In order to achieve a balanced development across the Eurozone, there should be a combination of centralized control and management of the available funds for development (the National Strategic Reference Framework (NSRF) documents are the EU funds at national level) by the Commission.
At the same time there should be a centrally coordinated management and allocation of these NSRF funds in such a way as to demonstrate the real contribution (quantitative and qualitatively measured) both to the local society and economy of the member state and in the budget of the central government of the member state that will approve and build any public project, but also in the overall Eurozone/EU economy.
The Commission’s goal should be not only the general development in the Eurozone/EU territory but also the specialized development in the Eurozone/EU member states. In order to achieve this there should be a centrally planned management of the allocation of NSRF funds.
by Thanos S. Chonthrogiannis
©The law of intellectual property is prohibited in any way unlawful use/appropriation of this article, with heavy civil and criminal penalties for the infringer.
The incorrect policy of the Development fund management system which are allocated to all Eurozone/EU member countries.
In summary, we will mention that the current system of management of the NSRF funds and generally the development funds of Eurozone which are allocated to the Euro-area member countries does not yield the greatest in terms of the expected growth size in economies of the Eurozone/EU member countries.
The Euro area/EU development funds that the European Commission determines each time and are granted through the well-known seven years programs of the NSRF funds in the Euro-area/EU member countries do not yield the most.
The reason is that the management and grant of the funds takes place by the central governments of the Eurozone/EU member countries, which should be aware of the problems and needs of their member countries.
This entitles the governments of the member states to choose several times to finance with these funds projects that are not so necessary for their society and their economy.
However, the projects that they are prejudging to finance are very important and necessary in terms of the prestige of the governments and their governmental parties. These projects are given to companies which usually are financiers of the governmental parties and habitually hire potential voters of these governmental parties. The governments goal is to attract more voters reducing parallel the unemployment in their economies.
On the other hand, the any grades of high absorption in this type of NSRF funds that the member states present are usually not reflected in the change of the status of the economy that absorbs these funds.
Moreover, many times the governments of the Eurozone/EU member states although that they are showing that they absorb these funds in practice these funds are dramatically delay reaching the beneficiary-contractors’ treasury. In this way, the governments create unfair competition against legal persons who are not politically adjacent to them, while at the same time they succeed to exert political pressures on those companies that undertake the projects.
The central governments in order to avoid exerting political pressures which will doom their popularity, they choose to finance projects that the legal persons who undertake them are “friendly” to the respective governments of the member countries.
On the other hand, the state corruption is moving into large levels, as the funds in these programs will go to companies that are selected from the governments. The ministries of the governments of the member states that are responsible for the development and manage the specific NSRF funds, set “strange terms”-obstacles to the applicants for funding.
For example, in Greece for the preparation of a business plan the applicant for funding from the specific funds of the NSRF should apply to specific accountants/business consultants who are listed in the accountants/business consultants list which designate the Greek Ministry of Development.
If the author (accountant/business consultant) of a business plan who will choose the funding applicant to make his business plan does not mention his name on this list of the ministry of development, the funding application is rejected.
The questions which everyone can pose are:
1. Are there any related or closed friendly relationships between those who draw up business plans and their names are on the ministry’s list and those responsible in development ministry who reject or approve the business plans and of course the approval for funding from the NSRF funds?
2. How much of the funding of the project goes as remuneration and to whom?
3. Why are specific accountants/business consultants being selected and at the same time is excluding the largest percentage of this type of freelancers and companies’ professionals equally in the market?
In order to avoid this kind of malfunctions in the management of the Eurozone/EU development funds, the Commission should organize a different type of organizational and administrative structure which will guarantee the maximum efficiency of these under management development funds.
The new organizational structure that will bring maximum efficiency of under-utilized development funds to the Eurozone/EU economy
The European Commission will must create, in each member state of the Eurozone, an Independent Management Authority for its Development Funds. In order to facilitate the reader and the following analysis we will name this authority as an Independent Development Fund Management Authority (IDFMA).
Of course, the management of these Euro area/EU development funds (i.e. NSRF funds) will be completely dismissed from the managerial hands of the so far responsible Development Ministries of the central governments of the member states of the Eurozone/EU and will be given full in each of these Independent Development Fund Management Authorities (IDFMAs).
Essentially, the European Commission will create nineteen (19) Independent Development Fund Management Authorities in the Eurozone territory, as well as its respective member countries.
In the organizational and administrative structure respectively of each of these nineteen (19) Independent Development Fund Management Authorities (IDFMAs), excluding all others, will must include:
1. All the services of the Eurozone member state and the Eurozone/EU in general, services which are in the member state and they are responsible not only for the deposit and approval development projects but also for the management of the development (NSRF) funds.
2. Independent departments that will be staffed either through a project contract or will belong to the payroll of this Independent Authority. The actions of these independent departments will be audited as to the integrity of the applications-dossiers of projects seeking funding, but also in the course of completion of projects within the pre-defined schedules.
These independent divisions will act autonomously and independently of all other departments of the Independent Development Fund Management Authority (IDFMA).
