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More budget support, less corruption

More budget support, less corruption

Why should developing countries be the only beneficiaries of a good idea?

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5/2/12, 10:16 PM CET

Updated 4/12/14, 11:09 PM CET

May Day this year was just another day for protests across Europe. Protest has become normal, and crisis is once again the word of 2011. It will also be in 2012 and in years to come. 

For every EU member state, it will be a struggle to get – and keep – annual budget deficits below 3% of gross domestic product and debt to below 60%. Can the European Commission and the European Parliament be part of the solution? Indeed they can. But only if they show some courage.

Cuts are hurting workers in many countries, but in some sectors and some countries the situation is now becoming unbearable. That is particularly true of the education and health sectors in some of the EU’s newer member states. From the perspective of older member states, the salaries of doctors, teachers and nurses in the public sector in Hungary, Poland and Slovakia – as well as Bulgaria and Romania – are unimaginably low.

Governments, populations and the Commission may argue about many things, but there is a consensus in all member states – old and new – that Europe needs strong education systems and good public health.

These are strategic areas where efforts to alleviate the crisis could be addressed. As a creative response to the crisis, why not strengthen the EU’s commitments and allocations for these two strategic sectors? And why not take one more step, moving from project support to budget support?

Budget support is an instrument widely used in development aid provided by the EU member states to countries in Africa and elsewhere. With budget support, donors’ funds flow directly into the budget chapters of recipient states and are used for whatever is needed and agreed on by governments and donors. Thus salaries of teachers in, say, Uganda and Rwanda may be covered by money provided by the donors.

Budget support is used, among other reasons, because the transaction costs are low and delivery is highly efficient. Both are strong reasons why the EU could use it within the EU. It is a public secret that a huge part of EU funding – estimates range between 20% and 50% – in new member states is being wasted because of corruption, misallocation and abuse. Since the Commission in November named Italy and Spain among the three worst managers of EU money, the situation in some older member states may not be very different. (The other main offender was the Czech Republic.)

It is practically impossible to reduce this, given that impunity is common-place. In addition, there are the perfectly legal tools and consultancies that have emerged with the purpose of milking EU funds. Their ‘know-how’ consists of inflating projects’ budgets, knowing who needs to get how much, which companies need to be sub-contractors if a project is to get through ‘the competition’ and the like. All a citizen can do is to play by these unwritten rules – or forget EU support. It is as simple as that. Not much would change if the EU’s anti-corruption unit, OLAF, were to triple its capacity.

With budget support, not a cent would be lost in bribes and to vulture intermediaries. Deeply underpaid nurses, teachers and doctors would know that €100 of his or her salary comes from the EU, with nothing lost in the process. Sectors of society that are critical to Europe’s long-term ability to overcome the crisis would be strengthened, and protests and strikes would be a less destabilising factor in national politics. Moreover, since the education and healthcare sectors are disproportionately staffed by women, most of the money would go to help reduce the shameful wage gap between the men and the women.

This is not a technical challenge: if Uganda can do this, so can Poland. All that is needed is some imagination and courage.

Juraj Mesík is a Slovak civic and environmental activist and university lecturer.

Authors:
Juraj Mesík 

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