Communication from the Commission - A European initiative for growth - Investing in Networks and Knowledge for Growth and Jobs - Final Report to the European Council
Date: 2003-11-11
Institutions: European Commission
Subjects: EU financial instrument, EU growth strategy, investment promotion, report, structural policy, trans-European network

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 21.11.2003
COM(2003) 690 final/2

Corrigendum
Pour des fautes matérielles
nouvelles pages 26,27,28,30,34
et carte finale.
Concerne uniquement la version EN.

COMMUNICATION FROM THE COMMISSION

A EUROPEAN INITIATIVE FOR GROWTH

INVESTING IN NETWORKS AND KNOWLEDGE FOR GROWTH AND JOBS

FINAL REPORT TO THE EUROPEAN COUNCIL

FINAL REPORT TO THE EUROPEAN COUNCIL

A EUROPEAN INITIATIVE FOR GROWTH

TABLE OF CONTENTS

1.

2.

2.1.

2.2.

3.

3.1.

3.2.

3.3.

Introduction .................................................................................................................. 3

A European Initiative for Growth ................................................................................ 5

The scope of the Initiative ............................................................................................ 5

Mobilising investment and finance in support of the European Initiative for Growth 8

Taking the Initiative Forward..................................................................................... 12

The Quick-start Programme ...................................................................................... 13

Innovative financing in support of the European Initiative for Growth .................... 16

The statistical treatment of public-private partnerships and securitisation operations
in ESA95..................................................................................................................... 19

3.4.

Monitoring progress and regular reporting .............................................................. 20

4.

Conclusions ................................................................................................................ 20

Annex 1: Quick-start Projects : Tranport Networks, Broadband Networks, Research,

Innovation and Development ..................................................................................... 22

Annex 2: A roadmap for knowledge and networks.................................................................. 36

Annex 3: Map of Quick-start Transport projects ..................................................................... 38

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1.

INTRODUCTION

The European economy has experienced two difficult years. Now there are encouraging
signs  that  the  worst  is  behind  us.  Business  and  consumer  confidence  is  starting  to
improve.  Economic  growth  is  expected  to  pick  up  in  the  second  half  of  2003  and  to
gather pace throughout 2004. Our recent forecasts indicate an average GDP growth in the
euro area of 1.8% in 2004 and up to 2.3% in 2005.

The situation remains fragile. The recent lacklustre economic performance confirms the
need for our ambitious Lisbon agenda for  economic,  social and  environmental renewal.
These reforms must be vigorously pursued, so that their contribution to raising Europe’s
growth potential can  now  be  felt.  Reform  at  a  national  and  European  level  is  essential,
but not enough  on  its  own to  consolidate progress. It must be backed by action now to
rekindle  investment.  This  action  should  reinforce  the  Union’s  capacity  to  grow  and
contribute to setting it on a sustainable path.

If this is done, it will send a message of confidence and commitment; a signal of effective
economic  governance.  There  is  now  a  window  of  opportunity  not  to  be  missed,  as
happened in the economic upturn of 1999-2000.

The European Council last October1 therefore called on Member States to maintain sound
macroeconomic  policies,  accelerate  structural  reforms  and  promote  investment  in
networks  and  knowledge.  It  highlighted  the  importance  of  speeding  up  the  roll  out  of
European  transport,  energy  and  electronic  communication  networks  and  of  increasing
investment in human capital. These are crucial steps to boost growth, better integrate an
enlarged  Europe  and  improve  the  productivity  and  competitiveness  of  European
businesses on global markets.

This European Initiative for Growth responds to that call.

This  Initiative  seeks  to  mobilise  investment  in  areas  that  will  reinforce  on-going
structural  reforms,  stimulate  growth  and  create  jobs.  Energy  and  transport  links  are
needed to bind together an enlarged internal market and to promote greater geographical
and  social  cohesion.  Broadband  communications  can  provide  a  physical  backbone  for
bringing  the  knowledge  economy  to  every  part  of  the  Union.  Boosting  our  ability  to
generate  and  use  knowledge  –  be  it  through  science,  skills  or  people  -  is  the  key  to
ensuring  that  European  businesses  can  continue  to  innovate  and  compete  and  that  our
citizens can participate more fully in society.

It  combines  action  needed  to  create  the  right  regulatory,  financial  and  administrative
conditions to boost private investment and the mobilisation of Community funding with
an  invitation  to  Member  States,  in  line  with  the  2003  Broad  Economic  Policy
Guidelines2,  to  continue  refocusing  public  expenditure  towards  growth-enhancing  areas

1

2

Presidency Conclusions, European Council, 16-17 October 2003, SN 300/03
COM(2003) 170 final/2 of 24.07.2003

3

                                                
without  increasing  public  budgets.  In  this  way,  it  recognises  that  continuing  macro-
economic stability and adherence to Stability and Growth Pact are essential elements for
returning  the  Union  to  steady  growth.  The  measures  proposed  also  take  account  of  the
Union’s  own  budgetary  discipline  contained  within  the  current  Financial  Perspective
ceilings and the likely focus on promoting growth in the next Financial Perspectives after
2006.

Taken together the measures proposed can provide renewed confidence, while offering in
the  medium  term  a  growth  dividend  in  the  form  of  cost  savings  in  production  and
transport  time,  improvements  in  quality,  accelerating  rates  of  innovation  particularly
through support for key technologies, increased competition and greater choice in terms
of where to invest and to locate businesses.  It should also help to reinforce cohesion as
infrastructure is upgraded and our citizens are given new choices and opportunities.

This Final Report, drawing on contacts with the Member States and with the European
Investment Bank (EIB):

–  Identifies the areas for action within the European Initiative for Growth and sets out
key decisions needed from the Council and the European Parliament, as well as areas
where the Commission will be taking work forward.

–  Presents  as  the  first  stage  of  this  initiative  a  “Quick-start  programme”  of  concrete
projects  within  these  overall  priorities  that  are  ready  to  go.  It  identifies  the  costs
involved and where the financial support should come from.

–  Identifies  current  and  new  financial  tools  to  support  the  European  Initiative  for
Growth, including those which can help to leverage private investment. It also looks
at  how  different  sources  of  funding  -  Structural  Funds,  research  spending,  European
Investment Bank support - can be better combined and co-ordinated.

–  Sets out a range of (non-financial) measures needed to create the right regulatory and
administrative  framework  to  encourage  private  investment  in  the  European  Initiative
for Growth  and, in  particular,  the Quick-start  Programme.  In  transport,  the  idea  of  a
co-ordinator or co-ordination body and the principle of a Declaration  of European
Interest,  to  push  forward  progress  on  the  cross-border  links  were  proposed  in  the
Commission’s recent TENs proposals.

–  Reviews  the  statistical  principles  within  the  framework  of  the  European  System  of
Accounts  (ESA-95),  on  the  basis  of  which  public-private  partnerships  should  be
treated  within  national  budgets  in  the  framework  of  their  compatibility  with  the
Stability and Growth Pact.

–  Describes how progress will be assessed as the initiative progresses.

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2.

A EUROPEAN INITIATIVE FOR GROWTH

2.1.

The scope of the Initiative

The European Initiative for Growth targets public and private investment in networks and
knowledge. The Commission’s Interim Report3 ahead of the October European Council
identified three principal areas and a concrete roadmap for policy action:

–  Moving  ahead  with  the  priority  Trans-European  transport  projects  requiring  €220

billion investment by 2020.

–  Accelerating the roll out of high speed, broadband communications in all parts of the

Union to meet the target of widespread access and use by 2005.

–  Strengthening  the  Union’s  capacity  to  generate  and  use  knowledge  through  specific
action to boost investment in leading edge technologies from the use of hydrogen as a
fuel to space technologies and their applications.

The  October  European  Council  endorsed  this  approach,  while  highlighting  as  well  the
importance  of  interconnected  Trans-European  energy  networks.  Such  networks  will
reinforce  the  internal  market  for  gas  and  electricity  and  to  help  avoid  blackouts  on  the
scale  recently  seen  in  some  Member  States.  The  European  Council  stressed  the  link
between knowledge and the broad  context of investing in human  capital.  It  also invited
the Commission and the European Investment Bank, as a first phase of the initiative and
to  show  its  credibility,  to  prepare  a  Quick-start  Programme  covering  both  the  network
and knowledge dimensions of the initiative.

Projects  in  the  Quick-start  Programme  are  cross-border  ones  with  a  strong  European
dimension  which,  in  the  Commission’s  assessment,  are  mature,  financially  and
economically  viable,  can  facilitate  investment  in  other  national  infrastructures  and
initiatives and which will deliver considerable long-term benefits for growth, jobs and the
environment. These are projects where, before the end of 2006, money can be committed
and works can start.

Overcoming barriers which hold back investment

Underlying  the approach  is  the  need  to  overcome  the  whole  variety  of  barriers  that  are
holding  back private investment. Some of  these  are  regulatory  or  administrative,  others
reflect  the  fact  that  the  financial  instruments  available  through  Community  or  national
funding or through the EIB need to provide greater incentives for projects to go ahead.