Such a type of organizational structure in each independent authority will lay the foundations for more effective control of applications-projects which are seeking funding, since the independent type actions of these departments will be rechecked either by choice or by randomness cases that already have been checked as to the integrity of the applications-dossiers and the predetermined course of completion of the projects.
And of course, these independent divisions will not know the existence of one with the other.
3. The heads of all the departments of the Independent Development Fund Management Authority (IDFMA) will be reported to the respective CEO (Chief-Executive Officer) of IDFMA and only to him. The head-CEO of IDFMA will never report not only to a minister, but not to the respective President of the government of the member state.
4. The departments and services of the Independent Development Fund Management Authority (IDFMA) who will carry out their audit and management tasks will never contact each other and will not be informed about which cases are checked each time by the authorized departments.
With this type of sealing is achieved a complete fight against any corruption that can occur in these mechanisms.
5. The Independent Development Fund Management Authority (IDFMA) of each Eurozone member country will must belong 100% administratively, organizationally and operationally to the Commission Commissioner responsible for the Development portfolio (the European Commissioner for Development).
The CEO, the Authorized Council and the heads of the departments of the Independent Development Fund Management Authority (IDFMA) should be selected on strict criteria and only by the specific Commission Commissioner and after the candidates for these positions will have submitted their applications in Brussels and in the relevant EU section.
6. The procedure and criteria for hiring the staff of these Independent Development Fund Management Authorities (IDFMAs) in each Eurozone member country will must be the same and common in all Eurozone member countries.
The staff who will be recruited for the staffing and the smooth operation of these independent authorities will have to come from both the public and the private sector.
It would be a great mistake for the European Commission to approve any requests made by the governments of the Eurozone member states to recruit in these Independent Development Funds Management Authorities the existing civil servants of the Development Ministries who have managed to date the NSRF programs.
In such a case, the state corruption and any of its methods will be “transfused” by these governmental agencies to these new independent authorities. The staff as well as the executives who will be recruited to these Independent Development Funds Authorities will must have nothing to do with the development fund management of the NSRF programs.
7. The total of the governments of the Eurozone member states will must never know who the candidates for the above administrative positions of the Independent Development Funds Management Authorities (IDFMAs) of their member countries are.
It will also not allow in every government of each of the Eurozone member countries to propose who wants to be in these administrative positions of the Independent Development Fund Management Authority (IDFMA), simply leaving the European Commission to agree every time with government’s suggestions.
8. The candidates for the staffing of these administrative positions of the Independent Development Fund Management Authorities (IDFMAs) will be originating in labor terms both from the private and public sectors of the Eurozone as a whole.
The foreign candidates of all these administrative positions of IDFMA should be aware of the official language of the member state of the Euro area to which the respective Independent Development Fund Management Authority (IDFMA) belongs, i.e. the candidates for the administrative positions of the Italian IDFMA should be aware of the Italian language respectively.
9. The payroll of these administrative positions of the Independent Development Fund Management Authorities (IDFMAs) in each Euro-area member state should only be charged to the European Commission’s budget (they will be regarded as Brussels officials).
The remaining employees of the Independent Development Fund Management Authorities (IDFMAs) for the first years, both their payroll and the operating expenses of the IDFMA will be paid by the state budget of the member state of the Eurozone that belongs the respective IDFMA.
In future, the payroll of all employees of the Independent Development Fund Management Authority (IDFMA) and the total operating costs of the IDFMA should be financed from the European Commission’s budget (and they will be considered in their total as employees of the European Commission).
10. The working status of payroll employees of these Independent Development Fund Management Authorities (IDFMAs) (and in general of each IDFMA in the respective Eurozone member countries) will be characterized by trespasses-permanence.
The evaluations of the employees of each IDFMA in the respective member countries of the Eurozone will take place every year and with the completion of the three years will be decided whether to renew their contract. The process of evaluation and employment contracts will be the same for all IDFMAs in the Euro area.
By completing five years of work, the Commission and specifically the European Commissioner responsible for the Development portfolio, will decide on the renewal of the employment contracts of the highest administrative positions and the positions of the heads of the departments of each IDFMA in the respective member countries of the Eurozone.
11. In a second stage and after the creation of all these Independent Development Fund Management Authorities (IDFMAs) in the respective Eurozone member countries, the Commission will must unify all the information systems of nineteen (19) IDFMAs via secure internet.
This strategy will achieve full homogeneity in the information systems of all the Independent Development Fund Management Authorities (IDFMAs) and the only that will change will be the local language of each Eurozone member country.
12. The Government of each member state of the Eurozone will be able at any time to receive information in each case and for each case by the head-CEO of the Independent Development Fund Management Authority (IDFMA) of its member state without a restriction and with the same access that will have the European Commission’s Commissioner responsible for the Development portfolio (approval, course and completion of any project of interest which is funded by the development funds of the NSRF programs).
However, the administrative and organizational structure, the decisions on management, the methodologies and strategies, the systems and the staffing as well as the operation of each Independent Development Fund Management Authority (IDFMA) that will exist in each Eurozone member-country, should be taken solely by the European Commission’s responsible Commissioner for Development.
