"The plan was largely prepared during the previous government's term, which is why we have no major criticism," Martin Helme, head of EKRE and former finance minister, told ERR. "It needs to be said that the plan is very general, only determining priorities and fundamental distribution of resources between different fields. How the money will be spent will depend on implementation plans that do not exist yet," Helme said.

"Our main goal was to channel as much of the money as possible into the economy and strive for it to be reusable so to speak, issued in the form of loans that would make their way back to the state budget to be reused. Things are not great in that regard," the EKRE chair added.

Isamaa: the right keywords, while practical aspects remain questionable

Chairman of the Isamaa party Helir-Valdor Seeder started by echoing Helme. "A considerable part of goals and investments were agreed by the previous government. The plan has the right keywords, such as development of digital solutions, living environment, environmental targets and enterprise support. That said, the relevant question is how effectively these goals can be met that depends on specific projects, distribution proportions and support conditions."

Seeder gave the example of environmental goals and said that the greatest challenge there is how to motivate the private sector to carry out structural changes for the next leap in development and improved competitive ability. "This means that support measures need to be available and come with as little red tape as possible," Seeder found.

The Isamaa leader also pointed to the Stockholm Environment Institute's (SEI Tallinn) analysis according to which achieving climate neutrality in Estonia will cost €17.3 billion and that recommends ramping up investments in energy efficiency of buildings, transport and industry first. "It remains questionable whether investments prescribed in the government's distribution plan are sufficient to ensure notable progress in the field," Seeder remarked.

Infrastructure investments in direct transport connections and digital solutions should also grow, the Isamaa chairman added.

Seeder pointed to the decision to channel all EU Just Transition Fund resources to Ida-Viru County as one important difference compared to the previous government's plan. "If today one of the main problems of Ida-Viru County is its dependance on a single industrial sector, aiming all available resources to the same county could constitute repeating the same mistake. It would be more sensible to use Just Transition resources in a broader area in order to achieve more balanced development," he said.

"That said, the picture today is too vague for any final conclusions to be drawn," Seeder added.

Social Democrats: Greater emphasis needed outside of Tallinn

Deputy chair of the Social Democratic Party (SDE) Lauri Läänemets said in his comment to ERR that the Social Democrats would pay more attention to supporting regions. "If we want to curb regional inequality, small cities and rural areas need to be allocated more resources than Tallinn, Tartu and the so-called golden circle of wealthy municipalities that surround them. It cannot be done any other way," Läänemets said.

"Studies have shown that past EU support distribution principles have only worked to increase regional inequality and the government's plan seems to be staying that course. The regional problem has two sides – measures based on nationwide competition and use of EU resources being decided on the central government level instead of its local counterparts," he explained.

According to Läänemets, nationwide competitive measures add to inequality as Harju County companies have more resources at their disposal and are often capable of writing up better projects than entrepreneurs in the periphery. "This ensures that money pools in the golden circle, whereas this goes beyond enterprise, to local governments and NGOs," he said.

He gave the example of the smart specialization measure from the previous support period where Harju County companies took 63 percent of the total pot of €44.1 million, with Tartu County getting 14 percent and the rest of Estonia splitting the remaining 23 percent. The smart specialization university cooperation measure saw 68 percent end up in Tallinn, 12 percent in Harju County and 16 percent in Tartu, with the rest of Estonia getting 4 percent.

Secondly, current allocation of European support fosters regional inequality in that decisions are made on the central government or ministry level, Läänemets said. "National measures cannot take into account regional peculiarities and at times very different needs. Every county has its own development plan for local enterprise, while local governments cannot afford to put them into practice or influence job creation to any notable degree. While some national measures do support local goals, that is often not the case," he found. The Social Democrats see regional support measures as the solution.

The politician said that SDE would direct €350 million toward job creation and salary advance in small cities and rural areas as those are the main reasons people are leaving. "In other words, we could give every local governments outside the golden circle €5 million for job creation, salary advance and improving working conditions or for retaining jobs. This would affect some 15,000 jobs and would have a considerable effect in terms of slowing down regional inequality," Läänemets said. "To put this into perspective, it was decided without much debate to allocate €380 million for the construction of the Tallinn Hospital. I believe it would only be fair to spend the same amount on job creation."

SDE also finds that Estonia should stop using European support to pay for current expenses. "The National Audit Office pointed out back in 2017 how Estonia covers more than a billion euros worth of fixed costs using European sums. At the same time, EU funds are first and foremost meant for one-off investments to help the Estonian economy catch up to counterparts in Europe," Läänemets emphasized.

The government on March 4 approved Estonia's foreign support distribution plan for 2021-2027 that governs the use of €4.83 billion. Major investments will be aimed at managing climate change and population aging, while digital services, research and education will also be allocated considerable sums.

--

Follow ERR News on Facebook and Twitter and never miss an update!