For Lithuania, this means both new opportunities and more complex negotiations. On the one hand, more EU funds are planned for areas that are particularly important to us due to the geopolitical situation – defense, strengthening the eastern flank, transport, and energy connections. On the other hand, Lithuania still receives significant support for agriculture and regions, but as the economy approaches the EU average, the share of this funding may decrease over time.
The European Commission’s proposed 2028–2034 EU budget amounts to nearly 2 trillion euros, or on average 1.26% of the EU’s gross national income. The Commission proposes not only changing the size of the budget but also its structure – merging some programs previously managed separately into broader national and regional plans, and allocating more funds to new priorities.
According to data provided by the Ministry of Finance, under the Commission’s initial proposal, Lithuania would be allocated about 14.2 billion euros at current prices for the National and Regional Partnership Plan alone. Of this, about 12.5 billion euros would go to cohesion, agriculture, and other traditional areas. At least 4.7 billion euros would be reserved for the less developed Central and Western Lithuania region, and about 4.4 billion euros for Common Agricultural Policy measures.
About 1.2 billion euros would be allocated for migration, border protection, security, and internal affairs, including 450 million euros for the Special Transit Scheme. Separately from this package, 678 million euros are allocated for the decommissioning of the Ignalina Nuclear Power Plant (NPP).
The Ministry of Finance views the Commission’s proposal as a good basis for further negotiations and calculates that, essentially maintaining its current structure, Lithuania would continue to be a net beneficiary of the EU budget – receiving more than it contributes. However, the relative financial benefit may be smaller than in previous periods.
Priorities are changing, but there is no revolution yet
Dr. professor at Vilnius University’s Institute of International Relations and Political Science warns that it is too early to declare that the EU budget is fundamentally turning away from traditional areas.
“We can talk about a certain shift in priorities, but it is not fundamental. The increase in funding for new areas reflecting modern challenges may seem impressive in percentage terms, but these amounts are increased from a very small base,” explained the professor.
According to him, even after the proposed changes, agriculture and cohesion will remain among the largest areas of the EU budget. Therefore, large percentage jumps in defense, resilience, or competitiveness funding do not mean that the old budget structure has fundamentally flipped. The European Commission’s proposal includes more significant changes related to the future principles of EU budget management, for example, linking the use of funds more closely to the results of national reforms, similar to how funds from the pandemic recovery fund were used, but these are also subject to disputes among member states.
R. Vilpišauskas suggests separating two different questions: how much Lithuania receives from the EU budget and where it is most sensible to invest these common European funds.
He states that in budget negotiations, countries traditionally follow the so-called “fair return” logic – aiming to pay as little as possible into the common budget and receive as much as possible from it. If a country has so far received significant support in a specific area, the political goal is usually at least to prevent its reduction.
Investments in infrastructure, energy resilience, and external border protection are especially important for our region.
However, economists may have a different perspective.
“From the perspective of public goods financing, most economists have long agreed that neither agriculture nor even cohesion are the areas that should be financed from the centralized European Union budget,” he said.
He believes that infrastructure projects – energy, telecommunications, and transport connections, as well as external border protection, scientific research, and investments in resilience – create greater European added value.
“If investments are made in regional connections – electricity or transport, such as Rail Baltica, Via Baltica, electricity grids – the benefit is received by more than one country involved in the project. That is precisely the added value,” explained R. Vilpišauskas.
For Lithuania, located on the EU’s eastern flank, bordering Russia and Belarus, such a shift in priorities can be beneficial. According to the professor, investments in infrastructure, energy resilience, and external border protection are especially important for our region.
Much more for defense and military mobility
It is precisely in the security area that the Commission’s proposal shows some of the most significant changes.
Through the European Competitiveness Fund for defense, security, and space, the Commission proposes allocating 131 billion euros – about five times more than in the current financial period.
Another area very relevant to Lithuania is military mobility, i.e., infrastructure that can be used not only by civilians but also by soldiers and military equipment to move.
About 18 billion euros are proposed for military mobility through the Connecting Europe Facility (CEF). This would be about ten times more than in the current financial period.
However, these are not funds reserved specifically for Lithuania. The Ministry of Finance emphasizes that the exact amount will depend on the projects submitted by Lithuania and their success in competing for common EU funding.
