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Regions & Cities 2018: A deep dive into the EU regional funds

  • Text
  • European
  • Regions
  • Funds
  • Cohesion
  • Cities
  • Regional
  • Countries
  • Euobserver
  • Funding
  • Eastern
The European Union has allocated around €350bn for the 2014-2020 period to cohesion policy – accounting for a full third of the EU budget. Only the EU's agriculture policy receives more.

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The EU's cohesion funds are a significant target for criminals Photo: European Commission 'ALIEN' MONEY Some academics have said the structural funds have a problem embedded in the design of the system: the money is coming from the general EU budget, but action to protect it against abuse will have to be paid by a national authority. Researcher Agnieszka Aleksandra Murawska first pointed out in her 2008 book Administrative Anti- Fraud Measures within the European Union that any loss would be suffered by the EU budget as a whole, while investigating and prosecuting fraud requires investment from the national budget. The book was her dissertation at the European University Viadrina at Frankfurt (Oder). "In theory, the member states should be interested in the correct functioning of the common market, but it is evident that particular interests of individuals, i.e. the voters, frequently prevail," she wrote. "Community law is perceived as something 'alien and distant', and the community budget is regarded as less worthy of protection than national financial interests," she added. Since the Lisbon treaty, member states have a duty to protect the EU budget as well as their national budget. European Commission spokesman Johannes Bahrke told EUobserver that the member states are "primarily responsible" for sound management, and that the cohesion policy programmes have strict safeguards. "As far as the commission is concerned: we have zero tolerance regarding fraud with EU funds and therefore insist on a clear commitment from all member states to prevent fraud," said Bahrke. "The commission closely follows up on that commitment and takes immediate actions, including by clawing back expenditure if the fraud is confirmed," he added. 'TOO MUCH MONEY' But there is another problem: "There is too much money," according to researcher Fazekas. He noted that if authorities in a country are unable to fund sufficient sensible projects, controls will become more lax. Like many non-governmental organisations, no one wants to lose part of their funding because of the appearance that they can do with less. Fazekas has also seen a lot of EU-funded projects being overpriced, but this is never a reason for withdrawing funds. "There are a lot of process controls, but outcome controls? Zero," he said. A final problem is the most sensitive one. "EU funds go to the least developed regions. By and large most least developed regions are the most corrupt regions in Europe," said Fazekas. Administrative cultures vary greatly between member states. "Wales receiving structural funds is very different from southern or eastern 18 — REGIONS & CITIES 2018

Romania receiving structural funds," he said. "A major error of the EU enlargement was thinking that eastern European countries can be treated like poor regions in western European countries," Fazekas noted. At the same time, he added that there was no other way to treat the new member states added in 2004, 2007, and 2013. "It was politically impossible to say: you eastern Europeans have weaker institutions, so we have a different set of rules than for the poor regions in northern Sweden," he said. But Fazekas pointed out that methodologies exist for establishing whether a government can be trusted with managing funds – not only the World Bank has them, but so does the European Bank for Reconstruction and Development. "It's not hard to come up with a methodology which classifies countries in, say, three categories: you can be trusted, you are in-between or you are absolutely not trustworthy. I can guarantee you Hungary would not pass". But such a ranking of EU member states is completely against the equal treatment member states seek – and a political no-go zone. How much money is being lost to fraud is difficult to know Photo: European Parliament 19 — REGIONS & CITIES 2018

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