Gaming Environmental Governance? Bribery, Abuse of Subsidies, and Corruption in European Union Programs

Abstract

In order to incentivize different actors to comply with environmental laws, the European Union pays out US$65 billion a year in subsidies — three times as much as the United States. Although these subsidies are bound to certain prerequisites, this article demonstrates how farmers, businesses and corporations use bribes to circumvent these guidelines while continuing to receive subsidies. For this purpose, several recent cases of subsidy abuse are discussed within the scope of the literature review. It is shown that especially central and eastern European countries seem to struggle with deficiencies in the process of delivering cost-effective solutions to environmental challenges. Furthermore, the EU legal framework and cultural aspects regarding corruption are examined. It is also demonstrated that measures for the effective combat of corruption have thus far not been discussed in depth by researchers. Due to this identified research gap, a qualitative study, during which interviews with select compliance experts were held, was conducted. Based on the study's findings, the article suggests that compliance bonuses could be a valid approach to the elimination of corruption and subsidy abuse in the EU. It is argued that this innovative approach could improve current practices in central and eastern Europe, which are shaped to a large extent by corruption. In the light of rapidly progressing climate change, it is of radical importance that the European Union addresses subsidy fraud and how local agencies can enforce compliance, so that funds are used in a manner that is fully proportionate to the objective sought.