Belgian presidency ‘may set back Prodi financial reforms’

Date: 14/06/01

By John Shelley

ROMANO Prodi's reforms of the European Commission's internal financial controls are under threat because the Belgian presidency is planning to do little or no work on them, MEPs and diplomats fear.

The President's plans to overhaul the way spending is approved and checked are in danger of being heavily delayed, according to Union executive sources, because the Belgians have not scheduled a single working meeting on the plans during their stint at the EU helm.

If Belgium fails to advance the proposals, Spain will have to oversee all the technical work during its presidency in the first half of next year if the reforms are to be completed, as promised, by the middle of 2002.

Diplomats say this would be a virtually impossible timetable, pointing out that it took them six months to conclude negotiations on a first round of so-called "fast track" regulation changes last year. "You can see the mountain that we have to climb," said one diplomat. "With the fast track regulations we had one article; the full regulation has 176 articles."

The Belgians will have difficulty finding extra time to work on the financial reforms because they also have to complete the annual negotiations for next year's Commission budget.

Insiders warn that leaving it to the Spanish could be disastrous because Madrid is sceptical about some of the plans proposed by Prodi and drawn up by reform chief Neil Kinnock and his budget counterpart Michaele Schreyer.

If the Mediterranean state oversees the 'crunch' work, that could give it a perfect opportunity to hinder the talks as it has deep concerns over plans to scrap the current centralised system for approval of payments. "Spain is the country which is the least enthusiastic about the need for a reform of financial regulations and therefore the least likely to try and get the Commission position through," said Dutch socialist MEP Michiel van Hulten, one of the Parliament's rapporteurs on the subject.

When Prodi came to power in 1999 following the resignation of the Santer Commission, he promised to end the poor management which had shamed the institution.

The reform of the financial regulations forms one half of his proposals to do this - the other being a revamp of staff regulations - and the main measure to clamp down on fraud and misspending. "This is a key to the whole reform agenda," said one EU diplomat. "For the Commission to remain credible, and the council as well, then we have to get this through in good time."

Schreyer's spokesman Luc Véron said the Commissioner still believed the reforms were on track although he admitted sticking to the timetable would be tough. "When Mrs Schreyer spoke to the council last Tuesday [5 June] she made very vividly the point that we want to proceed with this very important piece legislation," he said.

The financial reforms are designed to resolve a conflict of interest whereby the institution's financial controllers currently perform a dual task: approving payments before they are made and then auditing their books to make sure they are in order.

The Commission proposes separating the two procedures, with the Internal Audit Service taking over post-payment monitoring and the pre-payment approval eventually being scrapped.

They are also designed to decentralise financial controls to encourage officials to take greater responsibility for the spending of taxpayers money.

The Belgian representation to the EU was unavailable for comment on the issues raised.

Romano Prodi's reforms of the European Commission's internal financial controls are under threat because the Belgian presidency is planning to do little or no work on them, MEPs and diplomats fear.