Pöördumine

Suur-Ameerika 1 / 10122 Tallinn / Estonia / +372 611 3558 / [email protected]

www.rahandusministeerium.ee / Reg. code: 70000272

H.E. Mr Raffaele Fitto

Executive Vice-President for Cohesion

and Reforms

European Commission

European Commission

[email protected]

Dear Vice-President Fitto

I would like to express my sincere gratitude for your openness and commendable efforts in

seeking ways to enhance the flexibility of the current Cohesion Policy regulatory framework.

Such improvements are essential in accelerating and streamlining the use of funds while

effectively addressing the pressing challenges emerging around us. In today’s volatile

geopolitical environment, it is imperative that our policy frameworks provide the necessary

adaptability to respond swiftly and effectively to unforeseen developments.

Recent geopolitical shifts have significantly increased security risks, particularly in our

region. The growing instability has underscored the urgent need to strengthen our resilience

and raise our preparedness against various threats. We have already witnessed such threats

materializing in recent years through cyberattacks and acts of sabotage targeting physical

infrastructure. To respond to these escalating risks, we must make significant investments in

defense and deterrence, which, while essential for national security, has placed an additional

strain on our national budget. Our defense expenditures have now reached 3.3% of GDP and

will increase in the coming years. At the same time, since the onset of the full-scale war in

Ukraine, Estonia has experienced a prolonged economic downturn. The persistent security

concerns undermine both consumer and business confidence, creating an environment in

which economic growth remains fragile and vulnerable to further shocks.

Under these challenging conditions, the 2021-2027 Cohesion Policy funds are of paramount

importance to us. We have implemented them proactively, ensuring that commitments have

already reached approximately 70%. This demonstrates our dedication to making the most

efficient use of available resources to support economic stability and development. However,

to accelerate the deployment of the remaining funds and introduce the necessary flexibility

and synergies to address the multifaceted challenges ahead, we strongly support reopening the

Common Provisions Regulation (CPR). To this end, we present the following proposals for

modifications.

Our ref. 07.03.2025 No 11-3.1/1180-1

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Firstly, to better respond to evolving geopolitical challenges and enable more effective

combination of interventions to mitigate the negative effects of regional instability, we see a

need to relax thematic concentration requirements and enhance fund transfer

possibilities. Specifically, we propose eliminating ERDF PO1 and PO2 thematic constraints

and allowing the aggregation of climate tagging across policy objectives and funds. In

addition, we suggest introducing greater flexibility for reallocating funds between programme

priorities. These changes would enable us to allocate resources more dynamically in response

to emerging needs.

Secondly, given the complexity and diversity of the challenges we face, expanding the scope

of eligible activities would significantly enhance the effectiveness and impact of Cohesion

Policy programme. Namely, large enterprises play a crucial role in fostering economic

development and resilience. Therefore, we advocate for broadening eligibility criteria to allow

support for large enterprises. Furthermore, eligibility should be extended to dual-use and

defense technologies, cybersecurity, and civil resilience measures, all of which are

increasingly relevant in today’s security landscape.

Thirdly, greater emphasis should be placed on possibilities for funding capacity-building

activities to strengthen the ability of beneficiaries to prepare projects and use funding

opportunities to respond effectively to emerging challenges. To support local governments,

including those located directly on border, it is crucial to invest in their institutional capacity.

Ensuring that they have the resources and expertise to develop and implement necessary

interventions will be instrumental in mitigating the negative impacts of geopolitical

instability. A practical way to achieve this would be to increase also the technical assistance

rate for eastern border regions, providing them with the necessary support to carry out vital

projects.

When touching the administrative capacity of local governments and other beneficiaries, I

would also like to highlight an issue that we have long sought dialogue with the Commission.

This concerns the Commission guidelines on irregularities and financial corrections.

Currently, these guidelines and the resulting practices do not allow for the proper application

of the principle of proportionality, failing to take into account the nature, gravity and specific

circumstances of the irregularity. This is inconsistent with the rulings of both the EU Court of

Justice and the Estonian Supreme Court, which emphasize the need to assess each case in

context. To address this, we are urging the Commission to amend the Guidelines and practice

in a manner, that would explicitly permit to consider the nature and gravity of the

irregularities, to ensure proportionality at the same time protecting the financial interest of the

Funds. This would not only enhance legal clarity and certainty but also improves the

reputation of EU funding.

Fourthly, to free up national co-financing and reduce pressure on national budget, which is

tight due to high level of defense expenditure and support critical investments that stimulate

economic growth, we propose increasing the EU co-financing rate to 100% at the NUTS2

level on the eastern border. Allowing full EU co-financing for projects in these strategically

significant regions would enable much-needed investments in infrastructure, security, and

economic development.

Finally, recognizing the strained financial situation in the context of widespread challenges,

we would like to propose to allocate de-committed funds to eastern border regions. The

stability of the EU’s eastern border is not merely a national concern but a matter of collective

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European security. As history has repeatedly shown, border regions are often the most directly

affected by crises, and this situation is no different. Strengthening these areas is essential to

ensuring broader EU stability. By allocating de-committed funds to these regions, the EU

would demonstrate its commitment to safeguarding its external borders while simultaneously

promoting economic and social cohesion.

I am convinced that the proposals mentioned above are pragmatic and would make a

meaningful contribution to addressing both the EU’s broader challenges and the specific

challenges faced by our country as an eastern border region. Implementing these measures

would not only enhance the effectiveness of Cohesion Policy but also reinforce its positive

impacts, demonstrating that EU solidarity is both tangible and responsive to evolving

circumstances.

We remain fully committed to engaging in further dialogue on these matters and look forward

to your support in advancing with amendment of current regulatory framework.

Yours sincerely,

(signed digitally)

Jürgen Ligi

Minister

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Triin Tomingas +372 5566 2544

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