Global and macro-regional problems in the Baltic Sea area

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Countries around the Baltic Sea are both a vital force in resolving the EU-wide regional issues and in active part in the global efforts to tackle modern challenges. The 14th EUSBSR forum’s discussions were rotating around regional security, sustainability, connectivity and prosperity. These issues need closer governments’ attention, innovative strategies and additional efforts in green transition and smart growth. 

The third article on the Forum is aimed at showing how the states around the Baltic Sea region, BSR are combining the main existing problems in macro-regional cooperation. Previous two articles can be seen at:

a) https://www.integrin.dk/2023/08/21/eu-climate-issues-and-carbon-leakage-towards-green-growth-around-the-baltic-sea/; and

b) https://www.integrin.dk/2023/09/28/the-14th-annual-eusbsr-forum-resolving-modern-challenges/

14th Forum: issues covered and lessons learned
The EU institutions, including Commissioner for Jobs and Social Rights, and Commissioner for Cohesion and Reforms, have already revealed the experts’ community in BSR, as well as all those interested, about the main problems and possible solutions. The Commission published the 8th Cohesion Report six months before the 14th Forum (in February 2023), presenting an evaluation of the post-pandemic’s effect on macro-regional development and showing both positive and negative trends in EU regions, cities and rural areas.
The report assesses EU-wide economic, social and territorial cohesion: e.g. it shows that less developed regions have been catching up, but that many transition regions have been stuck in a development trap; furthermore, the growing innovation divide makes it harder for both types of region to catch up.
Source: https://ec.europa.eu/regional_policy/information-sources/videos/8th-cohesion-report_en

    The following issues have been chosen for the 14th Forum: = Baltic Sea: energy, environment and security, harnessing wind energy, submerged munitions and security; = Youth empowerment and culture: modern trends in cooperation; = Green transition, including hydrogen, other clean technologies, decarbonization and climate adaptation issues, as well as innovation strategy; = Smart growth through climate neutral and “smart cities”; = Interreg’s role in funding projects in the BSR; and finally, = Economy of wellbeing… Some of these issues are covered below.

The EU-wide financial support
It has been regarded crucial to avoid existing and newly emerging disparities among the states during the structural transformations and prepare for dealing with modern challenges. A reinforced EU Cohesion Policy intends to reduced territorial divides, manages the digital and green transitions on the ground and support people in the Baltic Sea region. During the last decade the macro-regional concept proved its deliverance: several other sub-regional strategies, including the BSR, were adopted during last decade in the EU: e.g. the Danube region, Adriatic-Ionian and Alpine regions; sometimes these strategies even include non-EU countries. There are, of course, other sub-regional groupings in the EU: e.g. three Benelux countries or four in the Visegrad group (including Czech Republic, Hungary, Poland and Slovakia).
To deliver on these objectives, Commission’s DG Regio provides support through the “financial interventions” by the European Regional Development Fund (ERDF) and the Cohesion Fund (CF), together with the European Structural and Investment (ESI) Funds (which include European social fund (ESF), European Agricultural Fund for Rural Development (EAFRD) and European Maritime and Fisheries Fund (EMFF). To that end, the Treaty establishes the European Structural and Investment Funds, ESIF (Lisbon Treaty, art. 175). These “regional funding” during last five years (2014-19) accounted for about one-third of the total EU budget (about € 45 billion a year); for example during 2017, about 660 action plans have been adopted in the EU states. Thus, in one year only (2017), two pilot projects were launched: a) to provide tailored support for regions facing industrial transition, and b) help inter-regional partnerships to develop competitive European value chains. The both aimed at providing adequate assistance to all European states/regions in investing in their niche areas of competitive strength (so-called “smart specialisation” process, 3S) and generate innovative and resilient growth needed to withstand globalization’s challenges. Thus, among existing 14 EUSBSR’s conferences, the 11th was devoted to the European sub-regional strategies, which took place in June 2020 in Turku, Finland.         Source: https://www.balticsea-region-strategy.eu/

Other EU regional incentives
During 9-12 October, Brussels will host the 21st European Week of Regions and Cities: more than 7,000 participants will attend the event onsite, which will host more than 300 sessions and include over 1,000 speakers from across the EU and beyond. The topics of the EU Regions Week include: breaking barriers to cross-border cooperation, local energy shifts for security and sustainability, promoting social innovation, regions in post-industrial transition, retaining talent for regional growth and SMEs role in driving urban growth.
More in: https://regions-and-cities.europa.eu/about/nutshell

