Europe in My Region

There’s a connection between the latest disaster in Genoa and the EU funds many Regional Administrations (mainly in Southern Italy) have plenty of and fail to spend.


This is a repost of L’alluvione di Genova e i fondi europei non spesi: due selfie di un Paese ingabbiato, originally published in Italian on the sole24ore blog by Giuseppe Chiellino (@chigiu) in October 2014 and submitted to the Europe in My Region 2016 blogging competition.

This is due to an aberration: the company having got the second rank in any tender procedure appeals before the Regional Administrative Court (RAC). Since the economic crisis has got worse, mainly for the construction & public works industry, any tender procedure now entails an appeal before the RAC and then the Council of State. The awful logic is: “if I hit the mark with one out of ten appeals, I’ll be OK for a while.” This means that some years go by before a building site starts working. If this has resulted in a paradox where the resources being allocated to remedy hydrogeology disruption in Genoa have not been spent yet (while a new flood has come and one more person has lost his life), as to the EU funds, it causes a much less dramatic impact in the short run, but a much more widespread one as regards economy. Indeed, the EU resources have to be spent during the programming period lasting seven years and two additional ‘forbearance’ years. The effects of appeals bombing by the companies are perceived when the EU funds programming period ends (the 2007-2013 one has just ended, but there is time left to use its funds till the end of 2015 according to the N+2 rule). According to the latest available estimates, Italy has still to account for 5 to 6 billion worth of expenditures before the EU Institutions. If it isn’t able to prove that it has spent the monies (along with which comes an equal national co-funding amount), the ‘ugly and wicked’ EU will apply the ‘automatic decommitment’ rule: they will hold the monies back and probably reassign them to more virtuous countries.

Is there a way to bypass the RAC appeal barrier without jeopardising the lawful rights of a company feeling unfairly placed at a disadvantage? A hypothesis to contain damages with regard to managing EU funds is to set up a guarantee Fund worth some millions, so that the appeal can go on without bringing the works in question to a halt. Should the appealing company prevail at the end of the administrative lawsuit, they will get compensation from the Fund. Otherwise, they would pay a fine that would increase said Fund.

Italy is the worst EU funds user after Romania not only because of the RAC appeals curse, even if it is the second largest beneficiary after Poland with over 41 billions EUR (2014-2020). First of all, we have administration inefficiency in Regional Administrations and Ministries that manage the ERDF, ESF and EARDF resources. This inefficiency accounts for at least one third (if not more) of the grounds for such foolishness. Therefore, the ‘ever uglier and wickeder’ EU has imposed Administrative Strengthening Plans (ASPs) upon the Regional Administrations and Ministries, on which the Administrations’ Presidents and Ministers will personally have to work.

We have then the so-called “outside causes” that the Regional Administrations and Ministries enumerated in a paper. This paper was the outcome of a two day seminar that took place in Rome at the end of September, together with representatives from the EU Commission. In addition to the RAC appeals, we have the inner stability pact preventing the municipalities from spending, even though available resources exist. As a result, everything gets jammed since EU funds have to be spent along with national resources. The Conferences of Service Partners were set up in the 90s to speed up procedures relating to public works. On the contrary, they became “one more slowdown factor”. When one of the stakeholders is missing, this is enough to stop the whole decision-making process. Accordingly, should a Cultural Heritage Superintendence Body or a municipality wish to exercise a veto, they can just avoid participating. The Code of Tendering Procedures is very complex and contributes to prolonging times, making them incompatible with the ones for the EU funds automatic decommitment. In addition, there are excessive administration levels (as the Regional Administrations precisely reported) to go through to obtain the necessary authorisations for public works. It is very difficult to obtain documents such as the Single Social Security Contributions Payment Paper or the Mafia-free Certificate that are required for the contract but that last just a few months (so that, when the tender file has finally been approved, these documents have expired and must be re-obtained). It is also hard to get a bank payment guarantee granted due to known credit sector difficulties. Eventually, some rules – although with shared intent, such as the corruption-fighting ones obligating managers with spending powers to turn over – are incompatible with management continuity required for the seven-years operational programmes of the EU funds.

The flood in Genoa and the inability to spend EU resources are just two snapshots of a fully jammed country, being the hostage of bureaucrats and statutes, structures and crookedness. A country where rules are too numerous and confused. As a result, “privileges and injustice flourish. A country were administration formalities and jurisdiction have turned into rites that serve to create niches where whoever may do so exercises vetoes to get richer or just to have revenge”. A country where a simple “expressly pragmatic” common sense solution is banally “inconceivable”. I am afraid that the EU will not save us. That body we ask for permission to raise our indebtedness without knowing how to spend the resources from it (apart from current expenditure).

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