The European Commission applies a ‘zero tolerance’ policy towards fraud involving European subsidies, but it is the EU member states that are primarily responsible for the proper management of such EU funds. The EU made this statement in response to an article in The New York Times about the abuse of agricultural subsidies in Central and Eastern European EU countries.
With this statement, the European Commission appears to shift the responsibility for controlling fraud with EU funds onto the individual member states, but it remains to be seen whether Members of the European Parliament will accept this. Moreover, it is questionable whether this is the right approach. It strongly appears that the European institutions that distribute these subsidies should themselves verify whether their money is being properly used.
The New York Times describes how politicians in countries like Hungary and the Czech Republic misuse some of the agricultural subsidies for personal gain or for favored large landowners. The New York Times conducted an investigation into the allocation of funds from the Common Agricultural Policy (CAP) in Central and Eastern European countries. Hungary, the Czech Republic, Slovakia, and Bulgaria were among those scrutinized.
The investigation covers a total of nine countries. Last year, the European Union spent nearly sixty billion euros on subsidies for European farmers. About one billion euros of this was intended as direct income support. Agricultural subsidies account for approximately one-third of all EU expenditures.
Research shows that a small group of politically connected entrepreneurs in these countries control a large amount of land, thereby receiving huge amounts of EU subsidies. Hungarian President Viktor Orban is said to be guilty of distributing state land among family members and friends. The newspaper reports mafia-like practices in Slovakia and Bulgaria concerning ‘land theft.’
The Prime Minister of the Czech Republic is also cited as an example. Czech leader Andrej Babis faces numerous accusations. His agricultural business received nearly 38 million euros in subsidies in 2018.
About 80% of the total EU budget goes to just 20% of the farmers. These incomes also finance political ambitions, such as those of Prime Minister Babis. In Bulgaria, the situation is not much different. This annual flow of millions creates an agricultural mafia in rural areas. In many cases, the government, large landowners, and buyers operate in collusion. A lawsuit is currently underway in Bulgaria regarding this. In Slovakia, the Italian mafia decided to take control of agriculture themselves. Journalist Jan Kuciak, who investigated this case, was murdered along with his girlfriend last year.
Next month, decisions are to be made in Brussels and Strasbourg on the EU’s multiannual budget, including European agricultural subsidies. There have been growing calls to cut this funding stream and to only pay subsidies as income support for small farmers.
Furthermore, agricultural funds must be subordinated to a European Climate policy. The New York Times investigation into subsidy fraud will undoubtedly be raised again in those European debates.