Analytics, EU Regional Policy, EU – Baltic States, Modern EU

There are several sectoral Commissioners in the EU executive institution dealing with the complex regional issues: among most important for the Baltic States are: a) regional and urban policy “sector”, and b) agriculture and rural development. Besides, there should be taken into account such directions in the European integration as energy, transport, health issues, etc.   

EU’s regional policy: structure and functions

In the main Commission’s department responsible for the European policy on regions and cities, there is a “general directorate” called DG Regio, with a special implementation unit D.5 dealing with the policy coordination for Estonia, Finland, Latvia and Lithuania (managers: A. Martinez Sarasola and L.Sproge).

See: https://ec.europa.eu/regional_policy/sources/dgs/organigramme_en.pdf

European policy’s objectives are numerous: from research, technological development and innovation, to ICT, to competitive small business, to shift towards a circular and low-carbon economy, to environmental protection and resource efficiency, to sustainable transport and better transport infrastructures, to sustainable and quality employment and labour mobility, to promoting social inclusion and combating poverty, to investments in education, training and lifelong learning. No wonder about 700 civil servants work for the DG Regio. 

More in: https://ec.europa.eu/info/topics/regional-policy_en

European regional policy is developing through 3 main funds: European regional development fund (ERDF), Cohesion fund (CF) and European social fund (ESF); these funds are working in close cooperation with two other funds: the European agricultural fund for rural development (EAFRD) and the European maritime and fisheries fund (EMFF), which have “united” recently into the European structural and investment (ESI) funds.

General reference: https://ec.europa.eu/info/departments/regional-and-urban-policy_en

Agro-rural development

Objectives in the agro-rural development sector are numerous too: from helping farmers to produce sufficient quantities of safe food (with the producers respecting EU norms on sustainability, environmental rules, animal welfare, etc.), to providing farm businesses with support systems to help stabilise their incomes in the face of less predictable production conditions, to facilitating investment in a sustainable, modern farming sector; to maintaining viable rural communities, with diverse economies; and to creating and maintaining jobs throughout the food chain. More in: https://ec.europa.eu/info/topics/agriculture_en 

For example, Rural Development in Estonia, Latvia and/or Lithuania is managed nationally through Rural Development Programme (RDP), funded under the European Agricultural Fund for Rural Development (EAFRD) and national contributions. The RDP sets out priority approaches and actions to meet the needs of the specific geographical area it covers. See more in the EAFRD-supported projects in the Baltic States, as well as in the local action groups’ activities, so-called LAGs. 

Rural development funding through the EAFRD in these countries is part of a broader framework of European Structural and Investment Funds (presently, ESI Funds), including also Regional Development, Social, Cohesion, and Fisheries Funds. These are managed nationally, by each Baltic State, on the basis of Partnership Agreements, i.e. strategic plans outlining these countries’ goals and investment priorities in the rural development as part of the general national growth strategy.

See, for example priorities for Latvia in: https://enrd.ec.europa.eu/country/latvia_en/ and for Estonia in:  https://enrd.ec.europa.eu/country/estonia_en  

Source: https://ec.europa.eu/info/departments/agriculture-and-rural-development_en

More on the European agricultural sector’s development see: Eteris E. European agriculture: policy’s effect for the Baltic States and Latvia, in:

http://www.baltic-course.com/eng/modern_eu/?doc=145322

Regional and urban issues

The Commission’s DG Regional and Urban Policy has identified the following main multiannual priorities for 2016-20 with about € 40 billion in yearly financial support. These priorities are going to be “transposed” into the Baltic States and Latvian growth strategies:

- a new boost for jobs, growth and investment;  

- a connected digital single market; for example, access to high capacity ICT networks is regarded as a key factor of competitiveness and economic growth. Due to ERDF investment, particularly in less developed regions, the extent of broadband coverage will increase: more than 14 million additional households will be covered by broadband access as a result of ERDF support in 2014-2020. Besides, 77 500 companies will receive ERDF support to boost the use of quality ICT services and to develop ICT products. Over 3,600 enterprises will be supported to introduce new to the market or new to the firm ICT innovations  

