Several countries — especially those that can borrow at low cost from financial markets — are reluctant to carry out unpopular domestic reforms in exchange for loans which they will have to eventually hand back to the Commission.
An EU official said the Commission introduced stricter checks as a sop to frugal governments, mainly countries in northern Europe, which worried the money would be misspent.
The EU’s auditing watchdog suggested that weak checks by Brussels authorities and tight deadlines potentially increase the scope for fraud.
“The big issue and reputational risk is that the payments are fine when they’re being made but the Commission is not sufficiently controlling subsequent expenditure,” Tony Murphy, the head of the European Court of Auditors (ECA), told reporters earlier this year.
There is increasing scrutiny on whether the rules are too strict ― or conversely, whether the Commission is right in its rigidity ― because some national leaders and senior officials are calling for similar financing initiatives, such as to fund defense and green spending, in the years to come.
Economists Tito Boeri and Roberto Perotti warned in an interview with POLITICO that misusing recovery cash would simply confirm to less indebted countries, like Germany and the Netherlands, that new joint borrowing is fraught with too much risk.
“A lot will depend on the perception among frugal countries of whether the money was well-spent by countries that received the most funding,” Perotti said. “The next three years are crucial.”
