Brussels, 28/05/2015 (Agence Europe) - In the small hours of Thursday 28 May, the Latvian Presidency of the Council of the EU and the European Parliament reached provisional agreement on the draft regulation to establish the European Fund for Strategic Investments (EFSI), the financial arm of the Juncker Plan that is expected to leverage more than €300 billion in additional investment over the next three years.
Investment Commissioner Jyrki Katainen said a major step had been taken in efforts to create a better environment for investment in Europe and the EFSI would counteract the dysfunctioning of the capital markets rather than add to the river of existing liquidity. José Manuel Fernandes (EPP, Portugal), co-rapporteur on this matter at the European Parliament, said there was now an innovative instrument to help finance additional investment products that would not get the funding they need were it not for the EFSI.
The inter-institutional agreement was reached after eight lengthy trialogue meetings, the last two over the previous two nights (see EUROPE 11322 and 11319). It now needs to be confirmed by the Parliament on 24 June (in the June plenary) so that the EFSI can be up and running at the end of the summer.
Public guarantee. The European Investment Bank (EIB) will be responsible for choosing the projects to be supported by the EFSI. The fund will have a public guarantee of €21 billion (€16 billion of this from the EU budget and €5 billion from the EIB) to deal with any initial losses from investment projects. The final negotiations were over the way the financing of this “irrevocable and unconditional” guarantee from the EU budget is to be forthcoming. The guarantee from the EU budget will be based on a special fund of €8 billion from the EU budget. In line with the Commission's initial proposal (see EUROPE 11229), the Council wanted €6 billion to be taken from EU programmes, such as Horizon 2020 and the Connecting Europe mechanism, and the remaining €2 billion from the annual budget margins that would normally return to the member states (see EUROPE 11271). In the end, €5 billion will come from the EU programmes and €3 billion from the annual margins. The reduction in €1 billion to be taken from the EU programmes (€500 million from Horizon 2020 and €500 million from the Connecting Europe mechanism) is seen as a victory for the Parliament, and it will be financed by additional withdrawals from the margins of the 2014 budget (€543 million) and the 2015 budget (€457 million).
Pleased that the European Parliament had won the first battle on this issue, Fernandes promised that it would fight each year to use the budget margins to achieve targets in policy areas such as employment and growth. Research Commissioner Carlos Moedas said not a single euro would be taken from the funding earmarked for basic research (three programmes in total, including the Marie Curie European Research Council).
In terms of the type of projects selected, Parliament pushed hard to obtain the right of scrutiny of the investment guidelines to be annexed to the new regulation. Likewise, a scoreboard drawn up by means of a delegated act will enable regular monitoring of the scale and type of projects being funded under the Juncker Plan.
EP co-rapporteur Udo Bullmann (S&D, Germany) said it was not a case of Parliament micro-managing projects, but of deciding on a broad framework and Parliament exercising its democratic control role to avoid any politicisation of the project selection process. He said projects should focus on future-focused sectors such as energy efficiency and broadband, and not nuclear.
MEPs will also have their say in the appointment of the future leaders of the EFSI. If the fund is successful, it will be possible to extend its life beyond the initially planned three years.
National co-financing. No member state will contribute to the EFSI directly, but on a voluntary basis, countries will be free to commit finance from their national investment banks to co-finance projects selected for Juncker financing. Six member states have already done so, viz. Poland (€8 billion), Germany (€8 billion), Spain (€1.5 billion), France (€8 billion), Italy (€8 billion) and Luxembourg (€80 million). Investment Commissioner Jyrki Katainen said he had the feeling that further countries would follow suit, and probably regional funds as well. He pointed out that these one-off contributions would be neutral under the stability and growth pact.
Katainen said that the member states were invited to set up decentralised investment platforms to give advice on how to apply for funding and to put project managers in contact with investors. (Mathieu Bion)