EU to cut corners on Poland and Baltic countries

The European Commission plans to shift more than 30 billion euro in EU funding away from central and eastern Europe, the Financial Times reported with reference to draft documents.

Draft documents show the commission is revising its criteria for allocating funds, leaving central and eastern Europe facing a far bigger squeeze than the 10% real-term cut envisaged for the overall cohesion programme.

The model presented to EU commissioners proposes reducing Poland’s funding by 23% (19.5 billion euro). Hungary, the Czech Republic, Estonia, and Lithuania face 24% reductions. While Portugal, Spain, Italy, Greece and Cyprus will receive a 3.7billion euro increase in 2018 prices.

Poland’s development minister Jerzy Kwiecinski has warned such cuts would be "completely unfair" — a sign of how the budget proposals may further inflame east-west tensions within the EU.

The senior research fellow at the European Research Centre of the International Relations Institute of the Russian Academy of Sciences, Vladimir Olenchenko, speaking with a correspondent of Vestnik Kavkaza, noted that the period of adaptation of Poland, the Baltic countries, Hungary and the Czech Republic, as well as Cyprus, Malta, Slovakia and Slovenia to the EU standards is coming to an end, after which additional financing from the EU should be canceled. "All these countries joined the European Union in 2004, their period of adaptation will be over by the beginning of the implementation of the  2020-2027 financial plan. Therefore, their increased funding will be canceled. In addition, by December 31, 2020, the UK will completely withdraw from the EU, its contributions to the European budget amounted to about 15%, so starting from 2021 there will be less money," he said.

"It is also important that since 2009 the European Union has demonstrated very low rates of economic growth after the crisis. Together with the previous two circumstances, this greatly narrows the space for Europe's financial maneuvers and compels the European Commission to carry out the budget's sequestration. The Baltic countries would catch the worst of it. It will be easier for the Eastern European countries, but it is still quite difficult," Vladimir Olenchenko stressed.

"Poland will have to moderate its political appetites. Poland claims to be the leader of the Eastern European and Baltic countries, but after cuts, it will have to deal more with domestic affairs. In addition, Poland is assuming additional obligations of the "Euro-Atlantic country," which seek to be the main US partner in Eastern Europe and encourages the US to increase its presence on its territory. It requires additional expenditures, but Warsaw does not have a clear idea of ​​the prospects. Therefore, it will be very difficult for Poland in 2020," the senior research fellow at the European Research Centre of the International Relations Institute of the Russian Academy of Sciences predicts.

Director of the Institute of Strategic Planning and Forecasting, Professor Alexander Gusev, pointed to systemic problems with the EU budget. "They do not have enough money. In fact, only Germany consistently transfers money to the EU - the UK has ceased to do it in connection with Brexit and France constantly delays payments. Hence the budget sequestering, the target of which is Eastern Europe and the Baltic countries, because they are poorest," he said.

According to the expert, the situation was aggravated by anti-Russian sanctions. "Initially, these countries believed that a consolidated voting on sanctions would free their financial system from Russia's influence. On the contrary, the EU and the Council of Europe promised that they will fill the budget losses of these countries from imposing sanctions against Russia, but no one gave them any money. The situation was aggravated by the fact that the Europeans are extremely unhappy with these countries of Eastern Europe, because they block many European laws because of their grudge against the EU authorities for funding fraud, especially the Czechs. They plan to completely abolish the sanctions against Russia, the Hungarians support them," Alexander Gusev said.

At the same time, the EU can approach the Eastern European funding cuts issue more gently. "Probably, the necessary billions of euros will be found, instead of taking harsh measures against the Eastern European countries, we should rather expect a half-way decision. Otherwise these countries will be broke, there is already a huge outflow of population from Latvia, million of citizens already left Latvia, because living in the country is impossible. Slightly less number left Estonia, a quarter of the population left Lithuania. They are heading to  Poland, while the Poles themselves are leaving for Germany and the UK. But still at some point Eastern Europe will be sacrificed," the director of the Institute of Strategic Planning and Forecasting summed up.