Wednesday

22nd Nov 2017

Euro bail-out funds lack oversight, auditors say

  • MEPs worry that huge sums of public money will go unaccounted for (Photo: Images_of_Money)

Scrutinised neither by national audit offices nor by the European Parliament, the two eurozone bail-out funds amounting to €700 billion lack democratic oversight and accountability, several auditors and MEPs said on Tuesday (24 March).

The new financial architecture of the eurozone - set up under market pressure in successive phases resulting in different funds and financing methods - is putting up unprecedented amounts of public money to contain the sovereign debt crisis.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

But according to the Dutch Court of Auditors, the Luxembourg-based funds - the temporary European Financial Stability Facility and the upcoming European Stability Mechanism (ESM) - are neither transparent, nor accountable enough for the amount of public funding they will be able to draw on.

"Democratic control and public scrutiny only exist to the limited extent that ministers of finance can be held to account by their national parliament for their individual share in the functioning of the ESM and not for the functioning of the ESM bodies or the organisation as such," a report presented to MEPs on Tuesday by the Dutch Court of Auditors reads.

The report warns that waning public support for all these financial contributions will be even less certain given this democratic deficit, especially since the ESM is to be established as a permanent institution.

After lengthy back-and-forths, a coalition of national auditors late last year managed to introduce a provision in the ESM treaty creating a board of five auditors, including two from member states and one from the European Court of Auditors.

But implementing laws on what powers these auditors will have - to check only financial flows or also to look in depth at how the money is used - is still under discussion.

Meanwhile, parliamentary scrutiny remains limited to national legislatures approving bail-outs - as in Germany's case. But the European Parliament has no say and will only be "informed" in yearly reports submitted by the ESM.

"This mechanism for 17 countries has no parliamentary dimension, no public scrutiny over how these public funds are being used. We are constructing an economic governance based on inter-governmentalism, sanctions, but we don't have a parliamentary dimension for this sub-structure of the EU," said French centre-right MEP Jean-Pierre Audy.

His Dutch colleague from the Liberal group, Jan Mulder, warned that this lack of parliamentary control "is a very dangerous development" that risks undoing whatever was achieved in the past 20-30 years in terms of public accountability.

Legal challenges may delay eurozone bail-out fund

Legal challenges in Germany, Ireland and Estonia, as well as political uncertainty in the Netherlands, may delay the setting up of a permanent eurozone bail-out fund at a time when Spain's economic woes require a strong firewall.

MEPs ponder how to fight tax havens

After the Paradise Papers brought new revelations about tax dodging across the globe, including in the EU, the European Parliament wonders how to step up the fight.

News in Brief

  1. December euro summit still on, Tusk confirms
  2. EU calls for end to Kenya election crisis
  3. Report: Israeli PM invited to meet EU ministers
  4. French banks close Le Pen accounts
  5. Commission relaxes rules on labelling free range eggs
  6. Commission issues €34m fine over car equipment cartel
  7. Estonian presidency 'delighted' with emissions trading vote
  8. Mladic found guilty of genocide and war crimes

Stakeholders' Highlights

  1. Idealist Quarterly"Dear Politics, Time to Meet Creativity!" Afterwork Discussion & Networking
  2. Mission of China to the EUAmbassador Zhang Ming Received by Tusk; Bright Future for EU-China Relations
  3. EU2017EEEstonia, With the ECHAlliance, Introduces the Digital Health Society Declaration
  4. ILGA EuropeFreedom of Movement For All Families? Same Sex Couple Ask EU Court for Recognition
  5. European Jewish CongressEJC to French President Macron: We Oppose All Contact With Far-Right & Far-Left
  6. EPSUWith EU Pillar of Social Rights in Place, Time Is Ticking for Commission to Deliver
  7. ILGA EuropeBan on LGBTI Events in Ankara Must Be Overturned
  8. Bio-Based IndustriesBio-Based Industries: European Growth is in Our Nature!
  9. Dialogue PlatformErdogan's Most Vulnerable Victims: Women and Children
  10. UNICEFEuropean Parliament Marks World Children's Day by Launching Dialogue With Children
  11. European Jewish CongressAntisemitism in Europe Today: Is It Still a Threat to Free and Open Society?
  12. Counter BalanceNew Report: Juncker Plan Backs Billions in Fossil Fuels and Carbon-Heavy Infrastructure

Latest News

  1. Mali blames West for chaos in Libya
  2. Orban stokes up his voters with anti-Soros 'consultation'
  3. Commission warns Italy over high debt level
  4. Mladic found guilty for Bosnia genocide and war crimes
  5. Uber may face fines in EU for keeping data breach secret
  6. EU counter-propaganda 'harms' relations, Russia says
  7. The EU's half-hearted Ostpolitik
  8. Glyphosate: 1.3 million EU citizens call for ban