EUKN interview with Ms Ilona Raugze

1 June 2015

Holding the function of presidency of the Council of the European Union still provides an important opportunity for Member States to set priorities for discussion and obtain political agreement. Commissioned by the incumbent Latvian presidency, the commonplace small- and medium-sized urban area (SMUA) is one of those priorities brought to the EUKN attention in a soon to be published report written in collaboration with the HESPI (Vidzemes Augstkola University of Applied Sciences). To mark the end of Latvia’s presidency and to fully understand why SMUAs are an important political topic for Europe, the EUKN exclusively talks to Ilona Raugze, Deputy State Secretary of the Ministry of Environmental Protection and Regional Development.


EUKN: As Latvia is approaching the end its Presidency of the Council of the EU, what have been the highs and lows for the Ministry of Environmental Protection and Regional Development in its contribution?

IR: Considering that we are still in the middle of the process of leading the council work and chairing the presidency, it is of course at this point still quite difficult to draw a final conclusion regarding the highs and the lows. However, as far as our contribution goes and the results that I can already see, I am very satisfied with the job we’ve done. We have drafted the Riga declaration, which will contain a number of very important political messages for on-going work during the next presidencies. This includes the topic of small- and medium-sized urban areas, as identified in our presidency priorities and trio presidency priorities, but also on the overall framework of the EU urban agenda, which is the final goal of the up-and-coming Dutch presidency to be adopted in 2016. We think that our main contribution is related to the fact that we have put onto paper the main principles and elements that should be at the basis of elaborating this urban agenda. We have brought to the fore specific issues of importance regarding the current and potential development of SMUAs. Thanks must also go to a very successful co-operation within the trio, the European Commission as well as the great support from our researchers the EUKN and HESPI. 


EUKN: Latvia’s urban development priorities have focused strongly on small- and medium-sized urban areas, why is this, and have expectations been met regarding the attention to problems and the potentials of such urban areas? 

IR: We wanted to focus the discussions of urban development beyond the challenges and issues of large metropolitan areas. We wanted to draw the attention of Europe towards what is actually a prevailing type of settlement. There are more than 8,000 small- and medium-sized urban areas, which are home to a quarter of Europe’s population. They have their own challenges and their own potential and should not be neglected due to a smaller number yet, politically more influential bigger cities. In Latvia, we view urban development as an integrated national and regional topic. Cities and towns do not hang in the air; they have a territorial context, and so the topic of SMUAs actually allows us to combine regional and territorial development. The development of SMUAs sustains the vital rural-urban contribution and co-operation, therefore we think that this topic has allowed us to keep a wider perspective on regional development issues. Adding to that, SMUAs are different in terms of development trends. They have experienced higher GDP growth rate compared to metropolitan regions where you see that the mean per capita GDP growth was only at the level of 20% when in the regions containing SMUAs, the mean per capita GDP growth was at the level of 41%. Other interesting facts point to the rate of unemployment, which is on average lower compared to the larger metropolitan areas. Poverty rates tend to be lower than in larger areas also. Furthermore, SMUAs present more favourable environmental conditions due to their proximity to green areas and to lower congestion levels, resulting in a greater quality of life. Housing costs are comparatively lower and at the same time they have enough conditions for smart economic development. However, for all of this to work, SMUAs really have to work smart. They have to identify their specialisations and understand what functional links they need to build with larger metropolitan areas and their surrounding neighbouring towns of similar scales. Such co-operation will pinpoint the critical amount of resources necessary in order to be competitive. In terms of EU policy making and the European urban agenda, the potential, the existing contribution and the overall development of existing SMUAs remains a topic in need of further attention and work.


EUKN: Looking at the bigger picture of Europe’s urban challenges, how has Latvia helped the development of the EU urban agenda and are you satisfied with your contribution?

IR: Our main contribution can be seen in the draft Riga declaration that will be presented and hopefully agreed during the informal ministerial meeting in Riga on the 10th of June. The main added value of this declaration is twofold. Firstly, we have managed to formulate the essential principles and elements of the future EU urban agenda that has also consolidated the previous discussions on the subject and the previous understandings of the governments and of the European Commission and of other institutions. Secondly, this declaration has managed to draw attention to SMUAs and we have fostered and animated the discussion of the topic among governments over the course of this half-year.

One of the principles that we have emphasised in this declaration is that the responsibility for urban areas and urban development lies within the competence of governments and will continue to follow the principle of subsidiarity and proportionality. There are a number of very important elements that have to be taken into account when building a European urban agenda, especially when considering the number of EU level policies that impact urban development. There should be priorities in formulating the European urban agenda: it must be operational; contain a set of specific measures that are related to better legislation; present a better legal framework and better instruments for promoting and supporting urban development. But also the knowledge on urban development issues must continuously improve. A final important principle is the understanding of the specificities of all types of urban areas in Europe. Member states have to collaborate with EU institutions and all stakeholders for whom this urban agenda is actually being created. It must be related to the practical reality aspects and the standings of the development on the part of the urban authorities in Europe. 


EUKN: Based on the findings of the soon to be published report, what are the most important challenges and opportunities for SMUAs in Latvia and also for Europe in general? 

