The European Investment Bank (EIB) has named the first four projects to receive loans under the EU’s new stimulus plan to re-boot Europe’s struggling economy, announcing investments in healthcare R&D in Spain, expansion of an airport in Croatia, the construction of 14 new healthcare facilities in Ireland, and backing for a steel pipe firm in Italy.
The bank approved loans covering up to 35 per cent of the cost of the projects, or €300 million. This will generate an overall investment of about €850 million and could benefit up to 7,000 small businesses in Europe, the EIB estimates.
In total, the EU is putting €21 billion into a new fund to underpin the Juncker plan and claims this will de-risk investments and attract a further €315 billion from the public and private sector.
A task force is screening the initial batch of projects submitted by member states, and will announce more investments in the next few weeks, the EIB said.
Return of the white elephants
Here we go again, was the reaction of Belgian MEP, Kathleen Van Brempt to the list of projects. “It’s perfectly acceptable for Croatia to invest in airports – but with EU public money? We want to see sustainable investments,” she said.
For Van Brempt, the plan to add a terminal to Dubrovnik airport conjured up ‘white elephant’ projects the EU has squandered money on in the past.
Last year a report by the European Court of Auditors said EU investment in airports between 2000 and 2013 was poor value for money. A total of €255 million was spent on infrastructure which was “unnecessarily large”, while €38 million worth of infrastructure was not being used at all. Only half of the airports needed EU funding, and much of the infrastructure, once built and paid for, was underused, the report said.
The EIB prefers to talk about potential job creation instead of the profitability of projects, saying airport staff could rise from 500 to 1,000. “We do not comment on expected return on investment,” Richard Willis, an EIB spokesman said
The EIB said it will take the projects on its balance sheet, “Even if the [EU] guarantee should be found not to apply.”
This prompted Kurt Deketelaere, Secretary-General of the League of European Research Universities, to say, “One can wonder why [the fund] is needed at the end of the day.”
Legislative battle rages on
Not only are some of the investment choices disappointing, the cart is being put before the horse, Van Brempt said. “I’m scandalised that it’s funding on a structure that hasn’t been decided on yet,” she said.
Claude Turmes, a green MEP, called it “bad quality propaganda,” saying, “The EIB is trying to pre-empt projects' eligibility and selection criteria, which are still to be agreed by EU lawmakers.”
However, EIB president Werner Hoyer defended the move saying, “We wanted to send out a signal to the investment community. Fast.”
On Monday, the Parliament presented its negotiation position on the fund, calling for a safeguarding of the €2.7 billion that it is planned will be diverted from the EU Horizon 2020 research programme to help bankroll the fund.
The Commission has been offering reassurances that the money will still be invested in research. Amongst the projects announced this week, €100 million is earmarked for Grifols, a Spanish blood products company that plans to use the money to improve medical treatment for conditions including Alzheimer’s disease.
The majority of the research community has not bought the argument. “We believe [the fund] is a good plan for Europe, but was based on a flawed funding proposal that would have affected Europe’s research capacity and undermined the very innovation potential it is trying to revive,” said Amanda Crowfoot, director of Science Europe, an association of 50 public research organisations in Europe.
Three way talks between the Parliament, the Council – which represents the interests of EU governments – and the European Commission will try to hammer out a deal on a final version of a bill before June.
Three scenarios are possible: the original proposal sticks; the Commission caves and is forced to search elsewhere for seed capital for the fund; or some kind of compromise is forged, with Horizon 2020 saved from the full €2.7 billion cut.