EU’s watchdog, the European Court of Auditors (ECA), found in a recent audit that EU´s financial support for candidate countries in the Western Balkans has gone some way to strengthen administrative capacity in the region but that the impact of the assistance was hampered by considerable shortcomings inherent to the national authorities.
The auditors conducted a “meta-audit”, an overview of the European Commission’s management of pre-accession assistance in Albania, Bosnia and Herzegovina, Kosovo, Macedonia, Montenegro and Serbia between 2007 and 2013. They also took into account developments relating to the 2014-2020 period.
As a meta-audit, it relied mainly on previous audits by ECA and evaluations by the Commission. “However, it should be added that wherever the information was insufficient or outdated, we tried to update it by collecting new data,” the auditors told The Brussels Times.
They found that the Commission’s management objectives had not always been specific and measurable. The absorption of funds was hampered by weak administrative capacity in some countries and the lack of strict requirements for EU fund management when implementation was decentralised.
Especially in Macedonia, the absorption as a percentage of contracted amounts still to be paid was very low or about 45 % during the audited period.
“It was the only country where the decentralised implementation system (now called “indirect management”) was introduced at the same time for four out of the five components of the assistance and apparently the country wasn’t ready for it,” the auditors explain.
During the audited period, Macedonia also started backsliding in its accession process, partly due to the blocking of accession negotiations because of the disagreement with Greece in the name issue.
“In our opinion, the Commission should have acted more selectively and taken into account the administrative capacity and the political situation in each country when deciding on the type of management of the projects,” the auditors added.
“The Commission should systematically apply strict conditions and follow them up”, said Istvan Szabolcs Fazakas, the Member of the European Court of Auditors responsible for the report. “If necessary, future payments could be reduced or suspended.”
Although there were shortcomings in reporting, the Commission had been partly effective in monitoring the implementation of projects. It had also been partially effective in following up on the conclusions and recommendations of evaluations.
The auditors, however, were critical against the use of the evaluations. “Unfortunately, the Commission did not take advantage of the recommendations in the evaluations to make greater use of conditionality.”
“In the case of the rule of law, it was obvious that the evaluations only served Directorate-General for European Neighbourhood Policy and Enlargement Negotiations (DG NEAR, former DG ELARG) and not other Directorates-General with the required expertise in the area of rule of law and public administration reform.”
“So, at best, it was a missed opportunity that such labour-intensive evaluations did not fully serve the purpose of following up projects to the extent that was needed.”
As regards donor coordination, an issue that has been on the agenda since the adoption in 2005 of the so-called Paris declaration on aid effectiveness, the Commission had been supportive.
But according to the auditors, “It is important to distinguish two levels of coordination: Commission and beneficiary country. It was always effective at Commission-level. At country-level, donor coordination was only effective in Serbia. In the other countries, it was not effective or only partly affective and needs to be improved.”
The auditors looked at both project outputs and results. While the EU assistance generally had delivered the planned outputs, 50 % of rule of law projects and 40 % of public administration reform projects were not sustainable. Why?
“When projects turned out to be unsustainable,” the auditors told The Brussels Times, “it was because no national budget was in place to fund the maintenance of the projects and the use of the outputs once EU funding ended.” The lack of political will to reform institutions affected project sustainability.
“To prevent this from happening, the Commission should have applied conditionality more strictly – the lack of conditionality worsened the situation. But the main responsibility for the missing sustainability lies with the beneficiary countries.”
Whether the overall allocation of funds was optimal in view of the needs in each country was outside the scope of the audit. The auditors found that relatively little funding had been provided in key areas such as media freedom, public prosecution and the fight against corruption and organised crime.
“The allocation by country was proposed by the Commission and decided by the Parliament and the Council and reflects largely the number of inhabitants in each beneficiary country among many other criteria, including political ones,“ the auditors say.
“However, we indicated in our report that, when applying conditionality, different measures could have been taken, which would have had an impact, albeit small, on the relative share of the total financial allocation per country.”