3

Interim Report to the European Council on a European Initiative for growth COM(2003) 579 final,
01.10.2003

5

                                                
BOX 1: PAST INVESTMENTS HAVE STALLED FOR A VARIETY OF REASONS

Too  often  in  the  past  investment  in  networks  and  knowledge  projects  has  been  delayed  by  a
combination of financial and non-financial problems, including:

(cid:1) 

(cid:1) 

In  relation  to  networks,  delays  have  accumulated  for  large-scale  cross-border  transport
projects  as  a  result  of  complex  administrative  procedures,  low  priority  by  Member  States,
uncertainties  associated  with  the  choice  of  routes  and  the  planning  process  and  the
complexity  of  co-ordinating  projects  with  a  cross-border  dimension.  This  has  been
compounded by the  difficulty  of structuring supranational businesses to run such  operations.
The absorption capacity of the administration in the Acceding Countries was also an important
factor  in  the  speed  with  which  projects  moved  forward.  Finally,  even  where  Community
funding has been available, the level of support and political commitment has not always been
sufficient to encourage public or private actors to move ahead with investment. In the case of
the roll out of broadband networks, where the main burden for financing investment falls on
private investors, several factors have been holding back investment. For high-speed internet
access,  the  severe  impact  of  economic  conditions  on  the  sector,  the  limited  degree  of
competition  in  many  Member  States,  the  lack  of  profitability  prospects  to  deliver  services  in
remote  and  rural  areas,  and  the  fact  that  more  needs  to  be  done  by  public  authorities  to
provide  everyday  services  on  line  as  a  way  of  making  the  Information  Society  a  reality  and
creating demand among the public have all slowed down investment.

In relation to knowledge, the main burden for financing investment in research, development
and  innovation  falls  on  the  private  sector.  A  range  of  factors  have  been  holding  back
investment  including  the  difficulty  for  innovative  companies,  particularly  SMEs  to  obtain  the
necessary access to capital to the need for a better skilled workforce, the continuing lack of a
Community  Patent,  and  the  fiscal  treatment  of  investment  in  research  and  innovation.  While
progress in some of these areas is being achieved, public investment in research has at best
stabilised and in several cases fallen and private research spending is still far from the target
established by the European Council in March 2002.

Decisions are needed from Council and the European Parliament to accelerate work on
networks and knowledge

The Commission’s  Interim Report addressed the  challenges  outlined  above.  It  set  out  a
roadmap  for  decisions  and  examined  possible  sources  of  financing  for  the  European
Initiative  for  Growth,  focusing  particularly  on  how  public  spending  might  provide  a
catalyst  for  private  investment.  It  highlighted  pending  measures  where  Council  and  the
European  Parliament  must  move  ahead,  as  well  as  areas  where  the  Commission  will
make proposals shortly to improve the administrative, regulatory and financial conditions
for  complex,  cross-border  investment  projects.  It  also  stressed  the  importance  of  the
effective application of  existing  rules –  such  as  the  new  legal  framework  for  electronic
communications that entered into force last July.

This  action  is  important  to  provide  business  and  government  with  a  predictable
framework within which to plan investment.

The scale, focus and extent of the action needed at the level of the Union vary from area
to  area.  While  public  funding  at  EU  level  plays  an  important  role  for  the  cross-border
sections of TEN-transport links, the roll  out of broadband or the development of cross-

6

border  energy  connections  tends  to  be  driven  more  by  private  investors.  Equally  in
pushing progress towards research targets, the key responsibility lies on the research and
innovation  community  itself.  EU  research  funding  plays  a  key  catalytic  role,  but  it
represents a small proportion of national research budgets, which are themselves smaller
than the budgets of industry and business.

In  this  respect,  the  Commission’s  Growth  Initiative  is  fully  consistent  with  the
subsidiarity principle, both vertically (the appropriate level of action between the Union,
the Member States and the local authorities) and horizontally (public authorities intervene
when and where market forces are insufficient, inefficient or dispersed).

BOX 2: ACTION REQUIRED AT EUROPEAN LEVEL TO IMPROVE THE REGULATORY,
ADMINISTRATIVE AND FINANCIAL ENVIRONMENT FOR INVESTMENT

The right regulatory, administrative and financial environment must back up the Initiative.

This  means  the  Council  and  the  European  Parliament  must  rapidly  agree  on  five  sets  of
measures:
(cid:2)  Adoption of the priorities for TEN-transport and updated financing rules for transport and

energy networks and for the eTENs programme.

(cid:2)  New  rules  related  to  charging  for  and  financing  transport  infrastructure  (the  “Eurovignette

proposal”).

(cid:2)  The final adoption of the Community Patent.

(cid:2)  The legislative package modernising the Community procurement rules.

(cid:2)  Company law  and  taxation  changes  to  make  cross-border  mergers  easier  and  as  well

as the operation of parent and subsidiary companies in the Union.

At the same time Member States must do more to implement existing legislation, for example, the
new  rules  of  electronic  communications, and  to  foster  investment  by  re-orienting  spending
towards growth-enhancing investment in line with the Union’s Broad Economic Policy Guidelines
for 2003.

In addition, the Commission will take work forward five areas over the next few months:
(cid:2)  Simplify the procedures applied to State aid given to SMEs, including rules governing aid for
R&D and look at the needs of small, research-intensive companies as regards State aid and
competition rules.

(cid:2)  Examine  the  way  public-private  partnerships  (PPPs)  are  treated  under  Community  public
procurement  rules  and  provide  early  guidance  as  to  how  PPPs  should  be  accounted  for
within national budgets.

(cid:2)  Creation  of  a  Harmonized  European  Fund  Legal  Structure  for  risk  capital  capable  of

ensuring transparency, from the fiscal point of view, all over Europe.

(cid:2)  Establish a range of European Technology Platforms intended to develop and implement a
strategic research and innovation agenda for a range  of key technology sectors,  in order to
better mobilise resources at European level through co-ordination and integration of efforts.

(cid:2)  Develop  a  proposal  for  the  creation  of  a  European  Guarantee  Instrument  to  provide

7

support for post construction risks associated with TEN-transport projects (see Box 6 below).

2.2.  Mobilising  investment  and  finance  in  support  of  the  European  Initiative  for

Growth

The role of funding at EU level

The  October  European  Council  invited  the  Commission  and  the  European  Investment
Bank  to  explore  how  best  to  mobilise  private  financing  in  support  of  the  European
Initiative  for  Growth.  It  nevertheless  recognised  the  important  role  of  Community
funding  in  supporting  some  of  the  goals  of  the  initiative,  not  least  as  a  lever  to  attract
private  investment.  Community  level  support  covers,  inter  alia,  the  Union’s  research
budget, the Structural and Cohesion Funds and the dedicated funding for Trans-European
Networks for transport, energy and electronic communications.

In  addition,  a  number  of  proposals  have  been  put  forward  including  new  EIB  financial
facilities, a new Guarantee Instrument, and an increase of the EIB’s risk-bearing capacity
without  calling  into  question  its  credit  rating,  through  the  use  of  its  Structured  Finance
Facility and other innovative tools, such as securitisation. These ideas are returned to in
the following Chapter. The EIB and the Commission also intend to further examine the
possibilities for cooperation and co-financing between the EIB and the European Social
Fund to support e-skills learning programmes.

Furthermore,  the  European  Initiative  for  Growth  implies  a  review  of  the  current
budgetary and financial instruments at Community level to exploit their full potential to
support  the  European  Initiative  for  Growth  within  the  limits  provided  by  the  existing
Financial  Perspectives  and  the  examination  of  how  this  momentum  for  growth  can  be
maintained into the next Financial Perspectives.

BOX 3: OVERVIEW OF COMMUNITY AND EIB SUPPORT FOR THE EUROPEAN GROWTH
INITIATIVE

The Community budget can play a key role in supporting the Growth Initiative.

–  The TEN-Transport budget line contributes with €700 million yearly to fund up to 10 percent
of total project costs. The Commission’s proposal amending the TENs financial regulation for
transport and energy networks opens up the possibility of funding up to 30 % of the costs of
the  cross  border  sections  of  the  priority  projects.  A  similar  proposal  for  a  30%  funding
threshold  for  deployment  projects  under  the  TEN  telecom  programme  (eTENs)  is  also
pending.

–  Over the current period 2000-06, the Structural Funds are foreseen to support infrastructure
investment  (energy,  transport  and  electronic  communications);  research;  technological
development and innovation up to  around €60 billion:  in  particular,  €29.2  billion  for  transport
infrastructures, €9.2 billion for research, technological development and innovation (RDI); €6.1
billion  for  electronic  communications  and  information  society,  €1.8  billion  for  energy.  The
European  Social  Fund  (ESF)  is  providing  €20  billion  for  ICT  skills  and  €7  billion  for
entrepreneurship  skills.  Furthermore,  the  Cohesion  Fund  resources  can  mobilise  up  to  €1.5

8

billion yearly for infrastructure investment in the four Cohesion countries.

–  The  Sixth  Framework  Programme  is  devoting  €17.5  billion  over  four  years  to  supporting
Research  and  Development  investment  within  Europe.  It  is  already  supporting  key  areas
identified in this Report. The Framework Programme foresees support for many of the areas in
which specific Quick-start projects have been identified.

