It used to be said that the EU did not have real fiscal firepower. Unlike its member states it did not meaningfully raise money and spend it. But in response to the economic damage caused by the COVID-19 pandemic (and the measures to prevent its spread) the member states agreed that the EU would borrow and spend up to roughly three quarters of a trillion euros, increasing its available funds by around 67% for the next few years. This is the Next Generation EU instrument, and 90% of NGEU funds will be spent on recovery and resilience, under the Recovery and Resilience Facility, or RRF.
The RRF initiative is financed by issuing common debt for commonly agreed purposes, in part redistributive ones. Although this does not represent a ‘Hamiltonian’ moment for the EU, it is nevertheless by any measure the mark of an at least temporarily closer union. The democratic legitimacy of this spending, however, depends in part on decision-makers being accountable for how much is spent and on what. Accountability is also important in that it reduces the scope for fraud; when large sums are to be spent relatively quickly that scope is large.
In this major new report for SIEPS, Dr Maria-Luisa Sánchez-Barrueco maps the accountability relationships in the RRF: who is answerable to whom, and for what, and are there any sanctions. This is no small task since the governance arrangements are complex and the European Parliament – a principal actor in normal budgetary accountability – has been somewhat sidelined. The report then assesses whether these accountability arrangements allow the ‘watchdogs’ (the Commission vis-à-vis member states, the Council vis-à-vis the Commission, the European Parliament, national parliaments, anti-fraud bodies etc) to fulfil their roles.
There are some welcome findings: RRF governance requires unprecedentedly high levels of transparency and reporting. But, the report concludes, there are real shortcomings: financial watchdogs are hampered by weak mandates and, faced with such a complex governance system, other actors are variously short of time, interest and powers.