Money Down The Drain: What Loss Of EU Funds Could Mean In Practice For Poland – Analysis
Poland’s fight with the EU Commission over its reforms to the judiciary could cost it 110 billion euros in lost funds. BIRN puts that into context.
By Claudia Ciobanu
Poland’s judicial ‘reforms’, amounting to the politicisation of the justice system, mean that the country’s citizens are now at risk of losing two major sources of cash from the EU: 35 billion euros in grants and loans from the EU post-pandemic recovery fund and a further 75 billion euros from Cohesion Policy funds, which were supposed to flow into the country between 2021 and 2027.
110 billion euros would be an enormous sum of money to forego under any circumstances. But the absence of this money is made more painful by the fact that, like other countries in the region, Poland has been struggling with inflation and rising energy costs – with no respite in sight.
The Law and Justice (PiS) government has for years been engaged in a protracted battle with the European Commission over the rule of law. In May, the government agreed on a series of “milestones” to dismantle the reforms, though after talks last week the EU Commission would only say that Poland is moving “in the right direction” and still needs to meet Brussels’ demands “in full”.
There’s such a sense of fatigue surrounding this long-running issue in Poland that, with each passing day, for many ordinary citizens it has become more and more abstract. Yet time is passing and some countries already began receiving their slice of the recovery funds in 2021.
This is why BIRN has decided to put the funds into context to show what is really at stake for the Polish people if its government refuses to back down and guarantee judicial independence, as requested by the EU Commission.
A health boost to the nation
Some of the largest amounts due to Poland under Cohesion Policy funds include the following (not an exhaustive list):
It is not possible to say exactly how this money would be spent if it were available today: the way that EU funds are allocated depends on the projects submitted by various bodies. However, examining where such funds went in the previous EU budget period (2014-2020) provides an idea of how the money might be used.
For example, in the previous budget period, the EU paid 50 million euros towards the reconstruction and modernisation of the regional hospital in Torun, a town in central Poland (it is just one of many similar projects financed from the Social Development track). One can then calculate that 80 different hospitals could be built or modernised using the money from the current Social Development track. Considering the depth of the crisis that the national health system is in, it would be hard to argue the government can afford to lose this cash.
Similarly, the EU contributed 20 million euros towards a psychiatric hospital facility in Mazowsze, the region where Warsaw is located. At this cost, 200 psychiatric units could be paid for out of the Social Development track alone. Poland’s psychiatric care is particularly lacking, with help from the state system virtually impossible to access, especially for young people, even as the COVID-19 pandemic, the Ukraine war and other crises fuels a mental health crisis.
In another example, the EU contributed a little over half a million euros towards the construction and equipping of a nursery in the town of Bydgoszcz, western Poland, which was used to create 80 extra places for kids under the age of three. Childcare, too, is in severe crisis in Poland, with parents – especially in the larger cities – facing waiting lists hundreds of places long if they want to put their children in state childcare and return to work. 8,000 such nursery units like the one in Bydgoszcz could be constructed with money from the Social Development track.
Keeping warm and mobile
In the previous budgetary period, the EU contributed 1 million euros towards the reconstruction of the district heating system in Bielsko-Biala, a town of 170,000 in the Silesia administrative region, southern Poland. Modern district heating is one of the major challenges for any government if it wants to move towards a less polluting energy system while at the same time reducing energy poverty. Over 20,000 similar district heating projects in small towns could be financed using the Infrastructure, Climate and Environment track from the current Cohesion Policy funds.
The EU provided 500 million euros in the previous budgetary period for energy efficiency improvements in a housing complex where 110 people live in the eastern city of Lublin. With the sharp rise in energy prices and heating source supply problems that Poland and countries across Europe are facing, saving energy by investing in insulation is one of the key means of building resilience in the system. Over 40,000 such projects to insulate housing complexes could be financed from the Infrastructure, Climate and Environment track from the current Cohesion Policy funds.
The EU also paid 100 million euros to modernise and purchase locomotives for the national rail carrier PKP Intercity. The money was used to upgrade 150 wagons, purchase 20 electric locomotives and modernise others. Over 200 similar investments in major rail projects could be financed out of the Infrastructure, Climate and Environment track from the current Cohesion Policy funds. With rail one of the cleanest modes of transport and enjoying a revival across Europe because of climate change concerns, continuing with improvements to the country’s rail network would be a worthwhile transport strategy for Poland.
If we assume a warm meal costs 20 zloty (5 euros) to prepare, the half a billion euros available from the EU precisely for this purpose could be used to feed 250,000 people every day for one year. Considering that food charities across Poland are reporting increasing lines for both warm food and food parcels, this dedicated chunk of the Cohesion Policy funds would certainly be warmly welcomed by hungry families across Poland.
Recovering from COVID
Unlike the Cohesion Policy funds, the 672-billion-euro Recovery and Resilience Facility is an unprecedented one-time injection of funds to support reforms and investments that can kick-start member states’ economies and build a more resilient, green and digital Europe.
The Recovery and Resilience Plan submitted by Poland for approval by the EU Commission, which details how it intends to spend the 23.9 billion euros in grants and 11.5 billion euros in loans, gives a sense of the targets that Warsaw could achieve were it to make proper use of this money.
As with the aforementioned Cohesion Policy funds, the following provides examples of how some of the recovery funds could be spent. Absent agreement with Brussels, Poland would have to use domestic sources of funding to complete these projects.
On the basis of the targets set out in Poland’s Recovery and Resilience Plan, we know the money would suffice for:
