‘The EU Solidarity Fund — representing solidarity and support between Member States’
Interview with Corina Crețu, Member of the European Parliament
In the EU budget, several budget lines can be used to address emergency needs, ranging from humanitarian aid and civil protection to structural fund financing for disaster prevention projects. One such budget line is the EU Solidarity Fund (EUSF), which was set up in 2002 to help Member States cope with natural disasters, under responsibility of the European Commissioner for Regional Policy. Corina Crețu has been a Member of the European Parliament (MEP) since 2007, with an interruption from 2014 to 2019 when serving as EU Commissioner for Regional Policy. She has dealt with the EU Solidarity Fund from various angles, most recently as a member of the Parliament’s Budgetary Control Committee. In that capacity she authored an own initiative report on the effectiveness of Member States’ use of the EUSF which was adopted by Parliament on 20 October 2021. Reason enough to interview her about her experiences with the EUSF, her concerns, and the prospects for the Fund’s use.
By Gaston Moonen
Solidarity as a fundamental value
The issue of natural disasters has received a lot of attention in Europe, in view of the floods and wildfires that hit the continent last summer. Perhaps also because of the global disaster caused by the COVID‑19 pandemic. Corina Crețu believes both types of disaster have had specific consequences: ‘The health crisis has affected all of us. In the beginning, it was unexpected and the EU was criticised. The whole situation has weakened our social and economic achievements, and it is still a great challenge for all of us, including in the EP. We could not work in camera for a few months. After some weeks of hesitation, I think that the institutions tried to organise themselves as quickly as possible to work effectively.’ She refers to a number of measures the European Parliament has approved to combat the crisis. ‘First emergency measures and also long-term measures. One of the measures is to include in the EU Solidarity Fund measures to alleviate the consequences of COVID‑19. Initially, when established in 2002, the EUSF was meant to address only natural disasters.’
The MEP sees the multiple signs of EU solidarity as one of the key outcomes of the crisis. ‘From the pandemic we can see that solidarity is a fundamental value of the EU. There is no country that can deal with such a crisis alone. The country I know best, Romania, is now in a very difficult situation.’ She points out that Romania makes use of the EU Civil Protection Mechanism. ‘Romania had asked for it in order to receive doctors, medication, oxygen and other equipment.’
Corina Crețu explains that initially the EUSF was not meant to be an emergency tool. ‘It was an instrument through which Member States could recover some of the expenses resulting from a natural disaster. When I was Commissioner for Regional Policy, I saw in Italy people desperate after an earthquake. This was the moment I called for the Solidarity Fund to become more flexible and efficient to provide more quickly financial assistance to Member States affected by natural disaster.’ She points out that between 2002 and 2020 the EUSF mobilised more than €6.5 billion for interventions in 96 disaster events that took place in 23 Member States and one accession country.
One of the conditions is that the damage to be repaired must exceed a certain threshold, and Member States have to provide evidence of the costs incurred. ‘This evidence, and consequently the money, often came late. For instance, in the case of the earthquake in Italy I approved €1 billion but they received the money after one year. Because they had to prove the disaster expenses and for some regions it was difficult to provide this quickly, presenting invoices, other documents, etc.’ The MEP adds that the largest share of applications (about 60 %) were submitted to cover damage caused by flooding, followed by earthquakes. ‘Until now earthquakes, because of the enormous damage they cause in financial terms, covers about 48 % of the support provided under the Fund.’ She sees the EUSF as one of the tools for the EU to help the most vulnerable regions and citizens. ‘But at the same time there are problems in communication about all the help that the EU can provide through these instruments. And frustration over the time delay between the natural disaster occurring and regions affected receiving the money.’
She underlines the fact that that MEPs have asked for a more speedy response from the European Commission, also given the impact of the pandemic. ‘I was pleased that this Fund was extended to the health crisis we are facing. Originally, the Fund was not allocated to fighting the pandemic. Now the European Commission needs to provide a response to what is happening regarding health issues in the EU. In that respect I think that it will be important for the Member States to have the new European Health Emergency Preparedness and Response Authority (HERA).’
