European Affairs

Transparency is not an end in itself. Its aim is to promote the long-term success of effective, time-tested policies by generating public support. This may sound easy, but it is increasingly difficult because the public is tending to become more demanding and less patient. Citizens want to have value for their money. They pay taxes and demand good government in return.

Whenever high expectations are shattered, citizens express their outrage at the ballot box. So, every political institution should be aware that genuine transparency must be an integral part of its policy.

The political institutions of the European Union are under permanent scrutiny. The physical and mental distances between the European public and the EU institutions tend to create gaps in both policy and perception. Brussels is regarded as a far away, inaccessible place, where all sorts of obscure measures are agreed.

The real Brussels, on the other hand, wants to do good for people, but often feels misunderstood. Brussels does not get any credit for the fact that the EU single market is creating millions of extra jobs or that citizens can travel freely across Europe at low cost. But whenever things go wrong, national governments or the media point their fingers at Brussels as the playground of restless paper pushers.

If Brussels tried to hoodwink the general public, the European Union would risk collapse. Secrecy in government would erode the legitimacy of the European Union, and lack of accountability could make public opinion feel so deceived that it finally rejected the European project altogether. Closed government would only serve the cause of populist movements that seek the European Union’s demise.We cannot let that happen.

That is why I plan to launch a European Transparency Initiative, which aims to promote greater openness throughout the European Union. I shall submit a White Paper to the Commission in the spring and organize a Round Table Conference at which the principal interested parties will exchange views and put forward concrete proposals. The European Transparency Initiative will be closely coordinated with the UK government, which will hold the EU Presidency in the second half of 2005.

Proposals for specific, possibly legislative, action at EU level, together with recommendations to member states and other stakeholders, could be presented this autumn and discussed with the European Parliament.

The European Transparency Initiative starts from three assumptions:

1. While transparency is needed to ensure the proper functioning of the decision making process, a fully open system would turn the EU institutions into unproductive talking shops. Policy makers need space for private reflection. In the preparatory stages of legislation, for example, decision-makers must be able to discuss freely and evaluate information before submitting a proposal.

Other interested parties may provide data, suggestions and position papers, but in the end those politically responsible have to make a proposal and defend it in Parliament. If there were no space for reflection, Parliament would engage in the preparatory stages of legislation and government would break down because the separation of powers would be infringed. One has to keep deliberations as open as possible, but also to strike a balance.

2. Transparency is needed to gain the public’s trust. Political institutions cannot perform without public confidence. Throughout history ambitious empires have tried to set up political institutions and conduct policies without taking account of public opinion. In many cases, people were promised happiness, even against their will. Model states were designed to implement “policies of good intentions.”

Intellectuals, in particular those far away from the scene, admired the model states and their leaders. But on closer inspection they were no more than houses of cards.Why? People did not believe in the system any more, in spite of the promising statistics and daily “good news” purveyed by the state-controlled media. Legitimacy is only ensured when political institutions are exposed to transparency, when people know that what they see is what they get.

3. Transparency protects policy makers against themselves. The fight against fraud and the abuse of public funds should be a permanent activity of every public administration. Policy makers are normal people. They may not be inclined to listen to the inner voice of evil, but it is always better to install a set of tangible guarantees.

Sometimes political institutions are on the slippery slope before they are even aware of it. Transparency helps keep public administrations on the right track and prevents human weaknesses from prevailing.

In the light of these assumptions, the European Transparency Initiative would focus on two themes: to increase financial accountability and to strengthen personal integrity and institutional independence.

Firstly, financial accountability is the linchpin of transparency in public administration. The EU budget totals about €100 billion, of which 80 percent goes to two policy areas, agriculture and structural development funds. In both areas the European Union and member states are jointly responsible for the allocation and spending of the financial resources. Many member states, however, regard European subsidies as other people’s money and sometimes turn a blind eye to possible misuses. That is wrong. “European money” is taxpayers’ money and should be spent just as well as national tax revenues.

We should, for example, request governments to allow open access to information on the final beneficiaries of European funds, which is not now publicly available in most member countries. I was amazed to learn about this information gap at European level, because in my country, Estonia, data on recipients of agricultural and rural development funds have been fully available on government websites since 2000.

Denmark introduced a similar system in June 2004, and the UK recently announced that such data would be accessible under the Freedom of Information Act. This information should be made available in all EU member states.

There is a similar lack of information on the distribution of EU structural development funds. Information to the general public is often provided simply by erecting billboards at the sites of projects. Nobody monitors the quality of the information. The Commission should improve the transparency of the structural funds as it prepares for the next programming period, from 2007 to 2013.

Proper information and public awareness are needed to prevent the evil phenomenon of fraud, or at least limit its scope. The fight against fraud lies at the heart of my activities because the European Union is spending taxpayers’ money. The Commission could try to raise public awareness of fraud through public debate and urge whistleblowers to tip off anti-fraud authorities. There is a free telephone line for this purpose in all EU languages, but it has only been used 32 times over the past year.

Secondly, personal integrity and institutional independence are cornerstones of good governance and require permanent control. Members of the Commission try to ensure personal integrity by respecting a code of conduct and providing a declaration of financial interests, both of which set high standards. The Commission could perhaps urge other institutions of the European Union, and even in the member states, to set the same standards. Members of the European Parliament are currently obliged to provide a declaration of financial interests, but the information is very sketchy and some members do not supply any at all. There is definitely room for improvement.

The integrity issue should not be limited to public institutions. Organizations, groups or persons in the ambit of the European institutions that offer advice, represent clients, provide data or defend public causes should also be accountable. There is nothing wrong with lobbies, because each decision making process needs proper information from different angles. There are now about 15,000 lobbyists in Brussels, and around 2,600 interest groups have permanent offices there. Lobbying activities are estimated to generate €60 million to €90 million in annual revenue. But transparency is lacking.

There is no mandatory regulation on reporting or registering lobbying activities, even though they can have considerable influence on legislation, particularly when it is technical. Registers provided by lobbyists’ organizations are voluntary and far from comprehensive. They do not provide much information on the specific interests represented or how lobbying is financed. Self-imposed codes of conduct have not been widely adopted and lack serious sanctions for misconduct.

The same goes for Non-Governmental Organizations, many of which rely on public funding, some of it from the Commission. Every year the Commis- 23 Winter/Spring - Volume 6, Numbers 1 & 2 - EUROPEAN AFFAIRS sion channels over €2 billion to developing countries through NGOs. The websites of some NGOs that receive funds from the Commission describe one of their main tasks as “lobbying the Commission.” Or to put it another way, “the Commission is paying lobbies in order to be lobbied.”

The European Transparency Initiative seeks to improve the current registry of NGOs and ensure it contains financial information. People have a right to know how their money is being spent, including by NGOs. A lot of money is currently channeled to “good causes” through organizations about which we know very little.

These are all questions and suggestions that are open to discussion as we prepare the European Transparency Initiative. All interested parties are allowed to ask questions and to raise issues. There are no taboos. The White Paper will be only a starting point. There will be enough time and plenty of occasions for consultations. Transparency is not a once-only achievement. It is a permanent process.

Siim Kallas is Vice President of the European Commission and Commissioner for Administrative Affairs, Audit and Anti-Fraud.

This article is based on a speech delivered to the European Foundation for Management at Nottingham Business School in England on March 3 2005.


This article was published in European Affairs: Volume number 6, Issue number 1-2 in the Winter/Spring of 2005.