The European Commission has released an additional €24 million in humanitarian aid for vulnerable Rohingya refugees and host communities living in Cox’s Bazar district, in Bangladesh.
Part of the funding will also cover disaster preparedness initiatives in the country.
Commissioner for Humanitarian Aid and Crisis Management ChristosStylianides said: “The humanitarian community and the government of Bangladesh have responded with true solidarity to the plight of the Rohingya refugees. Our collective efforts have saved countless lives since the crisis began over a year ago. Yet we cannot stop now as hundreds of thousands of Rohingya rely on humanitarian aid to survive. This is why we are stepping up our EU support. We will stand by those most in need for as long as it takes.”
Out of the funding announced today, €19 million will be targeted at Rohingya and host communities to provide protection, emergency health assistance, nutrition, water and sanitation, education and food security. A further €5 million will be used to support communities’ preparedness against hazards and to strengthen local authorities’ capacities to prepare for and manage natural disasters.
Today’s announcement brings the total EU assistance in response to the Rohingya crisis in both Bangladesh and Myanmar to €139 million since 2017, out of which €94 million for humanitarian aid.
The EU calls for voluntary, safe, dignified and sustainable returns, with the full involvement of the United Nations, in particular the UNHCR, in order to guarantee that return process will be fully in line with international law.
The announcement comes as the United Nations launches its Joint Response Plan for the Rohingya refugee crisis which finds that 1.2 million people are in need in Cox’s Bazar between Rohingya refugees and host communities.
Since the latest outbreak of violence in Myanmar’s Rakhine state in August 2017, over 745,000 Rohingya refugees have fled into Cox’s Bazar. Almost one million now live in an extremely congested mega-camp and are fully dependant on humanitarian aid, without freedom of movement or any livelihood opportunities.
Displacement from Myanmar has almost tripled the total population in Cox’s Bazar. This represents an unprecedented protection crisis in an area that is already prone to natural disasters.
Fostering defense innovation through the European Defense Fund
The European Parliament on Thursday adopted the partial agreement on the EU Defence Fund for 2021-2027, aiming for a more ‘European’ approach to defence.
328 MEPs voted in favour of the partial deal with EU ministers, with 231 against, and 19 abstaining. The EU Defence Fund will foster technological innovation and cooperation in the European defence sector and aims to place the EU among the top four defence research and technology investors in Europe.
Parliament advocates a budget of €11.5 billion in 2018 prices (€13 billion in current prices). This sum however is still to be discussed during the negotiations on the EU’s 2021-2027 long-term budget.
Main features of the European Defence Fund for 2021-2027 include:
Support to the entire industrial development lifecycle of defence products from research (up to 100%) to prototype development (up to 20%) to certification (up to 80%);
Small and medium-sized enterprises (SMEs) and mid-caps (a company valued at 2 -10 billion dollars) are given incentives to participate, as they are provided with higher financing rates, and projects by consortia which include SMEs are favoured;
Projects will be defined according to defence priorities agreed by member states under the Common Foreign and Security Policy but other priorities, such as those of NATO, can also be taken into account;
Only collaborative projects involving at least three participants from three member states or associated countries are eligible.
Rapporteur Zdzisław KRASNODĘBSKI (ECR, PL) said: “I believe that the European Defence Fund will help to jointly develop innovative defence products and technologies in cooperation between defence industries from different Member States, including those not involved in this process so far. Thanks to the EDF, we will not only prevent taxpayer’s money being wasted on unnecessary duplication of defence capabilities, but more importantly also increase Europe’s security and create new jobs in the defence industry sector.”
The newly elected European Parliament will continue negotiating the outstanding issues with member states.
What is InvestEU?
The InvestEU Programme will bring together under one roof the multitude of EU financial instruments currently available to support investment in the EU, making funding for investment projects in Europe simpler, more efficient and more flexible.
The InvestEU Programme consists of the InvestEU Fund, the InvestEU Advisory Hub and the InvestEU Portal. It will further boost job creation and support investment and innovation in the EU.
InvestEU will run between 2021 and 2027 and it builds on the success of the Juncker Plan’s European Fund for Strategic Investments (EFSI) by providing an EU budget guarantee to support investment and access to finance in the EU. InvestEU aims to trigger at least €650 billion in additional investment.
