projects”. He welcomed the “the swift adoption by the Parliament of the Commission's proposal, just six months after we presented it”. It is clear to Hübner that “the sooner we put (risk-sharing instruments) into operation, the quicker the recovery of countries worst hit by the financial crisis”.
Final stage, the Council. This is why the Parliament has stepped up to the plate and it remains for the Council to show the same sense of urgency, but Hübner does not doubt that it will: “The Council finds this acceptable and will make its decision to sign in May. Once it is published in the Official Journal, the instrument will enter into force the next day”. The member states are unlikely to have too many objections, particularly as the proposal will have no impact on the budget of the EU. Hübner adds that Greece has already got ready to use the instrument and may make a request immediately. In the best-case scenario, the country will be able to use some of its structural funds as a guarantee by the end of the year, and re-start outstanding projects. (MD/transl.fl)