The President of the European Commission, Jean-Claude Juncker has to make his first “big announcement” next week. Probably on Wednesday, November 26th. To MEPs in Strasbourg, he will disclose the details of its stimulus package of 300 billion euros, an initiative announced in July to boost a sluggish European economy and lack of investment.
But the question is how to find these 300 billion for Juncker account. On Tuesday, November 18, the French economy minister, Emmanuel Macron said he “feared a disappointment” about this plan. “None of the information circulating does not reflect reality. The final decision will be taken by the College of Commissioners next Tuesday,” warns Schinas Margaritis, spokeswoman for Juncker.
Centered on the issues of growth, recovery and investment, the Commission headed by Jean-Claude Juncker binds other objectives, sometimes equally ambitious – and unsustainable – according to some.
Most of the commitments come from the private sector
What seems certain at this stage is that more than two thirds of the 300 billion euros will come from private investors. Financial “roadshows” will be organized to “lift” the money. Pierre Moscovici, the Commissioner of the economy, and Jyrki Katainen, vice president for growth will participate. But whether “priming the pump” or convincing these private interests, it will still be public money.
A little public money to create leverage
The European Investment Bank (EIB), which has extensive experience in the identification and evaluation of projects, plays a central role. One or more new investment vehicle would be established under its aegis. They would provide leverage to the private sector.
Funds will also be made by the states. And if the amount were to encumber the public accounts, Brussels could be flexible in its assessment of compliance with the Pact of Stability and Growth: the Commission does not blame a country for creating more deficit if the sums involved go to the investment plan.
Mr. Macron on Tuesday spoke of the need, from the public side, for “a fresh supply of at least 60 to 80 billion.”
First concrete projects
Priority sectors to receive 300 billion euros from have been identified: energy efficiency, networks (telecom, IT, transport, energy), and education / training. On Wednesday Mr Juncker should present concrete projects that could be funded soon.
The EU countries had to make up their projects before November 14. France sent its copy, which would include the Roissy Express, the electrical interconnection with Spain and a denser network of charging stations for electric vehicles.
“A stronger Europe on the world stage”
The former Italian minister of foreign affairs, Federica Mogherini, who became High Representative of the European Union for Foreign Affairs and Security Policy in the Juncker Commission, will have the task of driving a policy of external relations of a new type. Focused on “prevention, management and vision,” in her own words. The folder on difficult relations with Russia and Ukraine appear at the top of her agenda. With an examination promise, ultimately, the effectiveness of sanctions against Moscow and the consideration of “strategic role” of Russia; although it cannot yet be regarded as a “partner” with the Twenty-Eight, she said.
Better regulation, cutting red tape
Juncker learned some lessons from the last European elections, reflecting a disillusionment with Europe. He wants his institution to be more concerned with real issues and fewer trifles. There should be a “more ambitious Union for the major challenges and a smaller one for small issues,” prophesied the President of the Commission. Dutch Socialist Frans Timmermans will lead the “Better Regulation” program, ensure, as it were, better regulation and reducing bureaucracy, as well as the principle of subsidiarity. An attempt to change the image of power that regulates the size of olive oil bottles, but do not give the impression of dealing with issues that are really concerns with the public.
Provide the Union with a real immigration policy
In one year, 150,000 people fleeing from wars or poverty landed on the shores of Europe, and more than 400,000 claimed refugee status. With a want of a better, Juncker calls for solidarity between the Twenty-Eight and a “strong” common policy on refuge. Aside from strengthening against illegal immigration fight (expensive) and dialogue with countries of origin and transit, the EU seems powerless and forced to listen to increasingly reluctant opinions on opening legal visas for access to Europe. The President mentioned the need for a “new” migration policy, including a section on legal migration, intended to address the demographic challenge of the coming decades, an aging population and the shortage of labor in certain sectors of economy.
“Strong” climate policy
The vice-president of the Union for Energy, Alenka Bratušek and Commissioner for Climate and Energy, Miguel Arias Cañete, are asked to work together since the policies they are supposed to lead are mutually reinforcing. Job creation, lower costs for consumers and sustainability for the common policy are promise by the President as an outcome of this cooperation.
The new Commission will deal with the economic emergency
For now, the corridors of the Berlaymont, the headquarters of the European Commission in Brussels are still cluttered with boxes, not all of the Commissioners’ cabinets are ready. Yet Juncker Commission returned to function on Saturday, November 1, replacing the team of President Barroso (2009-2014), with no time to lose. Hot topics accumulated. They are mostly economic.