The InvestEU Fund will support four policy areas: sustainable infrastructure; research, innovation and digitisation; small and medium-sized businesses; and social investment and skills. InvestEU will also be flexible: it will have the ability to react to market changes and policy priorities that change over time.
The InvestEU Advisory Hub will provide technical support and assistance to help with the preparation, development, structuring and implementation of projects, including capacity building.
The InvestEU Portal will bring together investors and project promoters by providing an easily-accessible and user-friendly database.
Why do we need InvestEU?
The investment conditions in Europe have improved since the Investment Plan for Europe, the Juncker Plan, was launched, thanks to structural reforms carried out by the Member States, a more a favourable economic situation and interventions such as EFSI. To help investment recover further, InvestEU will continue the work of the Juncker Plan to mobilise public and private resources in the EU. It will help to address market failures and investment gaps to foster jobs and growth and to reach EU policy goals such as sustainability, scientific excellence and social inclusion.
How will the InvestEU Fund work?
The InvestEU Fund will mobilise public and private investment through an EU budget guarantee of €38 billion that will back the investment projects of the European Investment Bank (EIB) Group and other financial partners, and increase their risk-bearing capacity. The financial partners are expected to contribute at least €9.5 billion in risk-bearing capacity. The guarantee will be provisioned at 40%, meaning that €15.2 billion of the EU budget is set aside in case calls are made on the guarantee.
The InvestEU Fund will be implemented through financial partners who will invest in projects using the EU guarantee. The main partner will be the EIB Group, which has successfully implemented and managed EFSI since its launch in 2015. In addition to the EIB Group, International Financial Institutions active in Europe – such as the European Bank for Reconstruction and Developments (EBRD), the World Bank and the Council of Europe Development Bank – and National Promotional Banks will have direct access to the EU guarantee.
The InvestEU Fund will also feature a Member State compartment for each policy area, meaning that Member States may add to the EU guarantee’s provisioning by voluntarily channelling some of their Cohesion Policy funds to these compartments. Like this, Member States will benefit from the EU guarantee and its high credit rating, giving national and regional investments more firepower.
What’s the advantage compared to the status quo, especially for the final beneficiaries?
Creating one coherent programme benefits from economies of scale. It achieves greater risk diversification, has a more integrated governance structure, and mainstreams cross-sectorial policies, bringing a multitude of instruments under one single structure. Using a budget guarantee – and not only financial instruments or grants – can help increase the impact of public funds. In this way we can do more with less.
The new approach also helps to reduce uncertainty for final beneficiaries and financial intermediaries about which instrument is the best for them.
Under the InvestEU Fund, there will be a single programme with a strong identity and a single set of coherent requirements (for eligibility, monitoring and reporting), which will apply throughout the financing chain to the benefit of financial intermediaries and final beneficiaries. InvestEU will eliminate overlaps and ensure synergies both for financing and advisory services. The InvestEU Advisory Hub will integrate 13 different advisory services into a one-stop-shop.
Also, when blending grants from other programmes like Horizon Europe, the Single Market Programme or the Connecting Europe Facility with support from InvestEU, InvestEU rules will apply for the entire project. This is a major simplification compared to today.
What will InvestEU finance?
The InvestEU Fund will be market-based and demand-driven. By crowding-in private investors, it will help achieve the EU’s ambitious goals in sustainability, scientific excellence and social inclusion. Investments will come under four policy areas, which represent important policy priorities for the Union and bring high EU added value:
- sustainable infrastructure;
- research, innovation and digitisation;
- small and medium-sized enterprises (SMEs) and small mid-caps;
- social investment and skills.
The budget guarantee is divided between the policy areas as follows:
Sustainable infrastructure: €11.5 billion
Research, innovation and digitisation: €11.25 billion
SMEs: €11.25 billion
Social investment and skills: €4 billion
The Commission can adjust these amounts by up to 15% in each policy window to adapt to evolving policy priorities and market demand.
Who will manage InvestEU?
