Labour Euro-Safeguards Campaign - Bulletin July 2002


QUESTIONS AND ANSWERS ON FRAUD, CORRUPTION AND DEMOCRACY IN THE EU

  1. What is the scale of fraud and corruption in the European Union?

    The answer to this question essentially falls into two parts. The first concerns the extent to which budget appropriations either get mis-spent or disappear completely. The second relates to the standards of honesty and transparency with which the EU bodies, and the people who staff and get appointed or elected to them, behave. As regards the money, we have firm figures on which to rely, and they are enormous. The European Court of Auditors itself admits that about 5% of the total EU budget cannot be properly accounted for at all each year, while a further 5% is not spent on the programmes for which the funds were appropriated. As regards the integrity of the EU bodies and personnel, the evidence is more difficult to quantify, but the picture is not an edifying one.

  2. How prone to fraud is the Common Agricultural Policy?

    Nobody nowadays believes that there is a rational case for the kind of subsidy system which the CAP represents. What keeps it going is the naked self-interest of those who benefit from it. These include both various Member States who are substantial net gainers and the agribusinesses who exercise powerful political pressure to keep the subsidies flowing from which they benefit. The distortion of prices thus involved, however, produces endless scope for fraud and misfeasance which would not be there if supply and demand were in balance. This produces scandals such as the 1.5m in EU subsidies for olive oil, much of which goes to non-existent trees. This has not stopped the EU trying to track every tree, using a satellite system at a cost of 130m, only to find their efforts frustrated by the use of plastic trees. Or consider the cynicism of the EU running programmes to reduce smoking while at the same time subsidising farmers to produce tobacco of such low quality that it has to be dumped on third world markets, causing cancer through its high tar content..

  3. How well administered are other EU funds?

    The CAP still takes up about half the total EU budget, but this leaves plenty for spending on other projects. Again, waste and fraud is endemic. The EU's programme for aid to the Third World runs years in arrears, leaving EU politicians able to protest their good intentions, while the money does not actually get sent to its targeted recipients. The social funds are poorly monitored and badly administered. There is an endemic problem with late payments. The checks that money is spent as intended are weak and prone to evasion. Meanwhile the cost of administering the EU itself is grossly inflated not least by French insistence on keeping the European Parliament in Strasbourg, necessitating fleet loads of lorries to cart tons of documents to and fro from Brussels and Luxembourg let alone the cost of new Parliament buildings which, after endless expenditure over-runs, finished up by costing the EU taxpayer about 1bn.

  4. What about the Common Fisheries Policy?

    In a class of its own, however, is the Common Fisheries Policy, which is so badly run that even the Commission is in despair about its operation. The result is an ecological disaster as rich fishing grounds, most of them historically in British waters, have been fished out by heavily subsidised fishing fleets. Attempts to limit the number of fish caught by the use of quotas have been flagrantly abused as cheating on a huge scale has gone on unchecked. Now recent attempts to try to get this disastrous situation back under some control have been blocked by Spain, which has built up an enormous fishing fleet on the back of EU subsidies which paid for most of the Spanish fishing boats to be built in the first place. Meanwhile, the British fishing industry has been decimated.

  5. How have all these developments been allowed to occur?

    How has it been possible for such misdirection of resources and mismanagement to occur in an organisation set up with apparently high ideals? Much of the problem stems from the gap between the lofty sentiments expressed by political leaders and the practical reality of the way in which so many EU institutions are run. Member States may say they favour EU wide approaches to problems, but the way they actually conduct their affairs is to protect their own interests as much as they can at the expense of everyone else. This attitude washes over into the way the Commission operates, where idealism is sadly lacking, leading a few years ago to the entire Commission being sacked following scandals of nepotism, favouritism, extravagance and bad management which even hardened eurocrats regarded as being beyond the pale. No wonder a recent report from the British National Audit Office (in a pearl of bureaucratic understatement) said that "the Commission have some way to go before they attain the quality of financial reporting expected of public sector financial statements such as government accounts in the United Kingdom."

  6. What has happened to democratic control in the EU?

    There is little doubt that one of the main reasons why the EU institutions have such low standards of probity is because the whole organisation lacks democratic accountability. The strongest bulwark against those in a position to do so feathering their own nests is for the electorate to be able to vote them out of office if they fail to maintain adequate standards. Regrettably, the structure of the EU makes this very difficult to do. Much of the power lies in the Commission, which is not elected by anyone, and which has always been a self perpetuating oligarchy. Another vitally important body, the European Central Bank, is completely isolated from democratic pressures, with the members of its board, appointed for eight year terms, specifically charged not to be influenced by public opinion. There is no doubt that the feeling among many ordinary people that the EU elites live in a world of their own, almost completely divorced from everyone else and impossible to influence, has led to the protest parties, mostly on the far right, springing up across the EU.

  7. What about the European Parliament?

    If there is a democratic deficit in the EU, the natural response from many people is to say that accountability needs to be improved, and that the obvious body to fulfil the same kind of functions which national legislatures perform is the European Parliament. There are, however, major problems with this argument. In the first place, for parliaments to work effectively, they need to have an electorate which feels itself to be at least some sort of a coherent whole. This is not, however, the way in which politics in the EU has developed to any significant extent. Loyalties are far more concentrated at national than at EU level, and EU wide public opinion simply does not exist in the way in which it does in each individual Member State. Furthermore, the respect with which the European Parliament is held is very low. This is largely the fault of the greed and irresponsibility of many of its members, whose willingness to milk the system for all they can get out of it is legendary. Widely publicised phoney expenses and absurdly extravagant lifestyles do nothing to provide the EU electorate with the trust and belief in the integrity of their representatives which are needed. The low turnout in elections to the European Parliament is a sad reflection of the extent to which this organisation has failed to inspire confidence in its ability to play any key role in getting the EU to operate in a less corrupt and more transparent fashion.

  8. Where does the tradition of lack of transparency come from?

    An important question to answer is why such relatively low standards of probity have become endemic in the EU. If the founding fathers set up the EU institutions to bypass democracy where they could - which they did because they were technocrats who distrusted democracy - why was this done? The reason is that much of Europe has a long history of shaky democratic institutions, combined with well established traditions that those elected to positions of power can be expected to look after themselves, their families and their friends in ways which those used to a different standard of public morality find incomprehensible. Unfortunately, with no effective ways of rooting out these venal attitudes to hand, there is a tendency for everyone to regress down to the lowest standards of behaviour. This is why there does not appear to be any real prospect of significant improvements in the future, as is evidenced by recent scandals which show a familiar pattern continuing.

  9. Where does this leave Britain?

    In Britain, we do not have an unblemished record. We have had examples of sleaze and corrupt behaviour which are to be deeply regretted. A sense of proportion, however, is required. The reality is that on a world scale, Britain is a remarkably uncorrupt country, with strong and effective democratic traditions, built over centuries. These are very precious assets. British standards of accounting for public money, for open and transparent administration, for a fair hearing in the law courts and for clear choices between government and opposition political parties are much higher than they are in a large proportion of the other Member States in the EU. It is on issues like this that much of the case for Britain being very cautious about getting further integrated into the EU turns. Whether or not we join the euro is of vital importance to our capacity to carve out the economic future for ourselves which we want. Even more important, however, is going to be our ability to run our affairs, confident that those we elect can be held properly to account and that those who serve them in public administration will be honest and trustworthy.

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