–  In  addition,  a  dedicated  budget  of  almost  €300  million  has  supported  the  roll  out  of  a
highspeed  communications  backbone  (GEANT)  linking  3000  universities  and  research
centres, more than 18000 higher education sites and more than 3000 hospitals, libraries and
other institutions in all existing and future Member States.

–  The Commission is considering setting up an innovative Guarantee Instrument to facilitate
private  sector  funding  in  PPPs  for  TEN-transport  projects.  The  Guarantee  Instrument
would  provide  time-limited  coverage  for  specific  risks  in  the  immediate  post-construction
phase  that  are  currently  insufficiently  covered  in  the  financial  markets.  (This  is  discussed  in
more detail in Box 6 below).

The European Investment Bank is also fully engaged in supporting both the Lisbon reforms and
this Growth Initiative.

–  The EIB is prepared to commit €50 billion under a TENs Investment Facility (TIF) in support of

TENs priority projects.

–  EIB investments in research, development and innovation have amounted to €15.3 billion
since its i2i Initiative was launched in 2000. It intends to continue and develop those activities
in support of Research, Development and Innovation (RDI) under its Innovation 2010 Initiative
that  also  includes  broadband  and  eTENs  related  applications  as  well  as  training.  This  will
deliver up to  €50  billion  by  2010  and  offer  a  broader  range  of  instruments  better  adapted  to
needs.

–  The EIB is prepared to reinforce its financing capacity under the Structured Finance Facility
(SFF)  that  is  of  importance  both  for  its  support  to  TENs  as  well  as  to  RDI.  The  SFF  was
established  by  the  EIB  Board  of  Governors  in  2001  and  extended  the  scope  of  the  Bank’s
financing  through  the  provision  of  senior  loans  or  guarantees  (incorporating  pre-completion
and early operations risks), subordinated loans and guarantees, mezzanine finance. Following
a first allocation to the specific SFF reserve of €250 million in 2001, the EIB is now proposing
a further allocation of €250 million, which would allow an additional financing volume of up to
€2.5 billion.

–  Supporting innovation through risk capital. The European Investment Fund (EIF) support
for risk capital funds including  the  Community scheme “ETF start-up facility” represents  €2.5
billion  spread  across  185  risk  capital  funds,  supporting  1500  high  technology  businesses  to
the  tune  of  €10  billion.  The  EIB  is  committed  to  earmark  to  the  appropriate  reserve  an
additional €500 million that will allow the EIF to raise its level of investment by around a further
€1 billion under the Risk Capital Mandate.

In order for the European Initiative for Growth to have an impact on current and future
priorities for public investment at both Community and national levels, the coordination
between different sources of finance must be fully exploited.

9

BOX 4: IMPROVED COORDINATION OF FUNDING SOURCES AT EU LEVEL

The Commission and the EIB Group have established practical ways to coordinate and increase
the use of their financing tools:

–  Between  EIB  operations  and  the  Structural  Funds,  they  aim  at  facilitating  the  joint
programming of interventions (global commitments by the EIB in the framework of Community
Support Frameworks; appropriate  modulation  of  intervention  rate;  advisory  role  of  the  EIF  in
developing financing mechanisms for SMEs at regional level);

–  Between  EIB  Group  and  the  Commission’s  Research  Programme,  an  inter-institutional
cooperation  agreement  has  been  signed  establishing  a  framework  for  joint  work.  Similar
agreements are envisaged for other major policy areas.

–  Both institutions continue to explore how to extend this joint collaboration to other areas where

the EIB intervention can crucially complement that of the Community budget.

Mobilising private investment in favour of growth

Mobilising  private  investment  in  infrastructure  and  research  and  innovation  will  be  a
central factor in boosting the Union’s growth potential over the years ahead. The creation
of  a  fully  integrated  financial  market  by  2005  is  crucial  in  this  respect.  It  can  be
instrumental  in  helping  to  make  the  enormous  pool  of  European  savings  available  for
growth-related  projects  across  the  Union.  This  represents  -  some  €10  trillion  of  private
savings in 2003 – invested in pension funds, life-insurance policies and UCITs.

The combination  of  an  affluence  of  savings  in  financial  markets,  historically  low  long-
term  interest  rates,  and  the  leverage  effects  of  EIB’s  top-credit  rating  offer  a  unique
opportunity to attract private investment. This opportunity is also a result of the progress
made in consolidating public budgets within the framework of the Stability and Growth
Pact  that  is  freeing  private  resources  which  are  now  available  and  that  can  now  be
diverted  to  support  the  European  Initiative  for  Growth.  This  should  raise  Europe’s
capacity  for  growth  through  efficient  investment  in  selected  projects  with  longer  time
horizon and that lie at the very core of the Europe’s competitiveness and cohesion.

This  is  why  many  of  the  actions  above  seek  to  create  the  right  incentives  for  private
investors:

(cid:1)  The  European  Council  last  October  highlighted  the  importance  of  the  European
Initiative  for  Growth,  by  addressing  missing  links  in  key  network  and  knowledge
infrastructures, to achieve effective integration of the enlarged Europe. By increasing
the level of Community support available and by focusing on a list of ready-to-launch
projects,  it  will  ensure  the  efficiency  of  the  Community  intervention  and  will  boost
cross-border 
interconnect  national
infrastructure  networks.Greater  integration  of  infrastructure  networks  will  help  to
ensure higher traffic volume and more efficient utilisation of transport infrastructures

investment  projects  to  complete  and 

10

and diminished congestion costs so that the expected return to investment for private
investors  will  increase  while  giving  rise  to  considerable  gains  in  terms  of  economic
efficiency, transportation time savings and environmental sustainability.

Moreover,  the  pending  Eurovignette  proposal  provides  greater  leeway  for  cross-
financing between different transport modes. It provides a much-needed level playing
field at the Union’s level, and will allow recovery of the internal and external costs
of the use of the TENs road network. It will allow Member States, when adopted, to
impose  extra  charges  in  some  sensitive  bottlenecked  areas  in  order  to  finance
alternative sustainable infrastructures (for example, estimates suggest that between 30
to 40% of the costs associated with the proposed Brenner Tunnel could be met using
revenues from the mark-up allowed under the proposed Eurovignette rules).

Finally,  providing  a  clear  and  co-ordinated  strategic  vision  of  these  infrastructure
projects  will  help  potential  investors  to  determine  the  expected  return  on  their
investment, be it in the cross-border segment itself, in national  segments  of a TENs
priority corridor, or in other connected infrastructures. Moreover, selected Community
support will provide greater incentives to public and private investors to bring forward
all priority projects as defined in the TENs-T Guidelines to a degree of readiness and
maturity that will make them also eligible under the Quick-start list. Co-ordinating and
combining  better Community  financial instruments  such  as the  Research  Framework
Programme,  the  TENs  programme,  Structural  Funds  and  EIB  support  will  also
improve their leverage effect on private investment.

(cid:1)  Experience from the Essen infrastructure projects selected back in 1994 and from the
on-going projects funded by the EIB and through the Structural Funds show that non-
financial  factors  can  often  be  more  powerful  barriers  to  the  viability  and
attractiveness  of  particular  projects  than  the  actual  lack  of  funding.  Furthermore,
uncertain  prospects  for  high  return  from  R&D  spending  can  deter  private  investors
from spending on knowledge and innovation because of costly cross-border protection
of  intellectual  property  rights,  legal  and  financial  barriers  to  cross-border  seed  and
venture research networking, and poor co-ordination with or access to basic research
funded  through  public  spending.  Hence  the  importance  of  co-ordination  and  of
ensuring that public  procurement and  concession  rules  work  in  favour  of  large  scale
projects  and  encourage  public-private  partnerships,  of  getting  the  right  tax  and
regulatory  treatment  of  the  cross-border  and  venture  capital  operations  which  may
promote  these  projects  and  of  ensuring  a  level  playing  field  in  terms  of  simplified
rules on state aids for SMEs investing in R&D.

Furthermore,  it  is  essential  to  press  on  with  efforts  to  integrate  and  remove  barriers
within the internal market in key network sectors from railways and port services  to
electronic communications and financial markets. For financial markets, the adoption
of  remaining  measures  included  in  the  Financial  Services  Action  Plan  and  their  full
and  correct  enforcement  should  contribute  to  mobilise  private  funding.  For  the  rail
sector, given the predominance of rail within the Quick-start projects this implies rapid
progress  on  interoperability,  market  opening  and  the  modernisation  of  management

11

structures  within  rail  companies.  These  efforts  provide  potential  investors  with  the
necessary predictability and the level playing field against which to plan investments.

(cid:1)  A  major  element  of  the  TEN-Transport  and  TEN-energy  financing  proposals  is  to
concentrate  available  resources  and  political  will  through  focusing  on  a  selected
number  of  priority  projects,  and  increasing  the  amount  of  support  from  the
Community budget from 10% up to 30% for cross-border sections of TEN-transport
links and certain e-TENs projects4.

