Corruption costs the European Union many billions of euros every year. However, a growing list of EU countries are looking to pass laws that could weaken efforts to root it out, raising questions as to how committed the EU is to fighting corruption.
A 2014 report published by the European Commission found that corruption costs the EU €120bn per annum – almost as much as the EU’s annual budget. This marked the first time a survey had been conducted that examined corruption across every EU member state. At the time of publication, the EC said these reports would be published bi-annually – but none materialised in 2016.
However, a 2016 study commissioned by the European Parliament found the cost of corruption to the EU could actually be as high as €990 billion – eight times higher than previous estimates.
Above: Drago Kos, Chair, OECD Working Group on Bribery
Nevertheless, in January 2017, Frans Timmermans, Vice-President of the EC, wrote an internal letter to Claude Moraes, Chair of the European Parliament’s Committee on Civil Liberties, Justice and Home Affairs, saying they had shelved this type of reporting in favour of addressing corruption concerns within the so-called European Semester – the EU’s annual process of macroeconomic surveillance of member states.
“Rising populism and the weakening of the rule of law across Europe requires concrete action from the EU on fighting corruption"
Director, Transparency International EU
The decision was widely criticised at the time, including by Carl Dolan, Director of Transparency International EU, who said: ‘The message coming from the European Commission is clear: fighting corruption is no longer a political priority and graft is only a serious problem in a minority of Member States. Now, more than ever, we need a strong and visible commitment to tackling corruption. Rising populism and the weakening of the rule of law across Europe requires concrete action from the EU on fighting corruption.’
Drago Kos, Chair of the OECD Working Group on Bribery says recent developments highlight the EU’s ongoing disinterest in this area. ‘It is obvious that the fight against corruption has never been a priority for the EU,’ he told Global Insight. ‘The problem is that the EU is now being torn apart by so many other issues – Brexit, a split between traditional democracies and strange developments in new democracies – and all of this is directly threatening the existence of the EU.’
The EC’s decision came at a crucial time for Romania in particular. The country was wracked by protests in early 2017 opposing alleged attempts by the government to water down the country’s anti-corruption laws. A year on, the protests continue as another wave of legislation looks to reduce the Anti-Corruption Directorate’s (DNA) investigative capacities and bring it under great political control.
“It’s obvious that the fight against corruption has never been a priority for the EU"
Chair, OECD Working Group on Bribery
Romania joined the EU in 2007 alongside Bulgaria and both countries continue to be subject to the EC’s Co-Operation and Verification Mechanism (CVM), which monitors their progress on judicial reform, corruption, and in Bulgaria’s case, organised crime.
Despite this measure, Kos believes the EU has failed to keep adequate pressure on both countries. ‘It seems that after accession to the EU that countries like Romania and Bulgaria were facing pressure from the EU, but this is now decreasing,’ he says. ‘In Romania the Anti-Corruption Directorate was very effective in fighting corruption, but now I think politicians there have decided this is the real time to fight back,’ he says. ‘If Romanian citizens were not so aware of the need to fight corruption, if they were not so sensitive to that issue, I would not have any doubt that their intentions would succeed because the EU is not reacting at all to such issues.’
Indeed, the CVM was not applied to Croatia, which joined the EU in 2013, nor was it applied retrospectively to countries that acceded in 2004, such as Hungary, which is still ranked as one of the most corrupt countries in Europe according to the 2017 Transparency International Corruption Index.
Jitka Logesova, a partner in Kinstellar’s Prague office and Senior Vice-Chair of the IBA Anti-Corruption Committee, says countries like Hungary could really benefit from greater EU involvement in fighting corruption. ‘In Hungary, most of the high-profile corruption cases are related to EU development funds,’ she says. ‘It is our impression that the EU is not really prepared to deal with reluctant authorities and systematic corruption. There are also numerous anti-corruption watchdog organisations in Hungary that would require more political support from the EU.’
Cvete Koneska, a senior analyst at Control Risks, says the EU is restricted in what it can do to stamp out corruption amongst its members. ‘The situation in Hungary and Poland has demonstrated that the EU currently has limited means to influence member states in this regard, and the means it does have – such as the Rule of Law process – are constrained by voting rules, such as the demand for unanimity,’ she says.
The 2016 European Parliament study, which included the indirect as well as the direct impact of corruption on the EU, also estimated that a CVM-mechanism applied to more member states ‘could reduce the costs of corruption in GDP terms by around €70bn annually’.
There is evidence the EU may be starting to take a harder line on corruption-related issues. In late December, amid growing concerns over the rule of law and separation of powers in Poland, the EC triggered Article 7 of the 2009 Treaty of Lisbon, giving the country just three months to reverse judicial reforms or risk losing its voting rights.
Koneska says recent moves by the EC to link the next EU budget – of which Poland is currently the greatest beneficiary – to member states’ capacity to a ‘functioning and independent judiciary’ are promising. ‘There is growing demand among older member states to strengthen the EU in this regard, for example by linking EU funds to respect for basic democratic values and rule of law,’ she says. Although Koneska warns that ‘finding unanimity to implement such a change is likely to be very difficult.’