“The Commission and the European External Action Service (EEAS) failed to ensure that the Egyptian authorities tackled major weaknesses in PFM [Public Finance Management],” the ECA said in a statement.
The audit focused on public finances and the fight against corruption on the one hand and human rights and democracy on the other.
“Lack of budgetary transparency, an ineffective audit function and endemic corruption were all examples of these undermining weaknesses. The Commission and the EEAS did not react to the lack of progress by taking decisive action to ensure accountability for considerable EU funds, which continued to be paid directly to the Egyptian Authorities,” read the statement.
The 60-page report further slams EU action in Egypt for achieving “little progress” in support of human rights and democracy.
“The main human rights programme was largely unsuccessful," the court said. "It was slow to commence and was hindered by the negative attitude of the Egyptian authorities. The Commission and the EEAS did not use the financial and political leverage at their disposal to counteract this intransigence.
"Some elements of the programme had to be dropped completely. Funds channelled through Civil Society Organisations (CSOs) were not sufficient to make a discernible difference,” the auditors said.
'Softly softly' approach
On 4 June, Egyptian courts convicted 43 NGO workers, including 16 Americans, to up to five year in prison for allegedly using foreign funds to undermine the regime. In addition, a draft law submitted by the office of President Mohamed Morsi two weeks ago foresees “steering committees” to oversee the activities of civil society groups. Western officials condemned the convictions and criticised the draft law, but Morsi made it clear that he would not back down.
“The ‘softly softly’ approach has not worked, and the time has come for a more focused approach which will produce meaningful results and guarantee better value for the European taxpayers’ money,” said Karel Pinxten, the lead author of the ECA report.
In the European Parliament, Liberals leader Guy Verhofstadt reacted to the ECA report by calling for a “fundamental change” in the way the EU brings financial aid to Egypt.
“What we have been saying already for a long time has now been proven by this report. The EU is not taking its conditionality seriously regarding Egypt. The EU failed to suspend aid to Egypt when President Morsi grabbed even more power in November 2012 nor when 43 NGO workers were sentenced to jail," Verhofstadt said.
"This inaction by the EU makes a joke of its human rights policy," he added.
The Belgian MEP slammed the European Commission for what he called “a fundamental lack of EU strategy towards the Southern Neighbourhood”.
“If we ignore the demands from ordinary citizens for more for ‘European values’ such as human rights, liberty and dignity, we have to do much more than repackaging the same neighbourhood programmes which were in place before the Arab Spring when these countries were under dictatorships. If we do not then we should not be surprised that the Arab youth become deeply disillusioned by Europe and turn their backs on the EU,” he said.
Verhofstadt added that Parliament would ask the Commission to explain the findings of the report, referring by name to EU foreign affairs chief Catherine Ashton and the commissioner responsible for neighbourhood policy, Štefan Füle.
“That is why I ask for - an urgent debate in plenary on this issue,” he said.