(cid:1)  A further crucial factor that has led to delays in the past has been the complexity of
moving ahead with cross-border projects or co-operation, be it in the transport or
research  area.  In  transport  there  is  a  real  need  for  an  effective  co-ordinator  or  co-
ordination body, as recently proposed by the Commission, linked to particular projects
that can push the project forward. Such a co-ordinator could help steer the evaluation
of  projects,  synchronise  administrative  procedures  and  monitor  the  works  on  either
side of the borders, help to engineer the necessary financing and act as a contact point
for private investors.  However,  for  progress to be made,  a temporary  solution  to  co-
ordination  problems  cannot  wait  for  the  legislation  to  have  made  its  way  through
Council  and  the  European  Parliament.  The  Commission  may  provide  facilities  for
Member  States  that  are  willing  to  organise  their  co-ordinated  efforts  with  respect  to
specific cross-border sections of the TENs or to Motorways of the sea. Co-ordination
of  planning,  environmental  impact  assessment,  complex  financial  operations  are  the
most likely, albeit not exclusive areas of intervention. In the research area, European
Technology  Platforms  can  play  a  similar  driving  role.  They  will  be  instrumental  in
fostering  and  facilitating  transitional  partnerships  by  bringing  together  public  and
private  stakeholders 
to  define  common  strategic  visions  and  roadmaps  for
development  and  deployment  of  technologies  and  to  address  non-technical  barriers
and  public  acceptance  issues.  Finally,  the  administrative  capacity  of  countries  to
manage  and  move  ahead  with  these  projects  must  be  strengthened  independently  of
the issue of the co-ordinator.

3.

TAKING THE INITIATIVE FORWARD

This  Report  on  the  European  Initiative  for  Growth  moves  beyond  the  October  Interim
Report and national initiatives and sets out, on the basis of objective and explicit criteria,
the  Quick-start  Programme  requested  by  the  European  Council.  It  identifies  in  more
detail the financial instruments at Community level that will support both that programme
and the whole of the initiative. Finally, it addresses other issues raised by the Council –
how can a more effective interface be established  between different types  and levels of
funding? How should public-private partnerships (PPPs) be treated in the budgets of the

4

In the revision of the eTEN guidelines in 2002, the Commission has aligned eTEN with the goals
of  the  eEurope  initiative,  which  include  the  wide  availability  and  use  of  broadband. The  aim  of
eTENs is to accelerate the roll-out of ICT applications in general interest services in areas such as
e-government, health, inclusion and learning

12

                                                
Member  States  in  the  context  of  the  macroeconomic  budgetary  surveillance?  How  will
progress be monitored over the years ahead?

3.1.

The Quick-start Programme

The  Quick-start  Programme  lies  at  the  heart  of  the  European  Initiative  for  Growth.  It
aims  at  rallying  political  commitment  and  resources  behind  key  priority  investment
projects of European interest. It is based on a thorough assessment of priorities and needs
on the basis of objective and explicit criteria and account is taken of the potential sources
of finances at Community and national level.

The  Quick-start  Programme  is  a  dynamic  and  open  process.  It  provides  efficient  and
selective Community and national support to projects that are “ready-to-launch” while, at
the same time, gives powerful incentives for public and private investors to move forward
on other priority projects of European interest. Once those projects meet these criteria and
attain the necessary level of commitment, maturity and readiness, they can be included in
this  Programme.  Such  assessment  and  possible  updating  of  the  Quick-start  Programme
will  take  place  in  the  framework  of  the  annual  reporting  cycle  linked  to  the  Spring
European Council as from 2005.

Working  together  with  the  European  Investment  Bank,  the  Commission  has  identified
this  “Quick-start  Programme”  of  projects.  These  cover  both  a  range  of  decisions  and
immediate  actions  to  develop  both  the  network  and  the  knowledge  strands  of  the
European Initiative for Growth. For transport projects, these form part of the Priorities
for TEN-transport and updated financing rules for transport and energy networks that
the  Commission  has  proposed  on  1st  October  2003,  whilst  the  projects  related  to
knowledge reflect research, innovation and eEurope priorities within the Lisbon Strategy.

These projects have been identified after assessing the following four criteria.

1.

2.

5

The  maturity  of  the  project.  Quick-start  projects  are  ones  which  are  either
ready  to  go  or  where  that  may  soon  be  the  case,  both  in  terms  of  the  project
planning and the financing for the project. The aim is to ensure that substantial
investment be underway before the end of 2006. In some cases, support via the
European  Initiative  for  Growth  may  help  to  unlock  or  accelerate  progress.  For
example, by increasing the return to private capital, by reducing the requirement
for national public funding or by ensuring that very costly technical preparatory
work  such  as  in  depth  technical  studies  are  launched,  it  may  allow  for  a  rapid
start of the works.

Its  trans-frontier  dimension,  with  a  particular  focus  in  transport  links  on  the
cross border segments of the TENs priorities5. This dimension is both politically
and  economically  important.  Cross-border  segments  constitute  the  fragile  links

In relation to TENs in the transport field,  the  Commission’s  proposal  provides  that  cross-border
segments of trans-European networks could benefit from TENs financing of up to 30% in order to
focus Community funding on areas where it can make the biggest difference

13

                                                
in the construction of a fully integrated internal market in an enlarged Union and
are often subject to long delays both because they may deliver a lower return on
investment and are inherently more complex to co-ordinate. Moreover, it is these
links  which  can  often  have  a  significant  multiplier  effect,  improving  the
financial viability of other “domestic” parts of TENs corridors or adding value to
other infrastructure investment, for example, funded by the Structural Funds.

The  impact  on  growth  and  innovation  in  an  enlarged  European  Union.
While the direct and indirect impact of these projects may sometimes be difficult
to quantify, projects have been identified which are likely to support growth and
jobs through the better integration and mobilisation of resources and by boosting
the  Union’s  innovative  capacity  by  keeping  it  at  the  cutting  edge  of
technological development from hydrogen to nanoelectronics and space.

The  benefits  for  the  environment.  A  preference  should  be  given  to  projects
offering  strong  environmental  benefits.  For  example,  projects  linked  to
supporting a hydrogen economy, or shifting traffic from road to rail or from road
to  the  sea.  Moreover,  the  problems  of  pollution  and  congestion  are  often  most
acute  at  the  bottlenecks  within  the  European  transport  network  which  form
natural barriers within our continent such as the Alps and the Pyrenees.

3.

4.

These  projects,  identified  on  the  basis  of  the  criteria  above  have  both  a  political
importance and a strong economic and financial case.

BOX 5: EUROPEAN INITIATIVE FOR GROWTH
QUICKSTART PROGRAMME – OVERVIEW

This Quick-start programme identifies key areas for investment in network and knowledge. These
projects, where work and investment can be under way within three years, accelerate progress
towards achieving existing EU goals. The total volume of investment that this Initiative mobilises
will  be  around  €60  billion  between  now  and  2010  and,  in  some  cases,  beyond.  The  split
between private and public investment will vary depending on the type of projects supported. The
specific projects foreseen cover:

a) 

Investing in networks

The Commission identified at the beginning of October 29 pan-European corridors as priority
TEN-transport links requiring investment of €220 billion up to 2020. Those corridors are made
up of a large number of segments. Within those segments, it has been possible working with
the  EIB  and  Member  States  to  identify  a  number  of  Quick-start  Transport  Projects  which
involve  investment  of  €38  billion  between  now  and  2010.  Using  the  Quick-start  criteria,  the
links  selected  are  predominantly  mature  cross-border  rail  connections,  sea  and  inland
waterways or  road  links  interconnecting  with  other  networks  such  as  the  “motorways  of  the
sea”. The Galileo Satellite navigation system is also supported.

Many  of  these  projects  will  be  co-financed  through  a  combination  of  programmed  TENs
support  and  Structural  Funds  at  the  level  of  the  Union.  They  may  also  benefit  from  around
€12-13 billion loans available from the European Investment Bank over the next three years,
in addition to other support that the Bank may offer (e.g. guarantees or its new securitisation
instrument).

14

Seventeen potential Quick-start energy  links have  also  been  identified  from  within  energy
TENs proposals involving investment, principally from the private sector, of €10.1 billion up to
2010.

Three  Broadband  Quick-start  projects  seek  to  speed  up  the  delivery  and  use  of  high
capacity communications networks as part of our transition towards the knowledge society.

The  Digital  Divide  project  will  focus  over  the  next  two  years  on  delivering  broadband
connections  in  remote  and  rural  areas  using  a  variety  of  technologies.  The  total
investment  required  will  be  identified  in  the  light  of  Member  States  national  broadband
strategies due to be published before the end of the year. It can also draw on part of the
substantial  support  from  European  Investment  Bank  lending  of  €7  billion  available  from
the over the next three years for Information and Communication Technologies.

The  Mobile  communication  and  technologies  project  will  focus  on  supporting
research  related  to  the  introduction  of  3G  mobile  communications  systems  and  also
looking beyond those technologies (with some EU level support through the Community
research or structural funding).