Towards shorter allocation times, yet tight controls
Having been a Commissioner and now in her role as MEP — particularly in the Budgetary Control Committee — Corina Crețu is well aware of the fine balance that needs to be found between not cutting corners on accountability in emergency situations and providing speedy aid to those affected. ‘When I was in the position of Commissioner I of course had to explain we have a regulation in place and we cannot speed up and give money without knowing exactly what damage is caused by floods, fires, etc. I was in Portugal and Italy to show our solidarity. But at the same time money went only after a certain amount of time. In my position as MEP and rapporteur for the Solidarity Fund in the Budgetary Control Committee, I have proposed to simplify the procedure and shorten allocation times. And insisting on the need for tighter controls to ensure that the money goes exactly there where it is needed.’
She explains that the Commission currently does not provide funding for personal losses but only for economic recovery. ‘Sometimes this is very frustrating for Member States. This was for example the case in Portugal: many lives were lost due to the fires, but there was not an industrial area affected with high damage in terms of economic costs. We also have to find a solution to show our solidarity in such cases.’ Corina Crețu also decided to start this own-initiative report in view of the effectiveness of Member States in using EUSF money in the aftermath of natural disasters. ‘One of the objectives was to contact the main stakeholders to better understand all the mechanisms, starting from the submission forms, the criteria related to the disaster cases, the allocation of funds, etc. Of course without forgetting the follow-up and controls in place to ensure that the allocation of funds has been done wisely and for the right reasons.’
She thinks that her report is a very good summary of what the EUSF represents. ‘How it is used by Member States to recover after a natural disaster. And of course we should recognise the complexity for a Member State affected by a natural disaster to sort this out and allocate funds as quickly as possible. And undertake efforts to make the Fund more flexible and helpful. This also — and my colleagues supported me — to do so to face recurrent disasters due to climate change.’
Corina Crețu says that support for the report has been very good. ‘We tackle the main complaint from the regions, which relates to speed. We would like to improve speed, coherence, effectiveness, public awareness, clarity, simplicity, transparency, lessons learned and identified by the different stakeholders of the Solidarity Fund. We also have the wish that the Solidarity Fund should do a lot more communication about what it is doing and representing solidarity and support between Member States.’ Regarding solidarity, she considers the cooperation shown among Member States during the pandemic to have been a great success. ‘The coverage of the Fund has been extended to include public health issues, and it is very important that the amount of the Fund was almost doubled. Plus the rate for advance payments was also increased. This means that Member States can better use it from the beginning of a crisis, having payment already before submitting all the documents relating to disaster costs.’ She hopes that the report will be welcomed by the Member States.
In the MEP’s view, it has become urgent not only to do away with red tape but also to use the EUSF proactively in Member States that regularly face natural disasters. ‘Especially for regions that are structurally vulnerable to certain recurrent disasters, such as floods, seismological volcanic activity — like we saw in the Canary Islands — or a public health crisis. It is really important to identify where are the vulnerable regions most prone to have these natural disasters. And to help them to prevent them where it is possible.’
Multiple sources for financing preventive measures
When it comes to prevention the former Commissioner points to the various sources available through the EU budget. ‘All Member States use Structural Funds for instance. What is very important in the new budgetary lines is that there is flexibility between the funds. The scope of the funds is very important and the conditionalities that we had in the last period, many of them, due to COVID‑19, are not completely in place. Now it is possible for instance to use the Regional Development Fund or Social Fund for this kind of action.’
She points out that the EUSF was initially intended just for natural disasters. ‘To address issues after the natural disaster. But all the studies show that many of them relate to climate change, for instance the fires in Greece. And it is clear that we have to help these countries in order to prevent these natural disasters that lead to huge losses, in human lives and damage. There can be effects destroying an entire industry, like olive oil cultivation for example. There are consequences in terms of economic prospects.’ She concludes that analysis could be used to ensure regions are provided with just compensation for the damage they have suffered.
On prevention, she argues that, while there is some money in the EUSF, the lion’s share should come from Member States. ‘That is for the 2021–2027 budget period, because this is the period for which they negotiate with the Commission the operational programmes for 2021–2027, and each Member State can assess what they need and they should put this in their operational programmes.’ National recovery and resilience plans are another possible source. ‘Each Member State can use this money, so it is an historic opportunity for Member States, since the traditional sources of funds is basically doubled. It is very important to make synergies between all these instruments to achieve recovery but also to move a step forward after these crises.’
She observes that Member States’ capability to deal with all these funds will be essential. ‘It is important that the Commission facilitates the establishment of a coordinated plan for accurate and rapid damage assessment. Each beneficiary country should also detail the preventive measures they have taken or are planning to take, including how they will use EU funds to limit future damage and a recurrence of similar natural disasters. As we have stipulated in the report, there is a need for a revision of the EUSF to ensure that the build back better principle is enshrined within it.’
