France and Italy have requested a new fund in response to the US strategy to combat inflation, which threatens to drive businesses out of the EU. However, European governments are split.
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| Brussels, Belgium |
The EU industry-saving fund is a cloud of black smoke in Brussels. Designed to offset the US Inflation Reduction Act (IRA), and hence called the 'European IRA,' the fund has not met with success among several European countries, particularly Germany and the Netherlands, who are opposed to the proliferation of EU financing channels built with shared debt.
The US response
The concept of establishing a European Sovereignty Fund was mentioned in Commission President Ursula von der Leyen's State of the Union speech in September. The instrument should serve to reply to Joe Biden's administration's mega-plan to boost the US economy, which aims to stimulate 'green' manufacturing conversion with over 350 billion euros in favor of the stars and stripes industry alone. A move that, according to European corporations, might force a portion of the EU industry to relocate to the United States in order to receive help and access energy bills that are far cheaper than those on the Old Continent.
The Italian-French alliance
As a result, France became the carrier of the sovereign wealth fund plan, as revealed yesterday by Economy Minister Bruno Le Maire. "France is convinced that the best response to the American Inflation Reduction Act is a European Inflation Reduction Act (or IRA), i.e. Europe's ability to equip itself with the same simple, massive, and effective means to re-industrialize the Continent and achieve the decarbonisation of the European economy," Le Maire said upon his arrival at the Eurogroup. "We have several tools on the table," he noted, but "the main issue is to guarantee the same amount of money that the US is allocating."
Italy publicly endorses the concept, with Economy Minister Giancarlo Giorgetti declaring his support for a "European IRA" strategy aimed at lowering inflation. "We see policies that encourage competitiveness and preserve strategic productions," Giorgetti remarked. However, the Italian-French cooperation on this topic has encountered pushback from the so-called thrifty.
Germany's no
As it did with the Recovery Fund, the German government has categorically rejected a new EU industry-saving fund backed by additional shared debt. "If it entails additional joint European debt," said German Finance Minister Christian Lindner, "it will not increase our competitiveness and stability, but it will be a threat." "If it's a rebranding of current tools, we're open to conversation," Lindner said.
The European IRA line, which was interpreted as a "rebranding" of existing instruments, was also signed by Dutch Finance Minister Sigrid Kaag, who noted upon her arrival at the Eurogroup that "EU financing is already separated into numerous funds and projects." As a result, "it would be prudent to take stock of what has already been allocated before revisiting the purpose and focus" of European financing channels. "There are key mechanisms already in place: Fit-for-55, Repower Eu, Sure, and so on," the Dutch minister emphasized. "We need concrete suggestions, we like specifics in Holland," you ended ironically, slamming the door to new instruments based on shared debt.
Source: TODAY.IT