Brussels, 07/10/2014 (Agence Europe) - Is Finn Jyrki Katainen the right person to head up the €300-billion investment plan promised by Jean-Claude Juncker, the president of the incoming European Commission which is likely to take office in November?
Following his hearing on Tuesday 7 October, only his own political family was unanimously convinced that he is. In the eyes of the EPP, it is obvious that Katainen is “the right person for the job”. As we were going to press, the S&D Group was still locked in discussion on how the Finn performed, refusing to make any official comment. The coordinators of the political groups were due to meet in the early evening to discuss, firstly, Katainen's situation specifically and then the fates of all the other candidates whose fates are in their hands.
The S&D Group and, to a certain extent, the EPP would like to go for a “package” of decisions on the fate notably of Katainen but also of the economic and financial affairs nominee Pierre Moscovici of France, whose additional written responses were expected around 6.00pm and Jonathan Hill of the UK, who appeared for a second hearing in the afternoon (see other article). “They'll put everything in a big basket and shake it about”, suggested an S&D source ironically in the early afternoon.
Within the ALDE Group, the level of satisfaction varied from one MEP to another. Ramon Tremosa i Balcells of Spain seemed satisfied with Katainen's answer to his question. Those close to another Liberal MEP, on the other hand, felt that the Finn's performance had not been wonderful, acknowledging, however, that this was largely the result of the instructions given by Juncker. The ALDE Group will meet on Wednesday to discuss the hearings and the candidates. The fact that Socialist Moscovici finds himself facing three Conservatives could also be problematic for some groups.
The coordinator of the Greens/EFA Group on the Parliament's economic committee, Sven Giegold, told EUROPE that he felt that Katainen had been “much weaker than I had expected”. His answers were hollow, the German environmentalist said, and expressed no enthusiasm for the task that is to be entrusted to him. Giegold stated, however, that he did not think that his group would call for a vote on Katainen. The GUE/NGL Group, on the other hand, appears intent on calling for one.
Still fuzzy €300 billion investment plan. Katainen made clear from the outset that he would probably be unable to answer all of the MEPs' questions on the €300 billion investment package promised by Juncker. Constrained by somewhat general considerations as the new Commission is not yet in place, Katainen said that public investment must not take over from private investment and that the public purse should only be used as a catalyst for private investment. Another key principle is that, thanks to the member states' coordinated approach, there will be no question of creating new debts or deficits.
Several MEPs asked where the money would come from. Katainen spoke of making better use of the European Investment Bank (EIB) and increasing its credit capacity, and better use of the EU budget. He called on countries in surplus to “invest more in the future” and those in deficit to direct their public expenditure towards research and development. “Some people are saying that it's just recycling existing money, but this is not so. If there is a change of priorities, more can be obtained”, argued the former prime minister of Finland. Paraphrasing Moscovici, he said “We need as much public investment as necessary and as much private investment as possible”.
Katainen was not able to spell out Juncker's plan in detail because of market sensitivity. Questioned later by the press on whether the EIB should be asked to take greater risks, he said he did not want to speculate. A French-German document presented at the last Ecofin Council suggested doing just that. EIB President Werner Hoyer has promised, however, that the Luxembourg-based bank would do nothing to put its AAA rating at risk as this would have a direct impact on its ability to lend (see EUROPE 11158). He nevertheless spoke of possibly using EU structural funds as a guarantee to create leverage and produce a greater impact when these funds are used as subsidies.
Katainen expressed the view that the quality of the money devoted to investment is just as important as how much is given to it. Tremosa i Balcells questioned him on how to ensure that projects will have a European interest. Katainen said that a very detailed impact study and a cost-effectiveness analysis were needed. “Projects have to be well prepared right from the start”, he stated. Why not, then, include resource efficiency in the European semester budgetary process and create instruments to evaluate it, he wondered.
Criticism on past positions taken. Katinen was asked to explain certain positions he has taken in the past. Elisa Ferreira (S&D, Portugal) criticised a lack of consistency between his speech to the ECON committee in July and at this hearing. “You said in July that investment and growth would spring automatically from austerity, the only source of confidence for investors, and that it was just a matter of time and persistence”, she said. “We have to reduce our debt in order to create growth and to produce growth in order to diminish the debt”, Katainen replied, believing that budgetary policy and growth supported each other. “Confidence is a pre-condition for attracting private investment and creating jobs”, he continued. And he concluded: “Now we have found growth again, we must attack the future”.
Another MEP questioned him on Finland's refusal to participate in the enhanced cooperation on the financial transaction tax (FTT). “As Sweden will not enter this, it is very difficult for Finland to embark upon it”, said Katainen, recalling that the tax on stability imposed on the banking sector at his initiative had provoked the flight of banks to Sweden.
Lastly, as regards the guarantees demanded by Finland on loans to Greece, Katainen stated that he had backed the aid plans despite their unpopularity in the country, and that the above-mentioned guarantees were claimed by the Finnish Socialist party and set as a pre-condition for a coalition agreement (see EUROPE 11169). He also said he was surprised by the way in which he is sometimes depicted. On the international scene, he is indeed described as a “budgetary hawk”. And he recalled that he would not be in charge of budgetary policies in the next Commission - a domain which is furthermore not his “cup of tea”. (EL)