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CABINET PROPOSAL FOR DOLING OUT €11.2 BN IN GRANTS DRAWS IRE FROM REGIONS, BUSINESS

EU funds plan blasted as pork barrel politics

IN PERHAPS its last major transaction before general elections, the country's mutilated ruling coalition on May 17 reached consensus over how to distribute €11.2 billion (Sk422 billion) in money that Slovakia is eligible to draw from European Union funds between 2007 and 2013.

IN PERHAPS its last major transaction before general elections, the country's mutilated ruling coalition on May 17 reached consensus over how to distribute €11.2 billion (Sk422 billion) in money that Slovakia is eligible to draw from European Union funds between 2007 and 2013.

However, furious responses from business groups and regional politicians to the cabinet edict promise that the administration will face stiff opposition in enforcing its will.

Construction and Regional Development Minister László Gyurovszky of the Hungarian Coalition Party (SMK) described the deal as a compromise between the SMK and the Slovak Democratic and Christian Union (SDKÚ), the two remaining partners in the former four-party government.

The plan gives lavishly to infrastructure and building a knowledge-based economy, which is unsurprising for two reasons: The ministries that govern these sectors are either currently or potentially in the hands of the current ruling parties, while most political parties in the country have declared education and a more competitive economy based on hi-tech skills and computer literacy as major goals.

If the cabinet proposal holds up, the transport sector will absorb €3.44 billion, while the knowledge-based economy will get €2.6 billion, and €1.47 billion will flow to Slovakia's regions. The environment will draw €1.45 billion from EU coffers, according to the National Strategic Reference Framework, as the money distribution plan is known.

Seventy-five percent of the €11.237 billion that is on offer should be gobbled up by these four main strategies; another five smaller programmes, including health care (€200 million), education (€800 million), educational infrastructure (€580 million), employment and social inclusion (€600 million) and technical aid (€100 million) will split the remaining 25 percent of funds.

The Transport Ministry, held by the SDKÚ, says that Sk32 billion will go on freeways while Sk30 billion will cover the construction of other types of roads. Slovakia is currently in the middle of an ambitious freeway construction project to link the country east to west by both a northern and a southern route from Bratislava to Košice.

Gyurovszky said that Slovakia must co-finance at least 15 percent of the total funding.

While the government now heads into elections as if the major EU funding questions have been answered, the matter is far from settled.

First, the European Commission will still have the last word on the document that the Slovak cabinet approved, as the wording of the National Strategic Reference Framework can be altered in Brussels.

Second, the June 17 general elections may return a substantially different government to power, one that will be concluding the talks with Brussels, and that will thus have the chance to scrap the decisions made by the current Dzurinda cabinet.

Indeed, given the SDKÚ's declared interest in the education portfolio during the next election term, observers have been quick to point out that the cabinet scheme potentially gifted the party several billion euros in support for the education and knowledge sector.

Third, in its determination to reduce EU funding support for commercial projects, the current government has angered the private sector, which blasted its decision to largely exclude companies from access to EU structural and cohesion funds.

Klub 500, a business association for companies with more than 500 employees, said the decision was highly discriminatory towards the private sector.

"The government's decision to exclude the private sector from the possibility to draw structural funds is unfortunate, incorrect and unfair. The club has serious objections towards the system of distributing grants in the first programming period. But the government, instead of conducting an in-depth analysis of these shortcomings, simply excluded the private sector from the possibility of drawing the funds," Klub 500 stated for The Slovak Spectator.

According to Klub 500, the exclusion of the private sector opens the door for money to be distributed on the basis of political connections.

The Klub also found fault with the plan's priorities, noting that compared to other EU countries, Slovakia has been investing far too little into developing tourism, while the business sector sees this area as a priority.

The chairman of the Slovak Chamber of Commerce and Industry, Peter Mihók, said that the cabinet decision would "hurt mainly small and medium-sized businesses, for whom no state budget support programmes exist, unlike in other EU countries".

Finally, the cabinet plan has angered Slovakia's regional politicians, who in a public letter to Prime Minister Mikuláš Dzurinda published on May 18 accused the government of favouring the richer western part of the country.

Given the fact that the EU's cohesion and structural funds, from which the money will be coming, are designed to reduce economic differences between regions, "it is absolutely unacceptable to us that the transport projects [proposed for receiving strategic EU funding from 2007 to 2013] were almost exclusively aimed at developing transport infrastructure in western Slovakia and Bratislava region", the eight heads of Slovakia's regional governments wrote in a joint letter.

"This is a gross misunderstanding or ignorance of the purpose of structural funds. The approval of this proposal in its current form would result in greater regional divides in Slovakia - the poor would get poorer, and the rich still richer."

The regional premiers said that only 31.3 percent of the funding for transport had been earmarked for the Košice, Prešov, Banská Bystrica and Nitra regions, while almost 70 percent was reserved for the richer west of the country.

"We demand an explanation," the premiers wrote, adding that if they didn't get one, they would appeal to the European Commission.

According to the May 17 proposal, Slovakia will also try to get EU funding for the renewal of concrete housing estates outside the Bratislava region. The coalition agreed on a sum of Sk4.5 billion, which should cover the renewal of about 50,000 apartments, according to the SME daily.

Slovakia has been searching for a solution to its decaying housing estates, which are in critical condition in ever y post-communist country.

Last December, representatives of the Visegrad Four countries (Slovakia, the Czech Republic, Hungary and Poland) collectively demanded that the renewal of housing estates in Eastern European cities be addressed seriously.

The volume of approved applications in Slovakia for grants from the EU's structural fund stood at Sk62.9 billion as of May 2, the SITA news agency wrote. These applications related to 3,638 projects. The Construction Ministry alone received a total of 11,625 applications asking for Sk189.8 billion, and approved 2,423 projects worth Sk41.3 billion.

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