MBR_ISSUE 47_JAN_LR

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Malta Business Review SPECIAL FEATURE: EESC SEMINAR FOR JOURNALISTS Member states jeopardising the rule of law will risk losing EU funds By Martin Vella Frans Timmermans Presentation of the conclusions of the European Commission's high-level multistakeholder platform and debate on Towards a Sustainable Europe by 2030, with Frans Timmermans, First Vice-President of the European Commission • New tool to protect EU budget and uphold EU values • Suspension or reduction of payments • Parliament and EU ministers may lock or unlock funding • Protection of final beneficiaries like researchers or civil society organisations Governments interfering with courts or going easy on fraud and corruption will risk being stripped of EU funds, according to a draft law endorsed in committee on Thursday. Assisted by a panel of independent experts, the EU Commission would be tasked with establishing “generalised deficiencies as regards the rule of law” and decide on measures that could include suspending EU budget payments or reducing pre-financing. The decision would ultimately only be implemented once approved by Parliament and Council. Once the member state remedies the deficits identified by the EU Commission, Parliament and EU ministers could unlock the funds. Independent experts to assist the Commission The European Commission may establish that the rule of law is under threat if one or more of the following are undermined: • proper functioning of the authorities of the member state implementing the EU budget; • proper functioning of the authorities carrying out financial control; • proper investigation of fraud - including tax fraud -, corruption or other breaches affecting the implementation of the EU budget; • effective judicial review by independent courts; • recovery of funds unduly paid; • preventing and penalising tax evasion and tax competition; • cooperation with the European Anti- Fraud Office and, if applicable, the European Public Prosecutors Office. To assist the Commission, a panel of independent experts in constitutional law and financial matters, comprising one expert appointed by the national parliament of each member state and five named by the European Parliament, would annually assess the situation in all member states and make a public summary of its findings. Protecting final beneficiaries Depending on the scope of the shortcomings and the budget management procedure, the Commission can decide on one or several measures, including: • suspending commitments, • interrupting payment deadlines, • reducing pre-financing and • suspending payments. Unless stated otherwise in the decision, the government would still have to implement the respective programme or fund and make payments to final beneficiaries, like researchers or civil society organisations. The Commission would have to assist the beneficiaries and strive to make sure they receive the due amounts. Along with deciding on the measures, the Commission would submit a proposal to the Parliament and the Council to transfer an amount matching the value of the proposed measures to the budgetary reserve. The decision would take effect after four weeks, unless Parliament, acting by majority of votes cast, or Council, acting by qualified majority, amend or reject it. Once the Commission establishes that the deficits have been lifted, the locked amount would be unfrozen using the same procedure. Quotes Committee on Budgets rapporteur Eider Gardiazabal Rubial (S&D, ESP) said: “The respect of rule of law and all European Union values are core principles upon which we built the European project. No government can violate those values without suffering the consequences.” Budgetary Control Committee rapporteur Petri Sarvamaa (EPP, FIN) said: “"Proper implementation of sound financial management can only be expected from governance and judicial systems that respect the rule of law. A government inflicting this principle should not be allowed to implement the EU budget – the European taxpayers' money – as they wish. If the judicial and governance systems of a Member State cannot be trusted, why should we entrust them with the common EU budget?” “The most important aspect of this mechanism is protecting the final beneficiaries – in our model, this is strengthened as compared to the original Commission proposal. We have also included the European Parliament in the decision-making procedure, thus strengthening the democratic accountability of any measures taken," he added. Next Steps The Budgetary Control Committee and the Budgets Committee MEPs endorsed the rules by 43 votes to 9 with 3 abstentions. Once the full House has voted, MEPs will be ready to enter negotiations on the final wording of the regulation with the EU ministers, which have not adopted their position yet. <strong>MBR</strong> Background The proposal for the regulation “On the protection of the Union’s budget in case of generalised deficiencies as regards the rule of law in the Member States” is an integral part of the EU’s long-term budget package, the 2021-2027 Multiannual Financial Framework. Concerns have also been raised as regards the new media law. The rule of law, as defined in our Rule of Law Framework, requires the respect for democracy and fundamental rights. Media freedom and pluralism are also closely connected with fundamental rights, in particular the freedom of expression. This is why the Commission considers it necessary to assess this law in the light of the rule of law. The European Union is founded on a common set of values enshrined in Article 2 of the Treaty on European Union, which include in particular the respect for the rule of law. Mutual trust among EU Member States and their respective legal systems depends on the confidence that the rule of law is observed in all Member States. When national rule of law safeguards seems to come under threat, the EU needs to act. Credit: Janis Krastins/EP/PO 28
