European Union

Written by Beatrix Immenkamp, Gianluca Sgueo and Sofija Voronova,

© Sean K / Fotolia

Faced with a growing international terrorist threat, the European Union (EU) is playing an ever more ambitious role in counter-terrorism. Even though primary responsibility for combating crime and ensuring security lies with the Member States, the EU provides cooperation, coordination and (to some extent) harmonisation tools as well as financial support to address this borderless phenomenon. Moreover, the assumption that there is a connection between development and stability, as well as between internal and external security, has come to shape EU action beyond its own borders.

EU spending in the area of counter-terrorism has increased over the years and is set to grow in the future, to allow for better cooperation between national law enforcement authorities and enhanced support by the EU bodies in charge of security, such as Europol and eu-LISA. Financing for cooperation with third countries has also increased, including through the Instrument contributing to Stability and Peace.

The many new rules and instruments that have been adopted since 2014 range from harmonising definitions of terrorist offences and sanctions, and sharing information and data, to protecting borders, countering terrorist financing, and regulating firearms. To evaluate the efficiency of the existing tools and identify gaps and possible ways forward, the European Parliament set up a Special Committee on Terrorism (TERR), which delivered its report in November 2018. TERR made extensive recommendations for immediate or longer term actions aiming to prevent terrorism, combat its root causes, protect EU citizens and assist victims in the best possible way.

In line with these recommendations, future EU counter-terrorism action will most probably focus on addressing existing and new threats, countering radicalisation – including by preventing the spread of terrorist propaganda online – and enhancing the resilience of critical infrastructure. Foreseeable developments also include increased information sharing, with planned interoperability between EU security- and border-related databases, as well as investigation and prosecution of terrorist crimes at EU level, through the proposed extension of the mandate of the recently established European Public Prosecutor’s Office.

Read this complete briefing on ‘EU policies – Delivering for citizens: The fight against terrorism‘ in the Think Tank pages of the European Parliament.

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Written by Alessandro D’Alfonso,

© magele-picture / Fotolia

An investment gap in the European Union (EU) persisting several years after the financial and economic crisis is one of the various challenges confronting the EU’s multiannual financial framework (MFF) for the years 2014 to 2020 since its beginning. The European Fund for Strategic Investments (EFSI) was created in 2015 to provide the EU budget’s contribution to addressing this challenge, as part of the broader investment plan for Europe.

Following its extension and reinforcement in 2017, EFSI currently aims to trigger additional investment worth €500 billion in sectors of the EU’s economy that suffer from market failures and sub-optimal investment situations by 2020. The concept of additionality is closely linked to the fund. This means that EFSI-backed operations should be viable financing and investment activities that could not have taken place, or not to the same extent, without EFSI.

EFSI focuses on various crucial sectors that can provide a significant contribution to job creation and sustainable growth in the EU, such as strategic infrastructure, education, research, development and innovation, renewable energy, and resource efficiency. Another major objective is to improve access to finance for European companies, with special attention paid to smaller businesses.

The functioning of EFSI relies on a strategic partnership with the European Investment Bank (EIB) Group, which can approve and finance investment operations with a higher-risk profile than its usual portfolio, thanks to a €26 billion guarantee provided by the EU budget under EFSI. In addition, the contribution from the EIB’s own resources to EFSI is worth €7.5 billion.

When putting the proposals forward for the investment plan for Europe, the European Commission estimated that each euro of public resources allocated to EFSI (i.e. EU guarantee obligations and the contribution from the EIB’s own resources) should generate, on average, €15 of total investment, by triggering additional financing from other private and/or public sources (the ‘multiplier effect’).

The EU guarantee obligations enable the EIB Group to deploy a wide range of financial instruments supported by EFSI, such as equity-, debt- and guarantee-type products. Relevant activities include the use of already existing financial instruments supported by the EU budget, at a higher and faster rate. Targeting the diverse needs of sectors, countries and individual projects is possible thanks to the variety of options offered.

The various EFSI-backed financial products are available under two investment windows that reflect EFSI’s two overarching objectives. The EIB implements the infrastructure and investment window (IIW) that stimulates strategic investment in various sectors, while the European Investment Fund (EIF) is in charge of the SME window (SMEW) to improve access to finance for small- and medium-sized enterprises (SMEs) and small mid-cap companies.

As of 5 February 2019, approved EFSI financing amounted to €71.4 billion (of which 75 % through the EIB and 25 % through the EIF), and was projected to trigger a total investment of some €380 billion. Almost three quarters of the investment relates to operations in three of the sectors supported by EFSI: smaller companies (32 %); research, development and innovation (23 %); and energy (18 %).

Examples of EFSI-backed financing include: a €20 million loan to the French small firm Amoéba, which, thanks to the discovery of a natural microorganism, has developed an alternative for industrial water treatment that does not use chlorine and chemical biocides; and €40 million in financing for the development of a wind park in Bruck an der Leitha (Austria) to produce renewable energy for 27 000 households.

EFSI has been closely monitored since its outset, which confirms the interest it has attracted as a tool that can contribute to reducing the investment gap in the EU. Various assessments, including independent evaluations and a special report by the European Court of Auditors (ECA), have been produced to date.

The various evaluations agree that EFSI has successfully raised finance to support substantial additional investment in many policy sectors across the EU. Areas for action, highlighted for example in ECA recommendations, include: encouraging complementarity between EU financial instruments and EU budgetary guarantees; improving the assessment of additionality and the estimate of the investment mobilised; and increasing the geographical spread of EFSI supported investment.

Taking account of the various assessments, the European Commission concluded that EFSI has been successful in triggering significant additional investment in the EU and that its function remains relevant in the post-2020 programming period. The Commission has therefore put forward a proposal for a 2021-2027 InvestEU programme, a single investment scheme for internal Union policies that should build on EFSI and streamline the use of financial instruments supported by the EU budget. The proposed guarantee obligations for the new InvestEU Fund, part of the overall programme, amount to €38 billion with an investment target of more than €650 billion over seven years.

Read the complete briefing on ‘How the EU budget is spent: European Fund for Strategic Investments (EFSI)‘ on the Think Tank pages of the European Parliament.

The EU heads of state and government are expected to grant a further delay for Brexit today. According to a draft decision Britain would then have to take part in the EU elections and act in a "constructive" and "responsible" manner until it leaves the Union for good. Not all commentators believe it's a good idea for the UK to participate.

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