Risks of corruption and the management of EU funds in Romania

The suspension of EU payments in four operational programmes in 2012 showed how problematic Romania's correct and effective management of EU funds is. Such funds aim primarily at decreasing the socio-economic disparities among EU members and support the economic convergence of less developed new EU members with their Western counterparts. Consequently, a poor absorption rate of EU funds threatens income convergence between old and new member countries, thus representing a major challenge for EU integration. Currently, Romania has the poorest absorption rate among all the EU Member States and the worst among the ten new Member States. Moreover, the financial corrections, which amount to roughly 22% of the assimilated European funds, further reduce the real absorption rate, a loss which can be attributed entirely to corruption and mismanagement. The present report investigates the proportion of EU funds which can reasonably be considered at risk because of mismanagement and corruption, asks what are the main defrauding tactics used at national level to obtain European money illicitly, and considers the extent to which the suspension or cancellation of EU assistance might be the best policy for dealing with the situation. In addition, the report will put forward a list of recommendations for the next EU programming period which are intended to mitigate the effects of corruption and mismanagement that result in a waste of public resources.