Time to redesign the Structural Funds system?

Views on BG | December 8, 2008, Monday // 00:00

From EurActiv.com

By Claus Schultze, Director, European Regions Research and Innovation Network (ERRIN)

The EU's recent decision to freeze structural fund payments to Bulgaria over rampant corruption is a "sad thing" as people of Bulgaria "badly need development," writes Claus Schultze, director of the European Regions Research and Innovation Network (ERRIN), in a post on Blogactiv.

They deserve better than a "corrupt government at home and an EU apparatus that has no other means to control whether expenditure goes to crooks except by freezing the funds," he insists.В 

The decision represents the first time in EU history that the bloc has taken the "bold step to freeze structural funds payments to a country on the grounds of rampant corruption," Schultze remarks.В 
В 
"560 million euros have been withheld" from Bulgaria,В Schultze states. Although this is a relatively small amount compared to the total sum of 11 billion euros earmarked for Bulgaria in regional aid and farm subsidies until 2013, the blogger believes that aВ large share of the money left untouched may end up "bolstering the lifestyle of the Bulgarian mafia and their corrupt or neglecting backers within the political and administrative system".В 

The EU decision reflects "concern among officials, diplomats and fraud investigators over the ability of the Bulgarian authorities to prevent billions of euros in European grants being siphoned off by organised crime," Schultze states.

However, this problem is "not confined to Bulgaria,"the ERRIN officialВ argues, referring to an article he wrote some years ago for the Open Society Institute. Indeed, the prospect of billions in EU subsidies, he says, "only encourages criminals to diversify from activities such as cigarette smuggling or trafficking into the equally lucrative white collar crime of siphoning off EU money".В 

What is equally troubling is that "the phenomenon also seems to encourage administrative and political insiders to seek their share, and not only through fraud but through influencing funding decisions to support projects that often do not make economic sense," the blogger laments.В 

This is a symptom of a deeper crisis, Schultze concludes,В calling for "a complete redesign of regional aid" to replace "the typical EU approach of incremental and slow reform".В 

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