As in the case of EFSI, a Steering Board will give strategic direction on programme implementation. It will be composed of the Commission (four members), the EIB Group (three members) and other implementing partners (two members – International Financial Institutions such as the European Bank for Reconstruction and Development or National Promotional Banks), as well as a non-voting expert appointed by the European Parliament. The Steering Board will strive to take its decisions by consensus.
An Advisory Board will assist the Steering Board. It is composed of representatives of implementing partners (one member each) and Member States (one member each). The agreement between the European Parliament and the Council extends membership to the Committee of the Regions and the Economic and Social Committee (one member each). The Commission will be able to consult this board when preparing and designing new financial products or to follow market developments and share information. This Advisory Board will be able to issue recommendations to the Steering Board on the implementation and functioning of the InvestEU programme.
An Investment Committee will approve the individual guarantee requests. This Committee is composed of external experts selected in an open process, and remunerated by the EU budget. The Investment Committee will be assisted by a secretariat, which will be staffed by and located in the Commission. The secretariat will provide administrative support for the organisation of meetings, agendas, minutes and interact with the implementing partners as appropriate to ensure the files transmitted to the Investment Committee are complete.
The EIB as the strategic partner may send its guarantee requests directly to the Investment Committee. This will be subject to notification to the secretariat, based in the Commission, which will assume all horizontal tasks and handle the guarantee requests of all other implementing partners.
Who will choose the InvestEU projects?
Just as is the case under EFSI, the Investment Committee will select projects based on compliance with the eligibility criteria set by the Regulation as well as the Investment Guidelines, with a specific focus on additionality.
Members of the Investment Committee will be external experts with expertise from the relevant sectors. The Committee will meet in four different configurations corresponding to the policy windows.
The Committee’s decisions will be made independently, with no political interference.
In practice, Commission services will first verify the consistency of the proposed operations with EU law and policies. Projects passing this initial check will be passed on to the Investment Committee.
The Investment Committee will approve the use of the EU guarantee for financing and investment operations, taking its decision after assessing the project scoreboard presented by the implementing partners. Just as under EFSI, all decisions approving the use of the EU guarantee will be publicly available.
What will be the InvestEU eligibility criteria?
InvestEU projects must:
- address market failures or investment gaps and be economically-viable
- need EU backing in order to get off the ground
- achieve a multiplier effect and where possible crowd-in private investment
- help meet EU policy objectives.
The eligibility criteria are defined in the Financial Regulation.
Why does EFSI cease to exist? Why not just create an EFSI 3.0?
EFSI was launched in July 2015 to boost investment and stimulate economic growth and employment in the EU, at a time when Europe was still recovering from the financial and economic crisis. It was originally foreseen to have a short investment period to maximise the impact, until July 2018. Due to its success, EFSI was expanded in size and extended in duration in December 2017. Its investment period now lasts until end-2020, the end of the current long-term budget, or Multiannual Financial Framework (MFF). No new investments can be undertaken under EFSI after 2020 but – as with most EU financial instruments – the liabilities run for much longer.
The InvestEU Programme builds on the success of EFSI, and will continue to create and support jobs across the EU by following the same model based on an EU budget guarantee.
Is InvestEU taking budget from other financing programmes? What will happen to programmes like COSME and InnovFin?
The InvestEU Fund will bring under one roof the 14 EU financial instruments currently supporting investment in the EU, giving it a single, strong brand. The InvestEU Fund will capture the objectives of existing instruments such as COSME and InnovFin and be able to boost investments even further thanks to the larger scale and efficiencies of the single InvestEU Fund. The four InvestEU Fund policy areas place emphasis on areas of strategic importance for the EU, with €11.25 billion each of the guarantee earmarked for small businesses and a further €11.25 billion earmarked for research, innovation and digitisation.
Can InvestEU financing be blended with EU grants?
Yes. Blending can be necessary in some situations to underpin investments in order to address particular market failures or investment gaps. The InvestEU Fund can be combined with grants or financial instruments, or both, funded by the centrally managed Union budget or by the EU Emissions Trading System (ETS) Innovation Fund. Such combinations can create advantages for project promoters in sectors such as transport, research and digital. When a project uses EU grants and InvestEU, the InvestEU rules will apply for the entire project. This means a single rulebook and a major simplification compared to today.
