The European Union Elections and the Future of European Anticorruption Policy

GAB is pleased to welcome back Professor Alina Mungiu-Pippidi, chair of the European Research Centre for Anticorruption and State-Building at the Hertie School of Governance in Berlin. Her many publications include the Cambridge University Press volume A Quest for Good Governance: How Societies Build Control of Corruption and most recently “Romania’s Italian-Style Anticorruption Populism,” in the July 2018 issue of the Journal of Democracy.

Do Europeans care about corruption?  If the results of the May election to the European Parliament are any guide, they do.  Turnout to fill its 751 seats was the highest since the first election in 1979, and polling data shows corruption was a top concern of many voters. A YouGov poll found corruption and migration were what troubled voters the most, and earlier research had shown that respondents’ perceptions of how member governments handled corruption to be a good predictor of their trust of both national-level and European-wide institutions. Party leaders apparently believed these polls. The heads of the major ones all issued pre-election statements denouncing corruption and backing open government (a surprise given their foot-dragging on a parliamentary ethics code and reluctance to commit to greater transparency in the operation of the parliament itself).

Can Brussels solve what voters believe is the problem of corruption in Europe? This very large question can be unpacked into three more manageable ones:

Is Europe in fact as corrupt as Europeans think it is?  Are their perceptions of corruption matched by reality?

Do the results of the May elections indeed reflect a demand for stronger anticorruption policies and better governance?

If Europeans are indeed demanding better governed, less corrupt polities, can the EU’s limited anticorruption instruments satisfy the voters demand?

Is Europe as corrupt as European think it is?  Describing the state of actual corruption in EU member states is a difficult business, but the last ten years have brought significant progress on this score.  Following the adoption in 2014 of new EU-wide procurement regulations, the European Commission finally developed (for member states only) a scorecard (for member states only) on procurement, allowing real-time tracking of how competitive and transparent national procurement is in its member states.

We know from our research that such indicators are closely related to subjective perceptions of corruption. Surveys of European business people sponsored by the EU Home Affairs Directorate show only in Scandinavian countries do clear majorities believe public integrity is the rule of the game; even in Germany, most businesses complain that public contracts are fixed.  Connections rather than merit most often explain success.

A check of the 2017 procurement scorecard shows that Italy, Greece, Romania, Bulgaria, Cyprus, Portugal, Spain, Slovenia, and the Czech Republic remain in the red zone: their procurements are neither transparent nor competitive by EU standards. Estonia was the only new member country that met the full EU standards by 2017; by contrast 44% of Croatia’s tenders were let without competitive bidding. Croatia’s procurement is on a par with that of Romania, the Czech Republic, and Poland.  The scorecard also shows Malta publishes very few calls for bids.

An assessment based on Opentender.eu, the corruption risk portal created by the Digiwhist project (details here), shows that EU institutions themselves have only average scores, remaining far from best practices and with large, significant differences across various agencies.  Interestingly, the differences accord with the country in which they are based.

Nor is there any shortage of “favorite” companies doing well by consistently winning contracts across the board, even in Brussels. Cross-border corruption in Europe also shows the limitations of national- level studies.  Scandinavian companies pay bribes in Eastern Europe, German ones in Greece. Add to this the amount of VAT fraud or tax evasion facilitated by European banks, and it becomes clear that Europe has a problem.

Besides its corruption problem, Europe has a double standards one too. The Commission can pursue some for corruption but not others, which results in highly uneven treatment. An ad-hoc ethics committee answering to European Ombudsperson Emily O’Reilly concluded that the Commission could not be blamed for how it handled the case of its former chief, José Manuel Barroso.  Barroso failed to disclose he would join Goldman Sachs (the same company that which helped Greece cheat the eurozone  Eurozone standards) upon leaving his post. The grounds invoked was the absence of a decision by European Court of Justice stipulating what public integrity is in Europe.  Such moral relativism is not uniformly applied, however; in Croatia and Romania, the EU pressured for long prison sentences against top politicians with little concern for such details.

Are voters demanding more anticorruption measures? So do European voters really want to see more anticorruption measures? What voters said at the May 26 elections to the European Parliament was mixed

On the one side, Austrian former Vice Chancellor Heinz-Christian Strache (Populist Freedom Party) secured a seat despite the release of a video showing him scheming to illegally fund his party in exchange for public contracts on government infrastructure projects. Speaking to someone he believed to be the wealthy niece of a Russian oligarch, Strache elaborated on a scheme previously observed in Hungary (an EU member state) and Turkey (an EU accession state).  Revelation of such a scheme,  deeply subversive of democratic principles, apparently did not deter Austrian voters, who sent Mr. Strache to Brussels amid an irrelevant debate about who wire tapped him. There was little discussion of the real question: why would anyone would promise a preferential infrastructure contract unless this exchange had already been proven doable — in other words, unless someone had already done it.

