Joint op-ed by HRVP Federica Mogherini and Commissioner Johannes Hahn on the new #EU External Investment Plan: Fostering growth in partner countries
In challenging times we need to rethink the way we do things, and we need innovative solutions. Faced with harder financial constraints, we cannot simply rely on public resources to boost the economy and create jobs for our people. Yet, our action can get several different actors together, from international institutions to the private sector, and mobilize them to join forces toward a common goal. Last year the European Commission put forward the European Fund for Sustainable Investment – the Juncker Plan – a turning point in our Union’s approach to growth in Europe. In one year it has already mobilized 116 billion euros and benefited over 200,000 SMEs. The fund is working; for this very reason we are now expanding the plan both in Europe and outside our continent, launching a new External Investment Plan.
Our European Union is already the first humanitarian and development actor in our neighbourhoods. In recent years we have demonstrated the capacity to mobilize conspicuous resources in a relatively short time. The Facility for Refugees in Turkey, with a total budget of 3 billion euros, is taking care of the education, the health and most basic needs of Syrians in Turkish camps. The Trust Fund for Syria, which will meet its initial target of 1 billion euros by the end of 2016, is helping the millions of people who are internally displaced, and supporting the host communities in Lebanon and Jordan. But today we are coordinating our development aid and our humanitarian efforts in an even more coherent way, with clear priorities and targeted actions.
Still we know that public resources are not infinite, nor almighty. Especially when we look at the medium and long term, we need new actors, new instruments and new partnerships to support growth, create jobs and address the root causes of displacement and migration.
This is where the new External Investment Plan comes into play. In a more plural world, the private sector has become a key foreign policy player. European firms are already employing hundreds of thousands of people in our neighbourhood, contributing directly to the wealth and the stability of the countries where they invest. This kind of business is strategic to our foreign policy. But we also know that private investments, without specific support, will head toward the safest and less risky areas.
Our business community asks for security and for protection from all kinds of risk, be it financial, legal or due to instability. The External Investment Plan will be their safety net, and their incentive to seek new opportunities beyond our borders. The plan aims to leverage more than 40 billion Euros in investments in our broader neighbourhood. That is more than the EU currently invests on aid worldwide. This amount could be doubled if our member states match the EU contribution.
The European Fund for Sustainable Development will guarantee private investors against the risk they face when they start a business in developing countries. This guarantee will not only promote single projects but also larger “investment windows” in strategic regions or sectors.
A “one stop shop” will encourage private and institutional investors, from both Europe and our partner countries, to channel their proposals and to gather information on the incentives and the investment windows. The External Investment Plan will provide technical assistance to enhance the quality, the number and the sustainability of projects. The European Commission, the European Investment Bank and other international financial institutions – with the specialist advice of private operators – will work hand in hand to deliver a swift and business-oriented screening of projects.
For our partners in the neighbourhood, the guarantee will be combined with already existing funds under the Neighbourhood Investment Platform. The plan will work in conjunction with the Neighbourhood Investment Facility and the Africa Investment Facility, which are already enhancing strategic and long-term investments with a focus on transport, energy, environment and social development. This will provide for a coherent mix of different tools that will be used under the European Fund for Sustainable Development to stimulate investments in our region. But the Plan will also be accompanied by policy dialogues and capacity building activities: our action will be coordinated and joined-up, in the spirit of our Global Strategy for foreign and security policy and the reviewed European Neighbourhood Policy. We are not only a donor (the biggest one) but most importantly we are a political partner.
With the External Investment Plan, we are taking our aid policies to the next level. Aid is central but not enough to deliver the transformation we have agreed in the Sustainable Development Goals. As we step up our financial commitment to sustainable development, we also need the private sector to get on board. Together with our partners, we can help our region achieve its full potential. A new chapter in European development policy has just begun.