What will be the risk profile of investments? What type of investments will the InvestEU Fund be targeting compared to today’s financial instruments?
The InvestEU Fund will target economically viable projects in areas where there are market failures or investment gaps. The InvestEU Fund instruments will seek to attract commercial financing to a wide range of operations and beneficiaries and will only support projects where financing could not be obtained at all or not at the required terms without InvestEU Fund support. It will also target higher risk projects in specific areas.
In addition, InvestEU places more emphasis on social investment and skills. The allocation for budgetary guarantees and financial instruments in the social sector under the current long-term EU budget amounts to €2.2 billion whereas InvestEU allocates €4 billion of the EU guarantee to this policy area, almost doubling what is currently available.
What is the expected multiplier effect for InvestEU? How do you expect to reach €650 billion?
Due to InvestEU targeting higher risk innovation projects and SMEs, as well as the greater focus on EU policy objectives, we expect a slightly more conservative multiplier effect than under EFSI: 13.7 rather than 15. That is to say that for every public euro that is mobilised through the Fund, €13.7 of total investment, that would not have happened otherwise, is generated.
The €15.2 billion budget earmarked for InvestEU allows the EU budget to provide a guarantee of €38 billion. In addition, each financial partner will be expected to contribute some resources to ensure alignment of interest, adding an estimated total of €9.5 billion, so the total guarantee will be around €47.5 billion. This in turn will be leveraged by each financial partner. This means they can lend more than the guarantee amount. Finally, each InvestEU-backed project will attract other private and public investors, as we have seen under the Juncker Plan, and we expect this will trigger at least €650 billion in total investment.
Why is the InvestEU Fund open to other financial partners? Why not work exclusively with the EIB Group, like with EFSI?
Given its role as the EU’s public bank, its capacity to operate in all Member States, and its experience in managing EFSI, the European Investment Bank (EIB) Group will remain the Commission’s main financial partner under InvestEU and implement 75% of the €38 billion guarantee. It will also play an important role in the programme governance and implementation. For the remaining 25%, International Financial Institutions and National Promotional Banks, which can offer specific expertise and experience, can become financial partners, subject to conditions.
Opening up the possibility to benefit from the EU guarantee to other institutions is driven by the fact that there are other experienced potential financial partners in the EU, which have specific financial or sectorial expertise, deep knowledge of their local market or greater capacity to share risk with the EU in some areas. This approach will enlarge and diversify the pipeline of projects and increase the potential pool of final beneficiaries.
The Commission wants to ensure that the beneficiaries of InvestEU can get the best possible support and with easiest access. The InvestEU Fund will therefore be open to other institutions, either multilateral or national institutions.
How does an entity become an implementing partner under InvestEU?
The European Investment Bank Group – the EU Bank – will be an implementing partner for 75% of the EU guarantee. For the remaining 25% of the EU guarantee, International Financial Institutions (the European Bank for Reconstruction and Development, the Council of Europe Bank, etc.) or National Promotional Banks and Institutions wishing to become an implementing partner must first undergo a so-called Pillar Assessment. This means that, as a prerequisite, they must meet requirements in areas relating to the internal control system, the accounting system, an independent external audit and rules and procedures for providing financing from EU funds through grants, procurement and financial instruments.
The process to become an implementing partner consists of three main steps. First, the interested entity needs to submit an application to the Commission. Second, Commission services carry out an eligibility check. If the result is positive, the Pillar Assessment can take place. It is usually carried out by external consultants contracted by the interested entity and lasts between six and 18 months. Third, the Commission issues a call for expression of interest and any entity in the process of passing the Pillar Assessment can apply to become an implementing partner. The Commission will discuss the financial products and negotiate a guarantee agreement with institutions that have answered the call. The Pillar Assessment needs to be completed on the day of the signature of the guarantee agreement.
How does a company apply for InvestEU financing?
