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A train enters the Warszawa Wschodnia station in Warsaw last month. Brussels promised billions of euros to revamp eastern Europe's railways but only 10 per cent has been spent. Picture taken May 15, 2012. To match Special Report EUROPE-TRAINS/ REUTERS/Kacper Pempel (POLAND - Tags: BUSINESS TRANSPORT) (KACPER PEMPEL/REUTERS)
A train enters the Warszawa Wschodnia station in Warsaw last month. Brussels promised billions of euros to revamp eastern Europe's railways but only 10 per cent has been spent. Picture taken May 15, 2012. To match Special Report EUROPE-TRAINS/ REUTERS/Kacper Pempel (POLAND - Tags: BUSINESS TRANSPORT) (KACPER PEMPEL/REUTERS)

New EU states struggle to spend Brussels billions Add to ...

It was meant to be one of the great rewards of membership. As the European Union expanded eastward over the past decade, Brussels set aside billions of euros to improve infrastructure – especially the fading communist-era railways – in 10 new member states.

But an investigation has found that just one in 10 euros up for grabs since 2007 has been used, raising questions about Europe’s grand plans to stimulate economic growth, reduce traffic deaths and cut carbon emissions.

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Infrastructure spending has always been one of the carrots to lure countries into the European Union. Brussels spent billions in Spain, Portugal and Greece in the 1980s and ‘90s. When the former eastern bloc countries joined the EU in 2004 and 2007, they too were promised a cash injection.

Few areas were as ambitious as railways. The European Commission allocated €14.9-billion ($18.62-billion) to the so-called “cohesion fund” for 2007-2013 to finance railway projects in entrant countries and create a competitive, pan-continental system dubbed the “Trans-European Transportation Network” or TEN-T.

The spending is meant to connect Europe, but is also a key part of Brussels’ long-term targets to reduce carbon emissions by 60 per cent, halve conventional car use and shift 50 per cent of long distance freight onto trains and ships by 2050.

The Trans-European Transportation Network foresees a massive overhaul of the way Europe’s people and goods move about. The target is to put every business and more than 500 million citizens within 30 minutes of the core network.

So far, though, only €1.65-billion, or about 11 per cent of the fund has been used, according to calculations by Reuters based on data provided by the European Commission and governments.

Beyond the failure to fully utilize this first wave of EU funding there are potentially serious consequences. It casts doubt on the bloc’s ability to meet a greater challenge – spending €500-billion, or 33 times that amount, which the EU says is required for its transportation network.

By 2020, the Commission estimates, more than €250-billion will be needed to achieve its first phase: connecting 120 major ports and airports to railways, upgrading 15,000 km of rail tracks to high speed and removing 35 key cross-border bottlenecks.

“Transport is the lifeblood of the European economy. And if it does not flow smoothly, our economy will weaken and fail to grow,” Transport Commissioner Siim Kallas said in a speech in Brussels, detailing plans to spend an additional €31.7-billion in transportation infrastructure over the next eight years.

Europe’s railways are an “inefficient patchwork,” he said. There are seven gauge sizes for tracks, only 20 major airports in 27 countries are connected and major infrastructure projects “are not getting built.”

So far, though, the promised billions of euros has not improved Europe’s ability to change that.

“It is obvious that in these countries, while the integrated railways have asked for many, many years for a lot of funding, this is in total contrast to the capacity to absorb this money,” said Monika Heiming, executive director of the European Rail Infrastructure Managers organisation.

“The absorption rate of EU funds, especially railways, is extremely low, much lower than we thought.”

A high-level EU official, who spoke on condition of anonymity, said the absorption rate was low partly because funds are paid by Brussels after projects are completed. New member states lack the administrative capacity to implement multi-billion euro projects and, in contrast to Commission objectives, have prioritized roads over railways.

“The technical issue certainly makes the numbers look a lot worse than they actually are, but at the same time, certainly I wouldn’t want to disguise the fact that, particularly on the absorption of rail funds, they haven’t done everything we would have wanted,” the official said.

“The 11 per cent makes that issue sound rather worse than that it is. Even in an ideal world we would only be looking at an actual, final payment rate at this stage of 20-25 per cent.”

The Commission is working with local governments to build administrative capacity, he said, and “once they’ve got the people who have the ability to plan and deliver the projects, I think it’s much more reasonable to expect the kind of things we are hoping for the future.”

In the meantime, the money will sit in an EU account. If unused by 2015, it will be returned to the overall EU budget.

In some places, public transport has gotten worse.

Take Poland, the EU’s largest new member. The country of 38 million people boasts one of the bloc’s strongest economies; Poland was the only EU country to avoid recession during the global crisis in 2008-2009.

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