Academic journal article Romanian Journal of Political Science

Risks of Corruption and the Management of EU Funds in Romania

Academic journal article Romanian Journal of Political Science

Risks of Corruption and the Management of EU Funds in Romania

Article excerpt

The Problem

Romania has received a consistent piece of the EU cake, ranking fourth after Poland, the Czech Republic and Hungary, in terms of the amount earmarked for the 2007-2013 programming period with 19, 67 billion EUR given by the EU for the Convergence and European Territorial Cooperation objectives (3). Currently, Romania has the poorest absorption rate among all the EU Member States (4) and the worst among the ten new Member States. At the end of 2012, Romania registered an absorption rate, as measured by the overall payment ratio (intermediary reimbursed payments from the European Commission), of almost 12% (5), dramatically below Bulgaria (34%), Hungary (40%) and the Central and Eastern Europe (CEE) average of 44% (KPMG--CEE, 2013: 9). In addition, among the countries with the lowest contracting ratio, Romania ranks last with 70% as compared to Slovenia (72%), Slovakia (73%) and to the CEE average of 83%. An important indicator of management efficiency in terms of real distribution is the difference between the grants contracted and those paid (KPMG--CEE, 2013: 14). The biggest differences are present in Romania (58%) and Bulgaria (66%) (6), the CEE average being 39%.

One of the immediate causes behind the low absorption rate is the decision by the European Commission in 2011 to halt reimbursement claims for two operational programmes (Regional Development and Human Resources) because of problems with the public procurement procedure as pointed out by the Commission's audit missions (7). The same happened in July 2012 when five operational programmes (Environment, Transport, Human Resources, Economic Competitiveness and Regional Development) were subject to halted reimbursement claims pending the results of the Commission's audit missions (8). Moreover, at the end of 2012, Romania was subject to pre-suspension mechanisms concerning three operational programmes (Transport, Economic Competitiveness and Regional Development (9)) because of suspicions of fraud and the lack of adequate management and control functions. More precisely, they refer to faulty public procurement procedures, defective financial management and an inadequate prevention and detection practice with regard to fraud and conflict of interest (10). The direct consequence of all the suspended reimbursements was the fact that the beneficiaries received the funds later than anticipated and the Government had to continue to support the programmes financially either from the state budget (11), or by contracting loans from the international financial market, thus increasing the state deficit.

The financial corrections applied by the Commission following audit missions merit special attention because although it has the weakest absorption rate, Romania is subject to the highest level of corrections among all the Member States (Iorga et al., 2013). That particular aspect is analysed in greater detail below.

Because of its poor absorption rate which is only slowly increasing, less actual money reaches the ultimate "consumer", the citizen meant to benefit from the financing scheme. The allocated per capita spending for Romania--strictly from EU funds--is 897 EUR (if the absorption rate were 100%). Even in that respect Romania lags behind since, according to data from 2012, the total amount of payments per capita (155 EUR) is the lowest among the CEE countries (Romanian Fiscal Council, 2012: 43) (12). Therefore, 742 EUR from the allocated sum did not reach the average Romanian citizen.

The picture described above permits us to state with a degree of certainty that Romania's predicament is a result of a combination of lack of administrative capacity, mismanagement and corruption.

Once political stability seemed to have been achieved in Romania after a stormy year in 2012, structural problems resurfaced. Corruption there remains the worst in the EU-27, echoed by the anti-government slogans of the 2012 demonstrators who stated to their rulers: "We apologize that we cannot produce as much as you can steal" (13). …

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