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Imminent new EU budgetary period brings confusion over Rail Baltic funding

Artist's rendition of a section of Rail Baltic.
Artist's rendition of a section of Rail Baltic. Source: ERR

Changes made under the European Union's proposed budgetary period for 2021-2027 put the high-speed Rail Baltic project into jeopardy, according to finance minister Martin Helme (EKRE). However, former European Commission Vice-President Siim Kallas says that Rail Baltic funding should continue along the same lines as before, and if the development should break down, that would be the responsibility of the current Estonian government.

The EU's new budgetary period will require the countries building Rail Baltic, I.e. Estonia, Latvia and Lithuania, to put up significantly more of their own money that was the case under the previous budgetary period for 2014-2020, at least for future projects.

However, Martin Helme says the government needs to weigh up whether to continue with the project at all, since the changes could adversely affect Rail Baltic.

Helme: Estonia wants at least 81 percent Rail Baltic funding from EU

Helme also added that Estonia requires a further €400 million for the project, with the figure reaching €1.5 billion across all three Baltic States; these funds should come from the EU, Helme said.

Speaking on ETV current affairs show "Aktuaalne kaamera" Wednesday evening, Helme said that Estonia wants a 19 percent co-financing rate for the project, with the EU putting up 81 percent of the money.

"With the next [budgetary] period, the bidding rate on the table presently stands at 35 percent," Helme said.

"With this level of co-financing rate, the project will end up losing its meaning for us economically, let's just say," he continued.

The previous co-financing rate for EU cohesion and structural funds was 15 percent in Estonia. A recent example of this in action was the Reidi road in Tallinn, completed late last year at a cost of €43 million, with the EU providing 85 percent of the funding.

Estonia has moved into a transitional category of countries as its wealth relative to the rest of the union has grown, meaning it now has to put up more money of its own for projects like this, at a time when the EU is already having to look to fill an approximately €15 billion hole left by Brexit.

Negotiations for the budget itself start Thursday in Brussels.

If the EU cannot provide 81 percent of the funding – obviously a 35 percent requirement would mean the union stumping up 65 percent – the project will need revising, Helme said.

"Since we don't now have the funding model we have had so far,
making it not possible to find the opportunity to add this missing piece, with them saying provide it yourselves, then surely we can't continue with it that way," he added.

"Estonia's position on Rail Baltic really is that on the one hand, the percentage of co-financing that exists today should be maintained and that we would in reality be able to get additional funding together with the other two Baltic States," Prime Minister Jüri Ratas, who will be in Brussels for the negotiations, said.

Former European Commission Vice-President and now deputy Riigikogu speaker Siim Kallas said that in general, large-scale projects have continued to be funded within the EU's budget negotiations on the same basis as before.

"That 80 or even 85 percent of the co-financing - this comes, as far as I know and as far as the logic has gone so far. Of course, once the Republic of Estonia lets the project down, no one can halt that," Kallas commented

Coalition party Isamaa leader Helir-Valdor Seeder repeated the same line as Martin Helme: "As of now we are still proceeding from what has been agreed [previously]. We hope that the negotiations with the EUon the new [budgetary] period will end up with the familiar financing scheme being at least be maintained. The Estonian state and our representatives are working towards this."

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Editor: Andrew Whyte

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