ABSTRACT

After joining the European Union (EU), Latvia will have access to at least 625 million EUR from EU Structural Funds. These resources are undoubtedly a huge asset to Latvia and can contribute significantly to the country’s development. They inspire hope that Latvia will more quickly approach a West European standard of living. However, there are two questions that raise concern:

1) Will Latvia be able to take advantage of this financial aid? There are doubts about the professional skills and capacity of the responsible institutions and those submitting projects to ensure that these funds are received on time;

2) Will money from the Structural Funds be distributed transparently and fairly?

In other words, there are suspicions about corruption and lack of transparency – nourished by the way that foreign funds were misused in Latvia’s not so distant past. These are very important questions. They do not, however, negate the fact that the Structural Funds will have a positive effect on Latvia. Should the guiding principle for obtaining these resources be “faster and more”? Does an influx of huge resources automatically mean improvements for a country?

This study argues that the Structural Funds can also entail risks to sustainable development. The study will examine the potential effects of the Structural Funds on sustainable development in Latvia. It will also examine public participation in planning, implementation and monitoring of the funds, since public participation is one of the main preconditions for sustainable development.

Concerns about the possible negative impact of the Structural Funds on sustainable development arise from previous experience with use of EU Pre-Structural or Pre- Accession and Structural Funds both in the candidate countries, including Latvia, and in the EU Member States. This experience reveals three groups of problems connected with exploitation of the Structural Funds:

Negative impact on environmental and social capital.

Experience shows that the concept of sustainable development is included in planning documents, but that it is rarely applied in practice. Implementation of the ISPA transportation and the SAPARD programs showed that the principles of environmental protection are often disregarded. And international experience shows that a strategic assessment of the environment is carried out only in some countries.

Poor public participation.

Lack of public participation has increased and promoted opportunities for corruption. The main reason for insufficient public participation has been the time that this requires, which is why it is considered to be an obstacle to speedy preparation of documents. Another reason is that not enough time is allowed for submitting comments. NGO participation in Monitoring Committees has also been poor.

Weak institutional capacity for ensuring efficient and democratic use of the funds.

The responsible government institutions lack fund management skills. This problem is exacerbated by the inertia of the government apparatus. It has also become apparent that the requirements of national legislation are frequently ignored. Projects are carried out according to the principle “get as much money as possible,” and cheaper alternatives are not even considered.

The study suggests a number of reasons for these problems and for why they can prove to be detrimental to the positive impact of the Structural Funds on sustainable development in Latvia:

in the institutions responsible for Structural Fund management, bureaucratic thinking (measure → strategy) dominates over strategic thinking (strategy → measure);

applicants are poorly informed about sustainable development, and if they are sufficiently well informed, they lack the resources to eliminate potential problems;

relatively large sums of money must be spent in a short period of time.

After analyzing these problems and their causes, the study recommends measures that could eliminate or reduce negative effects during the current Structural Fund programming period (1999–2006) and during the next one (2007–2013):

greater public participation must be ensured in planning, implementation and monitoring of the funds;

a special sustainable-development working group must be set up to monitor the compliance of plans and projects with the goals of sustainable development;

SF horizontal goals must be incorporated into the criteria for project selection;

before projects are approved, their impact on SF horizontal goals must be assessed;

responsible institutions and applicants must be educated and informed about sustainable development and about ways to eliminate negative consequences and risks.

The Sustainability of Latvia's Development Plan

((pdf English, PDF, 306 Kb)pdf)
((pdf Latvian, PDF, 313 Kb) pdf)