Project promoters should apply directly to the EIB, to national and regional promotional banks, or to the national offices of International Financial Institutions such as the EBRD, the World Bank, or the Council of Europe Development Bank. At that stage, the financial partners submit a proposal to the Commission to apply for the EU guarantee. SMEs should continue to apply to their local commercial or public banks whose financial products are covered by the EU guarantee in their country or region. The local intermediary will inform them if a particular financing programme is covered by the InvestEU Fund.
How will the InvestEU Programme ensure geographical balance?
The InvestEU Programme was designed to ensure it benefits all Member States, irrespective of their size or the development of their financial market. The access through other financial partners – compared to EFSI – should allow the Fund to better serve local needs and to be complementary to other sources of EU funding under shared management. Technical assistance under the InvestEU Advisory Hub will address the specificities of cohesion countries markets and contribute to build up a project pipeline.
The opening of the guarantee to national and regional promotional banks aims to better address where the financing needs are and how best to serve them. Finally, the InvestEU Advisory Hub will provide comprehensive project development assistance. It will provide capacity building support to develop organisational capacity and facilitate market-making activities and the collaboration of sectoral actors. The aim is to create the conditions to expand the potential number of eligible recipients in nascent market segments, in particular where the small size of individual projects raises considerably the transaction cost at the project level.
What about State aid control?
State aid rules are essential to ensure effective competition, so that consumers and businesses get fair prices and wider choice in the Single Market. At the same time, in order to match our InvestEU objectives to address market failures and mobilise private investment, it has to be easy to link up Member State money – which may entail State aid and be subject to State aid rules – with EU funds managed centrally by the Commission, which do not constitute State aid.
To further streamline the State aid approval process for such joint funding, in June 2018 the Commission proposed an amendment to one of the Council Regulations governing EU State aid control. The Council adopted this amendment in November 2018. This revised Enabling Regulation allows the Commission, subject to certain conditions, to exempt Member State funding channelled through the InvestEU Fund or supported by the InvestEU Fund from the requirement to notify such interventions to the Commission prior to their implementation.
The funding from Member States would be declared compatible with EU State aid rules, as long as certain clear conditions are fulfilled. The Commission proposal thus ensures that State aid rules can help facilitate a seamless deployment of the InvestEU fund. This continues the spirit of the Juncker Commission, which has already made sure that 97% of State aid can be implemented without any involvement of the Commission.
Who will be accountable for the investments made?
The financial partners in InvestEU will be responsible for the financing and investment operations under the InvestEU Fund since their governing bodies take the final decision on the financing.
The Investment Committee, composed of independent external experts, will approve the use of the EU guarantee under the InvestEU Fund to support those operations ahead of the final decision by the financial partner.
What role will the European Parliament and Council play?
The European Parliament and the Council will oversee the implementation of the InvestEU Fund through annual reporting to the budgetary authority and through the discharge procedure.
They will also be present in the governance bodies of the programme – Member States in the Advisory Board, and a non-voting expert appointed by the European Parliament in the Steering Board.
The implementation of the InvestEU Programme will be evaluated through an interim and a retrospective evaluation. The conclusions of the evaluations will be communicated to the European Parliament and Council so that they can feed into the decision-making process in a timely manner.
EU is strengthening its political partnership with Latin America and the Caribbean
The European Union is strengthening its political partnership with Latin America and the Caribbean by focusing it on four priorities – prosperity, democracy, resilience and effective global governance – for common future.
The vision for a stronger and modernised bi-regional partnership focused on trade, investment and sectoral cooperation is set out in a new joint communication presented by the European Commission and the High Representative. This new partnership aims at working together in changing global and regional realities that require joint efforts to address common challenges and opportunities.
On this occasion, High Representative/Vice-President Federica Mogherini commented: “Latin America, the Caribbean and Europe have social, cultural and economic deep links, a long history of common work for peace and prosperity, and share the same attachment to cooperation and multilateralism. With this communication, we lay the ground for further strengthening our collaboration, for the sake of our peoples and of the whole world.”
Commissioner for International Cooperation and Development Neven Mimica said: “Our commitment remains to continue engaging with countries in the region according to their different levels of development through tailor-made partnerships and innovative forms of cooperation such as transfer of knowledge or triangular cooperation. In this context, we will pay particular attention to countries least developed and in situations of conflict where the potential to raise finance is the lowest. Only when we join forces can we deliver on our ambitious Agenda 2030 for Sustainable Development or the Paris Agreement”.
