OSTRAVA, Czech Republic — With debate raging over the next EU budget, the Continent’s poorer regions are bracing for the possibility of big cuts in funding from Brussels.

Eastern European member countries are in the crosshairs because they have sucked up billions of euros in investment as part of cohesion policies meant to help weaker economies. Cohesion programs worth €351.8 billion accounted for nearly a third of the EU's budget for 2014-2020.

The future of such funding is up for discussion as part of the big debate around the EU’s next long-term budget, the Multiannual Financial Framework, which will run from 2021 to 2027.

The combination of Britain’s departure from the EU, which will leave a black hole of €12 billion to €13 billion per year, and the approach of a new budget cycle means the EU is confronting fundamental questions about how it spends its cash. But part of the discussion also focuses on whether cohesion funding should be linked to countries upholding the rule of law — which would be a way for Western European capitals to withhold cash from governments they see as democratic backsliders, such as Poland and Hungary.

Central and Eastern European governments have been lobbying hard for the EU to safeguard cohesion spending.

The European Commission will present its proposal for the new budget in May, but the dilemma for member countries is already clear: Are they ready to pay more to keep the budget at its current level or increase it — or should they decide it's time to cut EU spending?

The near constant flow of EU funds has become a given for locals in places like the eastern Czech city of Ostrava, a former industrial center whose mayor, Tomáš Macura, said at his office on the banks of the River Ostravice: "We are definitely trying to be prepared for the period when the EU and other funds will be lower, or maybe zero."

"We try to collect money from other players," said Macura, who represents the ANO party of Prime Minister Andrej Babiš. He said his office has reached out to the private sector and other cities to cooperate on projects, adding that the city has also used favorable economic conditions to reduce its debts and increase its financial reserves.

Around Ostrava, disused mines dot the landscape, buses with the EU regional development program logo hurry along snowy streets and rushing students pay no attention to billboards promoting university building renovation or an EU-financed sewerage project.

But some experts believe any loss of EU funds would be deeply felt here.

“In our region, the large majority of big companies that have invested substantially in innovations during recent years have accessed European Structural and Investment Funds to co-finance these projects,” said Tomáš Kolárik, director of the local regional development agency. Owned by the Moravian-Silesian region of which Ostrava is the capital, the agency was founded as part of an EU project in 1993 to support the area's economic transition from communism to capitalism.

Kolárik said that when there were fewer calls for EU funding, “this fact is clearly visible in the macroeconomic data. For example, the construction industry reacts very sensitively to whether funding is available or not.”

Many nonprofit organizations “cease to exist or significantly reduce their services” during such periods, he said in an email.

Outcry in east Germany

“The broad debate is of course one over how much money to give to cohesion, how much to agriculture, how much to new priorities,” said Guntram Wolff, director of the think tank Bruegel.

Central and Eastern European governments have been lobbying hard for the EU to safeguard cohesion spending.

In the Czech case, the challenge is threefold: Brexit could well leave less money in the EU budget for cohesion spending. At the same time, the Czech Republic, a net recipient of EU funds, is — like other members — under pressure from the Commission to increase its payments to the bloc’s budget to cover the Brexit hole, and fund new priorities. And Central Europe is undergoing an economic boom, making parts of the Czech Republic wealthier and thus probably eligible for less European funding in the next budget.

During the EU's previous budget cycle, the Czech Republic received some €22.1 billion, representing 2 percent of Czech GDP over a seven-year period and 34 percent of government capital expenditure, according to the European Commission.

“There is a very strong movement for keeping the cohesion amounts as they are,” said Finnish MEP Petri Sarvamaa, a member of the center-right European People’s Party group and vice chair of the European Parliament’s Committee on Budgets.

Sarvamaa noted that net contributors such as Germany have an interest in preventing eastern members from being left behind. Berlin has indicated a willingness to pay more into the EU budget. But, Sarvamaa added, cohesion spending is unlikely to be preserved in its current state if other EU spending programs are cut. “I just cannot see realistically that we will be able to keep it at the same level,” he said.

The real question, according to Sarvamaa, is not whether cohesion policy funds will be cut, but how close the new sums will be to previous levels.

The European Commission has floated several options for reforming cohesion policy, including the possibility of focusing spending exclusively on less developed regions or countries.

These scenarios would safeguard funding for much of Central and Eastern Europe, but would be a very hard sell for Germany, where the former communist east benefits from the funds.

“I don’t believe in subsidies for companies. It’s creating a bad mindset” — Tomáš Buchwaldek, businessman

“There was an outcry among east German Länder when a cut to cohesion funding was discussed for the first time,” said Wolff.

A move to focus solely on less developed areas would redirect funding to poorer areas in countries like Poland, Bulgaria and Romania.

As a result, the coalition agreement sealed between leaders of Germany’s two biggest political parties earlier this month expresses support for cohesion funds for all categories of regions that currently benefit from them.

Monika Vana, an Austrian Green MEP who sits on both the European Parliament's budgets and regional development committees, said she is concerned that new EU priorities, such as building up a defense union, would mean less money for cities and regions.

“The Commission is laying out scenarios where only less developed regions are supported, which would be undermining the goal of cohesion policy to be the EU's main investment and solidarity tool for all regions," she said.

'Bad mindset'

Currently, the EU offers cohesion funding to three types of regions — from richest to poorest, they are classified as "more developed" (with GDP per capita more than 90 percent of the EU average), "transition" (between 75 and 90 percent) or "less developed" (less than 75 percent). Less developed areas qualify for the most funding.

The Moravian-Silesian region, whose GDP per inhabitant was about 72 percent of the EU average in 2015, currently qualifies as “less developed.” But if it becomes just a little wealthier — or the formula for defining the categories changes — the region could face a loss of cohesion funds.

Some in the region argue that wouldn't necessarily be a bad thing.

“I don’t believe in subsidies for companies,” said businessman Tomáš Buchwaldek as he sat in a crowded coffee shop in central Ostrava. “It’s creating a bad mindset.”

He said that while EU and government subsidies should be used for public infrastructure, he sees companies that rely on subsidies as failing to focus on customers and create value.

Euroskepticism in the region goes beyond questioning the efficiency of EU funding: A large newspaper rack in the coffee shop featured a paper with a full-page cover story on the debate over whether the Czech Republic should hold a referendum leaving the EU. A Eurobarometer poll last year found that merely 30 percent of Czechs view the EU positively.

“Most people don’t really understand how the EU works,” said Martin Podzámský, a student at the Technical University of Ostrava where Czech and English can be heard in the halls of the economics faculty and recruitment posters for accountancy firm KPMG feature prominently.

Many locals “see the EU as an opponent that dictates things,” he said, adding that often Czechs get their information from headlines on their Facebook feeds and don’t bother to check sources, making them susceptible to fake news.

The son, grandson, and great-grandson of local miners, Podzámský said that while he sees the region’s future positively, despite economic growth there is lingering resentment over past privatizations and mass layoffs in traditional heavy industries. And although young people dream of seeing the world and sometimes leave for higher wages in Western Europe, many locals remain xenophobic and “closed off to everything different,” he said.

Back at city hall, Mayor Macura said he is confident Ostrava's transformation — from a pollution-infested place where 200,000 people working in heavy industry lost their jobs to a green city with less than 7 percent unemployment and an emphasis on innovation — ensures its economic future.

But decision-makers in Prague insist it is important that EU funds continue to flow.

“We tend to forget why the Cohesion Policy was created in the first place,” Czech State Secretary for European Affairs Aleš Chmelař wrote in an email to POLITICO. “If too large cuts in Cohesion Policy were implemented, this would put the whole European project and its main benefits at risk."