Thus, EU Cohesion Policy has also been helping vulnerable households and SMEs to pay their energy bills with the EU’s Support Affordable Energy, SAFE initiative to support SMEs in the states, as well as vulnerable households, to tackle rising energy prices. More than €725 million of Cohesion Policy funds has already been directed for these purposes, making the total support for the member states’ SAFE measures reaching €4 billion. “This is a clear expression of the solidarity that is at the heart of Cohesion Policy and a concrete demonstration of its commitment to leave no one, and no region, behind”.
Citation from Elisa Ferreira, Commissioner for Cohesion and Reforms (09/10/2023) in: https://ec.europa.eu/commission/presscorner/detail/en/IP_23_4793

Global challenges and macro-regional issues
The global issues are mounting: at the end of 2023, global community marks a watershed moment for the Sustainable Development Goals, SDGs as the world officially reached the midpoint of the 2030 Agenda. In September, world leaders convened in New York for the 78th UN General Assembly and the SDG Summit, resulting in a landmark political declaration where countries agreed to take concrete action and provide funding for universal health coverage, a historic agreement to strengthen international cooperation. A political declaration was adopted reaffirming the states’ continued shared commitment to achieving the 2030 Agenda. Besides, in order to strengthen countries’ commitments to curb emissions and increase financing for the SDGs the upcoming COP28 will be important as well.
Thus, climate change approaches have been entering modern governance: in exploring all solutions to the climate challenges the region is facing and exploring advanced climate action including “circular carbon economy’s” approaches which promote using all available technologies, forms of energy and mitigation opportunities that would contribute to achieving climate goals.
Hydrogen-driven or fuel-cell buses (FCEB) represent presently cost-effective solution to most vital transportation problems: they can be refueled quickly at bus depots; they are quiet and produce no carbon or particulate emissions, thus minimizing their environmental and health impacts. These buses are powered by electro-chemical cells that combine hydrogen stored in high pressure tanks with oxygen from the air to generate electricity, heat and water. Managers for some transport projects, e.g. Fuel Cells and Hydrogen Joint Undertaking, which is a public-private partnership aimed at funding research and demonstration projects, are seeking to enable the commercialization of fuel cell technologies. These buses are clean, smooth and easy to drive: i.e. “fuel-cell bus” can drive for 300-450 kilometers before it needs to be refueled; this gives the technology an edge over most established battery buses, which have more limited ranges. Besides, as they carry enough fuel for a full shift, the buses need very little route infrastructure, unlike trolley and/or battery buses.
Source: https://www.baltic-course.com/eng/baltic_states/?doc=133314; and https://www.integrin.dk/2022/07/21/hydrogen-energy-through-innovative-technologies-new-commissions-plan/

Transport is an important sector for the BSR and the whole EU’s economic and social cohesion. However, alongside huge sector’s importance there are numerous challenges: the EU transportation is entering a future of “redefined driving” with an idea of autonomous driving, digital and analogue infrastructure”, adopted by the Commission five years ago. Being a key sector of the economy, transport is a major contributor to the European growth: 4.8% or € 548 billion in gross value added and sustains over 11 million jobs in Europe. By 2050, the EU wants a 60% cut in transport-related greenhouse gas emissions versus 1990 levels and more specifically: a) reduced number of conventionally-fuelled cars in cities; b) 40% use of sustainable low‑ carbon fuels in aviation; c) 40% cut in CO2 emissions from maritime bunker fuels; d) 50% shift of freight journeys greater than or equal to 300 km from road to rail and to waterborne transport; and e) majority of medium‑ distance’s travel completed by rail.
References to: https://ec.europa.eu/info/topics/transport_en

Rescuing the Baltic Sea
Ministers responsible for fisheries, agriculture and environment from all EU countries and those around the BSR gathered at the end of September 2023 in Palanga, Lithuania to discuss joint actions facing modern challenges: – environment and fisheries (with progress on the actions announced in the 2020 Ministerial Declaration “Our Baltic Conference”); – economic activities linked to the sea (“blue economy”); – flourishing economic activities at sea, e.g. offshore renewable energy, aquaculture, bioeconomy, etc.; and – unexploded munitions
More on the Declaration in: https://commission.europa.eu/system/files/2020-09/ministerial_declaration_our_baltic_conference.pdf

