European citizens can rest assured: the hundreds of billions of the European Recovery and Resilience Fund will be well spent. Céline Gauer, who spearheads this groundbreaking project, brushes off criticism about its lack of transparency, fraud risks or the hurdles in the involvement of stakeholders and national parliaments. She is confident about the new step that the EU is taking towards European integration.
While the European Commission has started to transfer untold amounts of money to its Member States, Céline Gauer seems calm and in charge when we meet her for an interview in early February. She holds office on the 13th floor of ‘The Berlaymont’, the European Commission’s headquarters in Brussels. It’s on the same floor where Ursula von der Leyen, president of the European Commission, has her offices.
Gauer is a weathered French policy officer who has gained quite some clout in The Berlaymont over the past 18 years, leading several important departments. Today, she is in charge of one of the most prestigious projects the European Union has ever initiated: the European Recovery and Resilience Fund (RRF).
Gauer started her career at the Commission in 1994. She quickly made a name for herself during her years at the Competition Office, especially in dealing with the energy sector. She was part of a team prosecuting cartels, helped rewrite antitrust policy and was involved in setting up a network of European competition regulators. By November 2020, she was appointed as head of the task force managing the prestigious EU’s recovery fund. And now, it’s her job to make sure that the hundreds of billions in grants and loans will be invested correctly and to ensure that the member states will implement the promised structural changes.
The European Commission will be borrowing 723.8 billion euros from the financial markets for the fund. Member States can use it to fund green and digital projects, on condition that they implement some mandatory reforms. With Brussels coordinating and overseeing the entire process, the Commission has gained significant power. Or, as Gauer prefers to put it: influence. She engaged in a conversation about the benefits of this groundbreaking European fund, as well as its costs, with Follow the Money, the journalism platform leading the pan-European investigation The Recovery Files,
"We shouldn’t approve plans written within an ivory tower without a feel for the reality on the ground-level"
As we speak, almost every Member State has submitted a national plan to receive money from the Recovery and Resilience Fund. But some countries – the Netherlands being one of them – could have easily borrowed those billions from the financial markets themselves without having to comply with the reforms Brussels demands in return. Won’t this make the citizens of such Member States sceptical about the need for the RRF?
For me, it is not only a question of solidarity or helping those hit hard by the pandemic; it is also a reasonable thing to do. Bear in mind the spillover effects that will come from the recovery in Italy and Spain, where Dutch companies will find business opportunities. And it will also help all the supply chains across Europe from which very open economies such as the Netherlands are benefiting.
And to come back to your initial question: it is an instrument for all. And because it is an instrument for all, the same rules apply to everyone.
Would you say that by formulating milestones that the Member States must live up to, the Commission has become more powerful?
Powerful? I don’t think that is the word I would use.
What kind of word would you use?
I am trying to think of one…
The European Commission has gained more influence? Is that the word you would choose?
Yes, influence is good.
It was important for the Commission that the Member States would involve a lot of stakeholders, such as regions, when drafting their national plans. Why was this so important?
The reforms have an impact on people, so you need to hear them and get the facts straight. And since we’re talking about a lot of investments in the regions, you need to talk with the boots on the ground. They know what is needed and how to do it. The Member States shouldn’t make the plans, and we shouldn’t approve plans written within an ivory tower without a feel for the reality on the ground-level. Of course, there were limits because the plans were designed during the height of the pandemic. So everything had to be done very quickly.
"It is up to each Member State to decide how they want to arrange matters and what their national rules are"
Our earlier investigation showed that, maybe because of that rush, processes weren’t always followed properly. Aren’t you worried that the democratic process suffered due to the rush?
We can always improve, and in some countries, there was certainly scope for more. But public consultations took place roughly everywhere. That is good lawmaking.
Regarding democracy, I would look more at the involvement of the respective parliaments. That varied across the Member States. Some had an extensive debate, some had hardly any, and some held a vote. The governments followed their own country’s democratic processes. Who are we as the Commission to tell them what the rules should be?
Do you mean that if that democratic process was lacking, people should blame their own government, not Brussels?
It is absolutely not Brussels' fault. We called upon people to be inclusive and open, as we always do. It is up to each Member State to decide how they want to arrange matters and what their national rules are.
If you agree to a reform, it has to be a true reform, and it is only a reform if it enters into force
Did some governments indicate that they will not implement those reforms because their parliament will oppose them?
Oh no, that is not possible. They have made a commitment, not on behalf of the government but on behalf of their country. If you agree to a reform, it has to be a true reform, and it is only a reform if it enters into force. So if a Member State cannot get parliament’s approval, they have a problem because they then don’t comply with the milestone and cannot receive the payment corresponding to that milestone. This is not a free lunch.
