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15th Aug 2022

EU's post-Covid billions flowing into black hole

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It will be difficult to find out, if not impossible, where exactly the more than €700bn that are being distributed to member states in post-pandemic relief across the EU will end up.

The biggest ever economic boost to the bloc's economy will in most cases lack public scrutiny as member states do not plan to publish the details of the beneficiaries.

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"We have to be sure as well that all stimulus packages should be available in open data, allowing citizens to follow the money, and to prevent inefficiency and even corruption," said French president Emmanuel Macron in late 2020 when the last details of the EU recovery and resilience facility (RRF) were being negotiated.

However, it never became a legal requirement to publish the beneficiaries of the RRF — the European Union's economic stimulus package to help the bloc recover from the Covid-19 pandemic and at the same time achieve the union's target of climate neutrality by 2050 and to set Europe on a path of digital transition, job creation and boosting economic growth.

Instead, it is up to the member states themselves if they want to publish the info on who receives the money.

The case is very different when it comes to the Common Agricultural Policy (CAP) where anyone who receives EU funding under the CAP is included on publicly available lists that, in the European Commission's own words: "are designed to promote transparency and trust in EU funding measures".

So far 16 member states have received a little more than €66 billion in RRF funding, but only two member states — Lithuania and Slovakia — are preparing to publish all the beneficiaries of the fund via a single transparent website.

While some countries are planning to publish the data spread out on different regional levels and in a decentralised way, other member states have said they will not publish the RRF beneficiaries, citing the protection of privacy.

"Their arguments are that it's too much effort or that it would clash with privacy rules," said Krzysztof Izdebski from the Open Spending EU Coalition.

"We can observe the increase of the trend of using the GDPR to restrict the access to data not only of the final recipients of public funds but also company representatives and their beneficial owners," he said.

The General Data Protection Regulation (GDPR) is an EU privacy regime dating back several years.

"This is in contrast to the public interest and the principle of the effectiveness of public spending. We can observe this trend also in RRF funding, where member states are less than keen to present data on final recipients," he added.

"While I fully support the GDPR and the need to protect the private lives of citizens, I can't find the justification for restricting access to data of recipients of public funding. This is beyond their activity in private life, as the information about the fact that they have received public funding is a matter of the transparency and accountability of public money, and the way public institutions are performing their public tasks," said Izdebski.

According to an investigation by German newspaper Die Welt together with Dutch investigative platform Follow the Money, published on Wednesday (29 June), the German government that held the EU Council presidency during the final negotiations on the RRF in late 2020 was uncomfortable with making it an obligation to centralise data in a public database.

"Representatives of the German government were against the publication of the names of the recipients and even against the obligation to use interoperable data formats," said German green MEP Damian Boeselager, who took part in the negotiations at the time.

"This runs on the principle: don't look at my cards, then I won't look too closely at yours. In doing so, you accept that there will be corruption," Boeselager said.

"It's a missed opportunity that the EU didn't make such systems mandatory, but I'm not surprised," said Mihaly Fazekas, an assistant professor at the Central European University, who uses Big Data methods to understand the quality of governments globally.

"In 2020 some countries' GDP declined so quickly that the EU didn't want to spend two years on horse trading with the member states, some of whom were against better rule of law mechanisms. We shouldn't forget it's all very political," he said.

However, Fazekas still points out that there are risks when beneficiaries are not made public.

While researching for his PhD at the University of Cambridge, he found that EU funds were at higher risk of fraud and corruption than very similar national funds. There are three reasons for this, argues Fazekas.

"One reason is that when there is plenty of money that needs to be spent quickly, like with the RRF, it will be more likely to get spent on overpriced projects and exploited by corrupted managers," he said.

"Also, people don't feel EU funds to be hard-earned taxpayers money. They don't car," he added.

"And last: EU funds tend to go to specific projects, instead of more general welfare spending like personal pensions. Projects, involving big amounts of money and a lot of complexity, are at bigger risk for getting corrupted," he said.

This article was made possible through the research and input of the Recovery Files — an alliance between more than 35 investigative journalists and newsrooms from more than 20 countries led by the independent Dutch platform Follow the Money. Together they investigate the trails of €723.8 billion RRF funding

Author bio

Helena Spongenberg is a Danish journalist living in Spain, who is part of Recovery Files — an alliance between more than 35 investigative journalists and newsrooms from more than 20 countries led by the independent Dutch platform Follow the Money

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