The ICT-based research network infrastructure project focuses on further  upgrading
the Géant network, which currently connects 3000 universities and research centres and
18,000  higher  education  centres  across  the  existing  and  future  Member  States.  A
Community contribution of around €250 million is foreseen to investment of around €2.35
billion  investment  between  now  and  2010.  This  should  upgrade  connections  first  to  10
Gbit/s by 2005 and then to terabit speeds by the end of the decade.

b) 

Investing in knowledge

In terms of research, development and innovation five areas are identified with a total cost of
around €10 billion up to 2010.

Three  projects  focus  on  key  technology  sectors  for  the  Union’s  long-term  competitiveness
and  strength  of  the  European  economy.  These  cover  nanoelectronics,  next  generation
lasers,  as  well  as  the  use  of  hydrogen  as  a  source  of  energy  and  electricity.  One
example of what will be done in practice relates to the hydrogen economy. Hypogen involves
the  construction  of  a  large  scale  test  facility  for  the  production  of  hydrogen  and  electricity,
while  Hycom  will  establish  a  limited  number  of  "hydrogen  communities"  around  the  Union,
using  hydrogen  as  source  of  energy  for  heat  and  electricity  and  fuel  for  vehicles.  Another
example  is  support  for  developing  a  network  of  national  facilities  working  on  the  next
generation  of  laser  technologies.  These  lasers  will  be  crucial  in  areas  like  new  materials,
nanotechnologies,  biotechnology  and  genomics.  In  addition,  a  unique  international  laser
facility would come on stream in Hamburg around 2012.

The  two  other  Quick-start  projects  seek  to  boost  the  European  Union’s  presence  in  space,
complementing the support given to the Galileo and the possible use of satellite technologies,
among  others,  to  deliver  broadband  connections.  GMES  continues  support  for  the  new
satellite-based Global system for Monitoring of the Environment and Security, which aims to
be  fully  operational  by  2008.  The  other  space  project  aims  to  build  a  launch  facility  for
Soyouz rockets at the European facilities in Guiana in order to extend the European space
launch capabilities in terms of type of launch vehicle and size of payloads.

A  fuller  overview  of  these  projects,  timing  and  investment  requirements  is  set  out  in
Annex 1.

15

Other projects  can  become eligible for the other Quick-start Programme providing they
meet the criteria above in particular  within the TENs-Transport priorities.  In relation to
research,  development  and  innovation,  mature  projects  could  emerge  from  the  work  of
various  Technology  Platforms  (covering  areas  such  as  aeronautics,  hydrogen,  mobile
communications,  maritime  and  steel  technologies,  rail  transport,  textiles,  embedded
systems and biotechnology) as well as from on-going work in the area of environmental
technologies.

3.2.

Innovative financing in support of the European Initiative for Growth

Innovative  financing  techniques  will  play  an  important  role  in  facilitating  access  to
private  finance  for  the  European  Growth  Initiative.  Four  types  of  instrument  are  of
particular relevance:

–  the provision of third-party equity or quasi-equity to projects, alongside grant aids
and contributions from promoters. Under the TENs Financial Regulation, provision is
made  for  a  share  of  the  budget  to  be  used  for  equity  or  quasi-equity  investment  in
projects  through  specialised  investment  funds.  The  Commission  has  contributed  to
such  a  fund,  which  is  expected  to  finance  PPP-type  transport  infrastructure  projects.
As far as knowledge and innovation is concerned, the role of the European Investment
Fund  (EIF)  in  providing  venture  capital  to  innovative  small  companies  will  be
strengthened by the agreement of the EIB to increase the amounts available under its
venture capital mandate to the EIF.

–  securitisation  can  help  to  increase  the  available  pool  of  resources  from  financial
markets  for  new  growth-inducing  investments  and  to  reduce  the  balance  sheet  and
liquidity constraints of banking institutions active in the fields covered by the Growth
Initiative. Bond issues backed by the expected net revenue streams from projects has
already financed some TENs projects. But the securitisation market for infrastructure
is much less developed and less liquid than  the markets  for  credit  card  or mortgage-
backed  securities.  Measures  to  develop  a  more  liquid  and  more  ‘commoditised’
market,  including  the  packaging  by  financial  institutions  of  assets  from  different
projects,  merits  further  encouragement.  In  this  respect,  the  Commission  and  the  EIB
will examine the  feasibility  of setting  up  a  Securitisation Fund to  pool  infrastructure
lending  portfolios  of  participating  financial  institutions  and  securitise  them  to  be
placed with institutional investors. Participating credit institutions would undertake to
earmark the liquidity obtained through securitisation to increase their lending capacity
for projects related to the European Initiative for Growth.

–  mechanisms to share and spread the risk of debt provided to major projects. The EIB’s
Structured  Finance  Facility  will  contribute  to  increase  the  availability  of  debt
finance for the early, pre-construction stages of projects. The Commission is preparing
a new Guarantee Instrument to cover specific commercial risks to TENs projects in
their post-construction phase. The key features of this Instrument are described in Box
6.

16

BOX 6: AN EU GUARANTEE INSTRUMENT TO SUPPORT THE GROWTH INITIATIVE

1.

2.

3.

4. 

6

An EU Guarantee Instrument should have the following key features:

Aim. The aim of the instrument is to leverage private sector funding of TENs. It
should help to reduce the financing cost of projects and accelerate the conclusion
of financial packages. The new Guarantee Instrument will be similar to current
Guarantee Funds (for instance, that for External Actions). It should complement
existing  EU  grant  support  and  EIB  facilities  under  the  TIF  (TENs  Investment
Facility),  including  the  Structured  Finance  Facility  (SFF).  The  Facility  should
offer  guarantees  covering  specific  commercial  risks  that  are  not  adequately
available from financial markets or the existing EU support mechanisms. How to
extend  the  potential  of  the  new  Guarantee  Facility  for  funding  European-wide
R&D and broadband projects could be explored.

Risk  covered.  The  SFF  of  the  EIB  provides  an  important  addition  to  the
mechanisms  already  available  through  grant  support  and  from  the  market  to
finance the construction phases of major infrastructure projects. The Community
guarantee instrument should focus on post-construction risk such as the risks of
traffic/revenue shortfalls in the early years of operation of green field projects. It
would  act  in  a  way  similar  to  deficiency  payment  mechanisms  introduced  into
some  transport  projects  in  the  past.  The  guarantee  would  partially  cover
shortfalls  measured  relative  to  an  agreed  break-even  base  scenario  during  an
initial period (e.g. 3 years) of the post-construction phase. A portion of the total
revenue risk would be borne by the private sector.

Eligible projects. All projects would have to be economically sound  and cost-
effective and, after grant aid, have an acceptable prospect of financial viability.
The guarantee would be available to projects with a share of risks taken by the
private  sector,  especially  PPPs.  A  priority  would  be  given  to  cross-border
projects,  in  line  with  the  priorities  proposed  in  the  amended  TENs  Financial
Regulation and the quick start programme.

Beneficiaries. The guarantee  would  be  available to debt providers,  who would
benefit  from  appropriate  debt-service  for  the  period  in  question.  As  a  debt-
service  guarantee the instrument  would  work  in  a  similar way to the insurance
offered by monoline insurers6. Unlike other forms of guarantee (letters of credit,
etc),  the  instrument  would  not  provide  a  commitment  to  repay  debt  upon  an
event  of  default  triggered  by  the  traffic/revenue  shortfall.  It  would  provide  the
beneficiary  with  a  time-limited  substitute  for  the  revenue  sources  that  would
normally meet regular debt repayments.

Monoline  Insurer  :  An  insurer  writing  only  a  single  line  of  insurance  contract.  It  usually
guarantees  all  scheduled  interest  and  principal  payments  of  the  insured  debt.  In  the  case  of  a
guarantee call, it makes periodical payments in line with the agreed repayment schedule

17

                                                
5.

6.

7.

8.

9.

Risk premium. The guarantee should not be free of charge. The intention would
be to charge to the beneficiary a premium calculated on a risk basis taking into
account the trade-off between the attractiveness of the guarantee instrument for
investors and the cost for the EU budget. The definition of risk categories would
draw  on  the  methodology  developed  by  the  EIB  for  the  provisioning  and  risk-
management of its SFF.

Guarantee risk sharing. The guarantee risk should be borne equally by the EU
budget  and  the  Member  State  or  Member  States  sponsoring  the  project.  In  the
case  of  projects  where  two  Member  States  are  involved,  each  party  (Member
State 1, Member State 2 and EU) would take 33% of the guarantee risk.

A  limited,  provisioned  budgetary  risk.  The  risks  taken  by  the  instrument
would represent a contingent liability on the EU budget. However the potential
budgetary risks are limited and the Commission intends to propose to build up a
provisioning mechanism to provide a liquidity cushion for the budget. This will
work on a similar basis to the cushion  provided in respect of loans outside  the
EU by the Guarantee Fund for external actions. Three features of the instrument
will further  limit  the  potential  budgetary  risk.  First,  covering  debt-service  only
for a fixed number of years rules out the risk of the budget having to finance a
large call to meet the outstanding capital on loans covered. This is in contrast to
the guarantees on EIB external lending that are covered by the budget. Second,
the  priority  focus  on  cross-border  transport  TENs  limits  the  pool  of  eligible
projects.  Third,  risk  sharing  with  the  Member  States  will  also  significantly
reduce the potential impact on the EU budget. Given that the guarantee will only
come  into  effect  in  the  post-construction  phase  the  risk  of  any  call  on  the
Community  budget  will  in  any  case  be  deferred.  The  maximum  amounts  that
may  be  involved  and  the  likely  incidence  of  risk  over  time  are  under  more
detailed examination before a formal proposal can be made.

