EU criticizes Czech Republic for inefficiently drawing funds

In a document outlining the future priorities for EU funding for the Czech Republic, the European Commission has criticized the influence of political changes on government administration. The report also takes a strong stand on the country’s insufficient efforts to develop a more competitive economy.

Johannes Hahn, photo: archive of the Czech Government

The European Commission has put out reports for all EU countries, to highlight the focus of the investments of structural and cohesion funds in the next financial period from 2014 to 2020. The report for the Czech Republic, which Czech Radio made public on Wednesday, analyses the failings of EU fund use so far.

In an interview with Czech Radio’s Brussels correspondent Ondrej Houska, the EU Commissioner for Regional Policy Johannes Hahn emphasized a number of areas, which the Czech authorities should be focusing on:

“For the Czech Republic, like in all other countries, [the priority] should be the competitiveness of the economy, the innovation system, but also traditional infrastructure, in which further investments are necessary; the education system needs further improvements. But we also still have to tackle a weak administrative structure.”

The report criticizes the difficulties the Czech Republic has had with drawing and successfully administering EU structural funds, placing most of the responsibility on how much political changes affect the public administration personnel. Commissioner Hahn expressed his concern on this topic, but seemed optimistic about improvements in the future.

Photo: Barbora Němcová, Radio Prague International

“If there are political changes, there is also a wide-reaching change of civil servants. We need to see more stability, more robustness. In some areas you need certain knowledge and experience to deal with the demands of structural funds. So if the people [who were in charge of this] are replaced, it is like pressing the reset button. But I believe the Czech government is aware of this situation and together we can address this issue.”

This past spring, the European Commission suspended payments for most funding programs to the Czech Republic among suspicions of corruption and mismanagement. Commissioner Hahn has said that the main issue for the commission was the fact that the auditing and implementation for EU grants was linked, which created an obvious conflict of interest. Now, auditing of EU funding will be carried out by the Finance Ministry, to the satisfaction of EU authorities. The flow of funding has been renewed to the Czech Republic, and it seems that so far the main problem has been resolved.

“So far we are in agreement, we are fine. The changes have been made in a way that we had prescribed, but the real check will be in the next few months.”

But the report also criticized the insufficient quality of scientific and technological output from the Czech Republic, poor management of natural resources, and insufficiencies of the education market to meet the needs of the economy. The EU has also voiced a concern over inept usage of funding for regional projects, which is often administered by Prague and does not address the local needs.

Photo: archive of ČRo 7 - Radio Prague

In light of this year’s funding crisis, some critics in the Czech Republic have expressed doubt about the need for structural funds from the EU, which create greater accountability but also reliance on the European Commission. Regional Policy Commissioner Hahn strongly disagrees, and sees structural funds as needed resources for improving the competitiveness of the Czech economy.

“In terms of the necessity to have and use this money, I think there is no real discussion, because there are still a lot of investment necessary. For instance when it comes to university infrastructure, laboratories, research institutes and infrastructure in the Czech Republic. All of this is linked to the competitiveness of the economy.”