Blame game sparks back into life as EU threatens Rail Baltica funding

By bne IntelliNews September 1, 2016

Rail Baltica risks losing EU funding unless it speeds up the project, an EU official suggested on September 1. The warning only raised more bickering in the Baltic states however.

The project is suffering continued delays because decision-making has deteriorated under Lithuania's leadership of the the supervisory board of RB Rail, the Latvian CEO of the company responsible for the project claimed to local media the same day.

Baiba Rubesa spoke in reference to hints from the European Union – which covers the bulk of the project’s cost – that continued bickering between the Baltic states over the project, which will plug Estonia, Latvia, and Lithuania into European networks by connecting them to Poland and Finland, may lead to a loss of financing. 

“Everyone should understand that the biggest portion of the funding is allocated by the EU, and this money is provided under the ‘use it or lose it’ principle," the head of the European Parliament’s transport and tourism committee, Michael Cramer, told Lithuania's on September 1. "If this money is not used in the Baltic states, it will be sent to Germany, Austria or France.”

The Baltic states most recent fight over the project concerns VAT payments, which Estonia and Lithuania would like to be handed to whichever country hosts the applicable works. Riga, however, would rather see all payments go through Latvian-based RB Rail.

In July, officials from Lithuania, Latvia and Estonia were said to have finally agreed on VAT distribution. However, the countries reportedly remain at odds over the final financing scheme, LETA writes.

Rail Baltic is one of the EU’s strategic transport endeavours under the TEN-T network, a system of roads and railways, typically linking several member states. It will join the Finnish capital Helsinki with Warsaw via the Baltic states. The cost of the project is around €3.7bn.

The Baltic trio shares an interest in plugging the region into EU networks in transport, as well as energy and power, due to the isolation bequeathed by their history inside the Soviet Union. They have also often discussed joint projects in such sectors, which is often the only option for such small markets. However, cooperation has been scant, with all three seeking to win the largest leverage from any inter-regional efforts.





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