EU cash could stop flowing

  • 2008-06-04
  • By Marge Tubalkain-Trell

British invasion: Debenhams, one of the U.K.'s most popular department stores, announced plans to open stores in the country.

TALLINN  - The government has admitted that it has no contingency plan to deal with a situation where money from the European Union stops coming in.
After 2014, the European Union might give less money to Estonia from the Cohesion Fund, because Estonia has become too rich.

The Cohesion Fund was set up essentially for those countries, whose gross national product is less than 75 percent of the European average although those at 90 percent of average will still get a reduced amount. According to Eurostat Estonian, national gross product is now 71 percent.
By 2014, it is likely that the figure will have exceeded 75 percent. Moreover when countries like Croatia join, it will likely lower the average GNP of the European Union.

The ministry said the government is hoping to complete the most important projects by 2014 but if any of there is any delays to these projects, there could be problems because there are no other sources of cash.
"To those projects, which get money from the Cohesion Fund, there is no alternative besides state budget," said Annika Vilu, a spokesperson from the Ministry of Finance.
From 2004-2006, the Cohesion Fund has given 6.7 billion kroons (42 billion euros) to Estonia. This has been a huge boon to the Estonian economy and has helped fuel the rapid development of the country in the past four years.

"I can say that with the support Estonia has grown and developed faster," said Vilu.
 Some politicians claim that the country should not accept handouts from the European Union when it reaches a certain level as a question of national pride. In April 2008 Tunne Kelam, a member of  the European Parliament for the Conservative group Pro Patria and Res Publica Union, said  that Estonia should not take  the transition money from the European Union after 2014.

The ministry insists that the money is still needed to sustain the country at the same level
"Estonia does not plan to give up the support of the Cohesion Fund," said Vilu.