Financial expert on EU summit: The Czech Republic should have been prepared for a cut in funds

20-02-2020

The change of course in EU financing being discussed at the summit in Brussels, may see future funds allotted to the Czech Republic cut by 24 percent and moreover tied to new priority areas such as climate change and innovation. How would such a shift impact the Czech Republic, which insists that its main investment priority is still road and rail infrastructure? I put the question to Ondřej Houska, a financial expert with the leading Czech daily Hospodářské noviny, who is following developments in Brussels.

Ondřej Houska, photo: Marián Vojtek / Czech RadioOndřej Houska, photo: Marián Vojtek / Czech Radio “It is hard to say, theoretically the impact should not be profound, because everyone knew in advance this would happen –since you calculate the money that a country will get from its GDP and we all know that in the past years the growth of the Czech economy has been quite impressive. So the country should have been prepared for such a cut –if that is the case in practice only the officials dealing with this at government level know. So it is hard to say.”

The prime minister claims the money is badly needed to build roads and highways. How much would it hurt the country not to get it?

“Well, that is about to change. According to the proposal that is on the table the priorities for all EU members will change – going from infrastructure to research and climate change or a green economy, if you will. The Czech Republic insists that it has to use the bulk of the money for infrastructure purposes, but the Commission says you already had enough money for that and it is your problem if you were not able to build your roads and highways. So this is also part of the fight that will be fought in the coming days.”

The Czech Republic wants more freedom in how the funds will be used and transferring them from one area to another. What are its chances of getting that?

“The original proposal by the EC stated that a country can transfer up to five percent of its allocation between respective “headings” as they are called in EU terminology, now it has been raised to 10 percent, for the Czechs it is still not enough. So I expect it will be a compromise of maybe 15 percent or 12 percent, but in principle everyone acknowledges that flexibility is needed –the dispute now is about the degree of flexibility there should be.”

Could we be looking at a No Deal on the budget?

Photo: Michal Klajban, CC BY-SA 3.0Photo: Michal Klajban, CC BY-SA 3.0 “We will for sure end up with no deal this week but, as always, we will have an agreement at the end of the day –before the end of this year. I am sure of that. The EU always finds agreement. And at the end of the day I am sure that every prime minister will be able to say “I am satisfied with what we have got.”

What would be “a good deal” for the Czech Republic? When could the prime minister say – I am satisfied?

“That is a very good question. I have asked many diplomats the same thing and the reply is –we do not know. The prime minister insists on his maximalist position, but that position is clearly untenable and at the end of the day he will be forced to compromise, that is certain. From my point of view, the logical compromise would be to stick to the original proposal of the European Commission meaning cuts of 24 percent in the Czech allocation which is still lower than the growth of the Czech GDP over the last seven years -but whether the prime minister is willing to consider that – only he knows.”

20-02-2020