The Baltic Sea is an ecosystem whose shallowness, limited connection with the ocean, slow water circulation and low water temperature make it especially fragile. It is not only the most polluted sea in Europe; it is also affected by biodiversity loss, climate change, eutrophication, overfishing, and elevated levels of contaminants such as pharmaceuticals and litter, in particular plastic waste. Currently, about 97% of the Baltic Sea is affected by eutrophication lowering oxygen levels; less oxygen means fewer fish and less life in the sea, making the ecosystem more fragile and more vulnerable to environmental changes. Socioeconomic benefits are also lower, with fisheries badly affected. On top of this, some 300 000 tones of unexploded munitions from World Wars lie at the bottom of the sea, threatening the development of economic activities and leaking contaminants in the sea.
The Commission also adjusts Baltic States’ fishing opportunities according to the long-term sustainability targets: with the maximum sustainable yield envisaged in the Common Fisheries Policy. The Commission’s measures are in line with the policy intentions of the “Sustainable fishing in the EU: state of play and orientations for 2024″, and the Multiannual Plan for the management of cod, herring and sprat in the Baltic Sea.
More in the proposal for the 2024 fishing opportunities for the Baltic Sea: https://ec.europa.eu/commission/presscorner/detail/en/IP_23_4287

Hansa Union: modern development
The old Hansa Union, often called the Hansa league was actively functioning in the XIII- XVI ages, and it united about 200 European cities. This was not only an age-old trade organization; Hansa league emphasized the importance of the cities’ development, mutual social and cultural cooperation. New blood was poured into the concept by supporting the creation in 1980 of a New Hansa Union, which comprises 176 cities of the BSR, attempted to adapt the values and experience of the old Hansa league in developing European-wide economic and cultural unity.
The International Hansa days are organized every year in one of the New Hansa cities. The event attracts thousands of guests from various Hansa-cities in Germany, Netherlands, Belgium, Sweden, Norway, Finland, Poland, United Kingdom, France, Island, Latvia, Estonia, etc.
More in: https://www.baltic-course.com/eng/baltic_news/?doc=7209&underline=Hansa+Union

Smart specialisation
Sub-regional growth analysis among the Baltic Sea states is subject to certain challenges connected to “smart specialisation strategy” (3S) initiated recently by the EU institutions.
Attention to circular economy has become an important “path to wellbeing of the people in the BSR” and became a dominated model in regional economy. Instead of age-old approach based on “take-make-consume-dispose” concept, which is completely unsustainable, it has to be re-arranged with new notions concentrated on reuse, de-compose, recycle, de-consume, etc. with additional validity of an appropriate education and training in sustainability principles. For example, presently Latvian recycling share is the lowest among states in BSR with 39%, compared to 46% in Lithuania, 47% in Estonia and over 50% in Denmark and Sweden. Thus, both new circular economy principles and waste management are becoming highly desirable aspects in sub-regional cooperation.
The 3S concept means that: a) “smart” growth in the states resides on innovative approaches to development, which include the perspectives of the 4th industrial revolution; b) “specialisation” is about the states/regions’ capacities in using available resources (natural, human, etc.) in achieving competitive advantages in Europe and globally. Finally, c) “strategic growth” means defining perspective vision for any state/region in the long-term perspective. Thus, a uniting factor in 3S is a strategic economic growth through support for research and innovation.
More in: https://www.integrin.dk/2021/11/08/modern-trends-in-european-integration-smart-specialization-in-the-baltic-sea-region/

BSR’s perspectives
Looking at the priorities in the BSR, it is important to see the contents of the EU’s growth strategy for 2021-27. There are four vital dimensions in the EU’ perspective growth directions: first, a transition to a nature-friendly and climate neutral policy as the EU’ goal up to 2050. Second, developing new technologies and sustainable solutions with which the EU states can increase their economies and become global leaders in an increasingly digitalised world, including cybersecurity, artificial intelligence and 5G. Therefore, for example, the digital technologies have become a key enabler in the European Green Deal.
Third, the necessary measures to complete the EU’s economic and monetary union (EMU) to ensure that all economic tools are available to adverse possible economic shock; in this regard, the international role of the euro must be strengthened to enhance European SMEs’ role in the global markets. A vibrant and resilient EMU shall rest on the solid foundations provided by the two other EU “unions” – the Banking Union and the Capital Markets Union.
Fourth, the new economic agenda must ensure that the transition is fair and inclusive; it must pay particular attention to the regions, industries and workers who will have to make the largest transitions.
Source: European Commission, 17.12.2019; COM (2019) 650 final. Communication “Annual Sustainable Growth Strategy 2020”; {SWD (2019) 444 final}. See: https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1578392227719&uri=CELEX%3A52019DC0650

