Stop the misuse of EU funds under new budget

In November, the New York Times published an article that brought to light the shady use of EU taxpayer money in Hungary.

It exposed how land has been seized from local farmers and agricultural funds are used to benefit a select group of Fidesz loyalists.

Unfortunately, that case is not an isolated one.

Not even a month later, documents leaked to the Czech press showed that the European Commission had found Czech prime minister Andrej Babiš to be in a conflict of interest.

His former business empire, an agricultural conglomerate now run by two trust funds, is one of the largest recipients of EU subsidies in the Czech Republic. Ironically, both Orbán and Babiš are among the EU's loudest sceptics.

With Boris Johnson's election victory fresh in our minds and Brexit drawing nearer, it is tempting to shun the issue of the misuse of EU funds altogether, as it might play into the hands of eurosceptics.

But keeping silent pre-empts the healthy debate that is so vital to a genuine European democracy.

Currently, the commission has a number of instruments at its disposal. In the case of a blatant conflict of interest as defined in the EU's financial regulation, it can start an investigation - as happened with Babiš.

And it can audit the agencies responsible for pay-outs at national level, although according to the EU Court of Auditors the commission is trying to reduce these checks.

With regard to that last point, the commission is right in theory that national institutions are better placed to safeguard and control EU expenditure.

National paying agencies take decisions on the distribution of EU money in member states, and national auditors oversee their decisions. But exactly in those countries that are prone to misuse of EU funds, it is doubtful whether the autonomy of these bodies can truly be guaranteed.

Under the current rules, national paying agencies will reward farms on the basis of land-size (rather than sustainability or other criteria), which make pay-outs particularly vulnerable to abuse in countries with complex land-owning structures like Slovakia and Hungary, or in which land ownership can be awarded (and taken back) at the whims of the political elite.

No rules broken？

Indeed, money can land in the pockets of government loyalists without a single EU rule being broken.

In short, while most of the facts brought to light by the New York Times demonstrate dubious practices, those practices are not necessarily unlawful.

And although the commission has some instruments at its disposal to test for procedural flaws in national paying agencies' decisions, it is much harder, both for the commission and the European Court of Auditors, to check whether EU money is being spent justly and appropriately.

It is thus vital the EU have a means to punish governments that use EU taxpayers' money to tighten their grip on power, rather than to serve their citizens.

The above cases are rooted in systemic flaws, and require systemic change.

The good news in this respect is that a proposed “rule-of-law” mechanism - a tool long championed by the S&D and tabled by the commission last year- does exactly that.

The mechanism would impose financial sanctions on member states where problems with the rule of law are identified, in particular if they concern the proper functioning of public authorities.

Under its current design, triggering this mechanism would be much easier than triggering the notorious Article 7 procedure.

The mechanism would thus go some way towards halting the use of money in ways that are lawful but inappropriate, and safeguarding the impartiality of paying agencies and auditors. In short, it would better protect the financial integrity of the Union.

But now for the bad news: the proposal, perhaps not surprisingly, is currently stuck in council and being made part and parcel of the negotiations on the EU's long-term budget.

While leaders seem to be competing on who take the biggest dislike to the new budget and its overall size, their time would be better spent approving a mechanism that could potentially claw back misused millions.

Stain on project

This is aside from the fact that their focus ought to be on a modern budget including a modern CAP at the service of social and environmental goals, for this would in turn make the CAP less vulnerable to misuse.

While the problem of CAP conflicts of interest may currently be limited to a few countries, it has the potential to stain the entire European project.

It is time for EU leaders to stand up for integrity and transparency, approve the rule of law mechanism and make anti-democratic self-enrichment something of the past.