“After a report in Politico this week about the request of
Latvian Prime Minister Andris Kulbergas that Brussels should allocate 7 billion
euros to his country to cover military and economic costs related to the events
in Ukraine, the politician explained the motives for such a request to the LETA
news agency.
Emphasizes differences in defense spending
A. Kulbergas explained that Latvia does not require these 7
billion euros to be allocated as additional funding.
According to him, this amount reflects the difference in
spending: the Latvian Parliament (Saeima) has established by law that from 2027
Latvia must allocate at least 5 percent of its gross domestic product (GDP) to
defense, while the average European country will spend significantly less on
defense. According to Kulbergas, over seven years, these 7 billion euros would
amount to approximately 1.8 percent of Latvia’s projected GDP.
Kulbergas stressed that deterring threats at Latvia’s border
benefits the whole of Europe.
“If the border holds, Bavaria and other European regions
also become safer, regardless of whether Bavaria pays for it. When the benefits
accrue to everyone and the costs are concentrated in one geographical area, the
result is always the same – insufficient investment,” the Latvian Prime
Minister said.
He added that Latvia’s “market price of debt” is also higher
precisely because of the country’s border location, which means that the
country pays the highest interest rate for investments that reduce the threat
to the entire European Union (EU). In Kulbergas’ opinion, this is a fundamental
market flaw that makes it impossible to solve the problem with loans alone.
Orders for Western European countries, growing debt for
Latvia
According to A. Kulbergas, each euro invested in border
fortifications provides a greater deterrent effect than a euro spent 1.5
thousand kilometers west of the border.
“If Europe wants to get the most security for every euro
spent, it must invest where the border is. This is not a request to show
solidarity. This is a proposal on how to allocate capital most effectively,”
the politician assured.
According to him, most of the funds spent return to the
West, because weapons and equipment are purchased in Germany, France, Sweden,
the Netherlands and Spain. While Latvia is sinking deeper into debt, Western
European countries are receiving orders, A. Kulbergas noted. He emphasized that
it is not about transferring money to Latvia, but about ensuring common
European security.
“One cup of coffee per year”
According to A. Kulbergas, 7 billion The €1.2 trillion
budget represents about 0.4 percent of the proposed nearly €2 trillion European
budget and 5.3 percent of the €131 billion earmarked for defense and space.
Dividing this amount by 449 million Europeans, one person would have to pay
€2.23 per year.
“One cup of coffee once a year,” A. Kulbergas calculated.
At that time, the burden on one Latvian resident amounted to
about €540 per year, he stressed.
The public sector is suffering
The Prime Minister pointed out that currently Latvia is
actually financing part of its defense spending with borrowed funds, or, in
other words, by diverting funds from the country’s schools, hospitals and
pensions.
According to him, Latvia’s debt is projected to grow from 47
percent of GDP in 2025 to more than 54 percent of GDP by the end of this
decade.
“Europe can pay for its borders in euros. Otherwise, Latvia
will pay for them in people,” said A. Kulbergas.
The Latvian Prime Minister also stressed that if the EU
cannot allocate 2.23 euros per capita per year, the question is no longer
whether Latvia can afford to allocate 5 percent of GDP to defense. According to
him, then the question arises as to what Article 42(7) of the EU Treaty means
in practice. It stipulates that if a Member State becomes a victim of armed
aggression on its territory, other Member States must provide it with
assistance and support by all available means in accordance with Article 51 of
the United Nations Charter.”
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