Why the EU’s scam subsidies have repeatedly been banned

Recently, Czech Prime Minister Barbis was confirmed by the European Union to defraud the EU’s subsidies to the agricultural and investment plans of Central European countries, amounting to millions of euros, causing widespread public concern. However, the Czech Republic is far from alone. In recent years, in Romania, Bulgaria, Hungary, Slovakia and other countries, fraudulent attempts to obtain EU subsidies have repeatedly occurred and have been repeatedly banned. Where is the problem?

In order to stabilize the European agricultural market and ensure the stability of farmers’ income, the European Union (EC) introduced a common agricultural policy in 1962. The core of the EU’s common agricultural policy is to ensure food security in EU countries through tools such as subsidies and investment. However, with the EU’s eastward expansion, the common agricultural policy is also facing greater challenges, and has even become a high incidence of corruption in member countries.

Subsidy projects aimed at promoting agricultural development have become hotbeds of corruption and fraud for three main reasons:

First, in EU countries, large farmers and big capitalists are the main targets for obtaining subsidies. According to EU subsidy rules, whoever acquires land is eligible for subsidies. Due to the promotion of agricultural economies of scale and the mechanization of production, agriculture is a capital-intensive industry in EU countries. The vast majority of those eligible for EU agricultural subsidies are big entrepreneurs. According to statistics, 80% of EU agricultural subsidies fall into the hands of 20% of enterprises. These big entrepreneurs may be elected heads of state or exert influence on elections. Inevitably, some EU subsidy projects have even fallen into the “pockets” of some heads of state and their stakeholders.

Second, the basic principle of resolving the relationship between the EU and the member states is the subsidiary principle, in which member states enjoy extensive discretion. Regarding the repeated occurrence of fraudulent subsidies, the EU’s response is not to strengthen the rules for controlling corruption, but to hope that member states will investigate and deal with corruption through internal audits. However, government officials (and their families) are both athletes and referees. Faced with the domestic corruption of member states, the EU’s subsidiary principle cannot achieve an effective error correction mechanism.

Third, although the EU’s review mechanism is strict, the EU’s agricultural subsidy transparency and accountability mechanisms are far from being established. Anti-fraud offices have been created in Europe, and EU prosecutors have been set up to try to protect the EU’s financial interests from infringement. However, in practice, it is relatively difficult for EU institutions to obtain and analyze subsidy data. On the one hand, companies can conceal fraud through complex equity structures. On the other hand, informatization construction in Eastern Europe and other countries is still in progress, resulting in failure to obtain agricultural subsidies from EU member states. Opaque projects have led to corrupt ” “Barbaric” growth. In addition, some Eastern European countries still have inadequate domestic legal systems and lack of accountability, which also makes it difficult to monitor corruption and curb corruption.

Of course, the issue of subsidy fraud and corruption not only occurs in EU countries, but also in such countries as Asia, the Americas, and Africa. There are also such moral hazards and crisis of law. This is a worldwide problem.

Conflicts of identity are incentives to subsidize fraud. On EU subsidy projects, due to restrictions such as the principle of subsidiarity, member states have not been effectively monitored. How to strengthen the building of transparency and accountability on the basis of balancing itself with the power of member states is a challenge currently facing the European Union. This also provides some warning and reference significance for other countries to improve subsidy systems and prevent fraudulent subsidies. It should strengthen the transparency of subsidy projects and the construction of accountability systems at the source, instead of focusing only on project audits.