STRASBOURG/BRUSSELS (Reuters) - The president of the European Commission proposed on Wednesday a revamp of the bloc’s investment strategy aimed at doubling the capacity of a scheme for boosting EU growth and jobs, while launching a new fund to help countries at the source of migrant flows to Europe.
Delivering an annual speech commonly used to set out EU priorities, Jean-Claude Juncker sought to rally support for the battered EU project in the wake of Britain’s vote to leave.
He told the European Parliament in Strasbourg that the Commission plans to double to 630 billion euros ($707 billion) the capacity of an investment vehicle for Europe, and will launch a new 88 billion euro scheme to help growth in Africa and the Middle East to address the root causes of migration.
To finance riskier infrastructure or energy projects in Europe and help create new jobs, Juncker proposed doubling the capacity and duration of the European Fund for Strategic Investments (EFSI), launched in 2015 with the aim of generating investments of at least 315 billion euros by 2018, of which 116 billion has already been raised.
The doubling is to be achieved with 26 billion euros of guarantees from the EU budget, up from the 16 billion pledged so far.
Under the new scheme, the European Investment Bank (EIB), the EU’s financial arm, would contribute 7.5 billion euros, up from its current commitment of 5 billion to the EFSI.
The combined 33.5 billion euros of EU cash and guarantees would then be used to attract private investments totaling 500 billion euros, 15 times the original amount. The final objective of mobilizing 630 billion euros by 2022 will depend on countries’ contributions.
But member states’ financial backing is still under discussion. They also have a direct say on the EIB’s participation in the plan, as shareholders of the bank. “I am pretty sure we will find a consensus on this within the next weeks or months,” EIB president Werner Hoyer said.
An agreement is also needed with member states on which EU budget resources will be used for the expanded EFSI. Cuts to funds committed to EU projects usually face strong resistance in the EU Parliament and from states that benefit the most from the money.
Juncker also proposed setting up a new financial scheme, built on similar mechanisms as the EFSI, to create infrastructure and jobs in foreign countries from where migrants usually come to Europe.
Migration flows from Africa and other poorer regions are not new, but an unprecedented wave of more than 1 million migrants last year prompted bitter divisions among EU states over how to share responsibility for them.
A deal with Turkey has so far greatly reduced the flow, but better conditions in the countries of origin of migration are seen as key to addressing the root of the issue.
“Today we are launching an ambitious investment plan for Africa and the neighbourhood which has the potential to raise 44 billion euros in investment. It can go up to 88 billion if member states contribute,” Juncker told lawmakers.
The scheme is meant to attract private investments from an initial input of 3.35 billion euros from the EU budget and the European Development Fund, a financial tool funded by EU governments.
Editing by Mark Trevelyan and Hugh Lawson