There will not be enough money for everything in next EU multiannual budget - Usakovs

RIGA - It needs to be recognized that there will not be enough money for everything in the next multiannual budget of the European Union (EU), MEP Nils Usakovs (Harmony), who is a member of the European Parliament's Committee on Budgets, told LETA.

Work is currently underway on the 2027 EU budget, said Usakovs. He believes that this is an opportunity to review, or at least to start reviewing, what the EU really needs to fund, what it can afford to fund, and what it cannot fund in the future, as Usakovs foresees a lot of financial problems in the new multiannual budget.

Proposed EU budgets are never approved in full, there are always further cuts, Usakovs said. At this point, there are defense, security, support for Ukraine and other needs, and the loans taken out during the Covid-19 pandemic will have to be repaid now. The MEP described the situation as difficult.

Regarding the EU budget for next year, it for the first time covers priorities that are important for the Baltic countries and Eastern Europe as a whole, said Usakovs. This concerns municipalities close to the border: it has been proposed to launch targeted support for these municipalities - not in a security or military sense, but in a socio-economic context.

"It is a question of border reinforcement being financed from the EU budget. Because the Latvian-Russian, Estonian-Russian, Polish-Russian border is not a responsibility of these countries alone. This is the EU's external border and it should be paid for by all together, not just by Latvian, Polish or Estonian taxpayers," said Usakovs.

The MEP also commented on farmers and the agricultural policy. There will be less money for the policy in the future, but Latvian farmers still receive 20 percent less that the EU average. In his opinion, at a time when we are talking about farmers in border regions with all the additional challenges and consequences, this situation is unacceptable.

According to Usakovs, when the next EU multiannual budget is approved, it will be important to maintain funding for municipalities, farmers, as well as such programs as Erasmus+ for young people and students and Horizon for science.

"I believe that other things should be dropped. Perhaps it could be a reduction in global aid amount, something to do with the Green Deal. This discussion needs to be started. Therefore I believe that we need to start talking about budgetary matters as soon as possible, to see where we need to cut spending in order to keep and preserve what is most important," said the MEP.

Asked whether the EU is ready for a discussion on spending cuts and austerity, Usakovs said that no one was ever ready for such a conversation, be it a local or a national government. The EU might be even less ready because it has long been a "club for the wealthy", but reality dictates otherwise. If this discussion does not start now and proceeds in the right direction, it will happen during a crisis, which is always riskier, more politicized and probably less professional, said Usakovs.

Asked whether the discussions on the EU's multiannual budget include support for military mobility projects, including Rail Baltica, Usakovs said that military mobility might be the only hope. It is now clear that implementation of the project has not been effective enough. Despite the desire to criticize and look for those responsible, which also needs to be done, in parallel it has to be understood that Latvia cannot leave this project unfinished.

Usakovs believes that, thanks to funding for military mobility, the main route of Rail Baltica could be completed and then funding for other things, such as building the connection to Riga, could be sought. Funding for the project could also have to be sought elsewhere, not just from the EU budget, but this would concern the next stage of the project. The budget talks will be difficult and it is impossible to predict at the moment which programs will be maintained and how much funding will be available, as there will be new challenges. Work on the budget started before the war in Iran, which has again added a whole new dimension and risks, he said.

Furthermore, elections will be held in several EU member countries soon, including in France, Spain and Italy, and there are many uncertainties about the situation in Germany. From Latvia's point of view, it is important that the EU allocate funding for security, both for border reinforcement and other military aspects, but cohesion and agricultural policy are equally important, said Usakovs.

The Baltic countries and Poland are the shield of Europe, and the stability and security of Europe will depend on what happens in these countries, Usakovs emphasized. "It is therefore a shared duty to help and to ensure stability, both militarily and socially, for the people living along the border. This is essentially the main problem, but again - there is less money," he said.

A EUR 90 billion loan to Ukraine has been agreed upon. From 2027, Europe will have to repay quite a lot in interest, said Usakovs. At the moment, it is impossible to predict whether interest payments will be around EUR 1 billion to EUR 1.5 billion, as this depends on a number of factors, including the situation on the financial markets. Regardless, this will put a lot of pressure on the next multiannual budget.

"We will be paying interest on past loans, now also on a new loan to Ukraine, and this will be a huge burden. I would like to point out that the situation on the financial markets is not getting any more stable and favorable, so we have to start talking about austerity and reassessing spending," said Usakovs.