Financing the EU after 2020 – Improving Accountability for the use of EU Funds: New Developments and Strategies
In 2020, the EU’s current funding period, based on the Multiannual Financial Framework (MFF) 2014-2020 and the seven years funding schemes such as Horizon 2020 come to an end. The panel discusses new developments and perspectives for the period starting in 2021. In the post-Brexit era, not only a new MFF will apply, but also new strategies for how to deal with member states breaching the rule of law. In the European Union, accountability mechanisms and watchdogs have become increasingly important. The panel explores new trends in the development of EU watchdogs and their strategies. The panel is organised by the Research Network on Financial Accountability in the EU (EUFINACCO).
Presentations of the Symposium
A Package Deal for Reform of Own Resources and the EU Budget: Exit from Net Balances
Reform of the EU budget so that it is more responsive to changing collective needs such as energy or environmental security, while still securing minimum levels of solidarity to those regions most in need, depends on changing the means of financing the budget in the first place. This paper evaluates the ingredients for a package deal to achieve such reform. It does this by deconstructing the case for using net balances in calculating budgetary costs and benefits given that flows in funds at EU level do not correspond to their distribution by country. An approach based on gross rather than net expenditure may unlock the door to a package deal that would need to be less costly in economic and political terms than the status quo for all Member States. Simultaneously, new forms of revenue would be fiscally neutral, while delivering policy objectives in relation to combating challenges like climate change or transnational tax avoidance.
Suspension of EU Funds Paid to Member States Breaching the Rule of Law – the Commission could have done it Better?
In the European debate over the alleged breaches of the rule of law by Hungary and Poland it is increasingly pointed out that the EU does not have effective legal instruments to stop such violations. In response, the Commission presented, on 2 May 2018, a Draft Regulation authorizing the Council to suspend EU funds if a Member State is found to be in non-compliance with the rule of law (known as ‘the conditionality mechanism’). This paper comments on the proposed models for this mechanism which is supposed to apply after January 2021. It can be said at the outset that the premises required for launching this mechanism have been formulated extremely broadly, leaving the Commission and the Council, who will initiate it, with a considerable margin of manoeuvre. The Member States whose EU funds are to be suspended can easily lose them forever if, within two years from the year of suspension, they do not eliminate the alleged breach of the rule of law and have both the Commission and the Council lift the suspension. Even though the suspension should only affect Member States, beneficiaries of EU funds (including e.g. farmers) may also suffer from it, with no legal protections established. Doubts also arise as to the relationship between the conditionality mechanism and the Article 7 TEU procedure. All these reservations lead to the question: Could the Commission, the author of this Draft, have done it better
Shifting towards Performance: Evolution of the European Court of Auditors’ Methodology
In the past decade, the European Court of Auditors’ (ECA) methodology has gradually shifted in focus from a “financial and compliance audit” towards a more “performance audit oriented” approach. In its 2018-2020 strategy, the ECA expresses the intention of enhancing the added value of its work in the context of today’s EU financial management, focusing its task on performance and producing clearer messages for EU citizens and their representatives to ensure public funds are spent in a thoughtful and efficient manner. In this paper, a thorough study of the evolution of the ECA’s audit methodology and ECA’s products (i.e., Annual Reports on General Budget and Special Reports) is made along its whole history. Our findings support the new ECA’s strategy of focusing its attention more on performance, shifting relevant resources towards performance audit- i.e., looking into the evaluation of the effectiveness, efficiency and economy in the budgetary execution.