EU dangles infrastructure investment as key to jobs, growth

19th October 2011, Comments 0 comments

The EU dangled Wednesday a 50-billion-euro ($70-billion) carrot of investment funds in a bid to boost jobs and growth through upgrades to Europe's transport, telecoms and energy infrastructure.

The money, over seven years from 2014, is designed to unlock hundreds of billions in private investment to complete high-speed rail and city airport links, high-speed broadband networks and gas or electricity grids across borders.

European Commission president Jose Manuel Barroso said the new plan, which now needs backing from national governments, was "a down payment on Europe's future growth and jobs."

European Union economic and monetary affairs commissioner Olli Rehn said pension funds and insurers would be targeted to back "project bonds" developed for these purposes.

However, the German government, while welcoming the ideas as going in the right direction, stressed that financing decisions and modalities should remain a matter for industry.

Economy minister Philipp Roesler said the EU's budget "cannot be the solution."

The new inducements for European inter-connectivity are intended to re-route existing EU funding towards projects that have fallen into abeyance among governments facing tough economic conditions.

In an additional element presented by Barroso at the launch, the EU is vowing to release a further 230 million euros from the EU budget for 2012 and 2013 to mobilise private investment of another 4.5 billion euros.

"We need to accelerate and frontload growth," Barroso said, calling on states and the European Parliament to offer their quick backing.

"We believe in the current economic circumstances, when there is little fiscal room for maneouvre for most EU states, it is important to use some leverage at European level."

Transport accounts for the lion's share, with nearly 32 billion euros earmarked for development in this sector between 2014 and 2020.

Transport commissioner Siim Kallas completed outlined goals by 2030 that would include 37 mid-sized European cities -- such as Glasgow, Scotland -- still missing airport-to-city-centre rail links.

It will also aim for 15,000 kilometres of new high-speed railway lines, and has targeted a trans-Alpine TGV connection between Lyon in France and Turin in north-western Italy, a scheme that has already drawn opposition from Italian environmentalists.

Spain's high-speed rail network is Europe's biggest, reaching 2,056 kilometres at the end of 2010, ahead of France's 1,896 kilometres and Germany's 1,285 kilometres.

Telecoms, mainly high-speed broadband access, and energy would each get slightly more than nine billion of such jump-start investment.

Digital Agenda Commissioner Neelie Kroes, for instance, is dangling 6.4 billion euros at the high-speed broadband sector, in a bid to unlock 100 billion of private investment.

Energy counterpart Guenther Oettinger wants to speed progress on a dozen projects he reckons will ease the flow of electricity from those who generate it the most to those who need it and can pay.

The Greens in the European Parliament said they were unhappy with electricity grid priorities selected, saying only one was focused on transporting power generated from renewable sources.

© 2011 AFP

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