Commission rep: Further cuts could put Estonia's priorities at risk

Photo: SCANPIX

Some areas that are priorities for Estonia could suffer a blow if EU leaders decide to make further cuts in the union's budget draft for the next seven-year period, Hannes Rumm, head of the European Commission's representation in Estonia, said.

Rumm said that while the Commission's draft of the budget for 2014-2020 has been cut already by 80 billion euros, as far as the three budget lines that are of greatest importance for Estonia go there's no reason to complain now.

"At the same time, the clear danger exists that if the member states' heads of government make further large cuts in the budget some of Estonia's priorities could receive a blow at some point – cohesion policy, agricultural payments, and the transport part of the Connecting Europe Facility," Rumm said in his comments to BNS.

According to figures available from the government, as things stand now Estonia would receive 5.9 billion euros from the next period's budget and pay into the budget 1.4 billion euros. That would mean a positive net position of 4.5 billion euros, considerably bigger than the balance of 3.8 billion euros in the current budgetary period.

Most countries stand to receive less money from the common budget than before, Rumm added.

Rumm described as very human the attitude that whatever was being given was still too little. "To estimate the so-called national wins or losses it makes sense to put them into national context. For instance, the sum total of rural development support offered to Estonia in the next seven years is approximately 770 to 800 million euros, while the new Auvere power plant built entirely for the money Estonian taxpayers will cost 640 million euros. That is, a single investment by Estonia can cost almost as much as the entire EU support for an important filed of the economy during seven years."

"Since both the European Commission and the Estonian state are convinced that for successful functioning a strong European Union needs a strong budget, reducing of the joint budget compared with that put forward by the European Commission namely at the expense of research and development is unpleasant for sure," Rumm added.

In its current form the budget permits to go on supporting such projects as Rail Baltic. "The budget plan filed by the European Commission very vigorously supported cross-border investments for building new infrastructure, hopefully also the heads of government will reach a sensible compromise on that topic," he said.

Rumm described the likelihood that the EU heads of government will arrive at an agreement during their summit in Brussels at the end of this week as definitely bigger than the possibility that they will fail. "First, everybody understands that the dragging out of the budgetary process will scare the international financial markets and it's their behavior that the financial coping of several member states depends on," he said.

"Second, adjourning of the budget means that not all the programs for the payment of euro support can be launched by the beginning of 2014 and the gap in financing will weaken several member states and the European Union as a whole," said Rumm.

For Estonia whatever kind of agreement is better than no agreement, especially as failure to reach a new agreement would freeze direct agricultural payments on the present level. "Even under the most unfavorable proposal of so far they [direct agricultural payments] will effectively double in the next seven years."

In case of a failure the EU would start living in accordance with one-year budgets. "In that case it will be extremely difficult to start carrying out large-scale projects the preparation and implementation of which takes several years, because each following sum of money would have to be negotiated anew in order to go on with the project," he added.

The next financial framework that EU leaders will gather to discuss at the weekend sets out the EU's budgetary priorities for 2014–2020.