French voters returned Marine Le Pen to Brussels despite her being asked by the European Court of Justice Court to refund to the European Parliament 300,000 euros supposedly paid to parliamentary assistants but who in fact worked on French domestic politics (the total monies prosecutors claimed were paid was actually closer to 3 million). She has long managed to stall a criminal investigation in France into the same behaviour on the same topic. Her party finished ahead of President Macron’s  (23% to 22 %) despite him being the main promoter of an integrity package which would ban nepotism in the French Parliament and introduce other reforms to build “morality” into public life.

In Italy, the Northern League, plagued by corruption scandals, at 34% fared far better than the country’s governing party, the populist anticorruption movement Five Stars (17%), which has battled to end a common way Italian politicians beat corruption charges.  Their proposals include one that would toll the statute of limitations once a court proceeding has begun.

In Greece, Prime Minister Alexis Tsipras’ party lifted the immunity of some current MPs and former officials to allow investigation into the Novartis matter, which the was disclosed when the U.S. opened its own case of foreign bribery under the Foreign Corrupt Practices Act. This [convenient] decision, denounced by the opposition as an unjustifiable strike by of the government against its his opponents, did not help Tsipras.  These very opponents, the conservative New Democracy movement, won both in the European Parliamentary elections and early Greek legislative elections. And after the elections, the Novarits investigation in Greece was dropped.

In Malta, once a paragon of trust in government and integrity, Prime Minister Muscat’s Labour Party won by a landslide with 54.29% of the vote, despite a European Parliament resolution slamming the government for a lack of transparency about the assassination of the corruption-fighting journalist Daphne Gorizia, and despite the proposal by German Green MEP Sven Giegold to initiate Article 7 proceedings (the suspension of voting rights) against Malta.

Central Europe fared somewhat better. In the Czech Republic, an audit by the European Commission had asked that Czech Prime Minister Andrej Babis return millions of euros in EU subsidies following a conflict- of- interest situation.  Nonetheless, his ruling centrist ANO party saw the number of its European Parliament Members increase from four to six. Another major player facing a long overdue reckoning on corruption, Hungarian Prime Minister, also escaped electoral sanction.  The target of an OLAF investigation into on his use of EU funds for his supporters, the Orban-led coalition won a resounding victory, 52% to his main opponents (16%) in the May EU parliamentary election.  The Polish  Law and Justice party (PiS), also under fire from EU officials for infringing on judicial independence, came in first in its country’s EU parliamentary election with 45.38%.

On the other hand, voters in other European countries thought differently about corruption. In Slovakia, a target of a European Parliament resolution on corruption, the Progressive Slovakia/Together coalition — led by now President Zuzana Caputova — won the EU parliamentary election with 20 % of the vote. Caputova, an anticorruption lawyer and activist, was elected President in the aftermath of popular anger at the contract killing of a journalist investigating the connection between organized crime and the former then government. In Romania, voters turned out to punish the ruling left-wing coalition for its tepid anticorruption policies, for attempting to weaken anticorruption laws, and for many fiscal blunders. The ruling Social Democratic Party lost more than half its support since the 2016 legislative elections. The EU played a large role in the Slovakian and Romanian elections by repeatedly threatening to initiate Article 7 of the Lisbon treaty banning the two country’s voting rights, a drastic sanction.  The EU continued to threaten the action even during the electoral campaign, sending a clear signal to voters who the bad guys were (while ignoring several dubious figures present on the opposition side).

To crown the European victory in Romania, the day after elections the court issued a final decision sending the Social Democrats leader, Liviu Dragnea, to jail for three and one-half years for ‘instigation to abuse of function.’ His offense:  a decade ago he had asked a subordinate to provide fictitious jobs for two party communication personnel with a state-owned company. This move defrauded Teleorman’s budget, Romania’s (and Europe’s) poorest county, by roughly the equivalent of 20,000 euros. Fictional jobs for party activists are widespread in some older European old member states as well.: Recently in Belgium, party access patronage for public jobs has been called into question, while in France similar several scandals have surrounded some municipalities over the last two decades. Famously, former President Chirac received a two- years suspended sentence for years’ (and millions’) worth of fictional posts awarded to supporters.  The EU, however, did not make these peccadillos an issue in any election campaign.

