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Katainen has his work cut out. Most importantly, he will have to convince private investors to put up the €315bn the plan promises; the €21bn of EU money in the scheme is only a guarantee to raise bonds on capital markets.
First he will have to convince restless national politicians, who are already questioning whether the money will really reach the neediest parts of the EU. A similar €180bn European Investment Bank (EIB) plan two years ago fell flat amid criticisms the funding was being used in countries like Germany, rather than in those starving for investment.
Those concerns were raised anew last week after the EU task force intended to identify viable projects issued a report with 2,000 proposals needing a total of €1.3tn in funding.
Rather than supplying the task force with their most economically viable projects, EU governments appeared to have provided wish lists with every proposal sitting on their shelves, a sign they view the €315bn investment plan more as a traditional public works programme than a way to stimulate private investment. EU officials were forced to admit the task force list would not serve as a basis for their new project pipeline.
“I understand that in the public and maybe in some member states there was an understanding that once the list is ready, it’s a list of projects that will get financing,” Katainen said. “The purpose . . . was to identify whether there are investment needs and what kind of investment needs they are.”
Katainen’s aides remain fearful that without a shield from political influence, the investments could be directed to the kind of “white elephants” that have plagued EU infrastructure funding in the past. Instead, the plan Mr Katainen is attempting to sell is intentionally technocratic, despite its overtly political goals.
The scheme will create a new European Fund for Strategic Investments, but infrastructure projects will still be vetted by the EIB and chosen by an investment committee headed by finance professionals rather than politicians.
“For the credibility of the fund in the eyes of the private sector, it’s very important to have professional-based analysis and decision-making on the projects,” Katainen said. “If that’s not the case, there is no private money and there’s no investment.”
The investment committee will be overseen by a governing board that will provide broad policy goals and set the fund’s risk profile, designed to take on the more uncertain projects the EIB has traditionally shunned.