Paul Krugman, Nobel Prize winning economist turned NYTimes blogger and public intellectual, has written extremely interestingly about Europe’s economic problems, provokingly titled “Greece as Victim”.

Again, I have to agree with him on most points, although I would not like to take a position on whether ECB should result to quantitative easing or not. In fact, as of now, I remain slightly skeptical of that suggestion. Nevertheless, I agree with Krugman that while Greece has its sins, it is primarily in trouble due to its Eurozone membership. Something that I actually highlighted already back in spring 2010. It is also true that Greece’s welfare state was not dis-proportionally large, as sometimes claimed. What Krugman, however, forgets is that no-one ever forced Greece to join the Eurozone.

Several pre-Maastricht Treaty EU member states have not done so. Indeed, Greece could have negotiated similar opt-out as did UK and Denmark. When it became clear that Greece was not going to adopt Euro immediately in 1999 when it was introduced to world financial markets as an accounting currency (Euro coins and banknotes entered circulation on 1 January 2002), Greece’s government decided to approach their public finance auditing creatively – just to make Greece fit for the entry criteria into the zone. In other words, Greek politicians were so eager to take their country into Eurozone that they were willing to result to fraud. Part from ideological reasons (integrate Greece more thoroughly with Europe), there were probably other motivations behind this move too. One that I can speculate, was to enable more generous public spending (due to lower interests rates that Euro brought with it). Among other things, more public spending stimulated the economy and reduced unemployment, thereby increasing government’s popularity. It also allowed ruling politicians to reward their “clients” in the lower levels of government bureaucracy with jobs and pay-rises. In that sense, claiming that Greece is somehow a victim, is simply not justified.

I have been closely following Nobel laureate turned NYTimes blogger Paul Krugman’s blog for quite some years now. It is one of few blogs that I actually care to follow (others belong to my personal friends and acquaintances). While reading comments about Krugman’s latest post about Estonia, I noticed that several commentators had gross miss-impression about how much money does Estonia receive from EU institutions, in budgetary terms. Guesstimates were ranging from “more subsidies from the EU than [Estonia] collects taxes from its own citizens” to “a net $2-3 billion Euro a year in aid from the rest of the EU.” I knew it was not that much but, to be frank, I had to go and look exact details over.

With a brief research, I was able to uncover reliable data form the Ministry of Finance website, showing that in 2011, all combined foreign budget transfers amounted to 782.6 million Euros, which makes up about 13% of state revenue of 5.89 billion in 2011. To put this into another comparison, Estonia’s total exposure to the European Stability Mechanism (if it is ratified by Estonia, at all) is 1.3 billion Euros (although only 148 million must be inserted initially), meaning that even if worst scenario unfolds with Greece and other peripheral Eurozone countries (Greece’s total public debt of 355 billion is only half of ESM starting size and about half of Greece’s debt comes from private creditors) exit the Eurozone without ever paying anything back, then Estonia would still make net profit from the EU in budgetary terms about 1,66 years later.

These 782.6 million Euros also still make Estonia one of the big per capita recipients of EU funds, as this highly informative graph from the Guardian article shows:

As can be seen from the graph above, according to the Guardian, every Estonian contributes 92 Euros to the EU budget, while receiving back 602 Euros. Second highest (both in total and net) after Luxembourg. And all this, of course, excludes indirect economic benefits.