Sunday

11th Jun 2023

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.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

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.

Final push for EU-Mercosur deal, amid deforestation fears

Finalising the EU-Mercosur agreement is a priority for the EU and the upcoming Spanish EU council presidency, ahead of the summit with Latin America and the Caribbean countries to be held in Brussels on 17 and 18 July.

Opinion

The 'BlackRock exemption' has no place in the EU's due diligence directive

With the EU's Corporate Sustainability Due Diligence Directive, there's an opportunity to harness the power of investment for truly sustainable activities. But to do this, it must not allow the 'BlackRock exemption' and instead cover institutional investors and asset managers.

Final push for EU-Mercosur deal, amid deforestation fears

Finalising the EU-Mercosur agreement is a priority for the EU and the upcoming Spanish EU council presidency, ahead of the summit with Latin America and the Caribbean countries to be held in Brussels on 17 and 18 July.

Latest News

  1. Negotiations on asylum reform to start next week, says MEP
  2. EU gig workers compromise dubbed ‘a disaster for workers’
  3. EU's one-off chance to influence Laos taking over ASEAN chair
  4. Belgian bâtonnier on Russia: 'You can have a client you don't like'
  5. EU's proposed ethics body 'toothless', say campaigners
  6. Study: 90% of Spanish inflation 'driven by corporate profits'
  7. If Spanish economy is doing well, why is Sanchez poised to lose?
  8. EU lawyers for Russia: making 'good' money?

Stakeholders' Highlights

  1. Nordic Council of Ministers20 June: Launch of the new Nordic Nutrition Recommendations
  2. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  3. ICLEISeven actionable measures to make food procurement in Europe more sustainable
  4. World BankWorld Bank Report Highlights Role of Human Development for a Successful Green Transition in Europe
  5. Nordic Council of MinistersNordic summit to step up the fight against food loss and waste
  6. Nordic Council of MinistersThink-tank: Strengthen co-operation around tech giants’ influence in the Nordics

Join EUobserver

Support quality EU news

Join us