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Investing for the future

Submitted by on 14 Jul 2017 – 09:10

The aftermath of the economic and financial crisis had several profound effects on European economies and societies. On the one hand, the crisis accelerated a process of erosion of living standards. The political impact of this reality is undoubtedly relevant for today’s European leaders. Victor Negruscu MEP writes about investing for the future of Europe.

The rise of populism and extremism is not only fuelled by the actions of dangerous demagogues. It is also the consequence of a reality we need to acknowledge in order to give new impetus to the European project: people feel let down by Europe. The malaise, the disappointment is not necessarily with the institutions and definitely not with the principles. It is with the results.

On the other hand, it is also essential to correctly evaluate the impact of living in an increasingly connected global world. But the fact is that the menace of 19th century isolation and autarchy is no longer possible in a world where the production and supply chains stretch across continents and languages, in a world where ideas and communication are unimpeded by distance or time. Europe is at the centre of this web of connections and globalization, with its advantages and risks. The task for the future is managing its consequences.

In this context, the European Fund for Strategic Investments (EFSI) is a welcomed step made by the European institutions in order to support the development of European infrastructure, industry, research and innovation. I believe that bold moves are required in order to show not only the resolve of European institutions to support development and modernisation, but also to build upon the capital of trust generated by this initiative. Therefore, increasing the EU guarantee from €16 to 26 billion and in EIB capital from €5 to 7.5 billion, capable of mobilising investment up to €500 billion until 2020 and effectively increasing funding from 21 billion Euros to 33.5 billion is a move capable of exerting real impact in the near future.

Furthermore, it is most opportune that said funds will not be taken away from vital programs for European research, such as Horizon 2020. One of the most important advantages Europe enjoys both as an economic system and as a group of societies is the emphasis it puts upon science, research and innovation, whose impact is translated not only in pecuniary terms, but also in the vibrant nature of our democratic institutions and our free societies. Programs such as Horizon 2020 are not financial assistance for development. Safeguarding their financing is a covenant between European societies for a better future of our continent.

In addition to that, the EC’s proposal to earmark 40% of the guarantees for the financing of programs ran by SMEs and the enforcement of the social dimension of the fund are warranted. I also trust that while the emphasis placed on the social dimension of large European initiatives is most welcome, stronger steps should be taken to ensure that we robustly tackle inequalities in development and living standards.

One of the problems is the tremendous inequality in terms of development and living standards, leading to problems associated with social exclusion. In addition, the fact that this program did not take into account the regional dimension of inequalities and disparities at the level of the European Union is equally problematic. Enhancing the geographical coverage is a foremost priority. Many of the issues we are confronted with today originate within this reality and it is wrong that, while discussing the principles of the European project, we forget that its social dimension must be as effective as all the others.

While the success of this initiative is rewarding indeed, I think that the philosophy of the program still needs a serious and considerate debate. One of the reasons why European funding is “unseen” by European citizens is the excessive focus on the bureaucratic objectives, instead of the concrete results for societies, communities and citizens. This massive investment program ought to focus more on the specific requirements of communities in terms of development and infrastructure, and less on trying to achieve general statistical objectives. If Europe wants to make a great step towards a better future it must concentrate on bringing change at the levels where it is most needed, explaining these opportunities to potential beneficiaries, setting clear and well-targeted objectives.

Europe requires courageous decisions and not an additional level of bureaucratic procedures incapable of delivering results in communities in great need of investments. European public spending should follow the imperatives of good governance and not the profit imperatives of banking operations!

At the same time, I believe that in spite of its success, several improvements should be made to its structure and procedures. While it is important that the European Advisory Hub diversifies its geographical focus and takes into account regional and European-level disparities, the regional dimension of the investments can be emphasised by taking on board more members with expertise in underdeveloped regions or countries, or by building teams of consultants with expertise in the problems of said areas. While projects financed by other European funding lines can also become eligible for EFSI funding, for transparency reasons and efficiency these financing lines must be made to work together, in order to achieve complementary and long-term results.

Last, but not least, there is still work to be done in order to address the necessity for transparency. Given the impact and the size of the initiative, a clearer view of the selection and evaluation procedure is needed, in addition to a more exact list of the projects and initiatives eligible.

Europe has made clear that it has understood the voice of its citizens and that it is well prepared to forge a path towards a better future in the 21st century. The EFSI is one of the instruments that can and must translate economic success into socially measurable results. Building upon its success involves, however, a more considerate analysis of its priorities and a real dedication to transparency.