Czech Republic may lose millions of euros from EU structural funds

Photo: European Commission

The European Commission has warned EU members who joined the alliance in 2004 that they stand to lose the funds reserved for them in the block's joint budget because they are not accessing the money quickly enough. Altogether the ten states concerned have barely used up half of the money reserved for their research and development projects. The Czech Republic is one of the worst in this respect. In the course of this year it has failed to get a single grant application approved, and there is a very real threat that millions of badly needed euros will slip through its fingers.

Radio Prague asked Tomas Sedlacek, chief economic strategist at the CSOB bank, what seems to be the problem:

"Well the problem is an incredibly large number of "sins" so to speak committed by the administration and the authorities. They use the excuse of elections and then not being able to form a serious government, having only a fragile majority in parliament and so on and so on. But it is clear that these are just plain excuses. It is quite clear that there has been a lack of work in the most basic sense of the word to try and access money from the EU's structural funds."

Would you say there is also a lack of continuity in administration?

"This seems to be a big problem not only in administration but also on the political scene. I mean it is perfectly normal for politicians to quarrel over taxes and for there to be differences over petty issues. That is perfectly in order. It is a tradition of democracy that we all respect. But some things should be done together, coordinated together and one of those things seems to be the EU structural funds. That is an agreement that is far more important and lasts far longer than one electoral period and therefore this is an area that requires understanding and mutual cooperation across the major political parties. Because there will obviously be a repeat of this situation in four years' time. We can see a similar problem in the sphere of reform, for example pensions, where we must have some sort of a political agreement across all parties regardless of the party allegiance or the preferences of the individual deputies."

And what are the implications? What is at stake if this situation persists?

"Well there is a lot of money at stake and it is the cheapest money that we could have gotten. As we all know the Czech Republic is not doing very well in terms of the fiscal implications and this was an offer of help from the other countries of the European Union and the main philosophy of these structural funds is to try and do things that we believe in such as education or infrastructure or being ecological - lets do these things together and let financially stronger members help poorer members. So this is an opportunity that we have obviously not been able to make good use of. It is not only a shame it is a problem for the financial sector because it will mean that a lot of the money that we were expecting will not flow from the EU and thus plunge our finances into even more serious problems."

Photo: European Commission
Is there any chance of correcting the situation so as not to lose a great deal of money?

"Well the problem we are speaking of is available funds from the year 2005 -which will expire at the end of 2007. It is already quite late in the year and it would have to be a combination of some miracles and hard work on behalf of our bureaucracy and ministers and also a lot of goodwill on the part of the EC. There is still hope that some of the money that we should have drawn this year and have not will be made available - and we will have to ask for this - in the year 2008 but this is of course still under question and we will need to do a lot of begging in order to get to that favourable position."