The current trend of setting up trust funds

The current trend of setting up trust funds

The current trend of setting up trust funds and going beyond the EU’s budgetary rules raises a number of questions in terms of transparency and accountability. So far, policy-makers have justified going outside the EU budget on the need for more flexible and rapid EU funding instruments to respond to various emergencies outside the EU. This study critically assesses the trade-offs made in the name of ‘flexibility’ and ‘speed’ vis-à-vis democratic, legal and financial accountability and the EU’s budgetary integrity. In addition, the EUTFs and the FRT add to and ‘mix’ the instruments set up under the Multiannual Financial Framework. The EUTFs and the FRT are instruments for the EU’s external relations. For example, the FRT accompanied the EU–Turkey ‘Statement’ in March 2016 and the EU Trust Fund for Africa was launched at the EU–Africa Summit on migration in Valetta in November 2015. Similarly, the EU Trust Fund for Colombia was established with an aim of showing solidarity and political support for the Colombian government in concluding the Peace Agreement with ex-combatants of the Revolutionary Armed Forces of Colombia. Thus, some argue that EUTFs may allow the EU to be more relevant and strategic in its external policies. At the same time, the question arises over whether such external policies should be elaborated in a way that overlooksthe role of the European Parliament as an authority that provides democratic accountability for the EU budget and policies. The Lisbon Treaty took the direction of reinforcing the role of the European Parliament, to bring about more coherence and democratic accountability. The instruments assessed in this study work in the opposing direction, which is extra-Treaty (the EU–Turkey Statement) and extra-budget (EUTFs), and inject intergovernmental dynamics and democratic accountability deficits into European cooperation. This study does not constitute an audit of results or a comprehensive evaluation of these funding instruments or the projects implemented. More generally, the study addresses the EU added value of the EUTFs and FRT in light of the ‘Better Regulation’ agenda. The study focuses on the following five aspects: Policy Department D: Budgetary Affairs

____________________________________________________________________________________________ 8 • Establishment of the EUTFs and the FRT. The study reconstructsthe processes that led to the establishment of these mechanisms in section 1. • The governance, management, monitoring and oversight of the EUTFs and the FRT. Section 2 describes how the boards, Operational Committees, coordination and quality control mechanisms function as well as the venues for democratic accountability. • Non-EU practices on trust funds and similar instruments that can serve as ‘promising practices’ for the EUTFs. In section 3, lessons are drawn from the funding instruments and mechanisms set up by the UN and by the World Bank. • A general overview of the results and wider consequences for EU external policies. Section 4 illustrates the dynamics on the ground in the Central African Republic, Ethiopia and Turkey. Furthermore, the study assessesthe wider consequences of this funding for EU external policies on migration and development. • Conclusions and recommendations. Elaborated in section 5, the main conclusions and recommendations are also presented below. Recommendation 1: The European Commission should carry out a ‘fitness check’ under the EU Better Regulation framework, to assess whether the EUTFs and the FRT have met the criteria of effectiveness, efficiency, relevance, coherence and EU added value. The governance procedures for the EUTFs and the FRT deviate from the ordinary decision-making and potentially lead to more mistrust within the EU and when cooperating with third countries. Therefore, ultimately, they should be seen as exceptional or truly emergency-led instruments whose added value and effects on the ground should be very well justified and carefully monitored. Recommendation 2: The European Commission should re-examine whether the EU Trust Fund for Africa was established correctly as an ’emergency’ EUTF and should duly justify why it does not constitute a ‘thematic’ EUTF. The EU Trust Fund for Africa is assessed as an interesting case in section 1, and it remains unclear why an emergency EUTF is needed to address the ‘root causes’ of migration, or what ’emergency’ it seeks to address in the first place. Rather a ‘thematic’ EUTF would have been more appropriate in light of the scope and intervention logic of the EU Trust Fund for Africa, even though that would have excluded delegated cooperation through Member States(when Member States are also the main implementers). Recommendation 3: An express clause in EUTF constitutive agreements should be foreseen so as to explicitly exclude implementing organisations from the governance bodies. An assessment of the governance, management, monitoring and oversight of the EUTFs shows the major deviations in comparison with regular EU external instruments concerning governance. As the EUTF contributors, namely the European Commission and Member States, set up and make decisions on boards and Operational Committees, this changes the dynamics in selecting projects and implementing partners. The recurrent tendency to select Member States’ projects, lobbied for and not rarely involving their own implementing agencies, gives rise to questions over the transparency, efficiency and impartiality of the selection process. The European Court of Auditors, in its Special Report Oversight and Management of the EU Trust Funds ____________________________________________________________________________________________ 9 on the Bêkou Trust Fund, also highlighted a ‘conflict of interest’ in the project selection procedure of its Operational Committee. Recommendation 4: The EUTF constitutive agreements should exclude the a priori preference for delegated cooperation with Member States. Despite the European Commission’s readiness to use all existing flexibilities in management of the EUTFs, it could not be established that the EUTFs carry out implementation more quickly than the EU’s regular external-funding instruments. The delegated cooperation comes in principle with rather high overall management costs; hence, it is not a