STRASBOURG, France — European Commission chief Jean-Claude Juncker has revealed a huge 315-billion euro investment plan to "kickstart" the stalling economy, although critics lamented the lack of any new money.
The eagerly-awaited scheme, the key stone of Juncker's five-year mandate,involves the EU setting up a 21-billion-euro ($26 billion) pot with the aim of drawing in 15 times that sum in private investment.
The hope is that it will fund infrastructure projects and create desperately needed jobs and growth, amid concerns that Europe's failure to recover from the financial crisis is dragging the world economy down.
"Europe needs a kickstart and today the commission is providing the jump cable," Juncker, who took over as head of the EU's executive branch on November 1, told the European Parliament in Strasbourg, France on Wednesday.
"We need to send a message to Europe and to the rest of the world: Europe is back in business."
Europe's efforts to escape a slough of near-zero growth, near-deflation and high unemployment have been crippled by a lack of foreign investment, especially compared to the United States.
Juncker defended his decision to merely recycle existing funds instead of putting in new cash, saying cash-strapped Europe could not afford to create more debt.
"I often hear what we need is so called fresh money but what I believe we need is a fresh start and fresh investment," Juncker said. "Money will not fall from the sky, we don't have a money printing machine."
'No magic wand'
The 21 billion involves eight billion euros of existing EU budget funds, which will swell to 16 billion euros in the form of guarantees. It also includes five billion euros from the Luxembourg-based European Investment Bank.
Leaders of the 28-nation EU – which when taken together is the world's biggest economy with a population of 500 million – must approve the plan at a summit in December.
It is set to be operational by mid 2015 and spool out over three years. The announcement of the plan came just a day after Pope Francis gave a speech to the European Parliament in which he likened Europe to an "elderly and haggard" grandmother.
Details of the projects the Juncker plan will fund were kept vague, with the EU saying it would consult with private investors to make sure the funds go to the right places.
Juncker said he had visions of children in the Greek city of Thessaloniki going to a school filled with computers, and French drivers charging their electric cars by the side of a motorway.
But he also mentioned improvements to key priorities in the 28-nation EU such as hospitals, digital development, energy, transport and the environment.
EU officials explained that the fund aimed to draw in investors by promising to cover initial losses. A team of experts will also guide investors to available projects.
"It's an investment plan, not a magic wand," EU jobs and growth commissioner Jyrki Katainen told reporters.
'Loaves and fishes'
Europe's main stock markets rose on Juncker's announcement, coupled with a signal from the European Central Bank that it could begin purchasing government bonds next year in a further attempt to stimulate the economy.
Political reaction was mixed, however.
German Chancellor Angela Merkel, the austerity-championing leader of Europe's biggest economy, said she backed the plan "in principle" so long as the funds were invested wisely.
In parliament there was broad support for Juncker's plan, particularly from his own centre-right European People's Party and the centre-left Socialists and Democrats.
But Dimitrios Papadimoulis of the European United Left described it as a "drop in the ocean."
In a nod to the papal visit, the European Trade Union Confederation said the commission was "relying on a financial miracle like the loaves and fishes."
Gregory Claeys of the Breugel think-tank in Brussels said the EU needed 260 billion euros of investment a year.
"With 315 billion over several years, you're not there yet," he said. The run-up to the announcement was overshadowed by a controversy over tax breaks offered by Luxembourg to major international firms when Juncker was premier.
Juncker faces a confidence vote in the European Parliament on Thursday after eurosceptic lawmakers filed a motion against him, but he is almost certain to survive. — AFP