Market  testing.  It  is  essential  that  the  instrument  should  provide  a  workable
response  to  the  needs  of  market  operators  who  will  finance  and  manage  the
projects  concerned.  With  the  help  of  the  EIB  the  Commission  has  therefore
started a process of market testing with financial institutions and other interested
parties.

Next steps. In the light of market testing and the feedback from the Council the
Commission hopes to resolve the outstanding questions about the Instrument in
time to a formal proposal early in 2004.

18

3.3.

The  statistical  treatment  of  public-private  partnerships  and  securitisation
operations in ESA95

The European System of Accounts (ESA 95) - basis for the Maastricht criteria - sets out
statistical  rules  governing  how  to  classify  different  types  of  expenditure  within  the
National Accounts and how government commitments should be considered in terms of
impact on government deficit and debt.

The ESA95 fundamental statement set out that economic ownership of an asset depends
on which party bears the risks and rewards associated with the asset. Implementing this
principle  is  rather  complex  and  further  guidance  is  needed.  In  particular,  to  solve  one
important technical question: namely how to establish the economic ownership of the
underlying  asset  in  the  PPP,  either  as  government’s  asset  or  as  partner’s  asset,
regardless of the legal provisions related to ownership.

The European  Initiative for  Growth, aimed to remain fully within the framework of the
Stability and Growth Pact, adds to the need for clarification on this technical issue, given
its potential for more intense utilisation of PPPs in investment in physical infrastructure.

In  February  2003,  the  Commission  set  up  a  Task  Force,  in  co-operation  with  experts
from the National Statistical Institutes (NSIs) of Member States, Acceding Countries, the
ECB,  and  the  EIB,  to  clarify  such  statistical  treatment  and  to  develop  the  necessary
technical  guidance  regardless  of  legal  provisions  relating  to  PPP  ownership.  The  Task
Force  has  recently  concluded  its  works  and  consensus  appears  to  rally  on  several  key
principles:

(cid:1)  to distinguish two types of PPP: those where the contractor raises revenue direct from
users  of  the  asset  (e.g.  tolled  road);  and  PPPs  where  the  contractor  charges  the
government. For the former, any asset is assumed to be fully owned by the contractor.
For  the  latter,  full  ownership  is  attributed  to  the  party  most  exposed  to  risks  and
rewards of asset ownership during the period.

(cid:1)  PPP  assets  should  not  be  classified  as  a  government  asset  whenever  the  non-public
partner will bear, in any case, construction risks and one of the two following risks: (i)
availability risk (depending on the performance of the partner); and/or (ii) demand risk
(relating  to  the  behaviour  of  final  users  of  the  assets).  Other  aspects  to  take  into
account  are:  the  effect  of  the  call  of  some  guarantees  granted  by  government;  the
classification of the unit in charge of the project as regards its autonomy of decision in
respect of government; and the final allocation of the assets in some specific cases.

(cid:1)  if the PPP asset is considered as government asset, capital expenditure (for new asset
or for significant refurbishment)  will be recorded  as government  expenditure,  with  a
negative  impact  on  government  deficit/surplus.  As  a  counterpart,  government  will
incur as new debt recorded at the same time of the expenditure.

19

(cid:1)  If  the  PPP  asset  is  not  considered  as  government  asset,  capital  expenditure  has  no
impact  neither  on  government  deficit/surplus  nor  on  government  debt.  Regular
purchase  by  the  public  partners  of  services  from  the  private  one  will  qualify  as
government expenditure all along the life of the contract.

The  Task  Force  will  submit  its  final  report,  for  consultative  opinion,  to  the  next
Committee  for  Monetary,  Financial  and  Balance  of  payments  statistics  (CMFB)  in
January 2004. Later, a final decision will be taken in time before the official deficit and
debt notification on 1st of March 2004.

BOX 7: RULES ON SECURITISATION OPERATIONS UNDERTAKEN BY THE GENERAL
GOVERNMENT

1.  Securitisation over future flows not attached to a pre-existing asset is always to be treated as

government borrowing.

2.  The granting of guarantees by government to a Special Purpose Vehicle (SPV) or to another
entity  implies  an  incomplete  transfer  of  risk  and  is  evidence  that  there  was  not  an  effective
exchange  in  ownership  of  the  assets.  Therefore,  in  the  case  of  a  securitisation  operation
undertaken with a SPV, it implies the reclassification of the SPV within government sector, or
the recording of an implicit loan from the SPV to government.

3.  Whenever the securitisation contract includes, in addition to the initial payment by the SPV to
the  general  government  unit,  a  clause  on  additional  future  payments  (deferred  purchase
price) from the SPV, specific provisions apply. In particular, whenever the difference between
initial payment and the observed market price or market-based estimated price is higher than
15%, the transaction has to be treated as government borrowing.

4.  The value of the initial transaction must be recorded as an amount of cash effectively paid by
the  SPV  to  government.  Possible  additional  payments  might  have  an  impact  on  net
borrowing/net lending in the case of sales of non-financial assets only at the time they occur.

3.4.

Monitoring progress and regular reporting

At an Union level, progress in taking the European Initiative for Growth will be assessed
on  a  regular  basis  in  the  context  of  the  annual  reporting  cycle  linked  to  the  Spring
European  Council  as  from  2005.  In  addition,  five  years  after  its  launch,  a  more
comprehensive assessment of progress will be undertaken.

4.

CONCLUSIONS

This  report  responds  to  the  request  of  the  European  Council  last  October  to  take  the
European Initiative for Growth forward.

It provides a roadmap for boosting investment in networks and knowledge in support of
the  wider  process  of  structural  reforms  within  the  Union.  It  sets  out  how  these
investments can be financed and, in particular, how a combination of the right regulatory
and  administrative  environment  and  targeted  funding  at  a  European  level  can  help  the

20

private  sector  to  get  involved.  The  Report,  as  requested,  provides  a  first  set  of  projects
within a Quick-start Programme of actions which can help to better integrate an enlarged
European Union and reinforce our capacity to innovate. This is not a closed list. As other
projects mature and providing they satisfy the criteria identified in this report, they may
become part of this Quick-start Programme.

This report must provide a framework within which both policy and funding priorities at
a national and European level are now set. In particular, the Quick-start projects proposed
must be supported by the necessary financing. This means making best use of dedicated
funds such as the TENs programme and the sixth Research Framework Programme, but
also of the Structural Funds and EIB sources to support those projects.

The European Council is invited to endorse the approach proposed and to confirm a clear
timetable for action by the Commission, the Council, the European Parliament, the EIB
and the Member States to get this European Initiative for Growth underway.

21

Annex 1: Quick-start Projects : Tranport Networks, Broadband Networks, Research, Innovation and Development

Transport Networks

Mature trans-frontier segments
of TEN-T Priority projects7
(projects underlined completed by Dec. 2007)

Country

Start

End

Cost 8

Stage9

National
financing
10

Synergies with
Community Funding
until 200611

Synergies with EIB
until 201012

1. Railway axis Berlin-Verona/Milano-Bologna-Napoli-
Messina-Palermo

- Brenner Tunnel

A-I

2004

2015

4312

P/S

t.b.c

EUR  28.15  mio  from
TEN 2003-2006 

EUR 3 billion
already signed for
the whole priority
project.

On-going & in
preparation on
Italian components.
Greater involvement
in whole project
possible.
Involvement in
access to tunnel
and the tunnel as
and when it starts.

7

8

9

10

11

12

As defined in COM (2003) 564. For Brenner and Mont-Cenis tunnel, maturity refers to heavy drilling works (geological studies).
Total cost of segment mentioned, including studies. In EUR mio, 2003 price level.
O = on-going; P= Start before Dec. 2006; S= heavy technical studies; W= works
National funding matching Community funding and other national funding must be distinguished
The Commission has proposed to increase the TEN budget contribution up to 30% of the grant intensity rate for cross-border sections. For projects involving EU15, TEN grants
are those planned within the current Multiannual Indicative Programme (MIP) framework (decision 19/09/2001) or those allocated in 2003 outside the MIP. CF= Cohesion Fund;
ERDF= European Regional Development Fund.
The EIB Group contributions identified in this as well as in the other tables below refer to support via loans, in contrast to the Community funding in the form of grants. Moreover,
the EIB Group estimates relate to the whole of each identified TENs-Priority corridor, whereas the Commission estimates refer to Community funding to the specific segments
identified as Quick-start projects.

