Camino Mortera-Martinez / Jun 2021
The new European Chief Prosecutor, Laura Kövesi. Photo: European Parliament
If all goes according to plan, the EU should start disbursing money from its post-pandemic recovery fund next month. While the main focus has been on the enduring stand-off between the so-called frugal and the Southern, and supposedly spend thrifty, member-states, there is a much more worrying problem brewing. The fund will be part of the EU’s biggest budget to date, and will be susceptible to corruption, political manipulation and outright fraud. This matters not only because corruption is a serious crime and a major geopolitical challenge that dents European economies. But also because the more the more pervasive the corruption, the more it endangers the rule of law. Europe already grapples with the effects of democratic backsliding within the bloc. Depending on how it is spend, and who polices it, the recovery fund could help reversing that trend or make a bad situation even worse.
Too much political capital has been spent on the recovery fund for it to fail. The EU will need a stronger anti-graft strategy to ensure that corruption does not undermine democracy in the member-states, and that the bloc’s post-pandemic budget boosts economic recovery rather than enriching well-connected elites. The Union must upgrade its lines of defence. Here is how.
First, the EU will need to ensure that the newly minted European Public Prosecutor’s Office (EPPO) works well and has the necessary resources to do its job. Currently, the EU has three main ways to defend its budget: the first is the European Court of Auditors (ECA), which monitors how the EU institutions and EU governments spend their money and make sure they do so according to pre-established budgetary principles. But the ECA does not have legal powers. When it suspects fraud, corruption or other illegal activity, it must report it to the European Anti-Fraud Office (OLAF). OLAF is the EU budget´s second line of defence. According to the European Commission, it “investigates fraud against the EU budget, corruption and serious misconduct within the European institutions”. Because OLAF can only launch administrative investigations, the EU thought a body with a wider remit was needed. The EPPO, which begins operations today (1 June), has the power to prosecute criminals who may have acted against the financial interests of the Union.
The EPPO’s main problem is that not all member-states are part of it (for example, Hungary and Poland are not). This will create problems of enforcement across the EU. The EPPO will be ineffective if the more corrupt countries in the EU do not belong to it. One solution could be to use European Investigation Orders (EIOs) to initiate anti-corruption investigations in countries that are not EPPO members. A European Investigation Order is a court decision by one EU country asking the judiciary of another EU country to gather or use evidence in criminal investigations. Once the EPPO starts working, it will have the power to issue EIOs, just like any national judicial authority. Because EIOs apply to all member-states except Ireland and Denmark (which have opt-outs from aspects of EU justice and home affairs), the EPPO will be able to ask courts in Hungary and Poland to carry out anti-corruption investigations.
Another idea would be to make the disbursement of EU funds conditional on joining the EPPO. This would be a step further on the ongoing process of linking EU money and the rule of law.
But punitive actions alone will not reverse years of democratic erosion in the EU. The EPPO must be part of a wider strategy to address corruption and the rule of law in Europe, including ensuring co-operation with more reluctant member-states that do not participate in the EPPO. One crucial part of this strategy must be an uncompromising defence of the judiciary. There can be no anti-corruption plan if there is no one there to act upon it. Until recently, the EU had few powers to counter attacks on the judiciary in member-states, as this was considered a matter of national competence. Whenever it wanted to address questions concerning the judiciary, the EU had no choice but to resort to the inefficient Article 7 procedure. But in 2018, an ECJ ruling changed that. The Court said that, because national judges should be considered EU judges, the EU was competent to intervene when their working conditions stopped them from providing effective judicial protection under EU law. The EU should make sure it uses this power, together with broader sanctions, when it suspects a government is targeting the judiciary.
Finally, the EU should have better anti-corruption overseeing mechanisms, by, for example, upgrading the role of banking supervision in preventing money laundering through the European Banking Authority; and including a chapter specifically devoted to corruption in its European Semester recommendations.
Defending the rule of law may be the EU’s most pressing task over the coming years. To uphold the rule of law, the EU needs a broad strategy that includes credible and enforceable anti-corruption measures. For the EU and its member-states, the need to support a rules-based international order – an order that the Union itself is based upon – is existential.