The European Commission introduced EU leaders to the European Fund for Strategic Investments (EFSI) in Brussels Thursday evening.
The project – aimed at putting together a sizeable package to kick-start investment and growth in the region – will require heads to make a political decision to contribute. The Commission expects the fund to get off the ground next June and to invest in energy, transport networks, education and research.
The fund’s 21 billion-euro seed capital is expected to come from the EU budget and the European Investment Bank. Member states are also being called upon to pitch in.
“Finland will not be participating in the investment package under the current circumstances,” Prime Minister Alexander Stubb in Brussels.
“It would be prudent to proceed with caution with respect to this investment package. We first have to see what it contains and how open it is,” Stubb remarked.
The PM said he was also interested in how the fund’s leverage effect would work in practice. The goal is also to secure private funds to help swell the seed capital from 21 billion to 315 billion euros to bankroll investment projects.
“This package seems to represent creative accounting to me,” said Lithuanian President Dalia Grybauskaité, conceding however, that the "intention was good."
The fund itself falls under the purview of ex-prime minister Jyrki Katainen, who is now a Commission Vice President responsible for jobs, growth, investment and competitiveness.
Stubb: Not a public money box
The EU’s eastern member states have called for investment funding to be distributed on a geographical basis – an idea that Finland opposes.
“This investment package is not a public distribution box, which perhaps may have been seen in these EU discussions,” Stubb said.
Finland has stressed that the working group that decides on investment targets should be an independent body.
Many member states burdened by high budget deficits and public debt have been wary of taking a stake in the fund. However the Commission has promised no negative fallout for members that fail to balance their budgets because they’ve supported the measure.
That’s an option that may prove to be attractive for countries like Italy and France, which would like to spend more on economic recovery programmes than the current EU rules allow. However the final word on interpreting the EU’s Stability and Growth Pact – which ensures fiscal discipline by member states – lies with the Commission.