R. Vilpišauskas also warns that geographical location alone does not automatically guarantee more money.
“Not only Lithuania expects to receive them, but also other eastern flank countries. In this respect, there is competition. But the increase in the overall volume of joint investments is welcome – then there is a greater chance that Lithuania, like other countries in our region, can expect more,” said the professor.
Another important question is not only how much money will be received but also how it will be used.
According to him, another important question is not only how much money will be received but also how it will be used. A larger funding amount does not automatically guarantee long-term benefits if investments do not increase the country’s resilience or productivity. Agricultural or cohesion funds usually provide a short-term stimulus to the country’s economy, but the sustainability of their benefits is debatable.
Rail Baltica – one of the most important issues
Member of the European Parliament Virginijus Sinkevičius currently evaluates the Commission’s proposal for Lithuania quite favorably, although he emphasizes that negotiations are not yet over.
“It is still too early to say that Lithuania is losing – the final budget should be evaluated. I think the budget now proposed definitely meets Lithuania’s expectations. Of course, questions remain regarding agriculture,” he said.
In the transport sector, according to V. Sinkevičius, one of the most important issues for Lithuania is the financing of Rail Baltica.
“Financing Rail Baltica, that big project, is critical for Lithuania,” emphasized the MEP.
Money for transport projects will not be simply distributed to countries. They will have to compete for it, but priority is given to European transport corridors and dual-use – civilian and military – infrastructure.
This opens opportunities for Lithuania not only because of Rail Baltica. The Ministry of Finance highlights Via Baltica among the cross-border projects particularly important for Lithuania. Both are important not only for connectivity with Western Europe but also for military mobility and strengthening NATO’s eastern flank.
V. Sinkevičius also draws attention to a new opportunity to finance energy infrastructure protection with European funds – an area previously mostly considered the responsibility of member states themselves.
Funds for regions may decrease over time
A more complex outlook awaits cohesion policy – EU funding aimed at reducing economic and social disparities between regions.
The Ministry of Finance acknowledges that as Lithuania’s economy approaches the EU average, this funding may shrink over time.
In the EU’s statistical territorial division, Lithuania would continue to be divided into two regions – the less developed Central and Western Lithuania region and the more developed Capital region.
As Lithuania’s economy approaches the EU average, this funding may shrink over time.
The Commission’s proposal reserves 4.7 billion euros for the first. No specific amount is pre-allocated for the Capital region, and under the initial proposal, its EU co-financing rate would also decrease.
However, R. Vilpišauskas suggests viewing this decrease not only as a loss.
“If we agree that a growing Lithuanian economy is a positive thing, we must inevitably accept that as we approach the European Union average, the cohesion funds received will decrease over time,” said the professor.
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For this reason, the Capital region was previously separated from the rest of Lithuania – to preserve greater support for less developed parts of the country for longer.
“We should hope that other Lithuanian regions will also grow faster. Then, over time, their funds will also decrease. In such a case, appropriate planning is needed to attract private investments in the regions,” said R. Vilpišauskas.
According to him, the state will also have to finance more important investments with national funds.
“A more prosperous Lithuania, even if it loses part of the cohesion funds because of this, is probably our goal,” summarized the professor.
Agricultural funds will not be given up easily
Most political disputes may arise over agriculture.
The Commission proposes including the Common Agricultural Policy, which finances direct payments to farmers and some rural development measures, into broader national and regional plans.
About 4.4 billion euros of Common Agricultural Policy funds are reserved for Lithuania. However, according to the Ministry of Finance, the final amount for agriculture and rural areas will only be clear after negotiations.
V. Sinkevičius identifies agriculture as one of the most prominent areas where the current Commission proposal raises questions for Lithuania.
About 4.4 billion euros of Common Agricultural Policy funds are reserved for Lithuania.
However, he also recalls previous negotiation experiences.
“Last time, a decrease was also proposed, but negotiations ended with the agricultural budget remaining unchanged. Whether this decrease will happen this time, we will only know after negotiations,” said the MEP.
R. Vilpišauskas is also not convinced that agriculture will be the main loser of the new budget. The reason is a strong political backing.
The professor reminded that in previous negotiations, France managed to gather a coalition of more than 20 countries defending agricultural funding. Cohesion funds are actively defended by Southern, Central European, and Baltic countries. Meanwhile, some Northern and other countries that contribute more to the EU budget usually seek to limit overall spending and focus more on new priorities.
