Ursula von der Leyen, Mark Rutte en Sigrid Kaag

Ursula von der Leyen, Mark Rutte en Sigrid Kaag © European Union, 2022

Brussels will not tolerate any ‘interference’ in how the corona billions are spent

The European Commission has been conducting extensive talks with Member States about how they can spend the billions of euros from the Corona Recovery Fund. Journalists who were seeking information about that process had to wait months before they received any response, and then had their requests rejected. Meanwhile, the Commission has already paid out 100 billion euros.

This article in 1 minute
  • The European Commission refuses to release documents that could provide insight about the allocation of the Corona Recovery Fund, making journalistic monitoring of the jointly borrowed billions more difficult. This article is part of the international #RecoveryFiles project led by Follow the Money.
  • The European Union has set up an unprecedented fund in 2020 to help the Member States emerge stronger from the corona crisis. It consists of 338 billion euros in subsidies and up to 385.8 billion euros in cheap loans, although only a handful of Member States have made use of the latter possibility.
  • The European Commission is borrowing the money on the capital markets. There is no agreement in place on how the EU will repay the money (by 2058 at the latest).
  • Member States will only receive money if they meet targets laid down in national plans and carry out promised reforms. These recovery plans must also specify which project will receive the money and why. The European Commission has to approve these plans.
  • Last week, the Commission announced that it had approved the Dutch plan. The Netherlands is allocated 4.7 billion euros. Hungary’s plan is the only one not yet approved.
  • However, the creation of these plans is shrouded in secrecy. Understanding why some sectors will benefit from the money and others will not is difficult. The European ombudsman responds critically: ‘My initial observation is that it remains difficult to get an overview of the negotiations that took place between the Commission and the national governments on where the money will be invested.
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Officially, it had not yet been announced that the European Commission would approve the Dutch plan to spend 4.7 billion euros in European money. But European Commission President Ursula von der Leyen’s arrival in Rotterdam, announced a week in advance, ‘under the banner of the Dutch Recovery and Resilience Plan’, left little doubt.

Prime Minister Mark Rutte (VVD) already misspoke in the first minute of his speech by stating that he was ‘pleased’ with the ‘positive assessment’ and that Von der Leyen came to deliver the good news personally. He quickly corrected himself: ‘At least, I hope you are bringing us good news.’

Minister Sigrid Kaag (Finance, D66), who was also present, proved herself to be better trained in role-playing and made those present laugh by saying the approval was only ’a rumour’. Von der Leyen kept Rutte and Kaag in suspense for another five minutes but finally delivered the good news: the Commission had approved.

It is standard practice for Von der Leyen, who has visited almost every Member State since June last year, to personally report that the Commission has approved their national recovery plan.

The PR campaign starkly contrasts the Commission’s lack of openness towards journalists

The visits produce cheerful images of a smiling Commission President handing a government leader a blue and yellow folder containing the approval, visiting innovative companies (who benefit from the money from Europe), and taking selfies with citizens. In Rotterdam, she boarded an electric barge with replaceable batteries.

The PR campaign starkly contrasts the Commission’s lack of openness toward Follow the Money and the European #RecoveryFiles research collective investigating the functioning and spending of the Corona Recovery Fund, the so-called Recovery and Resilience Facility.

 In the summer of 2020, Member States decided to set up this fund to cope with the economic impact of the corona pandemic. The European Commission finances the fund – consisting of a maximum of 338 billion euros in subsidies and a maximum of 385.8 billion euros in cheap loans – with loans on the capital markets. Meanwhile, more than one hundred billion euros have already been transferred to the Member States.

What is unique is that the disbursement of this money is dependent on achieving milestones. This condition was a key demand by the Netherlands: the subsidies had to be accompanied by reforms set out in strategic plans. The Commission assesses these plans in a way the European Court of Auditors described last week as ‘overall appropriate’. The Court of Auditors did however advise the Commission to improve its assessment procedures and its ‘fragmented’ documentation trail.

Although the Commission has repeatedly acknowledged that ‘transparency is needed to ensure democratic legitimacy and monitoring’, it is doing the opposite of what it promised, both in terms of content and of process. In February, Follow the Money described how our team of European journalists asked for access to records of discussions between the Member States and the Commission concerning their recovery plans and the Commission’s assessment of those plans. We received the bare minimum.

Follow the Money and several fellow journalists appealed these decisions. Once again, we ran into a wall of resistance. According to transparency experts, the way that these requests are handled paints a worrying picture of how the Commission views democracy.

The corona recovery fund and the Recovery Files

The European Union has a fund with a maximum of 723.8 billion euros at its disposal to get the European economy back on track after the corona crisis: the Recovery and Resilience Facility. The fund consists of 338 billion euros in grants and 385.8 billion euros in cheap loans, although few Member States have made use of the latter option so far.

Before the Member States can claim the money, they have to submit a strategic plan to the European Commission, explaining the planned spending and the economic reforms that will make the country more resilient in the future. The Commission will assess the plans and either approve or reject them. Other Member States may also reject a plan.

