With billions of euros in the pipeline for recovery plans and little time to submit and review them, holding the authorities accountable for the management of funds will be pivotal in securing a recovery based on fundamental rights and the rule of law
On 9 March, the European Economic and Social Committee (EESC) held a virtual public hearing to delve into the challenges of implementing the Recovery and Resilience Facility (RRF) in a way which safeguards fundamental rights and the rule of law.
The RRF, the historic EU plan worth EUR 672.5 billion in grants and loans, is intended to help the European Union rebuild its economies after the COVID-19 crisis.
However, many eyebrows are being raised at the thought of how to ensure that this unprecedented sum earmarked for recovery is used in a fully accountable way and that the funds are not mismanaged, serving political or private interests instead of the common good.
Furthermore, in order to kick-start recovery as quickly as possible, the deadlines for Member States' national recovery and resilience plans (NRRP) to be approved by the EU institutions are very tight, and this will not leave much time for proper scrutiny.
Greater oversight and more effective monitoring measures will be key to securing a rule of law-based post COVID-19 recovery, with civil society acting as a watchdog to complement institutional supervision. The speakers at the hearing also agreed that strong social dialogue which actively involved the social partners and other stakeholders was an essential part of the process of drafting and implementing the NRRPs.
COVID-19 has been traumatic for our societies. In order to recover and build resilience we need transparency; specifically, we need transparency when it comes to NextGenerationEU, which will serve to make the EU stronger and more resilient post COVID-19, said Cristian Pîrvulescu, president of the EESC’s FRRL Group.
However, protecting the EU budget against mismanagement resulting from a lack of respect for the rule of law during the implementation phase may not be an easy or straightforward task.
Following tough negotiations in the Council of the EU late last year, it was agreed that a conditionality clause would be added to the RRF, meaning that the release of funds is now dependent on respect for the rule of law. The Regulation on RRF entered into force in February.
Javier Doz Orrit, president of the EESC's Ad hoc group on the European Semester, said that the inclusion of the conditionality clause established an important link between NextGenerationEU and the rule of law, and that a conditionality procedure had finally been introduced
despite last-minute pressure from some governments.
This is not the best possible solution, but it is enough to remind all politicians and authorities that respect for democratic principles and the rule of law is an inherent condition of EU membership, Mr Doz Orrit said.
Éva Török, from the Commission's Recovery and Resilience Task Force, said that the Commission had a good overview of what Member States were planning to do. The latter are required to include – among others - targets and milestones in their plans for investments and reforms and explain how each measure complies with the
do-no-significant-harm principle set forth in the regulation before they receive the funding.
However, not everybody's fears have been allayed by the introduction of a conditionality procedure. According to Päivi Leino-Sandberg, professor of transnational European law at the University of Helsinki, the legal basis of the RRF is very fragile, as it rests on very loosely defined and broad criteria. This makes the implementation of funding rules
a very political exercise as it will give considerable discretion to Member States if they choose to contest a decision not to allocate them funds.
Responsibility definitely lies with the national authorities; their incentive should be strong. On top of that, civil society should scrutinise the proposals very closely, demand transparency and call the authorities to account, both as regards what they are planning but also what they spend their money on, Ms Leino-Sandberg said.
PREVENTING CORRUPTION WITH OPEN AND PARTICIPATORY CIVIL SOCIETY OVERSIGHT
The injection of such an extraordinary influx of funds into the recovery facility, along with the need to spend it quickly, significantly increases the likelihood of fraud and corruption, said Karina Carvalho, executive director of Transparency International's Portuguese chapter.
Not only does corruption divert taxpayers' money away from investments that promote sustainable development, it impacts fundamental rights and the rule of law, Ms Carvalho said. In her opinion, now is the ideal time to complement existing controls with open and participatory civil society oversight, based on the
Integrity Pacts model.
Integrity Pacts are a real-time monitoring mechanism for public contracting procedures, which remain the primary instrument for the distribution and investment of EU funds. These procedures are also one of the most frequent vehicles for corruption, and it is estimated that the EU and its citizens lose around EUR 5 billion a year due to corrupt contracts.
Other measures include granting adequate resources to the recently created European Public Prosecutor's Office (EPPO), additional independent and external oversight mechanisms, and timely and accurate exchange of information relating to all aspects of the use of EU budgets and funds, Ms Carvalho said.
INVOLVING THE SOCIAL PARTNERS IS KEY
In its Resolution on the Recovery and Resilience plans, adopted last month and presented at the hearing by Mr Doz Orrit, the EESC said that the NRRPs would be more efficient and effective if civil society organisations were involved more quickly and more extensively. The resolution stated that it was essential to ensure good governance, vigilance against corruption in the management of funds and democratic accountability.
Social and civic dialogue is a very important instrument for ensuring that investments are delivered properly but also for preventing corruption – after all, we are talking about billions of euros being poured into the EU economy within a relatively short period of time, stressed Mr Doz Orrit. The EU Regulation on RRF provides for mandatory involvement of the social partners in the national recovery and resilience plans. However, he said, the extent of this has so far been
clearly insufficient in most of the EU countries.
According to Ms Török, the Commission follows the consultations of social partners and stakeholders in Member States. The Member States will have to summarise the outcome of consultations and explain how the input of stakeholders is reflected in their recovery plans.
These reforms and investments can only be successful if there is national ownership and this is why the Commission has encouraged Member States to involve stakeholders in designing and implementing reforms from the beginning. The Commission has reported some improvements and that consultations are taking place in Member States.
Gerhard Huemer, Director for Economic and Fiscal Policy at SMEunited, said that organisations representing SMEs had come up with their suggestions for the NRRPs and had been in contact with the authorities, but in the end they were informed of what the government was doing.
There has not been much consultation, with the governments asking or trying to find compromises or agreements with the social partners. In many cases, there has been nothing on the table so far, and we are pushing to become more involved, said Mr Huemer.
Isabelle Schömann, Confederal Secretary of the European Trade Union Confederation (ETUC), agreed.
Most of the time, we are happy to be informed, let alone consulted, she said, warning that it should not be like that.
On the basis of what we learned from the financial crisis of 2008 and now from this pandemic, we have clear evidence that when the social partners are included in developing plans and policies at sectoral and national level, recovery is much more sustainable and brings a better future for workers and society as a whole, said Ms Schömann.
However, the EU is adamant that the rebuilding of Europe will be based on fundamental rights and the rule of law, so as to ensure that nobody is left behind. Earlier this year, the Council adopted conclusions on the need for the post COVID-19 recovery process to be based on human rights.
COVID-19 is a wakeup call to remind us of the need for a united EU and to keep human rights on the agenda, said Margarida Teixeira Araújo of the Permanent Representation of Portugal to the EU, as she presented the Council’s conclusions on a human-rights-based post COVID-19 recovery, adopted in February.
The hearing on Fundamental rights, the rule of law and the post COVID-19 recovery brought together representatives of European institutions, governments and academia, as well as the social partners and civil society organisations. It was organised by the EESC’s Group on Fundamental Rights and the Rule of Law (FRRL Group), set up in 2018 to monitor developments on fundamental rights and the rule of law in the Member States.
A summary of the hearing will be available on the event page.
In December 2020, the FRRL Group held a hearing on
COVID-19: Mitigating Impact and Overcoming the Crisis. It focused on COVID-19's impact on employers, workers and CSOs and the EU response in terms of the rule of law and fundamental rights.