The purpose of this Seminar is to analyse the future of economic integration and how to ensure sustainability on a global scale. But - believe me - there is still much we need to do inside Europe.
The EIB was founded in 1958 as strongly requested by Italy. The original mission of the EIB was to contribute to the balanced growth of the internal market in order to improve the life of the European citizens.
Nevertheless, the great achievements on the path towards a richer and fairer Europe hide a recent surge in ramping inequalities.
After last decade’s crises, the call for solidarity is, in fact, more pressing than ever, as the landscape of our continent is much more heterogeneous and unequal than before.
Let’s look at the data. Germany's GDP is 11% higher than it was before the crisis. Italy's one, however, is 7% lower.
Investments in core countries have risen by 10% compared to the pre-crisis period, while they have fallen by 20% in peripheral countries like Italy.
The current unemployment rate in Germany is 3%, while it is over 10% in Italy. To help you grasp the magnitude of this problem you can see it like this: there are 900,000 unemployed people in Southern Italy alone: 50% more than in whole Germany, which has a population of 82 million compared to Southern Italy's 20 million.
The reasons for this divergence are numerous and varied.
One of them - and a quite dangerous one if you look at the medium/long term - is the difference in investment rate among various EU countries.
It is worth noticing that the curb on investments is often not caused by unavailability of funds, but rather from the depletion of the technical skills of the Public Administration – the worst legacy of the crisis in my opinion – as well as from difficulties in navigating through a maze of embedded rules.
Think about the following fact: in the current multiannual financial framework, our country has been allocated 44.6bn in EU funds, two-thirds of which target disadvantaged areas, i.e. the eight southern regions.
However, at the end of 2018 Italy was behind in the implementation of EU structural fund programmes: only 20% was spent, below the EU average (27%) and fourth lowest among EU countries. Now, while we are trying hard to avoid losing the funds for the 2014-2020 period, other countries are already planning their investments for the 2021-2027 period.
This is quite common across all peripheral countries in Europe.
As the EU Bank, we offer our help to overcome these difficulties, for example with the JASPERS program (Joint Assistance to Support Projects in European Regions), a free technical assistance programme. Our advisors, working side by side with managing authorities, prevent the loss of hundreds of millions of euros of structural funds every year.
Overall, Jaspers facilitated the implementation of more than 600 projects across Europe, for more than 100bn of investment mobilised since 2006. Some examples include 14 large-scale national transport projects in Italy (including the completion of the Naples-Bari railway line); the digitalisation of the cadastral system in Greece, fundamental to maximise tax collection; the realisation of new paediatric hospitals in Poland.
Besides being more efficient in the utilisation of EU funds, managing authorities should learn to use them in innovative ways. An example is the JESSICA (Joint European Support for Sustainable Investment in City Areas) initiative, to help local administrations to invest in economically viable urban regeneration projects. This tool has the added value of transforming one-off grants into “revolving” funds while crowding-in private sector resources.
In Italy, we supported 75 urban development and energy efficiency projects. 300m of structural funds have mobilised almost 800m of investment, generating a 2.7x leverage effect.
In general, the EIB Group can play a role in supporting the growth of segments of the European financial system that are not yet sufficiently developed but that are needed to both (1) drive the recovery of the regions of Europe lagging behind and (2) to reinforce the capacity to compete of the entire EU.
A key example is our activity in the Venture Capital sector. In this case, the EIF - a subsidiary of the EIB dedicated to equity activities - invested Euro 17bn in almost 900 funds and has become therefore a key player in the EU Tech Transfer, Venture Capital, Private Debt and Private Equity industries.
Looking at the future, the EIB is working with the European Commission on the InvestEU program, which will build on the success of the European Fund for Strategic Investments (EFSI – or so-called Juncker Plan) to make public support for investment and economic growth structural and permanent.
