Estonian PM: Security must be at heart of next EU budget

TALLINN, May 09, BNS - Estonian Prime Minister Kaja Kallas said on Thursday that the focus of the European Union's next budget must be on security.

The government approved Estonia's starting positions for negotiations on the future of the European Union's long-term budget and cohesion policy, which concern the EU budget period starting in 2028.

The positions express Estonia's stance regarding the areas most important for Estonia. Estonia's budget priorities in the European Union are ensuring European security, continuing to support Ukraine, and establishing trans-EU transport and energy connections. Securing the external border of the European Union is also important for Estonia. When designing the cohesion policy, the state considers it important that, despite the growth of Estonia's wealth, Estonia's subsidies from the EU budget do not decrease sharply and that the regional needs of the member states are taken into account more when the subsidies are distributed.

"Security is at the center of Estonia's European Union budget policy positions. We want the budget to take into account the risks and challenges of Russia's war of aggression more than before," Kallas said. 

"In addition, more money must be found in the EU budget for the defense readiness of the union. It must take into account both the development of the defense industry and the improvement of military mobility. The development of cross-border connections is also closely related to security. This means the need to increase the Connecting Europe Facility (CEF) so that we can build Rail Baltic and the necessary energy connections in the Baltic Sea region with its support. Of course, the European Union must also be ready to provide assistance to Ukraine as needed, either with military or macro-financial assistance or by contributing to the reconstruction of Ukraine," she added.

Finance Minister Mart Vorklaev said that the scale of security challenges, support for Ukraine and the development of the EU's cross-border infrastructure require additional funds in the EU budget, as the policies that have supported the development of the EU, including Estonia, so far, from cohesion to research policy, must also be continued.

"In the current security situation, Estonia considers it inevitable that contributions to the EU budget must be increased to cover new expenses. This is necessary so that the increased funding of the priorities highlighted by Estonia does not lead to a significant reduction in the funding of existing areas," he said.

Speaking about the shaping of the next period's cohesion policy, the finance minister noted that it is very important for Estonia to continue the current rule that limits the sudden decrease in subsidies allocated to a state as the country's wealth grows.

"Estonia supports the continuation of the so-called safety net system, which came into force in 2021-2027, where the support of any member state is not less than 76 percent of the funds of the previous period at constant prices. As wealth grows, the subsidies allocated to the state should decrease smoothly," he said.

Also related to the implementation of the cohesion policy is the financing of the just transition, where Estonia wishes that regional specificities be taken into account in the transition to climate neutrality in the next period as well.

In the case of the Common Agricultural Policy (CAP), Estonia once again points out that the CAP must be more focused on climate and biodiversity goals than before. At the same time, Estonia also considers security of food supply, ensuring food security and the development of rural areas to be important.

"Estonia also places importance on the continued harmonization of direct agricultural subsidies between countries, which has been our priority since joining the EU," Vorklaev said.

The minister also noted that Estonia has always stood for the reduction of bureaucracy and administrative burden not only at the national level, but also at the European Union level.

"In order to gain greater clarity, we support reducing the number of different EU funds in the budget negotiations. In addition, it is important that the EU support framework becomes more flexible and better takes into account the specificities and needs of the member states and their regions. It is in Estonia's interest that performance orientation and administrative capacity be strengthened and administrative burden be reduced when it comes to the EU budget," he said.

Estonia's framework positions are based on Estonia's EU policy priorities for 2023-2025, Estonia's previous experience in EU budget negotiations and the use of funds from various funds, and Estonia's economic status compared to other member states. The positions do not cover all areas related to the EU budget, but focus on those priorities where Estonia's active action is critical in shaping the EU's long-term budget.

In June 2025 at the latest, the European Commission will present a proposal for the new EU long-term budget starting in 2028, and with it also the proposal for future cohesion policy and the future of other policy areas.

As of April 2024, Estonia has contributed almost 4.3 billion euros to the European Union. This is the amount the country has paid as a contribution to the EU budget. By the end of 2029, Estonia's contribution to the EU budget is expected to increase to 6.9 billion euros. This is approximately 1 percent of the GDP of the years Estonia has been a member of the European Union. Estonia is estimated to get back nearly 20 billion euros from the EU budget by 2029.

More specifically, in the 2014-2020 period, Estonia received 3.9 euros for 1 euro, and in the current EU budget period, together with subsidies financed from EU loan money, 2.44 euros for 1 euro.