The Importance of Cohesion Policy in a United Europe: Latvia’s Economic Rise and Future Funding Changes

Cohesion policy may not seem like the most exciting topic, but it is a very important cornerstone of a united Europe. Cohesion is a type of equity fund that helps less developed European countries, such as Latvia, to rise economically to the European average.

The pull towards the European average is happening even if we don’t notice it day to day, but if we look at a wider cross-section of years, the changes are undeniable. This was also confirmed by the President of the European Commission, Ursula von der Leyen, in her speech to the Cohesion Forum:

“Gross domestic product by purchasing power in the countries that joined the European Union in 2004 has grown from around half of the EU average to almost 80% today.”

In particular, in the case of Latvia, this indicator is not 80%, but almost 70% of the European average. But it is also an improvement over 20 years ago.

Within the framework of cohesion policy, approximately 9.5 billion euros have been invested in Latvia from 2004 to 2021 through various European Union funds. In the current period, from 2021 to 2027, another €4.3 billion is available, allocated to objectives such as a smarter, greener, more connected and more inclusive Europe, among others.

From time to time we hear that the reconstruction of a hospital or the construction of traffic infrastructure has been delayed and therefore these projects could lose European funds. This has worried both the Ministry of Finance and businessmen, whose representatives followed what was happening at the forum.

Kaspars Gorkšs, director general of the Confederation of Latvian Employers, indicated that a stone should be thrown in the field of civil servants: “If we analyze, it is not one or two ministries that are reluctant to receive these funds, but that’s it. most ministries and the Chancellor of the Exchequer.”

Inviting change in funding distribution

Local governments are doing much better by investing European money. For example, 160 million euros have been invested in the development of the Cēsu area over the past 15 years, with 100 million of these being European funding.

Jānis Rozenbergs, chairman of the Cēsi County Council (“Jaunā Vienotība”), said that in many cases, European funding is exactly what ensures the development of the county: “Well, for example, the Cēsi Concert Hall. we could not afford such from our own funding.

Major investments in the education system. Major investments in street infrastructure, water management, heat supply management.”

While other regions are struggling to get funding, the mayor of the Cēsu region is asking the Latvian city to change the distribution of Cohesion funds in the next period. According to him, the objectives for the use of funds should be more flexible, because cities are different and their needs are different. Rosenbergs also confirmed that when deciding on support measures, special attention should be paid to regions whose development is affected by Russia’s aggression in Ukraine.

“The geopolitical dimension should be added to cohesion policy,” said Rosenberg.

“Entrepreneurs are currently stopping investments, people are saving money, the economy is slowing down, so the geopolitical aspect is very certain for us. “

The same opinion was also expressed by representatives of local governments of other European countries, but changes will only be possible in the next Cohesion planning period, which starts after 2027.

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