Our investigation project #RecoveryFiles

Follow the Money has set up a cross-border collaborative project with journalists and media from twenty European Member States to monitor the implementation of the recovery fund: the #RecoveryFiles.

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For example, Finnish professor of European law Päivi Leino-Sandberg calls the arguments the Commission uses to justify why it needs to conceal information about its conversations with Dutch officials ‘worrying’.

Emily O’Reilly, the European ombudsman, emphasises that citizens must be able to check whether money from the recovery fund is being spent correctly and sustainably. ‘My initial observation is that it remains difficult for people to get an overview of the negotiations that took place between the Commission and national capitals on where the money will be invested,’ she told Follow the Money.

Moreover, the Commission has clearly stalled the requests, says Maarten Hillebrandt, associate professor of public governance and management at Utrecht University and also an expert on EU rules regarding access to documents. ‘You are not taken seriously as a requester.’

Waiting for answers

To start with the latter, journalists associated with the RecoveryFiles project submitted six appeals to the Commission. None of them was dealt with within the stipulated time of 15 working days, nor within the once-only extension period of a further 15 working days.

Hence, it should take at most six weeks, but in the most extreme case, it took almost a year. French journalist Jean Comte from the Contexte platform had to wait 226 working days for an answer to his request related to the French recovery plan. Staffan Dahllöf, a Swedish journalist based in Copenhagen, had the ‘shortest’ wait. He submitted two requests concerning the Commission’s assessment of the Danish and Swedish recovery plans. The Commission replied to his appeals after 77 and 84 working days, respectively.

It took so long that most journalists complained to the European Ombudsman, who then urged the Commission to speed up its decision. Whether that made a difference cannot be said with certainty. What is certain is that Matej Zwitter of the Oštro investigative platform, who did not file a complaint with the European Ombudsman, is still waiting for a response – currently 179 working days.

In response to the various complaints, Ombudsman O’Reilly asked Commission President Von der Leyen what measures the Commission has taken to improve its handling of freedom of information requests. The Commission responded on 1 July by stating that it had allocated additional staff to deal with requests more efficiently, without quantifying the number of people involved. Up to that point, it had received 110 requests relating to the recovery fund (for comparison, in 2020, the Commission received some 8000 requests in total). A Commission official speaking on condition of anonymity said the number of staff members added was two.

According to O’Reilly, the number of requests submitted clearly demonstrates that the public wants to know how the funds will be spent. ‘It is encouraging that the Commission has put more resources into dealing with the requests. However, it is too early to say whether these changes are having a significant effect.’

This practice sounds familiar to Dutch researcher Maarten Hillebrandt. ‘These time limits are grossly exceeded.’ Hillebrandt once complained to the Ombudsman because the Commission did not respond to his request for documents in time. ‘They ruled in my favour, and the Commission promised to do better, but the exact same thing happened with a similar request.’ Brussels doesn’t have to fear fines. Hillebrandt: ‘They get away with it, and there are no sanctions which can be used to fight it. Publicity doesn’t seem to help much either, because journalists have raised the issue often enough. The embarrassment factor apparently has no effect. It is very annoying.’

The danger of ‘interference’

Then the contents.

Follow the Money requested all documents related to discussions between Dutch and Commission officials about the Dutch recovery plan. After the request, the Commission disclosed 23 documents it had previously refused to release, but still denied us access to 129 documents. Moreover, the documents released were largely insignificant emails referring to annexes with feedback on Dutch proposals. The annexes containing the actual feedback, however, were not released by the Commission.

Unlike the first reaction in January, when the Commission refused access with a barely substantiated two-page letter, it now takes ample space – 26 pages – to explain why the documents must remain secret. Follow the Money submitted the new letter to transparency experts Leino-Sandberg and Hillebrandt.

An important argument given by the Commission is that ‘the disclosure could negatively impact the economic policy of the Netherlands’. It’s never properly explained why, says Hillebrandt. ‘I don’t get their argument and it’s very abstract to boot.’ Leino-Sandberg, too, does not understand that argument ‘at all’. ‘What’s the harm, exactly? If the Dutch government proposes something that the Commission rejects, that can be embarrassing, sure. But harmful? That makes absolutely no sense.’

‘Interference is you, me, the Dutch parliament asking questions about what the Dutch government is planning to propose to the European Commission as new legislation’

Another argument of the Commission is that disclosure ‘would discourage the Commission officials and members of the Dutch administration from having free and open discussions on the national plan without interference’. Leino-Sandberg: ‘That sentence made me very angry. Because what is interference? Interference is you, me, the Dutch parliament asking questions about what the Dutch government is planning to propose to the European Commission as new legislation.’

