Lithuania was not happy about the new EU budget proposal

In the run-up to the Brussels European Council in one week, chap. Michel presented his version of what EU finances should look like for the next seven years on Friday.

“Our recovery goals can be summed up in three words: the first is convergence, the second is resistance and transformation. In concrete terms, this means: repairing the damage of COVID-19, reforming our economies, reshaping societies” , cap. Michelis

The proposal consists of two parts, the EU budget and the Recovery Fund. The latter is the same one presented by the European Commission in May, i. € 750 billion of which € 250 billion will be loans and € 500 billion. subsidies in euros to the states. The Commission plans to borrow this money from the markets and return it within 30 years from 2027. from Member States to the EU budget by the end of 2007, reducing payments in certain areas and taking over the administration of certain taxes.

Documents previously submitted by the Commission show that Lithuania has been allocated 3,908 billion. in the form of grants amounting to € 2,419 billion and EUR – loans. Total – 6,327 billion. EUR from the Recovery Fund. This is significantly more than for Latvians and Estonians, but 10 times less than for Poland.

Ch. Michel also presented the DFP, which is the lowest of all previously presented and amounts to 1,074 billion. (previously € 1,087 billion and € 1,135 billion). This is certainly a reverence for the so-called ‘austerity quartet’ (Austria, the Netherlands, Denmark and Sweden), which is hostile to billions in the Recovery Fund and blocked the European Council at the MFP in February because they felt that it was too big.

At that time, Lithuania is in favor of a larger budget.

“Lithuania’s position on the size of the EU budget has remained unchanged: the multiannual financial framework should be more ambitious, it is important to secure more funds for Cohesion Policy and agriculture, to seek direct convergence of payments to farmers, “said President Gitanas Nausėda in June.

According to ch. Michel’s new proposal for cohesion policy is proposed at € 380.5 billion. (That is, 6,750 million euros less than in 2014-2021). Less money is also planned for agriculture: 355.6 billion. 44,008 million euros less than in 2014-2020). It is true that additional money is provided in these areas of the Recovery Fund.

Lithuania also opposed another chap. Michel’s reverence for the “austerity quartet” is the return of so-called overpayments to the EU budget. According to ch. Michel’s proposal will benefit Austria (€ 237 billion), Germany (€ 3,671 billion), the Netherlands (€ 1,576 billion), Denmark (€ 197 million) and Sweden (€ 798 billion).

Nor has another request been received from Lithuania to increase the amount planned for the closure of the Ignalina nuclear power plant. As before, 490 million. (The EU share will be 86%), i.e. (i.e. only 70% of what Lithuania requested). The European Parliament approved a budget of 780 million euros in the previous period. euros

Ch. Michel’s MFP proposal also enshrines the rule of law pursued by many Western EU countries, which states that EU financial assistance can be suspended if a Member State does not respect the rule of law. This is directed against Poland and Hungary, whose governments are in conflict with the European Commission over certain supposedly undemocratic reforms (the Czech Republic, which has received much of the EU’s support from top-tier companies).

“We are creating an anchor that will link the rule of law and values ​​to our European project, which is why I propose to strengthen the link between funding and respect for governance and the rule of law,” chap. Michelis

Therefore, Lithuania may face a dilemma, either to support this principle or to join, for example, Poland, with which it has had very close relations recently.

It’s true, chap. Michel’s proposal mentions the Rail Baltica project, which is important to Lithuania, as “promoting greater economic, social and territorial cohesion, and contributing to a competitive social market economy and mitigating climate change”. The specific planned quantity for Rail Baltica is not specified. Lithuania, Latvia and especially Estonia are actively fighting for 2021-2027. The EU budget would provide € 6 billion. euros for this project.

Michel’s proposal also stipulates that countries that have lost large populations will receive compensation. This means that Lithuania should receive an additional LTL 180 million in the cohesion budget. euros

Altogether, Lithuania is promised about 11 billion. € 6 billion in support of the MFF (although € 7 billion remains “in the hands” after deducting contributions to the EU budget) and € 6.3 billion in the Recovery Fund. However, the Recovery Fund is a multi-year temporary project, and the EU budget is long-term, and its reduction could set a precedent for the EU’s next multi-annual financial perspective.

“The draft multi-annual EU budget presented today must be carefully analyzed first; the figures do not like the urgency.” It goes without saying that the draft EU budget will be the subject of negotiations at next week’s European Council, where we will continue to raise the most pressing issues for Lithuania, including increasing cohesion and direct support for farmers, “he commented with the Lithuanian ambassador to the EU, Jovita Neliupšienė, is cautious.

Next Friday and Saturday (July 17-18), the leaders of all the EU countries, including President G. Nausėda, will meet in Brussels and try to agree on the MFP and the Recovery Fund. Negotiations are difficult, so there is increasing doubt that a compromise will be reached as well.