- a resilient energy union; as to the energy efficiency, the following investments are expected (in €): 4.9 billion in renewable energy, which will contribute to around 7,670 MW of additional capacity of renewable energy production; 3.4 billion to support energy efficiency in over 57 000 companies, mainly SMEs; 13.3 billion will be invested in energy efficiency in public and residential buildings, leading to almost 1 million households with renovated dwellings and reduced energy bills for public buildings; 1.7 million will be invested in the support for high-efficiency cogeneration; 1.1 billion for investments in smart distribution grids will result in 3.3 million additional users connected to smart grids; and 2.3 billion is allocated for infrastructure for smart electricity and gas storage and transmission systems.

- a forward-looking climate change policy; for example, € 6.4 billion is allocated to prevent climate change-related risks, in addition to € 1.1 billion for disaster resilience and the management of non-climate related risks. This will support a broad range of measures, including flood prevention and ecosystem-based measures such as green infrastructure. These investments aim at protecting 13.3 million people from floods and 11.8 million from forest fires while making a positive impact on jobs and growth. Risk assessments, which take climate change adaptation strategies into account, are a precondition for funding in this area.

- a deeper and fairer internal market with a strengthened industrial base, etc.  

See more in: https://ec.europa.eu/info/sites/info/files/strategic-plan-2016-2020-dg-regio_april2016_en.pdf

Some expected medium-term achievements in the EU member states:

- Research and innovation, R&I: around 130,000 firms will receive R&I support and almost 72,000 researchers will benefit from improved ERDF-supported research facilities.

- Supporting the growth of Europe's SMES: under the European Regional Development Fund (ERDF) alone, 5% of all SMEs and 8% of all new enterprises will be supported. The ERDF will support approximately 1,100,000 enterprises, of which 129,460 will be in a position to increase their research and innovation capacity.

- Protection of environment, circular economy and resource efficiency: waste management will be supported by ERDF – with about € 5.5 billion – in the regions where this is particularly needed, leading to expected increased waste recycling capacity by 2.5 million tons.

- Transport infrastructures: 7,515 km railway lines, of which 5,200 km belonging to the TEN-T, will be built reconstructed or upgraded. 3,100 km of new roads will be built, of which 2,020 km will be TEN-T. 10 270 km of roads will be reconstructed, of which 798 km will be TEN-T. The 2,818 km of TEN-T road to be built or upgraded represents 5% of the TEN-T network.

748 km of tram or metro lines will be constructed or improved. 977 km of new or improved inland waterways are foreseen.

- Direct job creation: interventions financed by DG Regio will support the direct creation of 423,100 new jobs, 29,500 of which will correspond to new researchers employed under ERDF research measures; many more jobs will be created indirectly.

Regional development priorities

There are two mega trends - artificial intelligence and circular economy (circular economy is an economy that –popular said- doesn’t produce much waste and also reuses and recycles it). In the next five –six years it will be a huge issue for the EU and the member states. Besides, the Commission is preparing proposals to expand the number of products using the EU’s eco-design rules with some digital aspects.

The Baltic States shall be prepared if the next Commission decides to widen the scope of the eco-design directive to include regulations for some products that they must be “repairable” (e.g. repairing mobile phones, which is still too expensive.

See: Directive 2009/125/EC of the European Parliament and of the Council of 21 October 2009 establishing a framework for the setting of eco-design requirements for energy-related products, in the Official Journal, Legislation Issue, nr. 285, 31.10.2009, p. 10–35:

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32009L0125

Examples in perspective growth for regions

The EU is developing unified standards for packaging systems, which very soon could become global standards. When it comes to the circular economy, the member states are having their own powers to set standards: for example, in order to eradicate the worst plastic products for the environment: straws, coffee capsules, bottle caps and other plastics. That means, people have to change their consumer and cultural patterns, mainly the ways they use various plastic things.

The batteries for e-cars: the member states shall take the battery technologies seriously and should build up their own capacities, so that they do not dependent on the global pricing policies. The batteries are becoming a strategic question for development and that is a politically inspired decision with the state-aided regional champions in the field. The private sector shall take the lead with the sufficient state-aid efforts.