Financial management and accountability in #SOTEU – two ackward bystanders

The first State of the European Union (#SOTEU) speech of Ursula von der Leyen as President of the Commission was held at the Brussels premises of the European Parliament last Wednesday, 16 September 2020. This posts reviews the speech from the perspective of financial management and accountability, taking into account our conviction that the way in which public money is managed by the executive has a direct impact on the rule of law, the quality of democracy, and ultimately citizen’s trust in the political system.

Ursula von der Leyen, #SOTEU 2020

VdL placed NextGenerationEU in the context of an ‘opportunity to make change happen by design – not by disaster or by diktat from others in the world‘, an instrument to ‘ not only repair and recover for the here and now, but to shape a better way of living for the world of tomorrow ‘.

NextGenerationEU was mentioned 17 times in #SOTEU, highlighting its multifacetted inititiative nature, geared at addressing some of the most pressing concerns faced by the EU just now.

NextGenerationEU is useful to unearth the Commission as the ‘engine of integration’, through its multimillion investments in manifold areas: 8 billion euros in the next generation of supercomputers,  environmental conditionality in the green bonds that will represent 30% of the 750 billion euros of this initiative, building a European Bauhaus, a European Cloud based on GaiaX, a BARDA as biomedical agency,

Little did VdL say, and it was her role as ‘guardian of the treaties’ to do it -but perhaps #SOTEU not the right place for it- of the paramount importance of sound financial management for NextGenerationEU to fulfil its ambitious goals.

She linked it -one hour into the speech- to the ongoing debate on the rule of law, particularly in Hungary and Poland. We now know that the Commission will publish on Friday 25 September its first annual rule of law report covering all Member States.

In the Commission’s mindset, financial accountability is seen as neither an end in itself nor a means for a better use of EU funds, but an instrument to prevent local oligarchs from unduly enriching themselves out of EU funds, entrenching even deeper in power, and impeding their peoples to fully exploit the benefits of EU membership and EU investment.

VdL mentioned that the Commission will ensure that

money from our budget and NextGenerationEU is protected against any kind of fraud, corruption and conflict of interest. This is non-negotiable.’

Ursula von der Leyen, President of the Commission, 2020 Speech on the State of the European Union

Yet, I personally missed a prudent reference to the resources the Commission should invest in proper financial accountability of the funds that Member States grudgingly committed at the July 2020 European Council.

As many prominent observers have noted, NextGenerationEU is an one-in-a-generation window of opportunity for many Member States and regions to build capabilities and raise to the Union average.

Its financial management without proper ex ante and ex post oversight will quickly turn into selective mismanagement of the huge financial envelop of NextGenerationEU, with some Member States clearly faring worse than others, you know what I mean. No naming and shaming today but the main international indexes are out there for you to check (e.g. Corruption Perceptions Index, the Freedom Barometer Index, the World Bank Governance Indicators, or the World Justice Project indicators on the independence of the judiciary and corruption in the executive).

Corruption in the financial management of NextGenerationEU will -I fear-do away with this chance and broaden/deepen even further the existing breach(s) across Europe, from Lithuania to Spain, to use VdL’s geographic reference.

VdL could have also winked at the forthcoming launching of the European Public Prosecutor’s Office to send a message that the fraud and corruption against the EU’s financial interests will soon be over. But she did not.

Promises made at #SOTEU are not really accountable, neither politically nor legally; so we will not really criticise VdL in 2-3 years’ time if her words do not bring about concrete achievements (particularly because of national /regional corruption). But she could have taken a bolder stance in favour of sound financial management, without which key initiatives (as NextGenerationEU) and key principles (as the rule of law) will remain an almost empty carcass.

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