22

                                                
2. High-speed railway axis Paris-Bruxelles/Brussel-
Köln-Amsterdam-London

- Liege-Köln

B-D

1996

2007

1184

O/W

t.b.c

EUR  5  mio  from  TEN
2003-2006

3. High-speed railway axis of south-west Europe

- Figueras-Perpignan

- Lisboa/Porto – Madrid

E-F

P-E

2004

2009

950

P/W

2006

2011

5700

P/W

t.b.c

t.b.c

EUR  63.5  mio 
TEN 2003-2006
Possible CF 

from

4. High-speed railway axis east

- Strasbourg – Appenweier (Kehl bridge)

F-D

2004

2010

150

P/W

t.b.c

5. Betuwe axis

23

EUR 4.5 billion
already signed for
the whole priority
project.

On-going & in
preparation in UK,
Belgium and NL.

EUR 300 million
already signed, with
an additional EUR
2.4 billion imminent,
for the whole priority
project.

On-going & in
preparation for
Madrid, Barcelona,
Figueres. Possible
involvement in
Madrid-Valladolid.

EUR 600 million
already signed for
the whole priority
project.

TGV Est on-going
Possible further
involvement for
German section and
Metz-Luxembourg. 

6. Railway axis Lyon-Trieste/Koper-Ljubljana-Budapest-
Ukrainian border

- Mont-Cenis Tunnel

F-I

2006

2017

6100

O/S

- Budapest-Ljubljana – Rail upgrade

HU-SI

2006

2015

760

P/W

t.b.c

t.b.c

EUR  42  mio  from  TEN
2003-2006
EUR  43.5  mio 
from
ISPA  and  40.8  mio
from CF 

7. Motorway axis Igoumenitsa/Patra-Athina-Sofia-
Budapest

- Athina-Thessaloniki-(Bulgaria) (included in Pathe)

- Sofia- Kulata - (Greece)

8. Multimodal link Portugal/Spain-rest of Europe

EL

BG

1996

2008

120013

2003

2010

675

O/W

P/W

t.b.c

t.b.c

On-going  ERDF  and
CF 

EUR 100 million
signed for the whole
priority project.

Possible
involvement for
tunnel and access
links.

On-going & in
preparation for
Ljublijana-Budapest

EUR 3.5 billion
already signed for
the whole priority
project.

On-going & in
preparation for Via
Egnatia and Via
Pathe and for Sofia-
Kulata

EUR 3.7 billion
already signed for
the whole priority
project.

On-going & in
preparation for
Portuguese and
Spanish Motorways
and Coruna-Lisboa-
Sines railway.

13

Remaining works

24

                                                
9. Conventional rail link Cork-Dublin-Belfast-Larne-
Stranraer (completed in 2001)

10. Malpensa airport (completed in 2001)

11. Fixed rail/road link between Denmark and Germany
(completed in 2001)

12. Nordic triangle railway/road axis

- Kerava-Vainikkala - (Russia) – Rail upgrade

FIN

2003

2006

591

O/ W

- Malmö and Stockholm rail tunnels

S

2004

2011

2000

P/W

t.b.c

t.b.c

EUR  31  mio  from  TEN
2003-2006

13. UK/Ireland/Benelux road link

- Felixtowe-Holyhead/Stranraer – Road (new or upgrade)

UK

1996

2010

1349

O/W

t.b.c

EUR 5.8 mio from  TEN
2003-2006 

EUR 1.2 billion
already signed for
the whole priority
project.

Possible
involvement in
Kerava-Vainikkala
rail upgrade.

On-going & in
preparation for
Malmö City Tunnel

EUR 119 million
signed, and EUR
600 million
imminent, for the
whole priority
project.

Sections on-going &
in preparation for
road components in
both UK and
Ireland.

25

14. West coast main axis

16. Freight railway axis Sines-Madrid-Paris

17. Railway axis Paris-Strasbourg-Stuttgart-Wien-
Bratislava

- München-Mühldorf-Salzburg – Rail upgrade

D-A

2002

2015

- Wien – Bratislava – Rail upgrade

A-SK

2004

2010

18. Rhine/Meuse-Main-Danube inland waterway axis

- Wien-Bratislava

A-SK

2006

2015

- Rhine-Meuse, including lock of Lanaye

NL-B

2005

2019

898

134

180

504

O/W

P/W

P/W

P/W

t.b.c

t.b.c

t.b.c

t.b.c

19. High-speed axis interoperability on the Iberian
peninsula

EUR 600 million
signed for the whole
priority project.

No further short
term involvement
expected.

No involvement yet

Not involved in on-
going works.

Possible
involvement in
longer term.

EUR  4  mio  from  TEN
2003-2006 

EUR 5.6 mio from  TEN
2003-2006 

No involvement yet

- Corredor Norte - Noroeste, including Vigo-Porto

E-P

2001

2010

8736

O/W

t.b.c

Possible 
ERDF 

CF 

and

26

Expect significant
involvement in short
term AVE Cordoba-
Malaga and AVE
Levante.

Not involved in on-
going Vigo-Porto
(n.b. not undertaken
by GIF).

20. Fehmarn Belt railway axis

21. Motorways of the sea 14

- Motorway of the Baltic Sea

- Motorway of the sea of western Europe

- Motorway of the sea of south-east Europe

- Motorway of the sea of south-west Europe

22. Railway axis Athina-Sofia-Budapest-Wien-Praha-
Nürnberg/Dresden

EU

EU

EU

EU

2004

2010

t.b.c

2004

2010

t.b.c

2004

2010

t.b.c

2004

2010

t.b.c

P/W

P/W

P/W

P/W

Dependin
g on final
EC
Decision

- Budapest-Sopron-Wien- Rail upgrade

A-HU

2004

2010

1318

P/W

t.b.c

23. Railway axis Gdansk-Warszawa-Brno/Bratislava-
Wien

- Katowice-Breclav – Rail upgrade

PL-CZ

2004

2010

731

P/W

t.b.c

Possible CF or ERDF

- Katowice-Zilina-Nove Mesto n. V. – Rail upgrade

PL-SK

2002

2010

1331

O/W

t.b.c

Possible  EUR  49  mio
from CF 2004-2006

No involvement yet

EUR 1.8 billion
signed for EU port
projects in the four
regions.

Further involvement
possible.

EUR 90 million
signed for the whole
priority project.
On-going & in
preparation for
Danube bridge.

Possible on Czech,
Hungarian and
Romanian sections.

EUR 240 million
signed for the whole
priority project.

On-going & in
preparation for
small sections.
Others possible.

14

The Commission may provide facilities for Member States that are willing to organize their cooperation (e.g. seminars)

27

                                                
24. Railway axis Lyon/Genova-Basel-Duisburg-
Rotterdam/Antwerpen

- Dijon - Mulhouse-Mülheim – New rail

F-D

2006

2010

2080

P/W

t.b.c

EUR 7.5 mio in 2003

No involvement yet.

- Basel – Karlsruhe – New rail

CH-D

1987

2015

4235

O/W

- "Iron Rhine": Rheidt – Antwerp – Rail upgrade

B-NL

2004

2010

550

P/W

EUR  77  mio  from  TEN
2003-2006 

Possible future
involvement.

25. Motorway axis Gdansk-Brno/Bratislava-Wien

- Brno-Wien

CZ-A

2005

2010

479

P/W

26. Railway/road axis Ireland/United
Kingdom/continental Europe

- Cork-Dublin-Belfast – Rail upgrade

IRL-UK

2003

2010

- Crewe - Holyhead - Rail upgrade

UK

2005

2008

469

120

P/W

P/W

t.b.c

Possible ERDF

Possible ERDF

27. "Rail Baltica" axis Warsaw-Kaunas-Riga-Tallinn

28. "Eurocaprail" on the Brussels-Luxembourg-
Strasbourg railway axis

29. Railway axis of the Ionian/Adriatic intermodal
corridor

EUR 173 million
signed for the whole
priority project.

On-going & in
preparation for
small sections.
Others possible.

No involvement yet.

Possible future
involvement. 

No involvement yet

No involvement yet

No involvement yet

28

15. Galileo

- Development and deployment phase

EU

2002

2007

3200

O/W

EUR
1100 mio
by private
sector15
EUR 550
mio by
ESA

EUR 550 mio from TEN
2001-2006 

Possible 
involvement

EUR 200 mio from TEN
planned until 2006

15

This will depend on the result of the call for concession to be negotiated by the Galileo joint undertaking.

29

                                                
Energy Networks

Mature trans-frontier segments
of TEN-E Priority projects16

Country

Start

End

Cost 17

Stage18

Synergies with
Community Funding
until 200619

Synergies with EIB

until 2010

General comment : this
category of projects
can benefit from EIB
finance available for
energy –TEN (annual
lending estimated at
EUR 500-1000 mio)

13

30

25

40

P/W

P/W

P/W

P/W

Electricity

EL 1. France — Belgium — Netherlands — Germany:
to
electricity  network  reinforcements 
resolve  congestion  in  electricity  flow  through  the
Benelux.

in  order 

- Avelin-Avelgem line

- Moulaine-Aubange line

FR-BE

FR-BE

2003

2005

2005

2007

EL 2. Borders of Italy with France, Austria, Slovenia
electricity
and 
interconnection capacities.

