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[BRUSSELS] The European Union unveiled details of an eagerly awaited 300-billion-euro investment plan to boost the continent's flatlining economy on Tuesday on the eve of a formal announcement by new Commission chief Jean-Claude Juncker.
The new European Fund for Strategic Investment will be funded to the tune of 21 billion euros, but whose work will have an net effect on the economy of about 315 billion euros (US$390 billion), according to an official estimate.
As expected, overall responsiblity for the three-year plan will fall to the European Investment Bank, a little-known EU institution based in Luxembourg that is often criticised for its lack of ambition.
Juncker will formally unveil the plan to the European Parliament in Strasbourg on Wednesday before submitting it to EU leaders at a summit in December.
The plan is the cornerstone of Juncker's five-year agenda to jumpstart the EU's moribund economy, which has failed to grow since the financial crisis and is mired in mass unemployment and near-deflation.
The heart of the problem in the 28-nation bloc is a drastic lack of investment, which remains way off pre-crisis levels, in stark contrast to the US and despite unprecedented stimulus measures by the European Central Bank.
The plan announced Tuesday is designed to attack the investment problem head-on, but with the added challenge to do so without more public spending, with most EU countries already paralysed by high deficits and mountains of debt.
Crucially, the Juncker plan in the end relies on no new money, but re-engineers existing funds in such a way, officials said, that it will provide far more added value than in their existing allocation.
In essence, the plan uses existing cash from both the EIB and EU to feed an investment fund that will be tasked with financing private-sector driven projects. Officials said the projects would provide a "real added value" for the European economy.
The overall figure multiplies the initial 21 billion euros by a factor of fifteen, which was a "conservative" estimate, EU officials said.
A list of projects is currently being drawn up by EU and EIB officials, with the input of member states.
Officials hope the fund can be operational by mid 2015.
Once up-and-running, a team of financial experts at the new fund, will help decide projects, mostly based on their level of advancement and the likelihood to draw in private investors.