Clock is ticking for Romania suspended funds


Romania has two months to react to a warning from the European Commission, which has identified serious problems in the country's anti-corruption procedures in the implementation of programmes in the field of transport, regional development and competitiveness, a spokesperson said today (26 October).

The Commission has sent yesterday (25 October) a letter to the Romanian authorities, pre-suspending the funding in the field of transport, regional development and competitiveness.

The EU executive also proposed “financial corrections” in those three areas and environment, Shirin Wheeler, spokesperson of Regional Policy Commissioner Johannes Hahn said.

“Pre-suspension” of funds doesn’t mean that the funds are lost, but under this procedure, the country is given two months to react and reassure the Commission on its concerns. If it fails to do so, the funds are suspended. This again doesn’t mean that they are definitely lost, but the “suspension” is usually seen as a bad political signal for the country and their re-activation will require a political decision of the College of Commissioners.

Wheeler said the financial corrections were between 10 and 25% of the sums allocated under the programmes.

“It’s hard to put a figure on that, because it depends on whether the Romanian authorities accept those corrections, but assuming they did, that would come to around of €500 million,” she said.

This amount, however, could be re-used within the same programmes, if the Romanian authorities accept the correction two months after receiving letter and having re-assured the Commission that these are indeed “healthy” projects.

Public procurement under scrutiny

Wheeler insisted that Romania that EU funds will again be disbursed only after management and control systems are shown to function “robustly” and that the country is able to detect fraud and corruption,  showing sound financial management, particularly in the area of public procurement.

Romania who joined the EU in 2007 has been allotted €19.7 of EU funds from the 2007-2013 EU budget to bring its economy and infrastructure up to date. A recent report of the French Senate pointed out that the country has been able to absorb, by January 2012, only 4% of these funds. A more recent Commission document seen by EURACTIV puts this figure at 9.7%. The figure for Bulgaria, the second worst performer, is 19%.

Romanian Prime Minister Victor Ponta said yesterday his country would recognise its mistakes and pay the financial corrections. He added that consequently the Commission could decide to unblock the programmes, EURACTIV Romania reported, quoting a telephone interview of the Prime Minister with Realitatea TV.

The Romanian Prime Minister also said that he would take the blame for his government’s fault, but pointed out that most of the problems were created in the period 2009-2011. Ponta came to power in May 2012. Romania is holding general elections on 9 December.

When Romania and Bulgaria joined the EU on 1 January 2007, shortcomings remained regarding judicial reform and the fight against corruption. In the case of Bulgaria, problems also remained regarding the fight against organised crime.

A Cooperation and Verification Mechanism (CVM) was set up to assist both countries with judiciary matters after their EU accession. Moreover, the European Commission retained the right to use special safeguards.

These allow the EU to refuse to recognise court decisions or even freeze payments of EU funds.

On 18 July, the Commission published a scathing report on Romania, in the context of what the EU executive saw as a threat for the country’s constitutional order, under the new government of Victor Ponta. The next report on Romania is due in December. Regarding Bulgaria, the EU warned of persisting problems in combating organized crime. The next report on Bulgaria is due one year later.

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