In short, norms and standards of integrity, as well as the salience of the corruption agenda and the EU influence on the outcomes, vary wildly within Europe. By and large, most European voters are upset with their “political class,” seeing little difference between illegal corruption and the more general “privilege” that comes with office or that belongs to the politicians as a status group. The easiest anticorruption-motivated choice is therefore to vote for populists who promise to destroy that status group (“political class”) and level the field. Sometimes EU mainstream politicians like Emmanuel Macron are so conscious of this that they rush to deprive populists of their main message grounds.  The result is to leave mainstream parties sandwiched between pro-EU populists (like Macron) and anti-EU populists, all denouncing the privileges of the old politicians and calling for equal treatment for their voters. In Italy, France, and the UK, mainstream parties have suffered badly.

The Greens have profited from the assault on mainstream parties as climate change is a great concern in some EU countries. It is telling that countries that score highest on the perception of corruption in the Eurobarometer — Greece, Italy, Spain, Cyprus, and Balkan and Central European countries — do not have a significant Green vote. Such countries have not yet graduated to post-materialism:  they choose between mainstream clientelist parties and their  populist alternatives.

The media’s emphasis on corruption has resulted in political instrumentalization, with top party leaders denouncing abuses by their political opponents.  The Social Democrats leader, Frans Timmermans, and the Popular one, Manfred Weber, attacked one another over their parties’ respective attitudes their group’s attitude on Dragnea and Orban, nominally suspending their parties from the European political family during elections. These moves were pure rhetoric: since the election, the two parties have surreptitiously returned to their original positions as their seats were needed to boost the weight of their political families.  National political instrumentalization is on the rise, assisted by the newly omnipresent anticorruption discourse.  Going beyond the classic Italian case, anticorruption discourse has been deployed according to political logic and advantage at least in Slovakia, Greece, and Romania and arguably other member states. anticorruption seems to follow some sort of political logic and is played politically for some actor or another’s advantage.

Are the EU’s anticorruption policies and institutions up to the task? How effective are the EU’s anticorruption policies and institutions and what will be the impact of a summer of bargaining over them by Europe’s new leadership?

The first issue is how well will they safeguard EU funds. A new directive was adopted to curb widespread VAT evasion, to date treated leniently in many member states. The latest follow-up to implement this tougher approach is the European Public Prosecutor, EPPO, created by a voluntary (“enhanced”) procedure across some EU countries. It is intended to address what is believed to be the ineffectiveness of the European Antifraud Office (OLAF), the current watchdog of EU funds.

However, as the Audit Court, another EU institutional watchdog, has shown, creating the EPPO may simply drive up the costs of investigating and prosecuting fraud in the use of EU funds. One reason is, as the court argued, the Commission has no idea on what causes fraud and corruption despite a new generation of research which allows such studies and therefore no idea of what it will take to fight it:

“We found that the Commission lacks comprehensive and comparable data on the detected fraud level in EU spending. Moreover, it has so far not carried out any assessment of undetected fraud, nor detailed analysis of what causes economic actors to engage in fraudulent activities. This reduces the practical value and effectiveness of the Commission’s strategic plans for protecting the EU’s financial interests against fraud threats.”

No legal harmonization preceded the creation of the EPPO, so cases brought by the EPPO would thus be judged in national courts on the basis of different criminal law and procedural codes, which may result in uneven enforcement. Many member states, where prosecution of corruption offenses is not a problem, joined just to show they have nothing to hide.

Hungary and Poland, on the other hand, did not.  Thus it may be that the EPPO will end up prosecuting cases only in those countries where prosecution already works well. Such substantial issues are seldom discussed. Instead, Laura Codruta Kovesi, Romania’s charismatic  (but controversial) prosecutor is in a contest with French prosecutor Jean François Bohnert to head the EPPO.  Kovesi made headlines by winning cases with the help of the country’s secret service support (later ruled unconstitutional).  Bohnert argues that fighting VAT cross-border fraud rather than national corruption is closer to the EPPO mission and the EU treaty.  Given the lack of foundation for the EPPO, the one chosen may regret their selection.

The Greens in the European Parliament have shown constant interest in corruption and concern for the issue of double standards: they have proposed therefore something similar to the monitoring of corruption for Romania and Bulgaria (CVM) should be generalized to all EU-28 (soon to be 27). Of course, this proposal cannot really be put into practice the CVM Cooperation and Verification Mechanism is an accession probation mechanism, based on bilateral treaties allowing cancelling of accession for three years after or more in case of infringement of conditions.  There is no such mechanism for other members save for Article 7 in the Lisbon Treaty.  Moreover, even if the Greens squeezed a promise out of EU commission candidate von der Leyen in this regard, it is not easy to see how such an attempt would fare any better than the failed attempt of the EU Anti-Corruption Report, first published in 2014 and shelved after its second edition.

