Prime minister: We're working to soften Estonia's EU co-financing rise

Prime Minister Jüri Ratas (Center).
Prime Minister Jüri Ratas (Center). Source: Priit Mürk/ERR

Prime minister Jüri Ratas (Center) gave an interview to ERR's Indrek Kiisler on Wednesday, where he said that while Estonia's EU Cohesion Funds contribution will be less than the 35 percent currently touted for the new 2021-2027 budgetary period, he is working to make the proportion even smaller.

Estonia in the budgetary period now drawing to a close had to stump up 15 percent of the cost of cohesion funded-projects.

The EU's Structural Funds and Cohesion Fund are financial tools aimed at reduce regional disparities in income, wealth and opportunities within the union, with less well-off regions receiving most support. Estonia is in a transitional period, having crossed the 75 percent threshold of average EU purchasing power per resident during the 2014-2020 budgetary period, meaning cohesion policy funds available will concomitantly fall, with significantly higher co-financing ratios applying in the use of EU monies.

Following Brexit, around €15 billion must also be found to make up the hole left by the departure of the second-largest net contributor to the budget over the longer term. Official negotiations in Brussels start on Thursday.

Ratas also said that the Rail Baltic project, slated for completion in 2026, was €400 million short of funds. A transcript of the interview follows.

While Estonia currently pays a 15 percent on top of EU Cohesion Fund for projects, Finland offered 45 percent for the next budgetary period during it's EU presidency period (the second half of 2019-ed.), now reportedly set at 35 percent? Won't Estonia not agree to this higher percentage?

"I had meetings on February 4 in Brussels with both the President of the European Council (Charles Michel-ed.), the President of the Commission (Ursula von der Leyen-ed.) and sundry commissioners, where I have already said that the cohesion policy has been very important for the Estonian people and society in the 2014-2020 period. While driving around Estonia, we can see the blue signs showing construction with the support of the EU, be it roads, cycle lanes, educational institutions, and health care institutions. There has been a huge contribution, amounting to €3.5 billion over that period.

It is understandable that Estonia's standard of living has risen, which is great. This means that the percentage on top of the cohesion policy as it has been up to now – 15 percent – certainly cannot be applied going forward. The proposal from the European Commission and Finland's presidency at the time was that it should be either 40 or 45 percent, and again on February 4, when I met Charles Michel. My view was that this was too high, a tripling. As of now, Estonia's contribution has indeed been reduced to below 35 percent, and it is certainly our goal to continue to ensure that this increase in co-payments is kept even lower and to a minimum.

Could it not be such a difficult situation in the new budget period that wealthier and larger municipalities like Tallinn and Tartu won't have much trouble paying this 35 percent, but less well-off municipalities won't have the funds. Are any differences requested?

The first serious budget negotiation will begin this Thursday. It is very difficult to say here what this percentage actually turns out to be. Of course, in answer to your question, it is always in the national interest of regional policy that investments can be made locally and also based on the capabilities of smaller municipalities. This focus remains to be seen, when it is known what the percentage of the EU budget and cohesion policy co-financing will be.

Minister of Finance Martin Helme (EKRE) has told ERR that, in principle, €400 million is still not enough money for Rail Baltic money, in order to meet the 81 percent requirement you put in the government coalition treaty. Is it somehow a separate clause in the council conclusions that we want this money from the EU?

It is a little early today to say what the Council's conclusions will be. If you ask whether Estonia is in a position to apply, together with our good friends Latvia and Lithuania, for an additional sum of around €2 billion, already counted in the next period of the current MFF ( Multi-annual Financial Framework-ed.) Estonia's share is four hundred million, and of course we stand for that.

What is the probability that this wish will be considered?

Unfortunately, I have never been involved in divination or reading the future. We will start these negotiations tomorrow at noon in Brussels with our counterparts from other countries, and Estonia's position when it comes to Rail Baltic really is, on the one hand, that the percentage of co-financing remains as it is today,  and that we will really be able to get additional funding together with the three Baltic States. As I said, this is about two billion. This also includes the Vilnius-Kaunas connection (in Lithuania-ed.) and in the case of Estonia, at today's prices, four hundred million is still missing. Naturally it has to be said here that most of the construction contracts have not been completed, and what the final amount may be in end of Rail Baltic's completion is early to say at present.

Is there also a theoretical arrangement, whereby part of the money will come from the next but one budgetary period, so the rail construction is simply split between two budgetary periods?

We are still going to apply for funding for 2021-2027; we are not talking about 2027 and beyond.


What is the likelihood that a new budget plan will be adopted at this meeting?

The country certainly supports as in success with the next EU budget, as soon as possible. It is also important to us that we can use this money as soon as possible, precisely in the interests of the well-being of the people of Estonia and the development of the country. But, of course, we also have our priorities that we stand for. If Charles Michel is really willing to accept this weekend, but no agreement is reached, there will need to be additional or extraordinary councils.

The prime minister also responded to questions about plastic recycling and the EU's plastic bag tax, saying that the latter would have a mechanism in place to prevent the tax effectively being a regressive one, with less well-off countries having to pay proportionately more.

The European Parliament voted last March for a ban on single-use plastics, to come into force by 2021 in all member states.

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Editor: Andrew Whyte

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