Why has the referendum in the UK caused panic in the Baltics?

The UK’s EU referendum has caused panic in the Baltics. In fact, few Balts believed that the Brits would actually break away from the EU.

Where will they now send “odd” people?

The key reason of this panic is that the UK was one of the key places the poor Baltic states sent their emigrants to. Now those people fear that they may no longer get highly paid jobs in the UK. The same is true for the Baltic authorities, who, despite their calls for remigration, realize that they will not be able to receive hundreds of thousands of repatriates.

All this may end in a social upheaval. But this fear first emerged long before the Brexit. For more than six years already, the Cameron-led British Conservatives have been trying to stop the invasion of Eastern European gastarbeiters (one of the key arguments for the Brexit). Over the last decade, the percentage of immigrants in the UK has grown from 5% to 8.4% and is steadily growing. Last year, migration balance in the UK was all-time high – 336,000 people. As many as 162,000 EU citizens entered the country in 2015. The number of foreign workers grew from 2.9 million to 3.2 million, of whom 2 million were from the EU. Their percentage grew by 14%, while the percentage of gastarbeiters from developing countries grew by just 1%.

Today the UK is home to 95,000 Lithuanians. Half of them live in London. Lithuanian President Dalia Grybauskaite has repeatedly urged the British authorities not to deny entry to Balts. Her argument is that Europe has always advocated freedom of movement. In her opinion, Cameron’s anti-immigration measures restrict competition and entrepreneurship. Now that the Brexiters have won, things have become even worse – for at some time in future, the British authorities may require visa from EU citizens. Those who have worked in the UK for five-six years may hope for some preferences, but those wishing to go there may face much more serious problems than growing air ticket prices (today you can get to the UK for just 20-30 EUR).

“The result of the referendum will affect the Balts wishing to go to the United Kingdom, at least, until the EU and the UK reach any agreement on free movement of labor force. It makes no sense for them to seek a job in a country that may soon require them to have a work permit, does it?” says Latvian lawyer Alexey Dimitrov.

This is exactly what the UK Independence Party insists on. They in the party hope that this will cut the annual population growth in the UK from 298,000 to 50,000 and will result in wider employment and education opportunities and higher wages for the British people. Nor is it clear if the EU citizens paying taxes in the UK will be able to hope for social benefits.

Will they run short of funds?

The second reason why the Balts are worried is funds. Even though the UK is just the fourth biggest donor for the Baltics (after Germany, France and Italy), if it breaks away from the EU, the Baltics will lose 10% of what they get from Europe. At first glance, 10% is not much.

But Latvian Finance Minister Dana Reizniece-Ozola warns that the Brexit may cause the EU to redistribute its funds. As a result, in 2020, Latvia will get from the EU much less than it gets today. Mayor of Rezekne Aleksandrs Bartasevics hopes that the EU is too bureaucratic for reconsidering its budget policies in the coming years. “In the EU all changes take a long time. The Europeans may cut their funds, but until they do it, we will use all the funds we are supposed to receive till 2018,” Bartasevics says.

Mayor of Jelgava Andris Ravins says that general economic slowdown in the EU will have certain consequences for the Baltics and Latvia, in particular. “Since our key source is European funds, the slowdown will affect all sectors, especially construction,” Ravins says. Mayor of Bauska Raitis Abelnieks does not expect European funds to shrink in the near future. “The UK is a rich country. In the UK, it gave more than it took. There will be changes, but they will not be quick. We will try to use all funds we are supposed to get unless our ministries prevent us from so doing,” Abelnieks says.

Mayor of Valmiera Janis Baiks advises not to be pessimistic and to work. “Now that Scotland has expressed wish to hold one more referendum, the Brexit will be delayed. Since we joined the EU, Valmiera has received 80 million EUR. Till 2018, we are supposed to use 15 million EUR more. So, I think we must be calm and must continue to work,” Baiks says.

But behind all these soothing calls, there is huge fear to lose the European funds. If the Balts lose them, they will not be able to repair their houses, schools, kindergartens and roads, to develop their businesses, to retrain their employees, to protect their nature, to fight poverty. It was the European funds that helped them out of the 2008 crisis. “In fact, this was the key reason why Latvia joined the EU,” says economist Dmitry Smirnov. “But since 2012 European funding has dropped from 1.198 billion EUR to just 991 million EUR. This drop was due to bureaucratic restrictions and toughened requirements. And now that the UK has broken away from the EU, the Balts may face even more serious problems,” Smirnov says.

Vyacheslav Samoylov