The EU cannot guarantee that hundreds of billions of euros from its joint COVID fund were not wasted or lost through corruption. This revelation by the European Court of Auditors (ECA)—the EU’s corruption watchdog—raises serious questions about the EU’s ability to protect against financial mismanagement.
Simply put, the problem is that while the Commission sets anti-misuse standards for Member States to receive money from the fund, it can’t verify if those standards were met.
The joint fund in question is the €724 billion Recovery and Resilience Facility (RRF). Created in response to the pandemic, it was the first time the EU issued bonds under its own name. Member States decided to pool their resources under the EU—entrusting the distribution of their money to Commission expertise and oversight.
However, the ECA reports that “the EU’s executive did not plan to examine” how recipient countries would confirm “that RRF-funded investment projects comply” with their requirements. In effect, the Commission simply took the recipient’s word.
The RFF also allowed southern EU countries to borrow at lower rates, since the bonds were backed by the strong credit ratings of northern nations. This threatens to play on the EU’s old north-south division, as frugal northerners often feel they subsidise the financially irresponsible south.
Responding to the ECA’s announcement, MEP Charlie Weimers had harsh words for Swedish parties who supported the joint fund. On Twitter he wrote,
Ask [the moderate party] and [the Christian Democrats], how do you intend to vote the next time the EU proposes ineffective and wasteful funds that lack proper follow-up and control and that are financed with joint borrowing, where Sweden stands as a guarantor for bankrupt southern European countries.
ECA President Tony Murphy said, “with such large amounts at stake, it’s imperative that EU taxpayers’ money is adequately protected.” He added, “citizens will only trust new ways of EU funding if they can be sure that their money is being spent properly.” However, coming in the wake of the Qatargate scandal, trust in EU integrity and competency is unlikely to gain traction.