European Union (EU) funding for infrastructure is targeting the newest EU member states, with Poland receiving the lion’s share. Funding comes from the European Structural Funds and the Cohesion Fund—financial tools set up to improve the overall economic health of the EU by reducing regional disparities in terms of income, wealth, and opportunities. Based on levels of gross domestic product (GDP), Europe’s poorest countries are earmarked for the majority of support, although all European regions are eligible for funding through various subfunds and programs.
“There are fairly significant pockets of capital available for infrastructure that will amount to billions of euros being deployed in most of the recipient countries over the next couple of years,” says ULI Europe’s new chief executive, Joe Montgomery, who adds that “the accession countries are receiving a significant slice.”
The EU is putting into effect substantial expenditure programs to drive improvements in infrastructure across Europe, as part of the Trans-European Transport Network—a planned set of road, rail, air, and water transport networks designed to serve the entire continent and costing €390 billion between 2007 and 2013; along with the TEN-T priority projects—30 priority projects of European interest within a 2020 horizon, costing €154 billon during the same timeframe.
Of these key projects—some of which have already been completed—18 are railway projects, three are mixed rail/road projects, two are inland waterway transport projects, and one refers to Motorways of the Sea. One of the initiatives is a strategic rail project that will link four new EU member states—Poland, Lithuania, Latvia, and Estonia—as well as Finland.
National resources will contribute around 70 percent of the funding for these projects, with grants and loans from the 27 EU member states providing the remaining 30 percent of funding.
The European Regional Development Fund (ERDF)—a subcategory of the European Structural Funds—and the Cohesion Fund are important sources of cofunding of the TEN-T, representing almost 11 percent of the total investment requirement. Per member state, Poland accounts for the largest share of Transport/TEN-T objectives in the Cohesion and Structural Funds’ allocation. The Czech Republic ranks second.
“Poland is the most significant beneficiary, but other recently added EU member states will also receive substantial assistance,” says ULI member Anne Kavanagh, global head of the property services group at AXA Real Estate Investment Managers, based in London.
The ultimate aim of the projects and the funding is to promote balanced, harmonious, and sustainable development, creating the most important infrastructure for international traffic, in line with the general objectives of the cohesion of the continent of Europe (modal balance, interoperability, and the reduction of bottlenecks).
In terms of timing, a substantial component of the EU funding in Poland is being drawn down and implemented prior to the Euro 2012 football championships (held jointly with Ukraine), which will act as something of a showcase of Poland to the rest of the EU.
The Cohesion and Structural Funds will provide a total of €347 billion for the 2007–2013 period, a figure that is more than one-third of the total EU budget in this period. The central and eastern European (CEE) countries are the main beneficiaries of the EU funds with €177 billion, which is also the biggest source of public funding in the EU’s newest member states.
Being in the most need, Poland and other CEE countries will receive the greatest level of EU funding for infrastructure. These funds will help to improve transport links, alleviate traffic, and increase security. More widely, the TEN-T projects will also help position the transport network for tomorrow’s objectives: becoming more environmentally friendly as well as connecting Europe’s east and west.