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Juncker dealt setback on EU investment plan

18 December 2014, 19:03 CET
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(BRUSSELS) - European leaders were set Thursday to approve an ambitious investment plan but without adding more money, dealing a setback to commission head Jean-Claude Juncker.

Leaders of the EU's 28 member states meeting in Brussels were widely expected to greenlight the broad outline of Juncker's 315 billion euro ($387 billion) investment plan, intended to kick-start growth in Europe by financing hundreds of projects.

"We can now start with the investment programme," said the influential German chancellor Angela Merkel, arriving for the talks.

"The first proposals are on the table for the frame, which now has to be filled with concrete projects," she said.

The plan is based on 21 billion euros in seed money from the EU budget and the bloc's European Investment Bank (EIB), which Juncker expects to leverage to the 315 billion figure with private investment.

But the initial stake could be boosted considerably if member states put their hands in their pockets.

Leaders however said they would wait for the plan's details, to be negotiated in the coming months, before committing national funds.

"It is too early. The details will be the devil," said Lithuanian President Dalia Grybauskaite.

Finland Prime Minister Alexander Stubb said his country planned no contribution.

Juncker, who took office November 1, has been urging leaders to put up "hard cash" to back his plan, which was first unveiled last month and is central to his five-year agenda as head of the EU's executive.

The plan is built on a complex mechanism intended to attract private investors to risky and overlooked projects that meet the EU's longer term goals.

The scheme's cornerstone will be the new European Fund for Strategic Investments, which leaders will formally endorse at the summit.

- Not a 'magic solution' -

The new fund "is not the magic solution to Europe's investment crisis," said Werner Hoyer, president of the EIB, which will play a central role in the Juncker plan.

To encourage member states, Juncker's plan promises that contributions would not be counted as part of their national budgets, many of which are in breach of deficit rules which Brussels has tightened up considerably during the debt crisis.

"I read that some prime ministers have expressed that the volume of the package is a bit measly," Juncker said, arriving to the summit.

But as contributions would not count against the budgets of cash-strapped nations, "there is almost no reason for member states not to contribute to the financing," Juncker added.

Despite their reticence to put money on the table, member states leapt at the opportunity to submit projects for funding.

Last week, member states released a list of 2,000 projects worth 1.3 trillion euros, in hopes of attracting investment.

A senior EIB source said the list was nothing more than a member state wish list and that its release was unfortunate even if "unavoidable for political reasons".

"Nobody on the member state level said this was just an idea (of projects) and that their economic viability needed to be determined," the source said.

"It would have been proper to say that," the source said.


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