The report, an attempt to assess the state of corruption European-wide, excluded the EU institutions from the onset and was a top- down Brussels monitoring of national anticorruption policies of member states. Despite remaining a non-binding “communication” by  the Home Affairs Directorate, it was also subject, as many Commission documents are, to a great amount of intervention across various EU institutions.  The result was a document which on one hand told people what everyone already knew and on the other hand cut much on some countries from the first draft.

The Commission Vice-President Frans Timmermans found himself bravely fighting on two fronts:, first, with EU policymakers, where it has always been unrealistic to imagine something as politically explosive as this could be produced both objectively and to everybody’s satisfaction.  Second, with some NGOs which sought this naming and shaming instrument for domestic use. Before he decided to shut down the report, I had written a memorandum to the Commission myself (before resigning from the responsible DG Home expert group) arguing that either we create an objective method (which can be checked by an external referee to result in the same conclusions) or we should give up the business of telling others how to organize their anticorruption measures altogether.

In my view, no universal solution exists: corruption is a policy problem with the solutions dictated by national context. Similar objections were raised by the European Audit Court. Nevertheless, DG Home Affairs Directorate continued to spend money collecting country updates on countries without a clear methodology or follow-through mechanism.

Finally, a more recent instrument ties EU funding to the rule of law. The Commission found support in at the Parliament  to sanctioning of rule- of- law infringement by cutting EU funds. Poland, the main offender, lost in the European Court of Justice. The new instrument for rule of law issues only, as the EU cut funds before when corruption was suspected: in Bulgaria, Romania and Hungary.

Various MEPs of the new populist persuasion — anticorruption populism — pressed Ursula von der Leyen, the new Commission President, to commit to more such “rule of law” instruments in exchange for their endorsement. The drawback is that the definition of rule of law is again – like integrity — unclear to say the least. For example, the European Justice Court just decided that the EU sanctions against former Ukrainian President Viktor Yanukovych and his circle of oligarchs infringed their rights. Furthermore, far more infringements exist besides Poland’s unsubtle direct attack on the judiciary and Ukraine’s (which only has an association agreement) corruption.  These days, whoever defrauds the Danish tax system is likely to need a specialized defense lawyer in Luxembourg, and London City bankers are now providing advice on off- shore destinations outside Europe now that EU MS Malta and Cyprus have become difficult terrain.

Von der Leyen faced a nasty campaign against her on corruption grounds.  A PhD she received was alleged to be tainted by plagiarism and  her choice of external contractors for the reform of the German defense ministry was alleged to be marred by insufficient procurement safeguards. The Macron-endorsed appointee for European Central Bank, IMF International Monetary Fund former chief Christine Lagarde, would not pass the criteria of many given questions raised when she was French Finance Minister. In 2016, a French court found Lagarde guilty of negligence for awarding  €404m ($429m) to businessman Bernard Tapie but did not hand down  any punishment. Lagarde is a highly respected leader, unanimously greeted by EU’s central bankers.

Renew Europe will likely be the source of pro-integrity initiatives in the new Parliament, powered by Emmanuel Macron (his party’s group is the largest) drive. Macron’s commendable French reforms backfired because his administration was found lacking precisely on the issues he promoted: ending of privileges for the political class and their associates. Hopefully, Macron learnt some valuable lessons on leading others only where one is prepared to go oneself. If Brussels is to tell member states what to do regarding anticorruption, Brussels has to get into better shape. It is quite crucial that the Commission itself implements recommendations received from the Audit Court and builds in small steps a better evidence basis and more unified standards on which to base anticorruption policy. Such deep reforms are the opposite of creating new agencies without closing ineffective ones and throwing more money at the problem. There is no doubt that Frans Timmermans, the former (and future) Commission vice president for rule of law, who is likely to be cast in the role of Batman again, is aware of this. A Dutchman and a diplomat, he is among the most cultivated and experienced European leaders. He lost the top EU position himself because he had pushed the rule of law against Central European countries (who adamantly opposed his nomination). But will he be able to make the Commission’s approach more objective and uniform across all member states ? And start with reforms at home?

I began this post by asking whether Brussels can solve what voters believe is a problem of corruption in Europe? My answer: Given the current populist mood of some EU voters and MEPs alike, Brussels must lead by example rather than by policing.

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