European finance ministers failed to reach any breakthrough at a meeting in Luxembourg on Friday (April 12). Opinions remained divided over whether to extend the region's multibillion pandemic recovery fund and how to expand European Investment Bank (EIB) lending standards to include defence. Related assets.
Belgian Finance Minister Vincent van Peteghem told reporters after the meeting that there were “different views” among ministers on whether the EU's 723.8 billion euro Recovery and Resilience Facility (RRF) should be extended. , added that “some Member States…stressed that this is a one-off measure.” Due to the nature of the facility. ”
But the commission's executive vice-chairman Valdis Dombrovskis defended the fund's “ground-breaking” nature, saying its “design and flexibility are helping to tackle new challenges such as high inflation. ” he said. [and] Energy security issues. ”
“The RRF reassures financial markets of the EU's determination to tackle the challenges of COVID-19, ensuring the rapid flow of funds to Member States during a very difficult time, maintaining public investment and ensuring robust performance. “We have played an important rule in sustaining the recovery. The EU economy will return to pre-pandemic levels sooner than expected,” Dombrovskis said.
Meanwhile, Van Petegem said “certain issues require further discussion” on how the EIB might strengthen its support for Europe's security and defense industry.
But he said there was still “significant support among ministers” to proceed with the “action plan” outlined by EIB president Nadia Calviño to ministers on Friday.
Before the meeting, Calviño told reporters that the plan would include the results of a two-month study called for by EU finance ministers in February on the “definition” of so-called dual-use technologies.
The EIB's current mandate limits the scope of permissible defense-related investments to dual-use items that should be used primarily for civilian and military purposes.
Most of the potential future revenue from this technology will come from civilian use.
The bank is specifically prohibited from directly investing in arms, ammunition, and “core” military infrastructure.
Is there a panacea for Europe's investment and security needs?
RRF and EIB have attracted the attention of European policymakers in recent months.
The RRF is seen by many as a much-needed source of funding for member states still reeling from the twin shocks of the COVID-19 pandemic and the ensuing energy crisis.
But some so-called “frugal” EU countries, including Germany, the region's largest economy, have resisted extending the facility beyond its scheduled 2026 expiry.
Meanwhile, the EIB, the world's largest multilateral financial institution by assets, continues to intensify as Russia's war in Ukraine enters its third year and member states consider ways to step up fiscal spending. , seen by many member states as a potential means to increase European defense spending. Defense power.
Last month, the European Council “urged” the EIB to “adapt defense industry financing policy and the current definition of munitions, while ensuring financing capacity.”
In February, the European Parliament called on the bank to “intensify its support for the European defense industry” and called for a “complete review of investment grade criteria to ensure that munitions and munitions beyond dual use are not excluded from the EIB. “We requested “funding.'' ”
However, several stakeholders have expressed deep concerns about the EIB's potential shift to defense spending, saying it could cause the bank to lose its high ESG and triple-A ratings.
“We don't discuss scandals”
Van Petegem, whose country currently holds the rotating presidency of the EU Council, told reporters there was “no discussion” among ministers about the recent scandal involving RRF financing.
Last week, the European Public Prosecutor's Office (EPPO) announced that 22 people had been arrested in Italy, Austria, Romania and Slovakia for embezzling 600 million euros in RRF funds.
In an interview with Euractic on Tuesday, April 9, Tony Murphy, head of the European Court of Auditors, said that the scheme's scheduled expiration by the end of 2026 will “increase pressure on member states and increase the risk of diversion of funds.” “It's increasing the risk,” he said. Use this money quickly. ”
“That in itself inherently increases the risk of people being opportunistic and taking shortcuts and things that might be out there,” he says.
Mr Murphy stressed that the lack of central oversight had “amplified” the potential for funds to be misused.
His comments came on the same day that European Commissioner for the Economy Paolo Gentiloni called for the RRF to be used as a “blueprint” for future EU funding programmes, saying the bloc was “on the verge of scale”. They will benefit greatly from a permanent and secure asset that they can afford.” This issue will be a major issue to be discussed at the next committee meeting. ”
The RRF, agreed at the height of the coronavirus pandemic in December 2020, consists of loans worth €385.8 billion and grants of €338 billion, financed jointly by EU member states. is financed by debt.
The fund is a key component of the EU's NextGenerationEU (NextGenEU) initiative, which will build a post-pandemic Europe by funding green, digital and other critical investments in exchange for targeted reforms. It is intended to promote recovery.
[Edited by Anna Brunetti/Rajnish Singh]
