EU will withdraw financial aid from Estonia

Economically, Estonia is doing great. So great, in fact, that the EU will slowly start cutting back on financial aid. Understandably, this makes Estonians a little anxious. Are we ready to join the circle of wealthy countries?

Marian Männi
Marian Männi Eesti Ekspress, Estonia
Source: Eesti Ekspress
EU will withdraw financial aid from Estonia - NewsMavens
Euros. Wikimedia Commons

Why this story matters:

For a very long time, Estonians have depended on the EU's financial aid. Since 1991, which marks our independence from the Soviet Union, we have received billions of euros worth of support.

The aid increased substantially when Estonia became the member of the EU in 2004 and we have gotten used to this support. We almost take it for granted. Over the past ten years, around 11% of Estonia's budget consisted of the aid money.

Many government investments were executed with the EU's financial help. We have built roads and created jobs. Companies got boosts and some farmers only managed to stay afloat thanks to the aid.

There was a whole new sector created for people who wrote EU projects. I know farmers who set up their entire business in accordance to the requirements of the EU funds. Take the aid away and their farms would fall apart like houses of cards.

Presumably, if Estonia's economy keeps growing as predicted, the aid will start decreasing after 2020. And we already have had a taste of what it may feel like. The Scandinavians are also looking for new countries to support and pulling their assets back from Estonia.

Yes, this should make us happy because it means that we are doing well. Our northern neighbors and the EU don’t perceive Estonia as a third world country anymore. Well, that's nice.

But at the same time, the most vulnerable areas and the weakest people will be hit the hardest, as we have seen before.

After the traumas of the Soviet Union, Estonia was ruled by either central or right-wing parties. Hence, the governments were mainly focused on the economic growth and education. The disabled, the elderly and the poor were left far behind in this rat race. They have depended heavily on the aid.

For example, Norway has supported the victims of domestic violence in Estonia for years. In 2017, they pulled their money back and some shelters had to be closed. Moreover, many communities that help addicts were built with Scandinavian financial support.

I guess that in the long run, it is a positive development that Estonians will have to consider and take care of the weakest members of the society. I guess it's sign that we're entering adulthood -- that we are ready.

In fact, Estonia is 26 years old. Old enough to stop receiving pocket money from a rich uncle.

In the article below, the Financial Ministry gives a detailed overview on what exactly will change and how it will affect Estonians.

Details from the story:

  • The EU's financial aid to Estonia will decrease by 1,5 billion.
  • Now, for every euro Estonia pays to the EU as a member state, it gets back four. Presumably, from 2021, Estonia will receive three euros for every euro instead. The amount will keep on decreasing.
  • It will be an immense challenge for Estonia to figure out how to finance the projects that have depended on the EU aid for decades now.
  • The financial support will start diminishing after 2020. The decision is based on the prediction that with Estonia's GDP at that time, there will be no need for aid anymore.
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