A big part of the money must be spent on green projects: 37 per cent. The authoritative German Wuppertal Institute looked at the approved plans and concluded that many of them do not reach that threshold. For instance, Italy claims to reach 40 per cent, but according to Wuppertal, it is only 16 per cent. Do you think the RFF is vulnerable to greenwashing?
No. You have different methodologies to define what is green and what is not. We didn’t have much discussion in that respect because the co-legislator [the Council and the European Parliament, eds.] had set the methodology for us. You can always debate, but I am very comfortable with what we have.
Is there maybe too much leeway in defining what is and is not ‘green’?
You are absolutely right that some things are obviously green, renewables, for instance, and some things are clearly unacceptable, such as fossil fuel schemes. And then there’s everything in between. You will find very detailed descriptions for projects in each and every plan. We had to look at each individual investment in great detail. For example, if you want to renovate a house to have a better energy efficiency performance, that qualifies – but only if you do it in a way that saves energy.
"Everything has a limit and our resources are what they are"
In the past, we have seen severe misspending of European money by governments that were just not capable or even corrupt. Can the European Commission ensure that doesn’t happen again?
The Commission is under severe resource constraint, but because the RRF is so important, we have organised ourselves by giving this a very high priority. We have mobilised all the expertise we have. This is the reason why the task force that I’m heading was created and why we work very closely with our colleagues in the economic and financial departments. Not only to coordinate and negotiate the plans initially but also to oversee their implementation. That’s our job, our more than full-time job.
Nevertheless, fraud watchdog OLAF complained last year about a lack of oversight. Also, we heard from the European Court of Auditors that they are understaffed and therefore cannot do their job of thoroughly checking where the money is going. Should these concerns not be taken more seriously?
I am not saying that they don’t matter, on the contrary. But everything has a limit and our resources are what they are. We are trying to make the most of them and ensure that we get extremely qualified people. Could I do with a doubling of my staff? Absolutely. [laughing] But you can’t give me that, can you?
To be able to track and monitor the money, Member States will have to collect the data on the beneficiaries. Should this data be disclosed to the public because it is public money?
They have to have a proper IT system that stores data in an accessible manner for the national audit authorities, first, and then also for us, the European Court of Auditors, OLAF and EPPO, and for all of those who may be involved in the scrutiny. This should be stored in a place where we can directly access it. The publication is not foreseen in the legal base; it is just not there. Some Member States might want to do that, but it is not a requirement.
Do you think that would be a good idea?
I really don’t see how having a list of all the people who are renovating houses would benefit anyone.
Maybe not the houses, but it would be interesting to see which companies are big beneficiaries or whether many foreign companies are profiting from the RRF. Or whether the companies that were lobbying heavily for certain aspects of the RRF are also the ones benefiting.
We haven't seen any lobby, maybe because it was during the height of the pandemic. Still, there was no lobby by individual companies or lobby organisations in the design of the RRF.
"The Member States were part of the decision. It was not imposed on them"
Well, the automotive lobby has had meetings with the European Commission about their problems during the pandemic, because they saw a decline in production. They saw an opportunity in for example hybrid cars being included in the plans and being subsidized.
That has not made its way into the RRF. There was no lobbying of any sector regarding the RRF regulation. But I understand how that can be relevant if there is a conflict of interest.
We have a system in place through the obligation of the Member States to prevent, detect and act upon conflict of interest, and that essentially covers not only the company benefitting but also the people surrounding that company. We really try to get as much out of the data as possible to provide transparency. Then again, there is no legal basis for the RRF to publish the beneficiaries; whether we want it or not, it's just not there.
Was it a missed opportunity?
It’s not that it wasn't discussed. But the co-legislators decided not to put it in.
Are you referring to the Council?
Not only the Council. The European Parliament and the Council.
RRF money is borrowed money and must be repaid someday. However, it hasn’t yet been decided how. So how can the European Commission justify spending so much money without having a concrete plan of how it will pay back the loan?
What we cannot do without changing the legislation, is to borrow new money to repay old loans. The default option is evident: taking money from the next European budget, the MFF, to pay it back. If nothing else happens, and if there are no other resources, this is the backstop. And then, there is the initiative for additional new resources for the EU. There is a plan that was agreed upon in the inter-institutional agreement with the European Parliament and the Council, but it is just not that easy or instantaneous. Still, we have a few years to get it up and running, and we have already started.
Again, none of these options are very attractive to countries that were never very enthusiastic about the RRF, to begin with. Can you understand that people might feel that, with the RRF, they are trapped in a situation in which none of these outcomes would suit them?
They are not trapped; they chose it. They knew this from the very beginning, and they have been quite supportive of the RRF and very appreciative of what it did for the other Member States. They were part of the decision. It was not imposed on them.