Building on the achievements of the last decades, the partnership should concentrate on four mutually reinforcing priorities, underpinned by concrete initiatives and targeted EU engagement with the region:
Partnering for Prosperity – by supporting sustainable growth and decent jobs; reducing socio-economic inequalities; transitioning towards a digital, green and circular economy; as well as further strengthening and deepening the already solid trade and investment relationship
Partnering for Democracy – by strengthening the international human rights regime including gender equality; empowering civil society; consolidating the rule of law; and ensuring credible elections and effective public institutions
Partnering for Resilience – by improving climate resilience, environment and biodiversity; fighting against inequalities through fair taxation and social protection; fighting organised crime; and deepening dialogue and cooperation on migration and mobility, in particular to prevent irregular migration, trafficking in human beings
Partnering for effective global governance – by strengthening the multilateral system, including for climate and environmental governance; deepening cooperation on peace and security; and implementing the 2030 Agenda.
The strategic partnership between the European Union, Latin America and the Caribbean is based on a commitment to fundamental freedoms, sustainable development and a strong rules-based international system. As a result, there is an unprecedented level of integration and our economies are closely interconnected.
The EU has signed association, free trade or political and cooperation agreements with 27 of the 33 Latin American and Caribbean countries.
Close to six million people from both regions live and work across the Atlantic, and more than one third of Latin American and Caribbean students studying abroad do so in the EU. The EU is the third largest trade partner of Latin America and the Caribbean and the first investor. Total trade in goods amounted to €225.4 billion in 2018, while foreign direct investment reached €784.6 billion in 2017.
The EU has promoted the cooperation in areas of strategic interest, efforts to tackle anti-microbial resistance, improving aviation safety, working together against climate change and promoting a safe and human-centric digitalised economy are some concrete examples that illustrate this partnership towards a common future.
The EU has been the largest provider of development cooperation to its partners in Latin America and the Caribbean, with €3.6 billion in grants between 2014 and 2020 and over €1.2 billion in humanitarian assistance in the last 20 years, including assistance under the EU Civil Protection Mechanism in case of natural disasters.
The EU and LAC countries often align in the United Nations, and have closely cooperated on the 2030 Agenda for Sustainable Development and the Paris Agreement.
USA at odds with Europe and not only with Europe
The recent statement made by US Secretary of State Mike Pompeo to the effect that his country has failed to...
ADB’s Strategy 2030 Needs to be Accompanied by a Strong Results Orientation
The Asian Development Bank’s (ADB) new long-term corporate strategy, Strategy 2030, which came into effect this year, needs to be...
Luxembourg, UN Environment sign deal to accelerate sustainable finance
Luxembourg today signed an agreement to back a UN Environment-convened network that helps the world’s major financial centres to increase...
Violence complicates Pakistan PM’s tightrope walk as he visits Iran and China
Two attacks in as many weeks in Pakistan’s troubled province of Balochistan shatter hopes that the country has gained the...
Development in South Africa: Bridging the Gap
To live in one of the most unequal yet highly urbanised societies in the world means that there are high...
Peru should help more young vulnerable people into work
Peru’s remarkable economic growth since the 2000s and policies targeting the most vulnerable young people have helped boost the youth...
India’s purblind opposition to Belt and Road Initiative
China intends to host second global Belt-Road-Initiative (BRI) meet next month. China expects delegates from over 100 countries to attend...
Intelligence3 days ago
Uzbek’s Katibat al Tawhid wal Jihad changed its leader
Europe2 days ago
Italy escapes the ‘western propaganda trap’
Energy News2 days ago
Greening industry through a transition to hydrogen societies
Green Planet1 day ago
Do The Harmless Pangolins Have To Become Extinct?
Russia2 days ago
Is Israel Taking Advantage of a Longtime Strategic Partner for Russia?
Russia2 days ago
Russian- Arab Cooperation Forum
Reports2 days ago
New safety and health issues emerge as work changes
South Asia22 hours ago
India’s purblind opposition to Belt and Road Initiative