Collective risk assessment
It is for the first time ever, the EU’s officials have been defining critical technologies needed to protect states and European economic security. The three criteria for inclusion are: the transformative nature of the technology, the risk of dual use for civilian and military purposes, and the potential for human rights violations; these high-techs will be subject to export controls or outbound investment screening, etc. Other strategies to mitigate risks will be partnerships that allow the EU states to diversify suppliers and reduce dependencies.
Competition in the world is growing; hence several regions in the EU-27 are willing to defend their interests. There are four main technologies that Europe wants to defend, particularly from Far East countries and China. Three Commissioners involved, i.e. Věra Jourová, Thierry Breton and Valdis Dombrovksis have prepared a “hyper-controversial list” of critical technologies that the EU wants to protect from rivals. According to some drafts, the list contains 10 technologies, with four as highlighted particularly dangerous for the EU to be too dependent on external rivals such as China.
The four areas “considered highly likely to present the most sensitive and immediate risks related to technology security and technology leakage” are: – advanced semiconductor technologies (microelectronics, photonics, high-frequency chips, semiconductor manufacturing equipment); – artificial Intelligence technologies (high-performance computing, cloud and edge computing, data analytics, computer vision, language processing, object recognition); – quantum technologies (in computing, cryptography, communications, sensing and radar); and – biotechnologies (including genetic modification, new genomic techniques, gene-drive and synthetic biology).
The EU’s new external strategy, formulated by Commission President this March is “de-risk, not de-couple” from China; however, combining with the list of critical technologies, it is clear the EU doesn’t want to share with China.
As Politico mentioned, liberal-minded officials and governments wanted to “keep restrictions to a minimum, while more protectionist ones wanted to include up to 20 technology areas”; present compromise basically opens collective risk assessments with the mentioned four areas and see the results.
More on discussions in the Parliament: https://oeil.secure.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=JOIN(2023)0020&l=en

    Important to mention, that the EU Cohesion Policy, which since the conception of the EU has been one of the fundamental cornerstones in the development and convergence of the Union’s regions, has for some time now been coexisting with the Recovery and Resilience Mechanism, an instrument born of the EU member states’ consensus for growth in the post-pandemic period.
Although the two instruments (the national recovery/resilience plans, RRPs and cohesion support) are based on different economic and regulatory foundations, they have often overlapped in the same areas of investment, allowing for continuous synergies that are both a challenge and an opportunity. The general message is: how national authorities have to manage adapting new priorities and policies to the realities of each region: i.e. combining RRPs and regional support?
The importance of the forum was slightly reduced by two facts: first, Commissioner for cohesion and reforms Elisa Ferreira was in Italy to visit EU cohesion funded projects and sites in Italy during 4-6 October; secondly, national minister responsible for cohesion issues were almost at the same time governing in Spain (the country is a rotating Presidency in the Council) to discuss the ways main levels of national governance, i.e. central, regional and local can work together to improve their actions; the latter seems a vital issue as well.
https://spanish-presidency.consilium.europa.eu/en/news/informal-ministerial-meeting-general-affairs-cohesion-september-29-murcia/

Finally, the EU’s State aid Temporary Crisis and Transition Framework, TCTF adopted in March 2023 was aimed at supporting national actions in main economy sectors to accelerate the green transition and reduce fuel dependencies; this framework aims to enable the states to support economies during current geopolitical crisis. The TCTF will help speeding up investment and financing for clean tech production in Europe: it will also assist the EU states in delivering on specific projects under RRPs which fall within their scope. Thus Poland has already received recently €1.2 billion (PLN 5.5 billion) to support energy-intensive companies facing increased energy costs.
Source: https://ec.europa.eu/commission/presscorner/detail/en/IP_23_4732

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