Jean-Claude Juncker won parliamentary approval for his team of European Union commissioners, pledging to craft a 300 billion-euro ($381 billion) investment program to help kick-start a stagnating economy in Europe.
Juncker’s line-up received the go-ahead from the European Parliament to serve a five-year term starting on Nov. 1 as EU policy makers struggle to find funding for growth-boosting projects in the aftermath of the sovereign-debt crisis.
“This investment program cannot be financed by incurring further debt,” Juncker, the incoming president of the European Commission, told the 28-nation EU Parliament Wednesday in Strasbourg, France. “We have to be careful that we use public money in an intelligent and smart way and that we combine public money and private money.”
Juncker’s team faces familiar and fresh challenges after the 10-year reign of Jose Barroso atop the commission, the EU executive arm that proposes and enforces European laws, monitors national economies, negotiates trade deals, runs a diplomatic service and administers the bloc’s 140 billion-euro budget.
Barroso spent his first term absorbing countries in former communist eastern Europe into the EU and positioning the bloc as a leader in the fight against global warming. He spent his second term battling the debt crisis that forced Greece, Ireland, Portugal, Spain and Cyprus to seek a total of 496 billion euros in international aid pledges and threatened to break apart the euro.
“This crisis was probably the biggest since the beginning of the European integration process in the ’50s,” Barroso said in a farewell address to the EU Parliament Tuesday.
While bond markets have calmed since the height of the turbulence between 2010 and 2013 and Ireland, Portugal and Spain have emerged from their aid programs, Europe is flirting with deflation.
The economy of the 18-nation euro area stagnated in the second quarter and inflation, at 0.3 percent last month, isn’t seen returning to the European Central Bank’s target of just under 2 percent before 2017. [Bloomberg]
The limited scope for expansionary budget policies was highlighted Tuesday by the EU’s statistics agency, which said the euro area’s government debt mountain hit new heights in 2013. Government debt in the currency bloc reached 90.9 percent of gross domestic product at the end of last year, up from 89 percent 12 months earlier, according to Eurostat.
Juncker, who served as Luxembourg’s prime minister for almost two decades until late 2013, vowed to present his investment package by year-end, telling the EU Parliament “there is a need for haste, there is a need for urgency.”
His incoming commission faces an imminent test over applying EU budget-discipline rules to France, which is struggling to bring its deficit within the bloc’s limit of 3 percent of GDP. The euro area beefed up its fiscal-prudence rulebook at Germany’s insistence during the debt crisis, providing a basis for more squabbles between the stick-to- austerity and go-for-growth camps.
The spotlight on France’s public spending will be even greater because the next EU commissioner for economic and monetary affairs is Pierre Moscovici, a former French finance minister. His appointment as EU economy czar ruffled some German feathers.
Greece, which triggered the European debt crisis in 2009, will also preoccupy the Juncker commission because the country wants to exit its rescue program at the end of 2014 — more than a year ahead of schedule — after being forced to enact budget cuts that deepened a six-year Greek recession.
UK politics promises to intrude on the work of the new commission because of British Prime Minister David Cameron’s pledge to win back powers from the EU and, if re-elected next year, to hold an in-or-out referendum on the country’s membership of the bloc.
Juncker has said he wants the UK to stay in the EU and has promised the country a “fair deal” on the question of repatriating powers. Acknowledging the importance of London’s banking industry and seeking to blunt anti-EU feelings in Britain, he appointed the UK’s member of the new commission, Jonathan Hill, as European financial-services commissioner.
The Kremlin’s encroachment in eastern Ukraine, coupled with the threat of more EU sanctions against Russia and of disruptions of Russian natural-gas supplies, will keep the jobs of European foreign-policy chief and energy commissioner in the limelight. Italy’s Federica Mogherini will succeed the UK’s Catherine Ashton as the chief EU diplomat, while Spain’s Miguel Arias Canete will follow Germany’s Guenther Oettinger in the energy post, which will be combined with the climate-protection portfolio.
A planned EU-U.S. trade agreement that would expand what is already the world’s biggest economic relationship will top the commercial agenda of the new commission. Keeping those negotiations on track will be the job of Sweden’s Cecilia Malmstroem, the new EU trade commissioner, who also will have to steer through the final approval stages a landmark commercial pact with Canada struck by the departing Karel De Gucht of Belgium.
The outbreak of the deadly Ebola virus in west Africa will occupy the next commissioner for international humanitarian aid and crisis management, the Cypriot Christos Stylianides, who has pledged to visit the African countries at the center of the health scare.
Closer to home, handling a lengthy EU antitrust probe of U.S.-based global technology company Google Inc. will fall to Denmark’s Margrethe Vestager, who succeeds Spain’s Joaquin Almunia as European competition commissioner.