It's not easy being green

EU recovery plans are focusing on environmental investment and manufacturing, but the road is strewn with obstacles

David Gow in Brussels
guardian.co.uk, Wednesday 25 February 2009 12.20 GMT

The British government turned down £30m for vanmaker LDV, but Sarkozy and Berlusconi will push for substantial aid for industry.

This week the British government revealed its true colours: yes to £1.3 trillion for failed banks, no to £30m for Midlands vanmaker LDV, which happens to be owned by a failed Russian oligarch. New Labour remains in thrall to the financial sector and the City.
Forget Labour's talk about rebalancing the economy to give a greater countervailing weight to manufacturing and green technologies. Empty words. But over here, in mainland Europe, it's beginning, albeit falteringly, to be meaningful. On Sunday, at an emergency EU summit on the toxic asset crisis and protectionism, we may just see how much.
Nicolas Sarkozy, the French president, and Silvio Berlusconi, the Italian prime minister, will push for substantial aid for industry. "Industrial policy is not a swear word," the Sarkozy said in Rome. "There must be competition to build big European groups, not to make all our industries delocalise." If the Yanks can do it, so should we – and Sarko, after controversially bailing out Renault and Peugeot Citroën with €7.5bn (£6.64bn), has taken a fresh stake in component maker Valeo, via the new French strategic investment fund.
His policy has not gone unchallenged. Sweden, always ranked among the top five most competitive economies globally, has refused to rescue Saab; Germany is struggling to find a way of saving Opel, the biggest European unit of near-bankrupt General Motors. Sarkozy's brand of Bonapartist protectionism and state dirigisme (direct intervention) arouses fierce criticism. Many fear it will pave the way for the second great global depression in 80 years.
There are alternatives. Green MEPs, led by Claude Turmes, a Luxembourger who co-drafted the EU's climate change policies, are pressing for a genuinely eco-friendly economic recovery programme for the post-crisis era. Turmes has warned that, unless Europe gets its collective act together, it risks being left behind by Obama's America, China and even Japan.
A similar message has come from Nicholas Stern, author of the British government's agenda-setting report on climate change. And from Avaaz, the internet-based campaign, which is telling this weekend's summit via millions of emails that the US is moving with more clarity and purpose than the EU and that China, the world's biggest emitter of greenhouse gases, is committing a third of its huge stimulus programme to green investments.
At the core of the Turmes programme, which commands critical support from socialists and liberals in the European parliament, is a greater role for the European Investment Bank (EIB). The under-staffed EIB is overwhelmed by government requests for backing for short- and longer-term investments, with a greater share going to green technologies. But it is not classified as a bank, and so has no access to European Central Bank (ECB) facilities – something Turmes and others would like to change.
The Greens argue that current EU recovery programmes such as the €5bn scheme to promote "clean" coal, wind power and green power grids are old-fashioned and unviable and offer aid almost exclusively to energy and telecoms oligopolies. They argue that such schemes don't have an immediate impact and that state aid does little to leverage sorely needed capital.
But the EIB has won an increase in its capital to €232bn, so it can increase lending by 30% this year. Turmes and his supporters want the EIB to back investment in renewing buildings (a sector employing 26 million people in Europe), renewable energy technologies, green-tech companies and public transport in cities such as London, Paris and Milan. This would potentially trigger job creation (Obama's plan has promised 5m US jobs), reduce carbon emissions and enhance Europe's energy independence.
Fanciful or even phantasmagorical? Well, the omens for a new kind of economy are not bright. Earlier this week, 27 foreign ministers rowed openly about how to share out the €5bn eco-recovery programme and where to place the projects. Europe's squabbling, small-minded political class as a whole lacks vision and purpose. Bring back Jacques Delors …
Still having a ball
Waltz away the crisis. That's what around 5,000 "guests" including Nicollette Sheridan from Desperate Housewives, did last week at the annual Vienna opera ball.
Paris Hilton turned up two years ago as the star guest of 76-year-old business executive Richard Lugner and found it boring (even after being pelted by cigarettes and lipsticks by angry onlookers). Sheridan, however, told state broadcaster ORF: "This is like a fairytale come true."
But for Austria's banks and manufacturers it's more like a nightmare come true. And several stayed away, balking at the €17,000 they normally shell out for a box at the Staatsoper and the €42,000 needed to actually guarantee one.
Hardly surprising given that the banks have loaned the equivalent of 80% of the country's GDP to emerging economies, most of them over the border in eastern Europe. They're sitting on losses of some €230bn and asking for €150bn to bail them out.
"Hardly the time to appear here in public, quaffing champagne in front of the TV cameras, just as the government is injecting capital into the banking system," one banker said.
The ball, the 53rd of the series, was ausverkauft (sold out) even so. But attendees were told to leave the bling at home, refuse to talk about the financial crisis and even wear modestly chic evening dress. And that's the motto for the 450 forthcoming balls in the former Hapsburg empire capital and crossroads between ex-capitalist west and ex-communist east.
The ball's organisers, reportedly, insist that the opera ball, highlight of the carnival season held on the Thursday preceding Ash Wednesday, is a serious contribution to the Austrian economy, raising €65m for suppliers of gowns and the like. One observer said the Viennese, who fork out €230 each for their tickets, would spend their last cent on attending. "We'd still be dancing in a complete catastrophe." Hey ho, Europe.