Berlin's airport fiasco: Another €2.2 billion and 2 more years

The EU has become a Money Pit for lame ducks.

Another EU approved loan of 2.2 Billion Euros.

Another reason for the UK to quit the European Union.

Since it was Officially declared 'open' in March 2011, no commercial flight has actually left from or landed at Castellón-Costa Azahar Airport. Spain.

Built at a cost of 150 million euros.

The enduring feature of this freshly-deceased airport near Valencia is a statue in honour of Carlos Fabra, the local politician who was the driving force behind its construction. He is under investigation for tax evasion and corruption.

Actually, there's no EU spending involved here. They only gave the German government permission to guarantee Berlin's loans.

I'm not sure about Castellon...thought it was a private fiasco. Ryanair is finally using it...vut I believe they are being subsidized to do so...

Yes Paul. That's what an EU Approved loan is.

I guess I'm a little confused by all this.  Germany can't issue it's own bonds to built an airport in Germany (even a dog like this one)?  It needs the EU's approval?  Really?

Under EU Law the Government of a country can not subsidise a private venture. That would produce unfair competition. Like if Ford were given a Government subsidy, but not to another car producer. But the Government can act as a Guarantor to promise repayment if the venture fails.

The EU does however give money to Countries with high unemployment to build factories that produce goods. Like in Poland, Lithuania, Bulgaria - old eastern block countries.

Then the new factory owner - an international company - has a low wage producer for its goods in Poland.

So it winds down it's production in the UK - losing thousands of jobs here.

Like the US - China.

As Garry points out, it's an issue of state aid and competition. In the case of the airport, the company at the end of the chain, FBB (Flughafen Berlin Brandenburg), is structured as a private enterprise, although the Berlin and Brandenburg state governments (37% each) and the Federal government (26% each) are the investors. So, it is subject to the rules for government loans to private companies.

In this case, the Commission ruled (click here for the ruling) that the activities and the loan are not out of line with what a truly private company would do, and in line with normal lending practices, and therefore do not "distort competition."

Many countries have similar rules for competition and against favoritism; in this case, it's the EU rather than individual countries. What's odd here is only that the private company is actually a government company...but bound by the same rules as if it were private.