Sorry to Spoil Your (Recovery) Party: Talking About the Accountability of Next Generation EU
The new Multiannual Financial Framework was adopted under challenging circumstances that prompted Member States to approve measures that could not have been foreseen were it not in the context of a pandemic. The Commission was authorised to secure funds in capital markets through bond issuance, which resulted in a EU budget augmented five times the usual one. The management of the budgetary package involves numerous actors at the EU, national and substate levels. The funds created great expectations at the national level, especially in disease-ridden Member States. This panel explores the challenges faced by accountability institutions to measure the performance of Next Generation EU and hold managers to account. As such, it represents a not-so-welcome reminder of the risks that under-performant accountability poses for effective recovery. The contributions of this panel explore the interplay between policy areas, the intervention of watchdog institutions (audit institutions, the EPPO, constitutional courts), and accountability mechanisms (the rule of law conditionality in the access to EU funds), with a view to pinpointing pitfalls in the design of Next Generation EU that might spoil the party of recovery and thus risk deepening the development gap between Member States, as well as between the EU and other world powers. This panel is presented by the EUFINACCO Research Network on Financial Accountability in the European Union.
Presentations of the Symposium
The EU Response to the Covid-19 Pandemic. A Big Effort With No Trouble? The Complex Interplay Between Next-Generation EU and other EU Policies
With its €750 billion, the Next-Generation EU is set to fuel the EU recovery after the Covid-19 pandemic. The Next-Gen EU sits aside the Multi-Annual Financial Framework for 2021-27 which is going to provide €1074,3 billion to implement the EU policies, among which EU Cohesion policy, one of the most significant EU policies in terms of budget. The Next-Gen EU represents an unprecedented effort to tackle an economic and social crisis. The way it finances the recovery is also new, through a mix of loans and grants. How does this new tool interact with the EU policies implementing the EU Budget, notably Cohesion policy, and what are the risks entailed by this massive deployment of resources for the operation of EU policies?
One of the major threats of the EU strategy is to create excessive streams of funding, each with its own rules and timing, which could create ‘administrative fatigue’. Currently, the 2014-20 programming periods are still ongoing, with the flexibility and reorientation of funding offered by the Corona Virus Response Initiatives (I and II), while the REACT-EU programme is injecting fresh money during the transition between CRI, CRII, and the National recovery and resilience plans, the cornerstones of Next-Gen EU, setting out the reform and investment agendas of member states until 2026. On top of this, the new programming period (2021-27) for Cohesion policy, has officially started this year.
Other risks are also foreseeable. The six policy areas of the Next-Gen EU resemble the priorities on which the 2021-21 Cohesion policy should focus. This could create overlaps between measures and even phenomena of competition between funds. Also, it is a matter of scrutiny: while EU policies are scrutinised because they implement the EU budget, distinct oversight instruments should be foreseen for the Next-Gen EU given that it represents an additional and substantial stream of funding. A minimum requirement to offset these risks and properly manage all these funding streams would be ensuring strong coordination among different sources of funding.
The EU has shown the capability to tackle an unprecedented crisis with a strong and financially substantial response. This calls for a strong capacity to manage and implement funding in member states on behalf of their administrations. Given the notoriously low administrative capacity performance of some of these states and the objectively complex architecture of the funding, the Next-Gen EU may produce risks that should be appropriately off-set.
Accountability and Public Value in the EU: How can performance audit impact EU actions with a view to the European Green Deal?
This article analyzes public value (co)creation in public sector audit, with a focus on environment. We use data from performance audit reports issued by the European Court of Auditors and analyze, among others, audit recommendations by degree of acceptance and implementation by the auditees to assess if the audits added value for the stakeholders – mainly the citizens. Through qualitative and quantitative methods, we find evidence that accepted audit recommendations are most likely to be implemented and that performance audit has created public value for the citizens and co-created public value together with auditees. We also observe that the auditors performed an increasing task on environmental and sustainability issues, in line with the focus of EU policy.
This article contributes in a relevant way to the existing literature on both value creation and performance audit in the public sector. It brings empirical evidence that the audit work output of a relevant SAI such as the ECA has a significant impact on public actions in the sense that the recommendations are highly accepted and implemented. Furthermore, it confirms results from previous research (Reichborn-Kjennerud & Johnsen, 2018; Torres et al., 2019) and it offers practitioners valuable insights on performance audit impact. Thus, these findings should encourage the ECA to continue its task to improve EU actions and also to closely collaborate with MS SAIs to enhance the implementation level of audit recommendations made to MS. Furthermore, this analysis may help other public audit institutions to improve their performance audit activity and their relationship with the auditees, seeking their acceptance and implementing follow-up procedures and reporting on them afterwards to also produce a significant impact on public value. Our findings show that performance audit contributes to improving public management and policies and it may have professional implications for public auditors by offering guidelines on how to assess the impact of their audit work and how to focus on matters of public interest.