Many of the milestones promised in the recovery plans involve introducing new national laws. For example, in its recovery plan, the Netherlands promised to increase the air passenger tax for passengers departing from an airport in the Netherlands. Last week, De Telegraaf reported that this would mean an increase of over 20 euros per ticket. This increase in the air passenger tax had already been included in the coalition agreement, but including the measure in the recovery plan makes it more difficult for the coalition parties to back out. The European Union can force the law’s implementation by threatening not to pay out money if the Netherlands does not meet its promised milestone. This way, the power shifts from the parliament to the government’s executive branch.

Finnish professor Leino-Sandberg sees this as a danger of eroding parliamentary democracy. ‘The debate about what gets funded and which reforms are promised to Brussels should be held in the national parliament, rather than in secret discussions between the executive branches. I think it is frightening. But I am also astonished that parliaments let governments get away with this.’

Kaag vs Von der Leyen

At the beginning of this year, Follow the Money reconstructed how the Dutch civil service was already talking to the European Commission in January 2021 about ‘possible reforms’ for the Dutch recovery plan without involving the Lower House. This happened despite the fact that Rutte III had announced that a new coalition would decide on the content of the recovery plan after the March 2021 elections.

This publication led to unrest among some parliamentary parties, who wanted to know from Minister Kaag (Finance) whether the ‘informal’ talks with the Commission were part of the assessment process. Not at all, she replied in February 2022; those discussions were ‘not part of the assessment process’ – the Commission simply ‘explained the technical requirements’.

But if Kaag was correct, then the Commission’s argument no longer held water. In January, it argued that disclosing documents about the talks would undermine the decision-making process. Therefore, we quoted a part of Kaag’s letter in our request: how could the decision-making process be undermined by disclosing records of talks that are not part of that process?

However, in its decision on the appeal, the Commission maintains that the decision-making process does not start when a plan is formally submitted, but already in the months before, during the ‘intensive dialogue’ between the Commission and the Netherlands on draft documents. ‘During this phase, the European Commission provided specific recommendations to the Netherlands on the structure, content and objectives of the plan.’

Of course this is how it works, says Leino-Sandberg. That is why the Commission can assess the plans within a period of two months: the content has already been discussed at length in the preliminary phase. Kaag’s statement was, therefore, ‘complete nonsense’ according to Leino-Sandberg. ‘And now you have proof.’

However, in a reaction to Follow the Money, the Ministry of Finance maintains the distinction between the ‘informal’ phase and the period after the formal submission of the plan. There were indeed ‘frequent (informal) consultations before the formal submission about, for example, the structure, content and objectives of the Dutch plan,’ but ‘the official decision-making about the plan only started after its formal submission on 8 July’. As further evidence of this, the Ministry refers to a tweet from Von der Leyen, in which she wrote on that day: ‘We are now going to start our assessment.’

Furthermore, the Commission applies a generous interpretation of the term ‘decision-making process’. In a decision on documents relating to the French recovery plan, which the Commission already approved in June 2021, it argues that the process is only complete when all the milestones and targets in the plan have been met. In other words, the documents could not be published before 31 December 2026. The Commission’s arguments are broadly the same in its response to other journalists. One exception is the response to the appeal made by #RecoveryFiles journalist Hans-Martin Tillack (Die Welt) regarding the talks between Brussels and Berlin.

Tillack also was denied a large part of the documents, but the 26 documents that he did receive as part of the Commission's latest answer, contained substantial new information. Under the Merkel government, Germany wanted to subsidise the renewal of diesel trucks from the recovery fund and introduce a tax reduction for hybrid cars. However, the Commission did not consider it properly substantiated that these measures would positively impact CO2 reduction. In an email, a Commission official wrote that Brussels has ‘strong concerns’ whether these measures meet the requirement of not causing significant harm to the environment. In a subsequent version of the plan, Berlin removed the measures.

Emily O’Reilly, European Ombudsman

Although the Commission clearly recognises the importance of monitoring EU funds, concrete details on how it will do so are lacking

Why the Commission released these documents, but not those from other Member States, remains a mystery. The Commission asks the Member States for their opinion when documents originate from them. What is different from other Member States is that Germany, whose government has changed since the end of 2021, explicitly allowed the Commission to disclose documents.

This experience certainly inspires little confidence that it will be made easy for citizens to check how the money is spent and whether countries are implementing their promised reforms. ‘Public monitoring is essential to ensure that milestones are reached, and that promised reforms are indeed implemented,’ says Ombudsman O’Reilly. ‘Although the Commission clearly recognises the importance of monitoring EU funds, concrete details on how it will do so are lacking.’

The question remains whether, for instance after the elections in Italy at the end of September, a new government will stick to the agreements made with the European Commission. Therefore, in the coming months and years, Follow the Money’s #RecoveryFiles investigative collective will be working on mapping out the money flows, monitoring the reforms and exposing abuses.

In a previous article, we already pointed out that there will be no public register where citizens can check which companies and organisations are receiving money from the Recovery & Resilience Facility. However, beneficiaries are obliged to make this known with the statement ‘funded by the European Union – NextGenerationEU’. If you have come across this somewhere, please let us know!