For his “Commission’s last chance” – that is his expression – Jean-Claude Juncker knows he will not have a very long period of grace. Growth is lowered, unemployment in the Eurozone is still very high, the disaffection of citizens for the European thing reached alarming levels. He and twenty-seven other members have an obligation to deliver fast results.
First record on the stack: the investment plan of 300 billion euros
As has been mentioned above, Juncker promised this summer at his inauguration at the European Council. Since then, this plan is on everyone’s lips. The President of the Commission has ensured that the details should be presented before Christmas. He wants to be ready for the European Council (meeting of Heads of State and Government) in Brussels on 18 and 19 December. It is now proposed at Community level as a single project, to boost growth, according to the OECD, with a forecast at 0.8% in the Eurozone in 2014.
The reasoning? Boost supply to stimulate hiring and consumption. Because the situation is now shared by all countries of the Union during the crisis, many among them that are hit hardest – Greece, Spain and Ireland – have not invested enough. In Germany, the debate over the lack of investment rises.
The “task force” set up this fall by President Juncker – a dozen people in all, working with the European Investment Bank (EIB) and representatives of member countries – is considering mechanisms to encourage private money to be placed on projects not necessarily profitable in the short term (energy transport infrastructure, telecom, education, etc.). Given the financial state of many European countries, the money will not come from national budgets, even if a “significant public leverage” is considered, according to a European source.
The EIB, the financing arm of the Union, will be reassessed. “But recapitalization is not the heart of the debate,” says a Brussels source. The institution was recapitalized to the tune of 10 billion euros more by its shareholders, the twenty-eight member states in 2012. The idea is rather to encourage more risky behavior in order to finance projects whose performance is less obvious. The bank even might have to sacrifice its “AAA” rating. Using the ESM, the European Stability Mechanism, set up in 2012 to deal with future financial crises in the euro zone, was ousted, since the Germans felt inappropriate to apply this fund, as markets show a renewed excitement, especially with regard to Greece.
The “task force” is also working to identify projects that deserve the most funding. “Knowing that 300 billion will be invested gradually over three years,” they said in Brussels. Many, however, do not hide their skepticism: “The hardest thing will be to identify good projects. To avoid financing white elephants, airports in Greece, the blocks of flats in Spain…” said a diplomat.
Greek exit from bailout
Another delicate issue is that of Greece. The Prime Minister, Antonis Samaras, said in September that his country might leave the plan for international aid (International Monetary Fund, Commission, European Central Bank) earlier than expected. Further discussions between Brussels and the Greek authorities were expected as a result of the stress tests conducted by the ECB in late October. It was based on the results that the final decision was to be taken. Brussels discusses how to organize a plan to help out in the safest possible way, so that Athens does return to the markets with the rates at which it is funded rising, too.
This burning issue has recently called on the agenda of the Commission, when the Prime Minister, David Cameron, has suddenly discovered – or pretended to have discovered – that, as a result of a new methodology for calculating domestic gross products of EU countries, the UK was to pay $2.1 billion more to the EU budget on December 1st. For the British officer, the news was not at all acceptable, so he promised his countrymen to lower the bill from Brussels. He assured that he will not send the money. The Commission informed him that he had no choice…
Juncker, who said repeatedly that one of his priorities would be to avoid a “Brexit”, exit of the UK from the EU, and will therefore have to find another way out. The revelations of the Spiegel on Monday, November 3, in which Angela Merkel is no longer willing to keep the British at any price, especially if they implement a new migration policy, are symptomatic of the Brussels sentiment.
Publication of notices on the budgets of member countries
By late November, the board must analyze the substance of the members’ draft budget for 2015. This is the second year that the Commission engages in this exercise, in the context of strengthening the coordination of budgetary policies decided on in the wake of the crisis in the Eurozone. Northern countries of Europe, and those who made a lot of sacrifices in the South (Portugal, Spain, Greece) to restore budgetary balance, expect an impartial assessment from the institution, and severe one in such cases as France and Italy. The second and third economies in the euro zone are not in the claws of the Stability and Growth Pact. They narrowly escaped in late October a negative opinion and could be forced by Brussels to put in place concrete structural reforms.