Finance
The EU’s Corona recovery fund was supposed to strengthen Europe after the pandemic, but instead billions of taxpayers’ money threaten to flow into inefficient and questionable projects.
07.09.2024 – 07:00 a.m.
The EU Corona Fund, which amounts to over 800 billion euros, threatens to become a waste of taxpayers’ money as numerous projects are being implemented inefficiently or not completed at all.
An ambitious project with disappointing results
With great optimism and as a historic signal of solidarity, the European Union launched its Corona Recovery Fund in July 2020. For the first time, the EU jointly took on debt to invest over 800 billion euros in the reconstruction and transformation of its member states.
But the euphoria has subsided. A recent investigation by the European Court of Auditors reveals that implementation is stalling and billions of euros are at risk of being wasted on inefficient or unnecessary projects.
Questionable projects and slow implementation
There is no shortage of creative ideas about how the funds could be spent. In Italy, horse racing tracks and golf courses were to be built, while other places dreamed of a ham museum.
“The fund was intended as a crisis instrument,” says Ivana Maletić, who led the Court of Auditors’ investigation.
Such plans show how much the fund’s original purpose – to strengthen the economy after the pandemic and promote future-oriented investments – has been watered down. Florence and Venice also planned to renovate their football stadiums with EU money.
Despite the urgency to combat the economic consequences of the pandemic, less than a third of the Corona Recovery Fund’s funds had been disbursed by the end of 2023, calling into question the effectiveness of the program.
But the bigger problem is the slow implementation of the projects. By the end of 2023, i.e. halfway through the fund, less than a third of the funds had been disbursed.
Countries like Italy and Spain have received the bulk of the funds, but implementation is falling short of expectations. Projects are being delayed or even abandoned, meaning many investments could end up being wasted.
Complex bureaucracy and lack of resources
Ivana Maletić, head of the Court of Auditors’ investigation, blames excessive bureaucracy and a lack of resources in national administrations for the delays.
The states have to overcome numerous bureaucratic hurdles and implement extensive reforms to access the funds. But many governments fail due to the administrative requirements or feel blackmailed by the conditions of the EU Commission.
Some Member States have not yet applied for funds, including countries such as Belgium, Finland and Sweden. Others, such as the Netherlands and Hungary, have not even signed contracts to access the fund. This slow implementation shows how difficult it is for the EU to get its Member States to use the money quickly.
Joint debt as a model for the future?
Despite these problems, some politicians and member states see the fund as a model for the future. EU Economic Commissioner Paolo Gentiloni and French President Emmanuel Macron are in favour of joint European debt to tackle major challenges such as climate change or support for Ukraine. But resistance is growing.
Complex bureaucratic processes and a lack of administrative resources in the Member States prevent the rapid and effective use of EU funds, as the European Court of Auditors shows.
Many countries, especially Germany, are skeptical whether such debt-financed investment programs are really the solution.
CSU MEP Markus Ferber warns: “The Court of Auditors’ report shows that the fund cannot be a blueprint for the future.” He criticises the fact that many Member States do not have the necessary administrative capacity to use the funds effectively and in a timely manner.
A failed experiment?
The future of the fund is uncertain. Although the EU Commission is working to improve implementation and speed up disbursements, the challenges remain great.
There is a risk that billions of euros of taxpayers’ money will be wasted on inefficient projects. If member states do not access the funds by August 2026, many projects could remain unfinished – and that would be another alarming sign of the effectiveness of such joint debt projects in the EU.