In this way, the management of the European Financial Structural Funds will be left out of the “hands” of the government of each Eurozone member state, creating all the conditions for the rapid approval and financing of each project in each Eurozone member state and in the entire territory of the Eurozone.
Why must be created this managerial system of the Development (NSRF) funds in the territory of the Eurozone?
According to my opinion, it is of the utmost importance to the European Commission and more generally to the development of a high degree of operational management of the NSRF funds. By formulating this model of administration, control, management and monitoring the progress of projects which are funded by these development funds, the European Commission succeeds in direct and real time:
1. To know at the same time the applications for funding of projects, but also the nature and type of projects that seek funding in each member-country of the Eurozone and throughout the total Eurozone territory.
2. To be able to coordinate both the approval, financing and acceleration of the completion of cross member-countries projects in which will be involved more than one Eurozone member-countries (e.g. works on a pipeline network for natural gas transmission throughout the Eurozone territory, projects for rail and road networks equally throughout the Eurozone, etc.).
3. To be able to transfer development funds that have been committed in a member country, which these funds are not needed directly by the specific member country, e.g. due to reduced demand for funding for projects in its territory, in other member-country or other euro area member countries due to high demand for project financing in their dominions.
If this transfer of funds is combined with the movement of labor from Eurozone/EU member countries which dispose high unemployment in their territories in other Eurozone member-countries that are in demand for labor and project supply surplus, will be achieved a reduction in total unemployment figure in all the Eurozone economy.
In addition, the European Commission with this system of transfer of development funds from one-member state to another will be able to influence, in addition to all others, the cost of living and the wage levels in its member countries on behalf of Eurozone citizens.
4. To achieve a homogeneous allocation of funds and to accelerate the increasing rates of investments in Eurozone member countries with aim to achieve greater growth rates in large areas of the Eurozone territory. Achieving in this way greater and faster convergence of the economies of Eurozone member countries.
5. The methodology, the methods of approval, control and acceleration of projects and investments, the fight against any state corruption and financial crime occurring in this type of management of development funds will be applied simultaneously and in the first year throughout the Eurozone, since all employees of all Independent Development Fund Management Authorities (IDFMAs) will have the same common working culture on all these issues.
6. With full administrative control of the nineteen (19) Independent Development Fund Management Authorities in the Eurozone as a whole under the Commission’s Development portfolio, and given that all of these IDFMAs will be fully owned by the Commission’s Development portfolio administration (having these IDFMAs in their entirety the same administrative relationship that the ECB has with the respective central banks of the Eurozone member countries) the European Commission can turn this portfolio into a Ministry of Development of the Central Government of the Eurozone.
More development and economic homogeneity in the Eurozone
In addition, the EU member countries that are not yet part of the Eurozone will must also create respective Independent Development Fund Management Authorities (IDFMAs) in their countries.
What we are proposing to the European Commission is the creation by an Independent Development Fund Management Authority (IDFMA) in each EU member country with the same administrative and organizational structures and as described in the above paragraphs for the Eurozone member countries.
The IDFMAs to be created by EU member countries (totaling eight (8) in number as well as EU member countries) will have the same administrative and organizational function as the respective Independent Development Fund Management Authorities (IDFMAs) (total Nineteen (19)) that will be in each member country of the Eurozone.
The difference between them will be that the Independent Development Fund Management Authorities (IDFMAs) of EU member countries will be reported to the individual development Minister of the EU member state’s government that belong, and not to the Commission’s Commissioner, Commissioner responsible for the Development portfolio.
The wage and operational costs of each Independent Development Fund Management Authority (IDFMA) of these EU member countries will be borne by the respective EU member state budget that it belongs to and not by the budget of European Commission.
The specific Independent Development Fund Management Authorities (IDFMAs) of each EU member state will be involved in 100% administrative and operational competence of the European Commission’s Commissioner responsible for the Development portfolio, when the EU-member country enters 100% in the Euro area (adoption of the euro as the official currency).
However, the administrative, the organizational and operational structures equally of the eight (8) Independent Development Fund Management Authorities (IDFMAs) of the respective EU member states will be identical to the corresponding nineteen (19) IDFMAs of the corresponding nineteen (19) member states of the Eurozone.
So that when the EU member countries enter the Eurozone it will be smooth the transfer of the administration of their respective IDFMA to the Commission.
Certainly, our proposal to the Commission for this type of organization and management of its development funds throughout the European territory will find a severe reaction from the governments of the Eurozone member countries, given the economic and political transfer of power which will be carried out by the governments of the Eurozone member-countries to the European Commission (Brussels).
But the Eurozone cannot move to a single economic, fiscal & tax policy and consolidation respectively, if it has not been able to fully control its public tax revenue in its territory (See Analysis with title-The Proper way to achieve the one and only Operating Budget of the Eurozone-I, published at https://www.liberalglobe.com, 27/12/2018) as well as the corresponding development policy which are applied and implemented at the same time in all Eurozone member-countries.
