Cohesion policy, the regional policy of the EU, aims at reducing disparities among Member states, by fostering growth and competitiveness of their economies through European structural and investment funds. Within the policy, Financial Instruments (FI) have increasingly been used in the last decades to channel spending to final recipients. Being a repayable form of help, Financial Instruments contribute to the sustainability of EU public finance. However specificities in their structure, when compared to grants, also raise new accountability issues.nIn much of the literature on the multi-level governance, the vertical and horizontal dimensions of the layered governance interactions within the EU have generally been analysed with reference to relations between different levels of government (from the EU down to the sub-national level) or between government actors. Under Cohesion policy, which is the paradigmatic case of MLG, the European Commission is ultimately responsible for Cohesion spending, but the actual management of expenditure lies within Member states and sub-national bodies, according to the principle of subsidiarity. The growing use of Financial Instruments introduces two elements that are less well appreciated in this strand of literature: first, the involvement of private (as well as public) sector actors as fund managers and, second the delegation of implementation functions to these.nThe present paper investigates the implications for EU financial accountability of the introduction of FI in Cohesion policy: on the one hand, the involvement of private operators, who incorporate private market principles in the management of implementation, triggers important consequences in terms of attribution of responsibilities and of adherence to policy objectives. On the other hand, emerging delivery structures and governance relations between new actors and the traditional ones (e.g. managing authorities in public administrations) are not captured in the current debates within MLG. The paper gives account of these trends with reference to questions of efficiency, effectiveness and accountability in EU spending. It analyses both issues of policy performance and problems related to the regularity of expenditure and presents an integrated conceptual framework for analysis.n
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