SPECIAL FEATURE: EESC SEMINAR FOR JOURNALISTS "The past is a good teacher but not a destination for the future" Malta Business Review companies pay their taxes where they make their profits. This must become a principle, together with the creation of a tax base that we can all agree upon - then tax havens will disappear," the Commissioner argued. The EU has limited competences on social issues but huge political scope to urge the Member States to work on the social pillar and explain, for instance, that collective bargaining was an essential element of the European social model and for safeguarding the rights of all employers and employees. "Unfortunately, with growing inequality, too many people are following the backwardlooking path, but while the past is a good teacher it cannot be the destination for the future," he concluded, ending with a Jean Jaurès quote "It is by flowing to the sea that a river stays true to its source." First EC Vice-President Frans Timmermans speaks on the rule of law and a sustainable Europe at the EESC's last plenary in 2018 "We need a swift change to a sustainable Europe, and to achieve it the support of local and regional authorities and civil societies is crucial," said EESC president Luca Jahier at the outset of a debate with First Vice-President Frans Timmermans on sustainability and the rule of law during the EESC's December plenary. "We need to dare a new future for Europe, or as we call it a rEUnaissance. In order to have the support of our citizens, it is crucial that we focus on opportunities rather than new liabilities for our citizens," Mr Jahier added. The EU is based on the rule of law In his speech, Mr Timmermans noted that the rule of law was not "a sort of luxury" but the very foundation for the existence of the European Union. He warned against setbacks not only outside Europe, but also within the European Union. "We can see autocratic tendencies where democracy is used against the rule of law, where governments who achieved a majority in the last elections use this majority for instance in order to go against an independent justice", Mr Timmerman said, stressing that democracy was a "day-to-day-thing" and could not be reduced to the issue of voting. He condemned Hungary's recent decision to let employees work 400 hours overtime a year, without having involved trade unions in this decision, and was also worried about Poland's attempt to forbid its lawyers to seek guidance from the European Court of Justice when there was doubt. Involvement of civil society in the transition to a sustainable Europe With regard to sustainability, Mr Timmermans referred to the Commission's reflection paper which would be ready in mid-January, underlining that there was only one way forward - which was the way towards a sustainable society. He thanked the Committee for its remarkable role in the multi-stakeholder platform, where the EESC acted as a bridge builder and which could be an example for future involvement of civil society, for instance in platforms on energy transition, plastic, taxation, social protection inequalities – where the dialogue needs to be strengthened. "We have reached success and good consensus; however the work is not done yet," Mr Timmermans concluded. "We can see autocratic tendencies where democracy is used against the rule of law, where governments who achieved a majority in the last elections use this majority for instance in order to go against an independent justice. Taxation and the social pillar – the main instruments for social sustainability "We also need to include social sustainability", Mr Timmermans added. The gilets jaunes protests were the voice of people who felt they were being squeezed. "Inequality has increased in nearly all Member States. We must care about the people and this can only be done with the active participation of civil society." Taxation and the social pillar were two important instruments. "We must make taxation policy a highly political issue. It cannot be that every little shop, every pub pays its taxes and the big enterprises don't. The next Commission will need to have a precise programme that ensures that these big In his statement, Arno Metzler, president of the Diversity Europe group, urged the Vice-president to ensure closer cooperation: "Let us, the EC and EESC, work more closely together. The European institutions in general need much more structured collaboration. We should definitely cooperate more closely on fighting the upsurge of populism and promoting the rule of law and fundamental rights in our Member States." Gabi Bischoff, president of the EESC's workers' group, referred in her statement to SDG No 10 whose implementation was crucial. She argued that "For us as the workers' group, the fight against inequality has priority, but what we are seeing now is growing inequality within and between countries", blaming the Commission for having failed to address this issue successfully. For group I, Tellervo Kylä-Harakka-Ruonala emphasised that "sustainable development is not a zero-sum game. We need to seek measures that create economic prosperity, social welfare and environmental benefits simultaneously. The EU needs to be a forerunner, and champion for a favourable business environment to innovate, invest and trade in sustainable solutions." In their statements, members called for an overarching strategy for the implementation of the Sustainable Development Goals (SDGs) which was still missing, and stressed that it must be inclusive, involving businesses, civil society organisations and citizens. Social and environmental justice must go hand in hand. With regard to obvious set-backs concerning the rule of law, they called for a more proactive approach and better support from the Commission where civil society's rights were under threat. <strong>MBR</strong> Credits: EESC/GOPA/PO www.maltabusinessreview.net 29
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