EU commissioner: We expect Estonia will utilize €953-million recovery fund in full

Valdis Dombrovskis appearing on 'Välisilm.'
Valdis Dombrovskis appearing on 'Välisilm.' Source: ERR

The first portion of aid to Estonia from the European Union's Recovery and Resilience Facility (RRF) comes to €238.5, as announced Monday.

The RRF is intended a temporary instrument  and the focal point of NextGenerationEU, an economic recovery package initially issued in response to the Covid pandemic.

Agreed in principle by the European Council in July 2020 and adopted that December, the instrument is worth €750 billion.

Latvia's Valdis Dombrovskis, whose official, rather lengthy job title is: Executive Vice President of the European Commission for An Economy that Works for People, noted Monday that this sum is part of a total €953 million due to Estonia from the RFF pot and which Dombrovskis says he expects to be utilized in full.

The commissioner said that this is not the sole source of funding available to smaller countries such as Estonia and his own country, as they grapple with recovery after the double whammy of Covid and Russia's full-scale invasion of Ukraine and the related energy crisis, all the while having to deal with the situation without the huge state budgets that the larger EU member states enjoy.

Dombrovskis, a former prime minister of Latvia, was in Estonia Monday to  take part in the RRF Annual Event, joining Estonian Prime Minister Kaja Kallas on a panel discussion.

Later on Monday, he talked to ETV foreign affairs show "Välisilim."

Interviewer Johannes Tralla noted that larger EU countries such as Germany, France and Italy are able to provide heavy state aid to firms which smaller countries like Estonia cannot match – a phenomenon which, Tralla said, has been going on on an unprecedented scale for the past 18 months.

As for how Estonia, or for that matter Latvia, could deal with this, Dombrovskis said: "It's certainly a very valid point. That is why we are also discussing additional flexibility in state aid. We are discussing a temporary state aid framework because, clearly to preserve the integrity of the EU single market and to preserve the cohesion within the single market, we need to actually maintain strong controls on state aid."

"In parallel of course, there is a need to look at the EU-level funding instruments to support those countries indeed who are less in a position to provide substantial state aid from their own public finances, let's say; that is where once again funding like RRF comes from."

Dombrovskis gave the example of, via the RRF regulation, member states financing their tax incentives – not something which is very actively, leaned upon, he said, though such possibilities exist within EU financial instruments to support those countries who cannot compete with the bigger budget EU nations.

The RRF was designed precisely with he economic challenges currently being faced in mind, initially as a means of recovery after Covid, and now with a new dimension following Russia's invasion of Ukraine.

Estonia's total recovery plan volume comes to €953 million, while the European Commission issued the first, €238.5-million tranche of this, as announced Monday, Dombrovskis noted.

There are additional EU cohesion and structural funds and other funding sources available to Estonia, too, he pointed out.

As for the EU climate goals – reducing emissions by 55 percent by 2030; climate neutrality by 2050 – these are recently agreed goals, Dombrovskis said, while at the same time it is vital the EU does not waver from these goals, in order to maintain its credibility and to give industry conference that it is serious about the green transition.

The rest of the interview dealt with the EU performing poorly when compared with the U.S., which has a smaller overall population, and also when compared with China; also critical raw materials were touched upon.

The full "Välisilm" interview in English (from 17 minutes in to the 27 minute 40 second-mark) is here.

The RFF panel discussions can be viewed here.


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Editor: Andrew Whyte, Mait Ots

Source: 'Välisilm,' interviewer Johannes Tralla.

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