Respecting a delicate balance
According to Corina Crețu, money is currently not really the problem when it comes to emergencies. There is another challenge. ‘On the one hand we would like to help the Member States affected, but on the other hand when it comes to control it is very hard to see how this money was used. And emergency situations are especially vulnerable to fraud. All studies show that. It is essential to the European Parliament to have this possibility to control for fraud, corruption and irregularities. This is the reason why our report emphasises the importance of effective control and complaint procedures, to ensure that public procurement procedures are followed by Member States in response to crisis situations.’
For her it is clear that any allocation of resources from the EUSF must be compliant with the procedures and the principles of sound financial management and protection of the Union’s financial interests. ‘Including at regional and local level. It is clear that sometimes, even from the side of the European Commission, we need a clear assessment or report on how this money was used. From 2002 until 2020 we had €6.5 billion given through the Solidarity Fund, but no proper assessment of how this money was used.’ She points out that in some cases Member States are asked to cover part of the public expenditure for emergency actions in relation to COVID‑19. The situation is exacerbated further by the existence of thresholds for funding. ‘So it can be frustrating that in the case of natural disasters the Commission cannot approve a number of requests for funding in view of the criteria.’
Corina Crețu explains that, as Commissioner for Regional Policy, she had to keep the balance between two committees in the European Parliament. ‘One was the Regional Committee, which is very keen on simplifying and finding flexibilities. The other was the Budgetary Control Committee, where they require strict control procedures. I was in the middle between simplification and control.’ She observes that it is important to provide aid in time. ‘At the same time, in relation to COVID‑19 expenditure, I think in many countries they now started to investigate how money has been used. And I hope the ECA will also be very vigilant in this sense.’ She believes that there is a shared responsibility in this area too. ‘So not only at the level of the institutions, the first level of control should be in the Member States.’
What will be important is the capacity of Member States. Not only for controlling expenditure, but also for assessing which emergency activities qualify for EU funding. She refers to the 2021–2017 multiannual financial framework, which provides a new budgetary package and creates possibilities for synergies between different funds. ‘For example with the Solidarity and Emergency Aid Reserve, a special instrument aiming at ensuring the flexibility of the new budget. It should be used in cases of specific situations of natural disaster and emergencies. This reserve brings together the EU Solidarity Fund and Emergency Aid Reserve and is designed to respond on the one hand to emergencies arising from major disasters in Member States and accession countries, and on the other hand to specific urgent needs in the Union or non-EU countries, in particular in times of monetary crisis.’ One of the novelties the MEP identifies is that this instrument can help non-EU countries with emerging needs stemming from climate change, such as conflicts and wars, the global refugee crisis and natural disasters. ‘Emergency instruments will have a positive impact because they merge well the two budgets: the EUSF budget (€500 million per year) and Emergency Aid resources with €280 million per year.’
Corina Crețu underlines that these EU budgetary resources are available to respond to emerging issues in which every euro is sorely needed. ‘Provided there are projects in place. And this is a problem in many Member States. They have a lot of money available but not enough mature projects. So we did our part in the EU, in Brussels. We introduced flexibility mechanisms, and most of the flexibility mechanism is now kept outside the multiannual financial framework. And the funding can be mobilised above the expenditure ceilings and thresholds.’ She hopes that Member States can use these budgets whenever they will be needed. ‘However, coming back to the same issue: we should monitor the overall amount, its use, its allocation, having an impact on the effectiveness of the projects. So it is very important to have this second part in place: monitoring and control.’
Awareness in the Member States
With the various crises going on, the MEP thinks it is very important that people receive humanitarian protection and assistance, no matter in which country they are. ‘But governments have to do their part. The Commission acts with the Solidarity Fund after an application made by the Member State. It is very important that Member States themselves assess and submit. Sometimes they are not aware, and in the Member States you need people who know exactly which instruments can provide very quickly a response. Sometimes the Member States are the ones that put the application very late.’ She stresses that one of the aims of her report is to be more targeted and prioritised. ‘That aid goes to the people who are in need, whether it is a natural disaster, hunger, gender-based problems, etc. It will not always be easy but it is very important that the Member States in this budgetary framework, emergency aid, EUSF, etc., they are all designed to respond to emergencies.’
