Editor's note

Over the last 7 years (2007-13) only through the EU Cohesion Funds (the biggest in the EU’s regional assistance) the member states are supposed to receive about € 350bn attributed to more than 450 national and regional projects in the 27 member states.

For example, in the Baltic States, Latvia will get € 4,6bn, Lithuania - € 6,9bn and Estonia - € 3,4bn; just to compare, Poland has got already € 67bn of the EU development grants since it joined the EU in 2004. This assistance, definitely, has helped Poland to become the EU’s seventh-largest economy, the fact that makes its voce heard among the leading EU member states. The present half-year Council’s Presidency can help the country to gain more influence. 

And the same can be said about the assistance to the three Baltic States; the question is however whether this assistance has been used in the most rational way.

Statistics & strategy

Over the next 18 months, the EU-27 governments will decide on the block’s next “financial programming” for 2014-20 with a total expenditures at the level of 1 trillion Euros. Both the EU and the member states are interested in a rational use of the enormous amount, in particular at the time of crisis. Politicians have to make a proper choice of priorities!

According to the Commission’s proposal published at the end of June 2011, the spending figures are the following (out of total € 1,025bn for the whole 2014-20 period) in %:

• Economic growth & cohesion – 48;
• Common agricultural policy – 27,5;
• Other natural resources spending – 10;
• Global action – 6,8;
• Administration – 6,1;
• Security & citizenship – 1,8.

Main contributors to the EU budget are known well: Germany, France, Italy, Sweden, the Netherlands, the UK and Denmark, which “donate” the lion share of the EU-27 budget. The main recipients are well known too: Poland, Greece, Belgium, Hungary, Portugal and the three Baltic States, though in much less degree.

Rich and poor: differences towards the budget

The present critical situation in Europe has shown that the governments in the richer member states are quite reluctant to any kind of “transfers” to poorer countries. Some see it that the cohesion funds and bail-out programs are of the same essence. However, the problems are much more complicated.

Traditionally, main financial disputes during the budget drafts take place between France and Britain: thus France defends existing agricultural subsidies while the UK, which is less dependent on agro-production prefer existing rebate system enforced by Margaret Thatcher in 1984.

The new EU member states from Eastern Europe are afraid that “milking the EU budget” through cohesion funds would come to an end. The Commission authorities argued that these worries were groundless: in the budget proposal the cohesion funds equal 37 per cent of the total budget (which is actually 2 per cent more that in the previous budget term).

However, some say, there are some grounds for assistance’s reduction, e.g. in the cohesion fund a new line of expenses is envisages, so–called “connectivity fund” of about € 40bn aimed to build cross-border infrastructure projects. In fact, these projects include high-speed railways and pipeline connections which might be of a primary benefit for the rich member states.

Besides some proposed changes in the eligibility rules for various EU funds would make in more difficult for poorer states to get financial support.     

According to a Polish study, wealthy states can benefit from cohesion funds for the Eastern members: each euro in cohesion financing in Poland gives 36 cents to the richer states in the form of additional demand for goods and services. (Financial Times, 22 August 2011, p.5).

The final decision on the budget will take place in spring 2013. Hence, there is time enough for Baltic States’ leaders to reconcile both political and economic issues connected with the EU’s structural support.