Tallinn Deputy Mayor Tõnis Mölder (Center) has dismissed the Social Democratic Party's (SDE) idea to direct a part of EU subsidies for Estonia past Tallinn and give priority to smaller municipalities in the future as implementing regional policy at the expense of the country's capital city.
According to Mölder, using EU subsidies for the benefit of the economy will be a major challenge for Estonia in the future, and that there are many good examples of EU funds being used to build large infrastructure projects which create new jobs and will generate economic benefits in the future as well. The problem lies rather in the smaller municipalities, which are utilizing EU funding inefficiently, he said.
"Examples can be found in Estonia of community cultural centers being renovated and roads for non-motorized traffic and swimming pools built with the help of external funding, and the small municipality is unable to pay for the operating costs later and finds itself in a situation in which the swimming pool is finished but there is no money to fill it with water," said the deputy mayor. "In many cases, Estonia is unable to use EU funding because small municipalities are lacking the financial resources to make their required own contributions to the projects."
According to Mölder, 60 percent of the value added of the Estonian economy is generated in Tallinn and the surrounding areas. In addition, many functions of national importance are performed in the surrounding Harju County.
"The state should direct resources to the municipalities where population numbers are not declining and the investments made will benefit the people for several decades," Mölder said. "It doesn't make sense to destroy a functioning system. While balance between regions is important, it must not be achieved at the expense of Tallinn."
Mölder described the relocation of government agencies from Tallinn to other regional centers and the creation of jobs in regional hubs sponsored by the state as good examples of tackling the problem of regional inequality. He also said that, in the future, consideration should be given to making tax incentives available to certain municipalities to help eliminate inequalities between regions.
SDE: Split Estonia into two regions
The SDE council on Saturday discussed the opportunity to handle Estonia as two separate regions in the next EU budgetary period in the name of reducing regional inequality, as doing so could bring in up to €700 million in additional funding for the country.
"In reducing inequality, Estonia has made many necessary decisions in the last three to four years, but regional inequality still remains extremely high," said Marika Saar, SDE council chairwoman and deputy mayor of Elva Municipality.
The GDP per capita of Harju County, which includes the capital city of Tallinn, is nearing 110 percent of the EU average, but remains below 60 percent on average in the rest of the country.
"In this situation, we must utilize all options to ensure that the different tempos of development in the Greater Tallinn region and the rest of the country do not rip Estonia in two in the future," Saar said, adding that this scenario should have been addressed years ago already. "Several previous Finance Ministers have left this job undone, but we must speak about it and start dealing with it tomorrow already — better late than never."
MEP Ivari Padar, meanwhile, noted that as Estonia's average GDP per capita will exceed 75 percent of the EU average before the start of the next budgetary period, the country must be prepared for the support sums to be allocated to Estonia decreasing significantly.
Editor: Aili Vahtla