This article is brought to you in association with the European Parliament. The Budgetary Control Committee adopted its annual anti-fraud report for …
Money allocated to support Ukraine not adequately monitored and controlled
Protection of EU funds: EU should do more to detect, prevent and recover frauds
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…. the EU funds for assistance in non-EU countries and the money allocated for Europe’s response to Russia’s aggression against Ukraine are not adequately monitored and controlled. They call on the Commission to carry out more thorough checks to ensure that EU funds end up going to those most in need.
The number of cases of fraud and irregularities reported by EU and national authorities slightly increased in 2022 compared to 2021, while at the same time the affected financing related to these cases in 2022 decreased to EUR 1.77 billion (from EUR 3.24 in 2021).
The overall recovery rate in 2022 for both fraudulent and non-fraudulent cases was only 48% (compared to 54% in 2021) and that the figure for fraudulent cases was only 2%.
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In October 2023 the committees on Budgets and Foreign Affairs adopted, by 86 votes in favour, 6 against and 2 abstentions, their stance on the proposed Ukraine Facility, a substantial assistance package for the years 2024-2027, strengthening the Facility’s democratic accountability, encouraging multiparty democracy and Ukraine’s alignment with the requirements for EU accession.
The plan, in which Ukraine will detail the reforms and investments to be supported by the EU, should be established with Parliament’s involvement (via delegated acts) and an effective consultation of the Verkhovna Rada.
> A long-term solution for Ukraine’s funding needs
The new Ukraine Facility will support Ukraine’s efforts to sustain macro-financial stability, promote recovery as well as modernise the country whilst implementing key reforms on its EU accession track. It will support the transition towards a green, digital and inclusive economy that is progressively aligned with EU rules and standards.
The Facility is organised around three pillars:
- Pillar I – financial support to the State in the form of grants and loans. This will ensure stable and predictable funding, supporting the sustainability of Ukraine’s finances, while providing a solid framework for the protection of the EU budget. To access this support, the Government of Ukraine will need to prepare a Plan for the recovery, reconstruction and modernisation of the country and detail the reforms and investments it intends to undertake as part of its EU accession process. Funds under this Pillar of the Facility will be provided based on the implementation of the Plan, which will be underpinned by a set of conditions and a timeline for disbursements agreed with the EU. Significant emphasis will be placed on public administration reform, good governance, the rule of law, anti-corruption and sound financial management.
- Pillar II – a specific Ukraine Investment Framework designed to attract and mobilise public and private investments for Ukraine’s recovery and reconstruction, in support of the Plan’s implementation. It will complement all existing instruments supporting Ukraine, such as blending and guarantees, with the possibility of scaling up when conditions allow for it.
- Pillar III – technical assistance and other supporting measures, including mobilisation of expertise on reforms, support to municipalities, civil society, and other forms of bilateral assistance normally available for pre-accession countries under the Instrument for Pre-Accession (IPA), also supporting the objectives of the Ukraine Plan. Under this pillar, it will also be possible to support other initiatives aimed at responding to the Russian aggression against Ukraine, including to enforce international law in relation with crimes committed by Russia on the territory of Ukraine. Interest rate subsidies for the cost of loans will also be covered under this pillar.
The foreseen overall amount of the Facility is up to €50 billion for the period 2024 to 2027 for both grants and loans. Grants will be mobilised through a new special instrument, proposed in the context of the Multiannual Financial Framework (MFF) mid-term review. The loans will be guaranteed through the headroom, similar to the current financing under the Macro Financial Assistance ‘Plus’ (MFA+). The headroom is the difference between the own resources ceiling (i.e. the maximum amount of resources that the Commission can ask Member States to contribute in a given year) and the funds that the Commission actually needs to cover the expenses foreseen by the budget. The Facility also opens the possibility to use contributions from other donors as well as revenue generated by frozen and immobilised Russian assets as a contribution to Ukraine’s recovery and reconstruction. Work is ongoing on the possible use of Russian assets for Ukraine’s recovery and reconstruction.
In a resolution adopted on Thursday February 8, with 433 votes in favour, 56 against and 18 abstentions, the EU Parliament expresses its complete outrage and grave concern about the continuous efforts by Russia to undermine European democracy through various forms of interference and disinformation.
Looking at Moscow’s support for separatist movements in Europe, MEPs are extremely concerned about alleged relations between Catalan secessionists, including the representatives of the regional Catalan government as well as former regional President and current MEP Carles Puigdemont on the one hand, and the Russian administration on the other. Parliament wants the cases revolving around contacts between the Catalan MEPs in question and Russian representatives to be referred to the European Parliament’s Advisory Committee on the Conduct of Members for further scrutiny.
> MEPs condemn continuous Russian efforts to undermine European democracy
Parliament’s stance on the proposed Ukraine Facility was adopted with 512 votes in favour, 45 against and 63 abstentions, with MEPs making the Facility more democratically accountable, encouraging multiparty democracy and Ukraine’s alignment with the requirements for EU accession.
Urgent adoption needed in line with the EU’s long-term budget revision
The Ukraine Facility is part of the ongoing revision of the EU’s long-term budget, for which adjustments are needed, as it has been severely depleted following the multiple crises that have occurred since 2021. MEPs insist that the Facility, along with the entire budgetary revision, should be agreed as soon as possible, as there will be no provisions for assistance to Ukraine from 2024. The package should be integrated also into next year’s annual budget, to be negotiated in November.
> A long-term solution for Ukraine’s funding needs
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