Therefore, a paradoxical scenario is possible – the Commission proposes significantly more money for defense, competitiveness, or other new areas, but after member states’ negotiations, these ambitions are cut. According to R. Vilpišauskas, coalitions defending traditional policy areas have historically been stronger.
“In the end, negotiations usually end with new areas suffering, which do not have clearly identifiable defenders among interest groups like farmers. In previous multiannual budget negotiations, the last-night cuts were often made to areas such as European infrastructure networks funding, whose funds do not go into a specific country’s ‘national envelope,’ although such investments best correspond to the logic of European added value,” said R. Vilpišauskas.
Ignalina – as much as Lithuania requested
One of the clearest budget lines allocated to Lithuania is the closure of the Ignalina Nuclear Power Plant.
The Commission proposes allocating 678 million euros for the Ignalina NPP decommissioning program for 2028–2034.
The Ministry of Finance states that this amount meets Lithuania’s needs, so the main goal in negotiations is to prevent its reduction.
V. Sinkevičius, who oversees this issue in the European Parliament, assesses the situation similarly. His draft report also proposes allocating no less than the Commission’s proposed 678 million euros.
“Today, this amount is definitely sufficient. I am very pleased that the Commission is keeping the commitment the European Union made to Lithuania upon accession,” said V. Sinkevičius.
R. Vilpišauskas also sees no reason to believe that the EU could altogether withdraw from the fundamental commitment to contribute to the Ignalina NPP closure.
“I doubt the promises will be unfulfilled. The main discussion will probably be about what needs remain and are related to the decommissioning works and consequences mitigation of the Ignalina Nuclear Power Plant,” said the professor.
Would like a bigger budget, but who will pay for it?
The Commission’s nearly 2 trillion euro proposal is not yet the final budget.
The European Parliament seeks even more funding. V. Sinkevičius states that the Parliament’s overall position is for a budget at least 10% larger than the Commission’s proposal.
“Additional money would be directed to regions, agriculture, the European Union’s competitiveness, and military mobility,” he said.
However, the MEP himself views the chances of such a scenario cautiously. A larger budget would require either higher contributions from member states or new EU revenue sources.
And here lies the main conflict of the upcoming negotiations.
To simultaneously preserve billions for agriculture and regions and allocate significantly more to defense, infrastructure, and competitiveness, a larger overall budget would be needed. If member states do not agree to this, different areas will have to compete for the same money.
The Ministry of Finance acknowledges that if the funds allocated to Lithuania remain as proposed by the Commission, it would be difficult to simultaneously maintain current agricultural and cohesion funding and allocate significantly more to defense.
Is it most important to get as much as possible?
Here, Prof. Dr. R. Vilpišauskas suggests returning to a question often overlooked in EU budget negotiations: is the final amount really the most important thing for a country?
The professor predicts that Lithuania’s list of priorities will be long – agriculture, direct payments, regions, eastern flank defense, Ignalina NPP closure, Kaliningrad transit, transport, and energy infrastructure.
Is the final amount really the most important thing for a country?
“Everything will be emphasized as priorities, and it will be said that Lithuania seeks to ensure that funds do not decrease anywhere, or better yet – increase,” he said.
But when asked what is more important for Lithuania – the amount of funds received or the rules and priorities according to which the money is distributed – the professor chose the latter.
“From the perspective of the public interest, the second option is more important,” said R. Vilpišauskas.
His forecast is that even after negotiations, the largest amounts will most likely remain for traditional areas – agriculture and cohesion, although the funds allocated to them may be smaller than in the current financial period.
But whether such a distribution of limited EU funds will bring the most long-term benefit to Lithuania and all of Europe is another question.
V. Sinkevičius looks at the upcoming budget more pragmatically. If the final version retains the most important components for Lithuania – Ignalina NPP and Rail Baltica financing, agricultural and regional funds, military mobility, and energy infrastructure protection – it would be, in his assessment, “a really good budget for Lithuania.”
But it is important not only how many billions are written in the budget tables.
“It is important to us that these funds are really invested in Lithuania, that they reach Lithuania, that Lithuanian companies grow their work and competencies, that the budget provides opportunities for the growth of Lithuanian companies,” emphasized V. Sinkevičius.
The final result for Lithuania will only become clear after negotiations. If member states do not want to increase the overall EU budget, a much more uncomfortable question will have to be answered – which traditional or new priorities will receive less funding.
