The European Union funds constitute an essential instrument for the achievement of the EU objectives and policies. Flowing directly from the EU budget according to the allocation established by the Multiannual Financial Framework (MFF), EU funds finance several programmes and projects which promote EU policy goals in a variety of areas, ranging from agriculture to research and innovation. My contribution to the volume on Administrative Cooperation in the European Space analyses the different cooperation mechanisms in the management of EU funds, focusing on the legal provisions regulating the structural funds for the budgetary period 2014-2020 and, to some extent, 2021-2027.

The management of the programmes and projects funded can be carried out by different administrative actors. It can be the European Commission, through its departments or EU executive agencies (i.e. in direct management); or non-EU countries, international organisations, development agencies and other bodies (i.e. in indirect management); or it can be shared between the Commission and the Member States, entrusted with implementing programmes at national level under the supervision of EU institutions (i.e. in shared management). The European structural and investment (ESI) funds, which are the object of this study, are administered in shared management. Their operation implies the establishment of complex cooperative relations between different administrations and bodies, located at different levels of the European administrative space. For this reason, and for their overwhelming importance for the EU budget, these funds represent a particularly interesting case for analysing administrative cooperation in the implementation of EU funds policy.

The shared management of EU funds

The legal framework for ESI funds is established by the Common Provisions Regulation (CPR) and complemented by fund-specific regulations. The functioning of the ESI funds is a prime example of integrated or shared administration, where the European Commission and Member States have distinct yet interdependent administrative tasks. The Member States are under a clear duty to cooperate in the management of EU funds, stemming from the general principle of sincere cooperation set forth in Article 4(3) TEU. Moreover, especially relevant here is the obligation imposed in primary law to counter fraud and any other illegal activities affecting the financial interests of the Union (Article 325(3) TFEU). Additionally, policy-specific principles such as shared management, partnership, and complementarity require collaborative relationships between different actors at various governance levels.

The current regime is complex and relies heavily on an effective collaboration between the Commission and the Member States.  The existence of a plurality of levels in the management of EU funds entails frequent interactions between different public authorities in the decision-making process. Therefore, the management of EU funds is characterised by the strong presence, virtually in all its phases, of composite administrative procedures (with the consequent issues of accountability, liability and effective judicial protection identified in legal doctrine).

However, official reports highlight a chronic reluctance of the Member States to cooperate and properly enforce this policy. This is because EU funds policy is characterised by a fundamental tension between the collective interest of the EU and the interests of the individual Member States. On the one hand, the expenditure of large sums from the EU budget must be correctly deployed to achieve the objectives and priorities of the policy. Effective mechanisms for the application and enforcement of EU law are essential to ensure compliance and avoid mismanagement of resources, fraud and so on. On the other hand, Member States have an interest in maximising the allocation of EU resources in their territories and protecting their own financial interests.  Since the detection of financial irregularities in the national expenditure of funds may result in financial penalties for the state and in the withholding of further disbursement to particular projects, the individual Member State has an incentive to avoid these consequences in relation to projects conducted in its own territory.

Vertical cooperation in EU funds management

Vertical cooperation between EU and national authorities is inherent to the design and functioning of EU funds policy. This is evident in all four phases of the administrative procedure leading to the allocation of EU funds, namely: (i) the preparatory phase, which corresponds to the setting of the agenda, priorities and objectives; (ii) the implementation phase, which includes the selection of the projects and the disbursement of funds; (iii) the control phase, which consists in the reporting, monitoring and evaluation of programmes; and (iv) the financial management phase.

In the preparatory phase, this cooperation manifests as a dialogue between the Commission and national authorities to elaborate the strategic approach for fund implementation. The Commission’s approval of national Partnership Agreements and operational programmes significantly influences Member States’ discretion in implementation. The implementation phase involves systematic information exchange between national managing authorities and the Commission. This includes the establishment of computerized data recording systems and regular reporting on program implementation. The control phase introduces additional national actors such as Monitoring Committees, Steering Committees, certifying authorities, and audit authorities, all of which cooperate closely with the Commission in various capacities. In financial management and enforcement, the Commission’s power to penalize irregularities has been progressively strengthened. The procedure for suspending or cancelling payments includes safeguards for Member States, aiming to transform potential disagreements into a form of cooperation that reconciles diverging interests.

Horizontal cooperation between Member States’s administrations

The chapter also addresses horizontal cooperation between Member States’ administrations, which is less extensive but crucial for achieving policy objectives, especially in transnational projects and situations with a transnational element. This includes the shared management of transnational programmes, mutual assistance in control and enforcement, and the exchange of information and best practices through networks.

In particular, the operation of transnational projects often entails the establishment of shared management systems, with joint bodies composed of representatives of the different Member States participating in the programme. The mixed composition and role of these joint bodies in the administrative procedures pose issues of effective judicial protection, which have come to the attention of the Court of Justice in Liivimaa Lihaveis. Moreover, specifically in relation to the agricultural funds, EU legislation expressly provides for forms of mutual assistance (spontaneous or on request) between administrations of different Member States and even joint operations. Finally, forms of exchange of information or best practices are also common in the other ESI funds. The European Commission often plays a facilitating role, providing incentives for collaboration and networking, including financial support.

Conclusions

The analysis of administrative cooperation in the management of ESI funds has unveiled a rich and multifaceted reality of interrelationships involving a great variety of public authorities, both at the European and the national level. It has also emerged that EU funds policy encompasses all the forms of administrative cooperation typically identified in the literature, from simple information exchanges to more intrusive forms like joint operations, joint bodies, and mutual assistance.

Reflecting on the functions of administrative cooperation in EU funds policy, it appears that, while its fundamental objective is the effective implementation of EU law, cooperation in this context is intrinsically linked to protecting the EU’s financial interests and ensuring the correct allocation of resources. However, due to the tension with individual Member States’ financial interests, cooperation sometimes serves to balance conflicting interests and settle disagreements between national and EU authorities. A notable trend identified is the strengthening of cooperation in the preparatory phase, particularly through the use of conditionalities. This approach appears to anticipate potential conflicts between different actors and prevent them at an early stage. In this context, cooperation seems to extend beyond its traditional functions, serving as a tool for pursuing specific economic, environmental, and political objectives.

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Posted by Annalisa Volpato

Associate professor of EU law, University of Padua