'Biggest risk in infra today is political'

Former Hungarian Prime Minister Gordon Bajnai warned at Infrastructure Investor Berlin 2012 that the biggest threat to private sector investment in infrastructure is not financial, but rather how to reconcile the short-term electoral cycle with the asset class' long-term horizon.

Gordon Bajnai, a former Prime Minister of Hungary and current global advisory board member at French infrastructure fund manager Meridiam, kicked off Infrastructure Investor Berlin 2012 with a warning on the major risk affecting infrastructure as an asset class today.

“The biggest risk in infrastructure, especially for public-private partnerships, is political and not financial,” Bajnai told an audience of close to 300 delegates. The main problem, according to the former Prime Minister, is how to reconcile the long-term nature of infrastructure programmes with a four-year electoral cycle?

“We all know what we need to do. The problem is: how do we get re-elected if we do it?” Bajnai joked, referring to the conundrum politicians face.

In this sense, Bajnai believes European countries could look at creating technocratic structures that will help manage long-term infrastructure programmes, although they would still need to be democratically accountable.

Bajnai also warned that, although the European Union is keen to get more private sector investment into infrastructure to help create jobs and boost growth, investors are now having to do business in an environment characterised by less growth and the availability of shorter term money.

Perhaps as a consequence, the former Prime Minister sees Europe moving away from the social infrastructure programmes that characterised the last two decades in the direction of what he called “productive infrastructure,” which should help stimulate the economy.