How Britain's EU budget proposal could put Slovakia under deep financial strains

In Slovakia, Britain's EU budget proposal has been given a big thumbs down. Last year Slovakia invested 356 million euros in badly needed transport infrastructure. Eastern Slovakia is poorly served by roads and the Western part of the country is crossed by one of the so called Pan European transport corridors linking Southern Europe to the Baltic countries via Austria and Poland. But the British proposal to cut EU money for road projects puts Slovaks in a difficult position.

These road projects are very expensive and are financed by the European Union. Actually they are co-financed because the host country has to contribute with up to 70% of the total investment. The Slovak government had to borrow some money from international banks in order to cover its part of the costs. Here is Zuzana Paucova the public relation manager of Taisei a Japanese contractor that builds a section of the pan European corridor in Bratislava explaining how tricky it is to build a tunnel financed via an EU project.

"As it is usual when you come to the mountains you can't meet something which was already predicted in advance. The best investigation is done when you first build a pilot tunnel but the decision of the Slovak government and other investors was to do just a few drills and according to their results to asses the geology. But when you start to build de tunnel effectively we discovered that the situation was a bit different and the work went on slower."

EC Vice-President Jacques Barrot about the importance of building roads and railways across Europe:

Photo: European Commission
"The question is to better connect the European Union with the neighbouring regions. Why should we extend the transport corridors? Why should we go further? It is an issue of economic growth and free movement of goods and services. It is an issue of further integration. These infrastructure projects have a major financial impact."

Mr Barrot spoke at a press conference on Wednesday; two days after British Foreign Minister Jack Straw announced his government's proposal for the European Union's budget for 2007-2013. And guess what the Brits want? To cut by 10% the funds allocated to infrastructure projects in the new EU member states including Slovakia. This means that in order to finish its plans to build roads highways, the Slovak government needs to borrow more money as the funds from the EU are scarcer. Off the record, officials in Bratislava are and feel betrayed. Before Slovakia joined the EU in May last year EU kept on saying that the country doesn't have adequate administrative capacity to prepare projects good enough to make good use of the EU money. Officials in Brussels strongly advised Slovaks to invest in huge transport infrastructure projects. Less than two years later the EU is on the verge of cutting its funds for these projects leaving Slovaks to pay the price by themselves.

In Bratislava nobody wants to talk about the impact of such a cut, if approved. The Minister of Foreign Affairs, Eduard Kukan is the only one entitled to speak:

"We will fight against this proposal. If they want to give us less money for infrastructure then they should compensate for it somehow. We would like to get some extra 123 million euro for decommissioning the two reactors of the Bohunice nuclear power plant. Then they should make the rules for drawing the money from the structural funds more flexible, for example to count a project period from the moment it starts to work effectively and not from the moment the application package is submitted."

Slovaks hope that Britain's proposal will not be approved at the next European Council summit scheduled to take place on December 15-16 in Brussels. Otherwise, they will be laughed at by neighbours Austrians who didn't bother to build their own segments of the trans-European highway arguing it is a waste of taxpayers' money.