Something Rotten in the EU
by Michael Patrick O'Leary
The EU’s democratic deficit oils the wheels of the gravy train and encourages corruption.
Hamlet spoke of “something rotten in the state of Denmark”. Today Denmark serves as a benchmark for low corruption compared to the rest of the EU. The view from Europe used to be that corruption was a problem in developing countries, while the EU set a model of the rule of law and had a mission to export good governance. A recent report indicates that this is not so, and has probably never been the case. The estimated cost of corruption cited in that report, published on 9 April 2013 by the Hertie School of Governance in Berlin, amounts to nearly one-third the proposed EU budget for 2014-2020.
Tobacco is a poisonous substance that has a corrupting effect, physically and morally. Dealing in this deadly drug has highlighted the potential for corruption in the EU. Health Commissioner John Dalli resigned in October 2012, but the ‘Dalligate’ affair rumbles on in Dalli’s native Malta.
John Dalli left his post after a report from OLAF (Office de Lutte Anti-fraude) accused him of taking bribes from the tobacco lobby. The tobacco firm Swedish Match alleged that Dalli solicited a €60 million bribe to alter the tobacco directive for which he was responsible. The company manufactures Snus, a tobacco product consumed by placing it under the lip for extended periods. The sale of snus is illegal in the EU.
MEP Jose Bové alleged that Swedish Match’s lawyer lied about a crucial meeting during which Dalli’s agent allegedly solicited the bribe. Bové said company officials told him that that a meeting described by the lawyer never took place.
Where Is the Money Going?
There were concerns that the Dalli imbroglio might undermine OLAF. A House of Lords report accused EU member states, which are responsible for administering 80 per cent of EU funds, of being unenthusiastic about assessing fraud. The report criticised OLAF’s ineffectiveness; budgetary restrictions limited the number of cases investigated; there was little coordination with other EU agencies such as Europol and Eurojust.
There is a tendency to blame corruption on the newcomers to the EU gravy train. Older member states felt that Romania and Bulgaria joined in 2007 without resolving organised crime and corruption issues. The downturn eroded the principles of European solidarity, and boosted support for nationalism and immigration control. Some of the former Yugoslav republics attracted investment and began growing strongly in the credit boom before 2008, but they have been slow to emerge from the recession. There is fear that disappointment of their EU hopes could weaken the desire for reform and the region could, not merely sink into financial corruption, but explode into violence again.
Romania’s relations with the EU are at their lowest ebb. The EC published a scathing report on judicial reform and corruption. Austerity measures designed to please the EU are causing poverty and chaos and creating room for extremism in Romania. The EC published a wounding report on Bulgaria’s efforts to tackle corruption and organised crime.
Hertie School of Governance Report
The Hertie School of Governance report questioned the assumption that EU membership had a positive impact on corruption levels. Spain, Greece and Italy show a clear regression in the corruption index, despite being long-standing EU members.
The study puts EU nations into four groups.
Group A nations display high deterrents and low opportunities. This group includes Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Luxembourg, Malta, the Netherlands, Sweden and the UK. These countries control opportunities for corruption through transparent administration, reduced officialdom and few opportunities for discretionary spending.
Group B includes countries that have managed to create significant deterrents but still struggle with important challenges due to high resources available for corruption. This group includes Estonia, Lithuania, Hungary and Cyprus.
Group C includes Italy, Spain and Portugal, plus Slovenia and Slovakia. These are countries with relatively low resources, but also low constraints. The crisis itself has acted as a strong anticorruption agent in these countries, because of diminished resources and opportunities. They remain at risk because of insufficient normative and social constraints through civil society and media as well as legal deterrents.
Group D includes the five worst EU performers. Greece from the old member states and five newer members: Poland, the Czech Republic, Latvia, Bulgaria and Romania. Excessive bureaucracy poorly developed civil society and lack of media freedom is common to all of them. Bulgaria scores lowest on audit capacity and judicial independence. Greece has internet access at the level of an undeveloped country, which leads to poor controls and lack of transparency.
The Commissioner in charge of the Directorate for Economic and Financial Affairs is Olli Rehn. The Finnish electorate convincingly rejected Rehn – think of Neil Kinnock and Chris Patten in the UK. Imagine Ranil Wickremesinghe as a European Commissioner. After Rehn’s party was defeated in Finland, he went on Brussels where his effortless rise was disproportionate to his competence. His first brief was EU Enlargement; despite evidence of massive political and economic corruption, Romania and Bulgaria became EU members on his watch.
Turnout at European Parliamentary elections is consistently low. Why should voters bother when they know that real power lies with un-elected has-beens and faceless bureaucrats? In the light of this democratic deficit, does the EU have the systemic capacity to deal with the corruption eating away at it? The new powers of the European Commission and the Troika mark a further diminution of democratic control. The response of Brussels to the curtailment of democracy has been to propose a “commensurate increase” in the role of the European Parliament, to lend democratic legitimacy to the Commission’s expanded powers. The Parliament is constitutionally incapable of that. The EU electoral process cannot do what voters expect of parliamentary elections – i.e., determine the make-up of the ensuing government. EC president Manuel Barroso simply brushed aside MEPS’ concerns in the Dalli case.
Two years after the launch of the European Citizens’ Initiative, aimed at increasing direct democracy in the EU, not one of the 25 proposals has been implemented.
Although the nature and scope of corruption may differ from one EU State to another, it harms the EU as a whole by lowering investment levels, hampering the fair operation of the Internal Market and straining public finances. On the global Corruption Perception Index, Sri Lanka ranks 79th out of 176 countries. The nation badly wants foreign investment but investors will be wary of investing in a country widely regarded as corrupt. COPE could learn some lessons from the Hertie report on how to address corruption in Sri Lanka. The report recommends transparent administration and economy, reduced officialdom and limited opportunities for discretionary spending. Other essential assets required are an independent judiciary, free media (including an unfettered internet), and a healthy civil society. The capacity to audit and control is essential. The report indicates that nations with the least risk of corruption have high deterrents and low opportunities. The most at risk combine many opportunities with few deterrents. Which category will Sri Lanka choose to occupy?