Financial Accountability And Competing Courts In The EU Multilevel System – The Case Of Bonds Purchase By The European Central Bank
Even if the European Union’s founding Treaties in the 2009 Lisbon version still strictly limit the EU’s budgetary autonomy, the financial instruments used in the context of European integration have become more diverse since the 2008 debt crises and even more with the recovery plans reacting to the 2020-2021 COVID-19 pandemic crisis. The proposed paper asks to what extent financial accountability and competition between courts in the EU multilevel system are interconnected or conflicting. The empirical starting point is the German Constitutional Court’s judgment of 5 May 2020 regarding the purchase of bonds by the European Central Bank.
Repercussions Of The differentiated Integration Within The European Public Prosecutor’s Office For The Implementation Of The European Union Recovery Instrument
A coherent and unified approach at the European Union level for the economic recovery of the Member States revealed itself necessary from the onset of the Covid-19 pandemic. A specific proposal, the so-called European Union Recovery Instrument, created following the adoption of Council Regulation 2020/2094 of 14 December 2020, intends to achieve the above purpose. The financing of such instrument will come from funds borrowed on the markets by the Commission on behalf of the EU. Next, the financial resources thus obtained will be allocated to a number of EU budgetary instruments and will eventually be provided to Member States in the form of non-repayable support, loans, and provisioning for budgetary guarantees.
This paper aims at studying the accountability mechanisms available to monitor the expenditure of the aforementioned EU funds in the context of EU Member States’ differentiated integration within the European Public Prosecutor’s Office (EPPO, hereafter). Indeed, established on the basis of enhanced cooperation, 22 out of the 27 Member States will participate in the incoming EPPO.
In light of the above, this paper will answer the following research question: which risks poses the differentiated integration within the EPPO to the protection of the EU’s financial interests under the new European budget and the EU Recovery Instrument? Although theoretical, this question will acquire practical relevance where criminal offences affecting the aforementioned EU funds are committed in different EU Member States, including participating and non-participating Member States within the EPPO.
In order to answer the above question, this paper examines the institutional architecture of the EPPO, the future judicial cooperation between the EPPO and non-participating EU Member States, the future cooperation between the EPPO and OLAF, given that the latter, unlike the EPPO, operates across the whole EU. All these aspects are critically analyse from the perspective of their impact on and contribution to the accountability of the European Union Recovery Instrument.
The Rule of Law Conditionality Under Regulation No 2020/2092 – Is It All About the Money?
Some say that the Union is built by moving from crisis to crisis. Crises in the last decade which affected the Union and its citizens concerned, inter alia, public finance (the financial crisis, 2008), migration (2014), public health (the COVID-19 pandemic, 2020) and the rule of law crisis (2018). This paper focus on the latter. It has been noted that some Member States have been happy to receive the benefits of EU membership, specifically the financial ones, while their commitment to European values, including the rule of law (Article 2 TEU), has been lacking. Since many instruments applied by EU institutions to improve this situation have proved rather insufficient, halting transfers of EU funds to these recalcitrant Member States has been touted as the way that might solve this crisis. Accordingly, a draft regulation was put on the table that authorised the EU institutions to suspend EU funds if a Member State is found to be in breach of the rule of law. This draft aimed to make the transfer of EU funds to the Member States conditional upon their continuous respect for the rule of law (and therefore became known as ‘the rule of law conditionality’). This paper comments on this draft as first proposed by the Commission in 2018, amended in 2019 by the European Parliament, and finally adopted by the European Parliament and the Council as Regulation (EU, Euratom) 2020/2092 of 16 December 2020 on a general regime of conditionality for the protection of the Union budget (henceforth called ‘Regulation 2020/2092’). This Regulation, containing 29 recitals in the preamble and 10 articles, entered into force on 1 January 2021. In the conclusions of the European Council meeting in December 2020 it was however accepted that it will be applied only in relation to budgetary commitments starting under the new Multiannual Financial Framework (MFF) 2021-2027, including Next Generation EU. This paper provides the legal characteristics of rule of law conditionality established under Regulation 2020/2092 and aims to determine whether financial incentives can restore compliance with the rule of law in Member States. Or in other words, is it all about the money?