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EU subsidies
The small state and the sea

Latvia has benefited from economic support as has no other EU member. What if the Baltic country had never received it?

By Eric Bonse

Illustration: © Goethe-Institut / Zane Zlemeša
It is one of the greatest achievements of the EU Commission under Jean-Claude Juncker: since the Commission took over the helm in Brussels in 2014, investment and growth in Europe have increased significantly. New programs have contributed to this, such as the European Fund for Strategic Investments (EFSI), launched by Juncker. But the good old structural funds have also made their contribution.

What would have happened if this assistance had not existed, or even if the EU did not exist? For Germany, it would have been manageable, since the German economy has been running well anyway for several years. But for smaller EU countries like Latvia, it would be a big problem. They depend on stimulus from outside; the financial injections from Brussels came along just at the right time.

Even before Juncker took office, EU assistance in Latvia had an impact. From 2007 to 2013, 123 new research projects were prepared with Brussels’s support. 160 companies implemented the production of new products or technologies. Energy efficiency increased for 146 homes. In addition, 389.1 km of the transport network and Latvian roads were repaired.

EFSI has helped Latvian companies to remain competitive and to make profitable use of new technologies

After 2014, aid from the new “Juncker Plan” EFSI was added to this. It has helped Latvian companies to remain competitive and to make profitable use of new technologies. For example, the Latvian developer and manufacturer of electronic systems HansaMatrix has received ten million euros in assistance.

It was the first EFSI help for a private company in Latvia. Previously, some funding had already been approved with financial intermediaries or public bodies. The small Baltic state ranked sixth in terms of EFSI-supported investment in the EU at the end of 2018 (relative to economic performance).

Rural development has also been promoted by the EU. The result has been remarkable: in the first quarter of 2018, Latvia enjoyed the largest economic growth in the EU. At 5.1 per cent, it was ahead of even Germany. Without the EU, that would have been difficult to achieve.