IR: It warrants mentioning that the SMUA is not a homogeneous group of urban areas. They are different and divergent and therefore, the challenges of SMUAs depend on multiple factors such the administrative role within their country; economic structure; geographical positioning, linkage and cooperation within their region; historical developments; current macro and regional trends etc., There are however, a number of common challenges that need to be addressed from local, regional, national and EU level. Examples include: declining and ageing populations, youth migration, low economic activity and diversity, lack of highly educated skilled labour, job creation, provision of access to services. De-population in itself presents new challenges in terms of finding new ways of providing the missing services, and the added issue of infrastructures becoming more expensive when you have less people in these areas. In the case of Latvia, access to financial resources, capital investment and capacity issues represent challenges for the development of these areas. 

Opportunities are related to a greater flexibility to shift their development orientation, policy innovation, experimentation and research. SMUAs are better suited to provide better quality of life related to environmental conditions: the air is cleaner, the green areas are closer. They can also provide their inhabitants with more affordable places to live. And then, once an economic niche is found, co-operation with neighbouring towns can create competitive cities that can attract a lot of private investment. We have seen a number of very interesting cases provided to us by our colleagues in other countries. A good example in the Netherlands is Wageningen, a medium-sized urban area also known as “food valley”. Operating as a major hub of knowledge for the international food industry, this area has about 15,000 internationals active in matters related to sciences and technological development as well as people involved in manufacturing food products. There is an over spill from manufacturing activity across administrative borders and thus this urban area plays a vital role in the regional development and urban rural co-operation. This local production system involves agricultural production as well as new product development and research. Therefore, when the approach is smart and concentrates on assets and strength, the development of any kind of SMUA can be a success story. 

Another example in the annex of this report is the success story of Cēsis. This SMUA in Latvia is focused on encouraging local entrepreneurship. For example, in 2015 the town allocated several budget lines for grants that are aimed at implementing business ideas. As a local authority they are very active in promoting business activity at a local level and attracting external investment. Close co-operation is maintained on the one hand with our national investment and development agency in Latvia and on the other in maintaining the relationship with our diaspora with the aim of motivating these people to come back from countries such as the U.K., Ireland, Germany and Scandinavian countries. Latvian nationals having earned enough money abroad have since returned to Latvia and set up their own businesses operating in Cēsis and they are happy to be back home. This proactive attitude towards local people in spite of where they might be at the moment is an interesting approach to local potential development.

It is worth mentioning that local leadership is crucial to the success of SMUAs. The three mayors of Cēsis and its surrounding towns of Valmiera and Smiltene have established a triad of co-operation.  They meet on a regular basis to discuss their common development issues, to bring together resources when needed and to avoid unnecessary competition. Good co-operation with your neighbours at a functional level is a matter of smart leadership. 


EUKN: What kind of support do you expect from the EU to meet these challenges and expose these opportunities?

IR: There are a number of issues in which our SMUAs need support. Improving the connectivity and accessibility of SMUAs in terms of both transport and ICT infrastructure, capital investment in both infrastructure and services, promotion of entrepreneurship and innovation and also strengthening of human capital. What we expect from the EU is to have support mechanisms that allow SMUAs to implement their unique territorial development strategies and there are opportunities in the current programming period already provided with the mechanism of the Integrated Territorial Investment (ITI). However, I would say that although the ITI is a good idea on paper, it is quite a complicated mechanism to be implemented. We are currently in the process of trying to understand how to bring it all down to earth in the way it was envisioned. 

Another expectation comes from cities harmonising and co-ordinating different EU level regulations and instruments which will come up as a result of the public consultations that were organised by the European Commission. As a result of some privileges from the presidency, I can already say that there will be a very strong message related to the quality of EU regulation, in terms of high standards and requirements for local authorities as well as a linear and non-contradictory approach. Urban authorities have signalled that many cases of EU legislation are difficult to transpose into national legislation, they tend to be contradictory and difficult to implement. Simplifying this EU regulation is one very important demand from local authorities that we will hear in the next months during the discussion on this Commission staff working paper. 

The third level of support is knowledge, data, statistics, and methodology. We are currently discussing with the Commission the development of a territorial impact assessment methodology to evaluate the potential territorial impact of different policies and initiatives, instruments and legislation. We have been talking about this for a number of years within the intergovernmental co-operation network and we hope to continue with this topic with the Commission in the coming months and maybe years so a significant move forward can be made.


EUKN: As we await the publishing of the SMUAs report, what would you say have been the most interesting insights and policy suggestions?

IR: The different case studies from around Europe are insightful real-life examples. Other points of interest compare Europe with other parts of the world, showing how Europe is characterised by a more polycentric and less concentrated urban structure than the USA or China. An interesting fact states that only 12.3% of Europe’s population live in cities with a population of over a million, while 24% live in SMUAs. The report also compares a number of interesting performance rates between SMUAs and larger cities, which we addressed previously, such as lower levels of unemployment and higher growth rates in SMUAs. These figures contradict the typical stereotype that we have i.e. the bigger, the better; the larger, the more developed. We see a number of smaller places that are actually more vibrant and provide better living quality conditions then the average metropolitan area that has to somehow be able to manage and organise a much larger number of people in usually physically smaller spaces and that again causes different types of challenges. So we have to respect that when planning policy as well. 

Finally, we are appreciative of the EUKN and HESPI for their support during the Latvian presidency and especially in advancing our presidency priority on the role of small- and medium-sized urban areas. This co-operation has been positively productive and very successful and we are very thankful for the support provided to us. As a small country, the capacities of our local research institutions are limited, so it was very important for us to involve an already very experienced institution such as the EUKN, which also has a wide network of experts in the field who could assist us in preparing and elaborating this subject as a basis for the discussion during the presidency.