Auditors: EU Commission was 'generally weak' in handling bailouts

Take note – story published 8 years and 4 months ago

The European Commission (EC) was unprepared for the financial crisis, and its handling of bailouts for the crisis-hit countries was “generally weak” and inconsistent, according to a Tuesday report by the European Union’s Court of Auditors (ECA), reported LSM's Latvian-language service.

The auditors said that the analysis carried out by Brussels was incomplete and at times chaotic - and at that, several important documents are missing from the archives even now.

Many in Latvia perhaps still remember Brussels officials visiting Riga in 2009 and the following years of the economic downturn. The officials' task was to analyze the financial standing of Latvia and to decide what has to be done to balance budget income and expenditure and save the country from collapsing financially.

Now their work has been reviewed, and one of the main findings of the ECA is that the EC's approach was inconsistent.

The auditors "found several examples of an inconsistent approach to different countries", that were furthermore "difficult to justify [..] by specific national circumstances".

For example, the funds required to bail out the banks were accounted in the state budget deficit in the case of Latvia, but not Ireland and Portugal. It meant that Latvia had to cut budget expenses more than the other countries did. The structural reforms required weren't always corresponding to the existing problems too, the report said.

While Annika Breidthardt, a spokeswoman at the EC, said in response to the criticism that no one was fully prepared for the financial crisis and that the Commission learned from its mistakes. She said that there was a lack of resources to deal with the crisis and even though the EC admits that mistakes were made in the early programs the auditors said the approach had improved over time.

Breidthardt noted that the auditors reported that the goals of the program were reached in full.

The ECA report examined how well the European Commission managed the assistance provided to five countries — Hungary, Latvia, Romania, Ireland and Portugal — in response to the European sovereign debt crisis triggered by the 2008 financial crash.

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