Innovation Europe > News > Innovation blog > Power playing

The dust is still settling in Brussels following the announcement of the new team of Commissioners to run the EU’s back office for the next five years.  The research and innovation portfolios are rarely the most contested prizes but, perhaps as a sign of the times, a regrouped ‘Digital Agenda’ portfolio has been created to cover the highly politicised areas of telecommunications and the online world. And an ‘Innovation Commissioner’ has been appointed.

The Digital Agenda will be in the hands of Neelie Kroes of the Netherlands, a tough operator and former Commissioner in charge of competition policy. Now with the status of vice president, she will give the Commission a more forceful edge in battling with industry and national governments into finding workable comprise solutions in these big business areas.

A surprise appointment is Ireland’s Máire Geoghegan Quinn to manage the newly re-branded Research and Innovation portfolio. The Irish government is believed to have lobbied hard to get this portfolio, which resonates strongly with its own ‘Smart Economy’ agenda. Quinn is a teacher-turned-politician who retired from Irish politics some time ago and was recently working with the EU’s Court of Auditors in Luxembourg. Her primary focus may thus be keeping a close eye on how the massive research budget is spent.
With the results of EU-backed research rarely justifying the outlay, it could be the moment for some good housekeeping from Mrs Quinn.
Curiously, the new European Institute of Innovation and Technology (EIT) – Commission President Barroso’s brainchild to create Europe’s version of the Massachussets Institute of Technology (MIT) – will not be in Quinn’s portfolio, but shifted to the education portfolio of Commissioner Vassilou.  Located in Hungary and relegated to a training function, it is already hard to see it emulating the hyper successful model of MIT.

The new team of Commissioners will take up their positions in January after being vetted by the European Parliament. This will lead to an interesting power play in the lead-up to the launch of the European Innovation Act, scheduled for spring 2010.  The new Irish Innovation Commissioner will find that the Innovation Act is being drafted by the Enterprise department, now being rebranded as ‘DG Industry and Enterpreneurship’.

Under the lamentable German Commissioner Verheugen, this deparment was notorious for developing glamorous hot air concepts such as the ‘Small Business Act’, which on close analysis was little more than a regurgitation of existing policies coated with a rather transparent PR gloss.
 
The Innovation Act will be heavily promoting ‘Creative clusters’, a new-sounding flagship concept . Clustering has been around a long time so the idea of making it more creative will raise a few sceptical eyebrows.

The Commission’s ‘Enterprise’ officials have been looking at the problem of innovation finance and particularly the pereceived shortage of ‘risk finance’, a.k.a. venture capital or private equity. In reality, the Commission has been looking at this area for more than 20 years and always seem to suffer from corporate amnesia in forgetting the lessons already learned.

They are once again talking about turning to European Investment Bank (EIB) to provide the magic solution and arrange for its European Investment Fund to act as a venture capital investor. The Commission has already ‘learned’ that the skills required as a venture capital investor are totally different from those of a banker. Bankers have never demonstrated any skills in ‘picking winners’, which is what innovation finance is all about.

The advice given to the Commission was to provide ‘cheap’ finance to those who prove they know what they are doing, i.e. private equity funds with a good track record. The irony here is that PE funds with a good track record do not need funding entangled in red tape from EU sources.

And this approach at best attracts the less successful funds trying to support funding for marginal projects that don’t quite meet the full investment criteria.

Is this a valid role for the EU – funding the ‘B’ league projects? Well maybe it is better than doing nothing, but it is certainly not a magic bullet solution.

By Nigel Griffiths, Brussels based writer and EU affairs consultant.