A dispute has arisen between Brussels and Berlin concerning the European Union's new investment plans.
The European Commission wants to give permanent status to the planned European Fund for Strategic Investments (EFSI), but Germany doesn’t.
On Tuesday in the E.U.’s Economic and Financial Affairs Council ECOFIN, Germany's finance minister, Wolfgang Schäuble, argued the fund should be limited to three years. When investment activity gets going again in the European Union, the fund will no longer be needed, he said.
Jyrki Katainen, the E.U.'s vice president responsible for investments, disagreed, saying no one can know yet how long investment will be low so the E.U. shouldn't put a time limit on the fund.
ECOFIN's chairman proposed a compromise: E.U. finance ministers should consider extending the fund in three years.
Smaller E.U. member states fear that in that case, the principal beneficiaries of the EFSI fund would be large, powerful nations such as Germany.
European Commission leader Jean-Claude Juncker's new investment fund is to be provided with €21 billion. The money will come from the E.U. budget and the European Investment Bank. The member states are not contributing directly to the fund's capital, although Mr. Juncker has repeatedly asked them to do so. The Luxembourger even promised to record payments in the plus column in evaluating the governmental deficits of individual nations.
But at the ECOFIN meeting Tuesday, no finance minister was ready to contribute capital to Mr. Juncker's fund. The only possibility seems to be that member nations finance projects together with the EFSI fund. But here as well, there is little more than vague promises.
“Up to now, we are the only country that has announced additional contributions of €8 billion through the development bank KfW,” Mr. Schäuble said. The E.U. finance ministers are still debating about who should sit on the executive committees of the EFSI fund. The planned committees — a managerial council and an investment board — should not become politicized, argued Dutch finance minister Jeroen Dijsselbloem.
For that reason, he opposed including representatives of governments or national development banks in the managerial council. In its draft decree, the European Commission specified that only itself and the European Investment Bank (EIB) should be represented on the committee as joint partners in the fund.
This proposal received support from the EIB president, Werner Hoyer. The EFSI fund’s executive committees “should be as apolitical as possible,” he said. EIB experts alone should decide about which projects are selected — with no outside political influence, he argued.
Moreover, there is controversy as to what criteria should be used to select the projects. Two are currently debated: a project should bring “additional utility to the E.U.” and be “economically feasible.”
Several ministers spoke out against national proportionality in the selection of projects. But it doesn't seem to have been decided whether geographical criteria will ultimately be left out of consideration entirely. Smaller E.U. member states fear that in that case, the principal beneficiaries of the EFSI fund would be large, powerful nations such as Germany.
Ruth Berschens heads Handelsblatt's Brussels office, leading coverage of European policy. To contact the author: [email protected].