EFSI 2.0 : the extension and enhancement of the European Fund for Strategic Investments as a case study for the review of European policies

The EU faces a disinvestment crisis. Its response was the European Fund for Strategic Investments (EFSI) that I first attempted to evaluate in a 2016 paper. In this chapter, I pursue the endeavor by analyzing three basic points of the EFSI, inasmuch as these are the main aspects that were found to be in need of enhancement: governance and transparency, additionality, and geographical diversification. By focusing on these aspects, I aim to assess the process used by the EU Institutions for the reform of EU policies. The chapter's conclusion is that the EFSI's strategy of risk-sharing via the use of public funds and guarantees as leverage so as to mobilize private financing in suboptimal investment situations has succeeded in crowding in significant additional finance, even though its combination with a temporary and intelligent fiscal stimulus would be more efficient in restarting the European economy. Nevertheless, the downside of this relative success is that it has proven the important leveraging capacity of an increased use of financial engineering in a constrained fiscal environment, and has consequently provided legitimacy to the EU structural pattern "Fiscal restraint/Financial ease," lessening thus the sense of urgency of an EU economic policy overhaul.