Switzerland: 

increasing 

- Robbia – St.Fiorano line

CH-IT

2003

2005

- Phase shifter installation

IT-SI

2004

2005

16

17

18

19

As defined in Decision 1229/2003/EC.
Total cost of segment mentioned, including studies. In EUR mio, 2003 price level.
O = on-going; P= Start before Dec. 2006; S= heavy technical studies; W= works
ERDF= European Regional Development Fund.

30

                                                
EL  3.  France  —  Spain  —  Portugal:  increasing
electricity  interconnection  capacities  between  these
countries and for the Iberian peninsula and grid
development in island regions.

- Sentmenat – Bescano – Baixas line

- Aldeadávila – Douro- Valdigem line

EL 4. Greece — Balkan countries — UCTE System:

development  of  electricity  infrastructure  to  connect
Greece to the UCTE System.

ES-FR

2004

2006

100

ES-PT

2006

2008

11

P/W

P/W

- Philippi – Hamidabad line

GR-TR

2004

2006

50

P/W

Support to  wider  UCTE
criteria

EL  5.  United  Kingdom  —  Continental  Europe  and
Northern Europe:

establishing/increasing  electricity 
interconnection
capacities and possible integration of offshore wind
energy.

- Undersea cable

NL-UK

2004

2006

480

P/W

31

EL 7. Denmark — Germany — Baltic Ring (including
Norway  —  Sweden  —  Finland  —  Denmark  —
Germany):

increasing  electricity  interconnection  capacity  and
possible integration of offshore wind energy.

- Skagerak 4 undersea cable

- Harku – Espoo (ESTLINK)

- Alytus-Elk

Natural gas

— 

NG  1.  United  Kingdom  —  Northern  Continental
including  Netherlands,  Denmark  and
Europe, 
(with
Germany 
connections  to  Baltic  Sea  Region  countries)  —
Russia:
gas pipelines connecting some of the main sources
of  gas  in  Europe,  improving  the  interoperability  of
the
networks, and increasing the security of supply.

- North Transgas pipeline

DK-NO

2005

2008

EE-FI

2005

2007

LT-PL

2006

2008

400

110

434

P//W

P/W

P/W

RU-DE-
NL-UK

2006

2010

5000

P/W

EIB  approached  for  the
UK-NL section

32

NG 2. Algeria — Spain — Italy — France — Northern
Continental Europe:
construction of new gas pipelines from Algeria to
Spain, France and to Italy, and increasing network
capacities in and between Spain, Italy and France.

- Algeria – Spain – France pipeline

- Algeria – Libya - Italy

DZ-ES-
FR
DZ-LY-IT

2004

2008

1500

P/W

Under EIB appraisal

2004

2008

540

P/W

NG  3  .  Caspian  Sea  countries  —  Middle  East  —
European Union:

new  gas  pipeline  networks  to  the  European  Union
from new sources, including the Turkey — Greece,

Greece — Italy and Turkey — Austria gas pipelines.

- Turkey – Greece – Italy

2004

2010

P/W

900

TR-GR-
IT

Feasibility study
requested

33

Broadband Networks, Research, Development and Innovation

Project Area

Specific projects

Total cost

Synergies with
Community Funding

Synergies with EIB

t
r
a
t
S

d
n
E

2004 2006 To be determined

later on the basis of
national broadband
strategies

2004 2006 € 800 million for R&D

Broadband / Digital
Divide

Mobile Communications
and technologies

Promoting broadband
coverage of remote and rural
areas (optical, fiber, copper,
wireless, satellite, etc.) by the
end of 2005, in line with
national broadband
strategies20 to be published
by the end of 2003. This will
also allow to connect schools
and health centres

To be developed through
Mobile Communication
Technology Platform. In
Community R&D area two
projects supporting (1) a
large scale distributed mobile
interoperability test bed, (2)
evolution of current mobile
systems beyond 3G.

ICT-based research
network infrastructure
(Géant)

Upgrade research and
education networks to 10
Gbit/s by 2005 and transition
to Terabit networks

On-
going

2010 €2.35 billion

€6 

Eligible  for support  through  the
billion
Structural  Funds. 
programmed  for  the  information
society  in  general  over  the  period
2000-2006 
reviewed
following  SF  mid-term  review).
Criteria  and  modalities  of  use  are
detailed  in  the  Guidelines  on  use
of  Structural  Funds  for  electronic
communications.

(to 

be 

Indicative amount of Community
funding of €400 million for R&D
through the 6th FP. To be matched
by an equivalent amount from
private participants in Community
R&D projects.
In general Community funding for
R&D on ICTs represents about 5%
of total R&D spending on ICTs in
the EU. The remaining funds are
private (companies investing in
R&D) or public (support from
national R&D programmes).

Indicative amount of Community
funding of €150 million through 6th
R&D Framework programme.

Projects will
benefit from the
ICT and
Research
envelopes within
the Innovation
2010 Initiative,
itself globally
amounting to €20
billion  between
2004-2006

20

Member States committed to put in place national broadband strategies by end 2003 at the European Council. 20-21 March 2003, Conclusions point 38.

34

                                                
Hydrogen economy

Hypogen - large scale test
facility for production of
hydrogen and electricity

2004 2015

Hycom – Establishment of a
limited number of "hydrogen
communities" around the
Union, using hydrogen as
source of energy for heat and
electricity and fuel for
vehicles

Nanoelectronics

Infrastructure and projects
being defined with industry
via Nanoelectronics
Technology Platform

2004 2009

Hypogen
€1.3 billion

Hycom
€1.5 billion

Phasing
2005-2007 (€500
million)
2007-2012 (€1.5
billion)
2013-2015 (€800
million)
Infrastructure €2.5
billion

R&D Projects
€2.8 billion

Possible Research Framework
Programme and Structural Funds

Possible Research Framework
Programme and Structural Funds

Next generation lasers

GMES (global
monitoring for the
environment and
security)

Develop network of national
laser facilities by 2010 and an
international facility by 2012

Build up of the GMES
satellite network, facilities and
related applications

2005 2012 Up to €1.25 billion

Possible Research Framework
Programme and Structural Funds

2004 2013 2004-2006

€900 million

Possible Research Framework
Programme

2007 onwards
increasing from €300
to €450 million p.a.

Korou launch facility

2004 2005 €320 million

Possible Research Framework
Programme and Structural Funds

Projects will
benefit from the
ICT and
Research
envelopes within
the Innovation
2010 Initiative,
itself globally
amounting to €20
billion  between
2004-2006

35

Annex 2: A roadmap for knowledge and networks

By December 2003

–  Simplification  of  procedures  related  to  State  aid  to  SMEs  including  rules  for  aid  to

R&D (Commission)

–  Launch of a preparatory action for security-related research

–  TENs  proposals:  priorities  for  transport  networks  and  adjusted  financing  rules  for

transport and energy TENs

–  Proposals  for  changes  to  existing  company  law  provisions  to  facilitate  cross-border

mergers

–  Proposed guidance on the treatment of Public Private Partnerships in national accounts

–  Implementation of national broadband strategies

–  Review of initial progress by December European Council

By March 2004

–  Political  agreement  on  priority  projects  for  Trans-European  Transport  Networks  and

on financing rules for transport, telecoms and energy TENs

–  Final  adoption  of  the  pending  measures  on  public  procurement  rules  and  on  the

Community Patent

–  Final adoption of the second railway package

By June 2004

–  Final adoption of the proposals modifying the system for the Eurovignette

–  Agreement on proposals on tax treatment of parents and subsidiary companies and of

mergers

–  Final adoption of the Investment Services and Transparency Directives

–  Mid-term review of Structural Funds

–  Green Paper on public-private partnerships and public procurement law

–  Commission proposals on a possible harmonised European fund structure to ensure tax

transparency for risk capital operations

–  Commission to complete setting up first wave of European Technology Platforms

36

By December 2004

–  Final  adoption  of  priority  projects  for  Trans-European  Transport  Networks  and  on

financing rules for transport, telecoms and energy TENs

EIB/EIF ACTIONS WITHIN THE ROADMAP FOR THE EUROPEAN GROWTH
INITIATIVE

By December 2003:

–  Approval of EIB and EIF Corporate Operational Plans 2004-2006 (COP), including  their
contribution to  the European Growth  Initiative.  TENs  Investment  Facility  (TIF)  formally
launched. Innovation 2010 Initiative refocused in line with Growth Initiative

By March 2004:

–  Progress Report on the Growth Initiative, with measures put in place and first ongoing or

identified operations (in view also of Spring European Council)

–  EIB Group to launch (with Research Framework Programme funding) the feasibility study
for  a  new  type  of  risk  capital  vehicle  for  centres  of  excellence  and  bridging  the  gap
between  research  and  early  stage  investment.  This  could  lead  to  implementation  of  pilot
action in 2004

By June 2004:

–  Mid-term  review  of  COP  and  of  EIB  Group  contribution  to  the  European  Growth

Initiative; report to Management Boards

By December 2004:

–  Approval  of  EIB  and  EIF  Corporate  Operational  Plan  2005-2007,  including  possible

adjustments to their EIB contribution to Growth Initiative

37

Annex 3: Map of Quick-start Transport projects

38