Brussels warns govt may regret dividing Lithuania into 2 regions for EU aid

Marc Lemaitre, Director-General for Regional and Urban Policy, says that discussions are underway to link cohesion support with GDP per capita in a more balanced way, scrapping the division into three categories based on strict thresholds.

Under the current EU rules, there are three categories of regions: less developed regions, whose GDP per capita is less than 75 percent of the EU average, transition regions, whose GDP per capita is between 75 percent and 90 percent, and more developed regions, whose GDP per capita is above 90 percent.

“We are not excluding that for the future we would have one all encompassing formula which would not require to then talk about below a certain level or between a certain level. If it is a continuum, you don’t need to slice it up into different blocks of regions,” Lemaitre said.

If these categories are scrapped, the difference between 88 percent and 92 percent below the EU average will not be as significant as it is now.

In the cohesion policy context, Lithuania has until now been treated as a single less developed region, but Vilnius’ recent rapid economic development gives cause for concern that the country may be upgraded to a transition region and thus lose a significant part of support.

In response to these concerns, the government early this year decided to divide Lithuania into two statistical regions — the county of Vilnius and the rest of the country — in an effort to secure larger regional development funding for the central and western parts.

Lemaitre said, however, that the government might regret this decision.

“You might come to regret it, who knows. Why? If in the end this doesn’t really bring Lithuania any financial benefit compared to just leaving things as they were. Which might be the case if we reform the support system in the way I described — making it more continuous,” the head of the Directorate-General for Regional and Urban Policy, said.

“In that case if you have two regions and you have a capital region, which necessarily will look like a pretty developed region in statistical terms, suddenly you might feel that we are too restrictive in what you can spend the money on in the capital and around it,” the official said.

“To me it is obvious that we will have to continue to be much more limited in what Cohesion policy can be used in more developed regions in particular. Lithuanian authorities might not like it,” he added.

Lithuania’s average GDP per capita in 2013 to 2015 stood at around 75 percent of the EU average. GDP per capita in the region of Vilnius for that period accounted for 109 percent of the EU average, and that of the rest of the country, for around 62 percent.