EU EFSI program unveiled

Anyone giving presents at Christmas also has to be prepared for some disappointed faces. From this perspective Jean-Claude Juncker's European Fund for Strategic Investments (EFSI) is not a pure ode to joy: it's more reminiscent of a big, nicely packed box which contains a few balls of wool along with a note saying they can be knitted into a lovely scarf. That's because Juncker wants to grow 21 billion euros ($26.2 billion) of public investment funding by a factor of 15 to over 300 billion euros - by attracting private investors.

EU short on cash

For anyone managing a household budget that sounds like voodoo and even Juncker's supporters say the program is very ambitious - noone's exactly overwhelmed. But the European Commission President faces the dilemma of simply not having any more money to give away for Christmas. There's no more cash in Brussels after what was there was squandered mainly in southern Europe on thousands of useless kilometres of highway, bridges to nowhere and airports for noone. Just as well that's over.

Necessity of course is the mother of invention and Juncker has had to scrape the bottom of the Brussels barrel for even this modest program. That's because the EU's 28 member states haven't allocated any extra funding since settling the bloc's budget until 2020. For them to then mock the Commission for a ''magic wand money program'' is really just the old Brussels game of passing the buck when the donors themselves have made sure there's no cash in the kitty.

EU states miserly towards Brussels

The EU is supposed to pour billions into the bloc's stagnating economy? Anyone who wants that first has to stump it up! There's more than a little truth behind leftist demands in the European Parliament for fresh capital while lambasting German influenced austerity policies; Chancellor Angela Merkel is one of those who fought against an EU budget increase. Juncker's critics are also welcome to applaud British Prime Minister David Cameron who isn't even willing to pay his country's outstanding dues.

Others complain that Juncker hasn't requisitioned misdirected energy subsidies or useless farm subsidies and rolled them together into a fund with a serious punch. They obviously either don't know how Europe works, or are simply polemicising. Every cent distributed was hard fought for by the various states - claw anything back and the outcry in Paris, Rome or Madrid would be deafening. EU money comes from EU members. If they don't fork it out, it isn't there. So it's rather shabby to beat up on Juncker for his supposedly threadbare program.

Juncker's approach is creative

And finally, what's wrong with a bit of creative thinking? In times of scarcity what's wrong with tasking the experts at the European Investment Bank with overseeing projects aimed at boosting the bloc's economies? They'll have to make sure the money doesn't go straight into concrete white elephants. It'll need channelling instead into projects with a future in areas like R&D, education and sustainable development. That could be a lot more effective than simply plodding through member countries' wish lists. And the fact that the funds are guaranteed by member states is just what might attract institutional investors like pension funds, who are legally required to avoid risky investments.

Nonetheless, the Brussels plan's success hinges on member states' willingness to reform their economies. The downside of overregulated and inflexible labor markets in France and Italy is only too well known. They will only attract investors once that's been sorted out. That means for Juncker's EFSI package to be even moderately successful, European governments will have to want it to be successful. They are the ones who have to make sure that the astronomical sums of money zooming electronically around international capital markets finally get diverted into their economies. Because in the end Jean-Claude Juncker is not really a magician - he can only act like one.