Corina Crețu recalls the experience she had as Commissioner when an earthquake struck several Italian regions. ‘Of course we tried to be on the spot, to respond in an efficient, fast and flexible way. As Article 1 of the EUSF regulation stipulates, the Fund aims to respond in a rapid, efficient and flexible manner to emergencies. But this is not always possible because the assessment of the regions is sometimes coming very late. Most often the time between the disaster and the payment is usually around one year. It is true that local authorities have an important part to do — apply and provide proof of disasters and their economic consequences. Which is not always easy.’
She highlights that her report calls for measures to shorten the time needed after a disaster before payments are made. ‘But this situation has improved only slightly, following the reform of the Solidarity Fund. And we do not know yet the situation around the new MFF arrangements. Because the Commission cannot just give money without sufficient proof. It is very important for local authorities to be very accurate and access the damage and then to monitor and report on implementation.’
Another worry she has relates to advance payments, the value of which has increased from 10 % to 25 % of the anticipated financial contributions. ‘The average time for making an advance payment is still very long, around five months — too long sometimes for the Member States as an affected country needs to receive aid as soon as possible. I know why. I was and am in contact with the representatives of Member States. Some consider that the time between the moment that the application is submitted to the Solidarity Fund and the implementation of work is very long. I know all these complaints, and I really consider that the Commission should come with more reactive solutions. In particular to continue its resort to comprehension and patience towards Member States on how to use the Solidarity Fund in a more simplified mode in order to facilitate such for local, regional and national authorities.’
She is in favour of networking among the Member States to share knowledge on using the EUSF. ‘Because sometimes Member States are in a completely new situation, and other Member States and the Commission can give advice. Within the report, we have called upon the Commission to continue their work on simplification, to speed up the application procedures for Member States. And pay particular attention to simplifying applications for activation of the Solidarity Fund across several regions in the context of cross-border disasters. Such cooperation, also between Member States, can enable them sometimes to meet the threshold.’ She also believes that the Commission should establish a mechanism that provides financial support in an emergency, regardless of whether the annual EUSF budget has been spent. ‘This is an issue raised by several members in the Budgetary Control Committee. I think that, at this moment, a doubled sum would be enough. Countries applying for support as a result of the pandemic in 2020 received less than 50 % of the potential aid amount.’
Extended aim and use of the Solidarity Fund makes proper reporting the more important
When it comes to the achievements of the EUSF, Corina Crețu sees the ECA’s reports as an essential source of information. ‘I think the ECA is crucial in every sector when it comes to spending EU public money. We know very well that procurement in emergency situations could be an area for fraud, corruption and irregularities. We rely very much on the EU’s audit institution because we would like to make sure that the public procurement procedures are followed by the Member States in response to crisis situations.’ She reiterates that primary responsibility for the Fund’s use lies with the Member States. ‘But it is very important for the ECA to check all these things and to ensure that if there are derogations they comply with the procurement procedures, including at regional and local level.’
The MEP points out that shared management undoubtedly gives potential for misuse of the EUSF. ‘I really think that there is a need to introduce steps to improve transparency and monitor and protect potential misuse. The annual reports for the Solidarity Fund cover the period from 2008 to 2018 and are published in a very irregular manner. This can contribute to mistrust on how money has been used. However, for 2019 and 2020 there is not yet an annual report published, even though the European Commission has the obligation to publish every year.’ She believes her colleagues on the Budgetary Control Committee are not comfortable with this situation, with no reporting on how money was spent. ‘That is why I would like to ask the ECA to inform the EP of any findings as part of its annual work on assurance relating to the Solidarity Fund and its implementation. Very important for us!’
More specifically, she explains that the Commission’s report on the Fund’s use in 2019 should have been presented in 2020. ‘That is why the EP is also inviting the Commission, and the ECA, to conduct a new audit of the Solidarity Fund to reassess the instrument and the budget in order to make sure that a sufficient and functional budget is available to deal effectively with major national and regional natural disasters, as well as major public health emergencies.’ She underlines that to have an annual report from the Commission is much more important now since the health crisis is included in the Solidarity Fund. ‘Effective spending is a key concern in many governmental programmes, be it EU programmes at national or local level. And foster trust in public authorities functioning. It is very important not only to spend money but also report on how this money was spent.’ She concludes on a positive note: ‘I believe that last year was the year of solidarity and I hope that this year will be the year of reconstruction!’
This article was first published on the 3/2021 issue of the ECA Journal. The contents of the interviews and the articles are the sole responsibility of the interviewees and authors and do not necessarily reflect the opinion of the European Court of Auditors.