Thursday, November 15, 2007

Romania told to fix farm payments system or lose aid

EU Observer

The European Commission has given Romania until mid-December to fix the remaining problems with its farm payments system or face losing millions of euros in EU farm aid.

On Wednesday (14 November), the commission welcomed the progress made by the South-Eastern European country since October in putting in place the required controls over agricultural spending.

"We have told the Romanians that they have made good progress. We've looked at their report, we've looked at the [audit] report of Deloitte and we are pleased to see (...) that they will not make large scale payments in the short term and that they have put into place one of the IT modules," a commission spokesperson said.

But the commission also warned that Romania should fix the lingering IT system problems in order to avoid a provisional 25 percent farm aid cut.

Such a 'safeguard measure' is allowed under EU rules if serious shortcomings in the national farm payment system are discovered.

The spokesman said that the second IT module - there to ensure that payments are made correctly - contained a "certain number of deficiencies."

"Therefore, we've decided this morning that we will continue with the process for introducing the safeguard measures," he added.

Romania has been given another two additional weeks to fix its remaining problems.

"If by the 16th of December, they have got rid of the deficiencies in the IT system, then we will be able to stop the procedure for introducing the safeguard mechanisms. So if you like, they have one final chance to avoid provisionally losing a quarter of their farm payments," he said.

The possibility of holding aid back was first mentioned in a letter sent by the commission to Romania on 10 October. The letter said that the country should reverse the shortcomings in its administrative and financial control system before the payments to its farmers, scheduled on 1 December, would take place.

To prevent this scenario from unfolding, the country would have to make its farm payment scheme, designed to prevent fraud, fully operational in time. More specifically, two objectives had to be reached.

First, it had to put into place and properly test two software modules to make sure that payments are done properly. Secondly, any large payments to farmers before the required controls were fully functioning, were to be avoided.

In a letter of reply sent to the commission on 8 November, Romania set out the measures it had taken, and included an audit report.

The audit report concluded that despite significant improvements, the overhaul of the system failed, stressing that additional adjustments were necessary for one of the two required software modules.

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