Given that the Western Balkans is a region made up of countries that are all aspiring to join the EU, the Commission has encouraged regional cooperation among them. But the auditors found that the instruments for regional cooperation were not effective. The Regional Cooperation Council, located in Sarajevo, did not have a significant impact on the ground.
“The Regional Cooperation Council absorbed EU funding for specific projects, as well as for their own administrative budget. They actually did implement many projects, but these were not really connected with each other and did not contribute very much to regional cooperation in the audited areas.”
The auditors are also critical against the Regional School of Public Administration (ReSPA), located in Danilovgrad in Montenegro. “In principle ReSPA was a good idea and it has tried to reform itself since 2013 – moving from training to networking – but it’s still too early to determine if they have succeeded.”
Strengthening administrative capacity in the Western Balkans requires both financial assistance and political dialogue and, not the least, a coherent link between them. Did the audit cover both assistance and political dialogue?
“While we recognize the link between financial assistance and political dialogue, the focus in the audit was on financial assistance,” the auditors say. “Although political dialogue was taken into account, we did not validate the information in the Commissions annual progress reports and did not regard them as a source of information in the same way as the evaluation reports.”
The auditors continued: “The progress reports state the Commission’s political position on each enlargement country. From an academic point of view, it might have been interesting to audit to what extent financial assistance addressed problems or gaps identified in the progress reports but this was unfeasible, hence outside the audit scope.”
“What really mattered to us was whether the projects were carried out according to the principles of sound financial management.”
Public administration reform (PAR) and good governance fall under the Copenhagen political criteria and aim at the establishment of a transparent, accountable and effective public administration capable of implementing the Community law (acquis) in all policy areas (chapters). The challenge is that there is no separate acquis chapter on PAR.
Some horizontal requirements concerning for example the civil service, administrative procedures, prevention of corruption and local self-government are not covered by any of the existing chapters. According to an OECD – study after the enlargement round in 2004, when 10 countries joined EU, this weakened EU´s leverage in the accession negotiations.
Until now, however, a major argument against a PAR chapter has been the expected negative reaction from the Member States, where different models of public administration are in place. What is ECA’s opinion on the need of a separate acquis chapter?
“First of all, strengthening administrative capacity is something that the candidate countries need to do for their own sake and development and not only because of the accession process,” the auditors replied. It is not ECA’s prerogative to say whether there should be room for a separate PAR chapter.”
“From a technical point of view, for accession negotiations, it would be difficult to have such a large chapter, as many PAR issues are already addressed in existing chapters. To push for reform, applying conditionality is more important and urgent than considering the creation of a new acquis chapter.”
As usual in audit reports, this report also sets out a number of recommendations to remedy the shortcomings identified by the auditors. The recommendations are drafted in general terms and this might explain why the Commission accepted them all without reservations but the auditors have another explanation.
“We welcome that the Commission accepted all recommendations we made in the report. The onus on implementing them lies primarily on the enlargement countries. We hope that the Commission will use the report to explain to and put pressure on the countries to make better use of the financial assistance.”
“As we do for all our special reports, we will present this report to the European Parliament’s Budgetary Control Committee, in the presence of the Commission’s representatives, in December, and later on also to the Council of the EU,” the auditors added.
The issue of ant-corruption measures will apparently be put on the agenda when the report is discussed.
According to the auditors, “It is up to each country to adopt its anti-corruption policy, so the Commission does not apply an anti-corruption policy for the Western Balkans. But our report made a clear statement that the funding of anti-corruption policy was too little. As we speak, the issue is not legislation or training, it is implementation.”
“The main problem in the Western Balkans and which distinguishes that region from many other European countries remains the scale of corruption, including in the judiciary, and organized crime,” concluded the auditors.
The Brussels Times
Note: The cabinet of Commissioner Johannes Hahn, for European Neighbourhood Policy and Enlargement Negotiations, did not respond to a request for comments on the audit report and DG NEAR was not immediately available for an interview.