International

by SP Member of the European Parliament Dennis de Jong

The European Commission, the IMF and the European Central Bank only concern themselves with budget deficits and sovereign debt. They take no notice of the underlying problems. If they were to do so, they would put their efforts into tackling corruption and tax evasion.

In Brussels the entire discussion of the eurocrisis is stuck in a sort of tunnel thinking: if the weaker Eurozone countries could only impose austerity, and above all huge cuts in wages, everything would be fine again.

As if sovereign debt were the origin of the crisis, when everyone knows that it is the greedy and the speculators who caused it. This approach to the crisis in countries like Greece and Portugal is of no use whatsoever. The European Commission, the IMF and the European Central Bank concern themselves only with budget deficits and sovereign debt, paying no attention to the underlying problems. If they were to do so, they would put their efforts into tackling corruption and tax evasion.

According to the Commission, €120 billion is lost every year as a result of corruption. At the end of September, therefore, the European Parliament, on the initiative of myself and other Members, held an emergency debate with European Commissioner Cecilia Malmström. This turned out to be a waste of time. In earlier informal meetings, I got the impression that I had had some effect on a Commissioner who was determined to take a tough approach to corruption. But now she showed an extremely bureaucratic attitude: while the public in countries like Greece, Italy, Portugal and Spain are crying out for action, all they will get, at best, is a report in 2013.

This is a pity, because I had just called on her to become the European Commissioner for Corruption and Tax Evasion, which would enable her to offer leadership for an emergency anti-corruption plan. This would strengthen her position within the Commission, which is under normal circumstances one of a Commissioner’s prime concerns, as has been shown by all the ardent attempts made by our own Neelie Kroes to make something of her own rather light portfolio (the digital agenda). Yet in this case the answer remained – ‘wait until 2013’.

This attitude is of course unacceptable. If the Commission isn’t prepared to act, then the member states must shoulder the responsibility. As long as tax collection in the weaker Eurozone countries isn’t functioning, you’re wasting your time, like someone who tries to mop out a yard while it’s still raining. And as long as European funds are preyed on by fraud and the tender procedures don’t operate cleanly, these countries will continue to lose piles of money.

For an effective approach to corruption you need time. You have to alert the public to the problem and make use of independent media which have the perfect means, through their own investigations, to bring abuses to light. Whistle-blowers must be protected, and the entire legal system cleaned up: incorruptible investigators, officers of justice and judges are essential if people who pay or accept bribes are to be brought to book. If we don’t get started on that straight away, these countries will never get back on their feet.

Prime Minister Rutte has the chance during Sunday’s European summit to break through the tunnel vision afflicting the Commission and his fellow heads of government. I’m not confident this will happen, because no-one is uttering the C-word, Rutte no more than the rest of them. Is there then still a taboo on this?

Where there certainly is a taboo is when it comes to the multinationals’ tax evasion. During an anti-corruption meeting which I organised in the European Parliament on 11th September, a Portuguese social democrat colleague remarked that of the twenty biggest listed firms from his country, seventeen were established in the Netherlands. What this means is that Portugal misses out on the major part of what should be the tax revenues from these corporations, because the Netherlands and Portugal have agreed in a taxation treaty that companies established in the Netherlands will in principle pay their taxes only in the Netherlands, and only pay taxes in Portugal itself in respect of activities undertaken there. This means that they pay no taxes whatsoever in Portugal on earnings from their activities in the rest of the world. These are paid in the Netherlands. At the same time the Netherlands has such favourable rates of taxation for multinationals that they pay at most 5% tax on their profits, and often even less.

It is therefore ironic to consider that Rutte and his Finance Minister Jan Kees de Jager are up on their high horses when it comes to the need for spending cuts in the weaker Eurozone countries, while at one and the same time they are doing nothing at all about the leakage of tax revenues from these countries to the Netherlands.

In my view we don’t so much need a European Commissioner for Budgetary Affairs as Rutte proposes, but a European Commissioner for Corruption and Tax Evasion. At least, that is, if we do want to find a structural solution for the Eurozone countries, surely a duty that government leaders owe to their citizens. This will provide Rutte with a pleasant task during Sunday’s Brussels summit.

This article first appeared, in Dutch, on Sunday 23rd October on the website vk.nl