CEE faces massive cuts in EU cohesion spending

CEE faces massive cuts in EU cohesion spending
By Wojciech Kosc in Warsaw May 30, 2018

Poland and other Central European members of the European Union will have to deal with severe cuts in the EU’s cohesion funding in the next EU budget, the European Commission said in a proposal published on May 29.

The smaller cuts – although still at 20% – will affect funding the Commission allocates for Latvia and Slovakia. Poland will receive 23% less money, while other countries in the region – Czechia, Hungary, Lithuania and Estonia – will all see their cohesion funding pools reduced by 24%.

The cuts are the aftermath of shifting spending priorities in the EU and reflect how country differences have changed in the EU following the previous rounds of cohesion funding and the financial crisis a decade ago.

Until now, cohesion funding has been allocated primarily on the basis of GDP per capita figures. The Commission now proposes to reduce the weight of that criterion to fit criteria like youth unemployment, climate, education level, and the reception and integration of migrants.

Cohesion funding is the EU’s tool to help less developed countries close the gap separating them from better-off ones. Since 2004, when seven CEE states facing the cuts today joined the EU, they have benefitted from tens of billions of euros of EU help that financed construction of roads, development of waste management facilities, new rolling stock for public transport and many other investments. 

Should the reductions stand, Poland will lose €19.5bn in 2021-2027. Hungary and the Czech Republic will each receive nearly €6bn less. Slovakia will need to deal with funding reduced by over €3bn, while cuts for the Baltic states will be nearly €2bn for Lithuania, €1bn for Estonia, and under €500mn in the case of Latvia.

Overall, the Visegrad Four and the Baltic states will receive €37.5bn less in cohesion funding. “The natural consequence of getting richer is a gradual decrease in cohesion policy support. This is a fact and in the end is a good sign,” the Commissioner for Regional Policy Corina Cretu said.

On the other hand, Bulgaria, Romania, Greece, Spain, and Italy will receive more funding.

Even with the cuts, however, Poland will stand to be the biggest beneficiary of the new round of cohesion funding, as the Commission allocated €64.4bn for the biggest CEE economy.

In the country riven with political conflict, the Commission’s proposal was instantly used by the opposition to hit at the populist Law and Justice (PiS) government.

“We have long warned that the policy of the PiS government will elicit a reaction [from the EU], Grzegorz Schetyna, chairman of the biggest opposition party Civic Platform, said.

He linked the reduced funding to the government’s conflict with the EU over rule of law, the controversial reform of the judiciary, and the earlier takeover of the country’s Constitutional Tribunal.

The Polish government said it was not going to agree to the cuts. "This division [of funding] is unacceptable to Central European countries," the government spokeswoman Joanna Kopcinska told the state broadcaster Polskie Radio.

Reactions in the Czech Republic and Slovakia were milder, with the government representatives saying cuts were expected because of economic gains made by the countries since joining the EU.

“It is clear that given our booming economy we will get less money,” the Czech Secretary for European Affairs Ales Chmelar told the newspaper Hospodarske noviny.

“[The reduction] reflects a successful growth of the Slovak economy,” the head of the EU representation in Slovakia Ladislav Miko said.

The budget proposal still has to be agreed by all member states.