InvestEU will run between 2021 and 2027 and will be based on a Euro 38bn budget guarantee. The aim of InvestEU is to trigger €650bn in additional investment. This figure is ambitious yet feasible thanks to the market-based ad demand-driven characteristics of the program.
The InvestEU Program will be implemented for 75% by the EIB and for the remaining 25% by other financial institutions and national promotional banks, to maximise its outreach.
InvestEU will support four policy areas in which the EU still register a sizeable investment gap: (1) sustainable infrastructure; (2) research, innovation and digitisation; (3) SME businesses; and (4) social investment and skills.
The program will also allow for flexibility to enable swift reactions to market changes and variation of policy priorities over time.
Finally, the InvestEU Advisory Hub will also provide technical support and assistance to help with the preparation and implementation of projects.
In a nutshell, InvestEU will be a system in which EU resources (EU funds, EIB lending and technical expertise) will be mixed with national, public and - in particular - private funding. A similar architecture has worked well under the Juncker Plan and it will now become a permanent financial tool in support of EU’s sustainable growth.
Coming now to the main topic of the seminar, new challenges have been added to our mandate over the years, in addition to our original mission to sustain European growth. Challenges affecting not only Europe, but the whole World.
First of all, fighting against climate change to improve the life of the current and next generations.
For this purpose, the EIB created the “climate awareness bonds” (so-called green bonds) in 2007, a financial instrument enabling investors to sponsor projects with a positive environmental impact.
With more than 23.5bn of issues, we are still the biggest green bond issuer in the World and we dedicate every year approximately 30% of our lending volumes to the financing of project to mitigate climate change. Our objective is to increase further such threshold in the near future and to play a key a visible role in the climate financing both within and outside the EU, as a response to the request of many EU political leaders.
Let me give you an example, an example which I particularly care of since I am responsible for the Mashrek region.
I am talking about the Red-to-Dead Sea Corridor, involving Jordan and Israel. The project provides for the realisation of water infrastructure in Jordan which will allow two things: (1) to bring fresh water in the South of Israel and to convoy salty water from the Red Sea to the Dead Sea, preventing it to dry-out; and (2) to perform a swap of water resources to provide clean and drinkable water in the North of Jordan.
We have committed 260 million to this initiative, characterised by a great environmental, social and geopolitical impact.
This example allows me to introduce a second key challenge: improving economic resilience and tackling mass migration. In 2016 the EIB launched the Economic Resilience Initiative, an instrument to strengthen essential services and the private sector in the so-called Southern Neighbourhood and the Western Balkans.
Enabling economic resilience in such regions, where millions of refugees live, has a great impact on the management of migrant flows and encourages transition towards a safer, more human and higher dignity migration.
The objective of the Economic Resilience Initiative is to increase EIB financing in the Region from 7.5bn to 13.5bn (an increase amounting to 6bn in total) by 2020, supporting additional investments worth 15bn. Since 2016, the EIB has financed 45 ERI projects in 11 countries, for a total of 4.5bn out of the 6 planned within 2020.
Overall, we reached 3,150 local SMEs, employing 161,000 people. In addition, we facilitated the improvement of hygienic and sanitary conditions for some 6 million people and contributed to the production of energy for 16,000 families.
Finally, we are actively engaged in the achievement of the UN Sustainable Development Goals, including empowering women in society and the economy.
Improving female employment would contribute to increasing the GDP pro capite up to 9.6%. In general, reducing gender inequalities is associated to faster economic growth, more efficient businesses and more stable and united societies.
Recently, the EIB has lent to UniCredit 200 million dedicated for at least 25% to the support of businesses managed or controlled by women. We are replicating this scheme also in Romania, Greece and Ethiopia.
To conclude, international economy is nowadays more interconnected than ever. Economic and social crises call for a united response by public bodies with the aim to address them globally and in partnership with the private sector.
As the EU Bank, the EIB is a protagonist in this process and is fully equipped to respond to the new worldwide challenges without forgetting our original mandate: to help building a cohesive and inclusive Europe.
Thank you.