Social Europe: A European Germany Returns?

There also was something in the same briefing to Kohl of which he had been unaware and that Merkel may not yet appreciate: EIB bonds do not count on the debt of Germany or any other major member state of the Union, nor need count on the debt of others. In this regard, they parallel US Treasury bonds which do not count on the debt of California or Delaware. What’s more, the servicing of EIB bonds is by the member states which gain from the investments that they fund, not by fiscal transfers from others, or from the Commission’s tax funded Own Resources. Further, aided by the Amsterdam criteria for social and environmental investments, the EIB quadrupled its investment finance in the decade from 1997 until the financial crisis to four fifths of Own Resources. [...]

Moreover, the joint EIB-EIF case has been fully grasped by Emmanuel Macron. When minister of economy and industry in the second Valls government he argued in September 2014 that to offset the low subscribed capital of the EIF the EU should access unused resources from the European Stability Mechanism. As an adviser put it : “If we could mobilise €20 to €40 billion from the ESM, for example to recapitalise the EIF, you then have a multiplier effect on the EIB that can reach almost €200 billion of public money”.

Wolfgang Schäuble opposed Macron, claiming that this was not within the ESM’s remit. But legal advice to the European Parliament declared that it was not excluded that the ESM should ‘fulfil other tasks’ to assure the stability of the euro for which a sustained recovery of the European economy is vital. Besides which the private sector multipliers from EIB investments range up to three, which could mean that the total public and private investment generated could reach some €600 billion, with further employment and income multipliers. And, because the Roosevelt New Deal was bond financed, it managed to reduce unemployment from 22% to 8% in the seven years from 1933 to 1940 with an average annual federal deficit of only 3%, i.e. the Maastricht limit.  

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