Baltics back proposed or larger EU budget, Germany calls it 'too generous'

VILNIUS - The Baltic finance ministers voiced support in Vilnius on Tuesday for the European Commission's nearly EUR 2 trillion draft budget for 2028-2034 and even suggested it could be increased, but Germany's vice chancellor described the proposal as "too generous."

"We shared our countries' positions. On some issues, they differ quite significantly, for example, on the size of the European Union budget. The Baltic ministers said the EU should stick to the size proposed by the European Commission or perhaps even raise it. The German government, meanwhile, has a different position," Lithuanian Finance Minister Rimantas Sadzius told a news conference.

The Commission unveiled the bloc's draft 2028-2034 budget last Wednesday. Worth nearly 2 trillion euros, the plan aims to boost competitiveness, support Ukraine and satisfy traditional beneficiaries of European money, such as farmers.

"We want to strengthen the multiannual financial framework, but the European Commission's proposal is too large, too generous, given the current situation, where we must act very responsibly and manage taxpayers' money very carefully," German Vice Chancellor and Finance Minister Lars Klingbeil told the news conference in the Lithuanian capital.

"I'm sure we'll work toward common positions so we can agree on a joint multiannual financial framework," he added.

Germany has previously said it cannot support the proposal, which Commission President Ursula von der Leyen has called "the most ambitious ever proposed."

Latvian Finance Minister Arvils Aseradens (Unity) and Estonian Finance Minister Jurgen Ligi also took part in the meeting of the German and Baltic finance ministers in Vilnius.

Aseradens said that the Baltic states are united in their appeal for a flexible and future-oriented EU budget that would strengthen the bloc's security, competitiveness and solidarity.

"Like Latvia, all countries are currently analyzing in detail the EC's proposal for the EU's multiannual budget, and it is clear that further discussions to reach a common decision among all EU member states will not be easy. At the same time, we confirmed the close relationship between the Baltic states and Germany and the common goal of strengthening Europe, its economy, capital markets and defense capabilities," the Latvian finance minister said.

Alongside the discussions on the future of the regional capital market, the Baltic and German finance ministers discussed the EC's proposal for a long-term EU budget or Multiannual Financial Framework for 2028-2034. The Latvian minister stressed the need for a simpler and more flexible EU budget, which would at the same time maintain sufficient funding for the cohesion and agriculture policies and provide targeted support to countries bordering aggressor countries and experiencing a high socio-economic impact due to the war in Ukraine. The focus of the countries is different and the finance ministers acknowledged that further discussions to reach a common decision among all EU member states will not be easy.

The brigade-level unit currently stationed in Lithuania is the first German unit deployed in a foreign country after the Second World War and comprises around 700 German soldiers. By 2027, the German presence is expected to grow to 5,000 Bundeswehr personnel. The German finance minister underlined that Germany and the Baltic states are close allies and reliable partners in strengthening security on Europe's eastern flank. The finance ministers also discussed ways to increase spending in the national budgets to strengthen defense capabilities, as well as the need for long-term financial support for Ukraine, including the creation of a new EU instrument and legal solutions for the transfer of frozen Russian central bank assets for the reconstruction of Ukraine.

During the meeting, the parties agreed to meet in Riga next year, and Aseradens invited the Estonian and Lithuanian ministers to participate in the Baltic Capital Markets Conference, which will take place in Riga on November 27 this year. Discussions at the conference are expected to focus on the development of capital markets in the region, highlighting their importance for sustainable financing, especially in the context of growing defense needs and budget deficit challenges. Promoting private sector involvement and strengthening the integration of the Baltic capital markets will also be high on the agenda.