THE PROCESS WITHOUT AN OWNER: ESTABLISHING THE EU FUNDS MANAGEMENT SYSTEM IN ROMANIA (2011 - 2015)

Cristian GHINEA

Bucharest University of Economic Studies, Faculty of Administration and Public Management, Bucharest, Romania

ABSTRACT The aim of this paper is to analyze the management system of EU funds in Romania, as it has evolved in the two financial exercises from the EU accession 2007 - 2013, respectively 2014 – 2020, with a clear accent on the evolution of the central public administration system. Romania has started its first financial exercise with a diluted decision-making system, with Managing Authorities spread across the line ministries. It evolved, rather following crises and harsh political decisions than clear and coherent plan, towards a system in which the Managing Authorities are subordinated to two ministries: Ministry for EU Funding and Development Ministry.

KEYWORDS EU Funds, Managing Authorities, Management System, public administration.

INTRODUCTION

In 2016 I had the honor to serve as state adviser within the Romanian government (led by the independent Dacian Cioloș) and one of my responsibilities was to coordinate several ministries dealing with EU Affairs; later on, I was appointed minister for EU Funding. In both capacities, I had to deal with a complex and unwieldy administrative system in which the responsibilities were not clearly defined. As Minister for EU Funding in 2016, I’ve had to opportunity to closely watch and analyze the entire process from within and from the top, having to deal with critical situations and delays. Decisions had to be taken in order to adjust the system, but there were serious limits given the timing - too late in the process of implementing new EU budget for substantial changes. Knowing the current state of the affairs, I was curious to observe the beginning of the process and all the factors that had a key role in organizing it. So, following my experience as public official, I started this academic research in order to have an overall explanation on how the system has evolved until the point I was directly involved at the executive level. I am convinced that Romania needs a radical reform if it is to better use the money from the EU in the future budget (2020 - 2027) and I intend to use this academic analysis to propose policy recommendations. I remained involved in this topic as a Member of the Romanian Parliament, where I represent an opposition party. I am currently a vice-president of the party and I am what in UK they call a "Shadow Secretary" for Development and EU Funding from my party.

 Corresponding author. E-mail address: [email protected] 106 My research focuses on analysing the inside resorts of these transformations, evaluates the system efficiency and draws conclusions for the future programming period (2020 - 2027). To follow these objective, I’ve set up interviews with officials and decision makers involved in the programming process and administrative management and I’ve analyzed key official documents such as:  Government memorandums submitted by the Ministry for European Affairs (MAEur) and then the Ministry for European Funds (MEF), during 2011 – 2015, when the inter- ministerial consultations for 2014 – 2020 programming were launched and they took place.  Minutes and agendas of inter-ministerial committees organized during this process.  Reports of the special consultants hired with technical assistance contracts to assist the coordinating minister in drafting the management system for 2014 - 2020  Key legislative acts that have been starting points in these administrative transformations. I had access to an archive of official documents that, to my knowledge, hasn’t been object for academic research before. In order to contextualize and better explain from an academic point of view the substance of these documents, I’ve concluded several interviews with officials from the institutions mentioned in the paper and with independent experts on the EU funds matter.

General remarks on EU regulations

336 billion Euro, representing 33% of the EU budget, have been dedicated to the Cohesion Policy in 2014 - 2020 multiannual EU budget. Of these, 21,8 billion were put aside for Romania, a country that suffered in its first 7 year cycle (2007 – 2013) of chronic incapacity to spend the EU money, huge delays and low capacity to develop proper projects. The EU framework demanded a coherent multiyear policy cycle, strategic thinking and clear prioritization for spending the cohesion funds. None of these was specific to the Romanian central public administration. The PhD thesis I`m working on tells the story of this mismatch between two very different ways to think and implement public policies. In this preliminary paper I will focus on the management of the EU funds system and the way the internal consultations took place in Romania, from the European Commission (EC) launch of the EU wide dialogue on the future Cohesion Policy in 2012, until 2015, when the Romanian Government adopted the final decision on the Partnership Agreement and the structure of the management system. The Commission’s Proposal1 emphasizes the so called ”Thematic Objectives” (TOs): the key policy objectives for the Cohesion Policy: ”Regarding the Cohesion Policy, every action financed must be linked to a particular thematic objective. Reporting (on financial progress, indicators etc.) can also be linked back to particular thematic objectives2. Thus, the EU was reorienting the Cohesion Policy towards the following major themes: 1. Strengthening research, technological development and innovation. 2. Enhancing access to, and use and quality of, information and communication technologies 3. Enhancing the competitiveness of small and medium-sized enterprise, the agricultural sector (for the EAFRD) and the fisheries and aquaculture sector (for the EMFF) 4. Supporting the shift towards a low-carbon economy in all sectors

1 The European Commission presented the new framework in January 26, 2012 in a conference with all the relevant Romanian ministries and agencies. The following summary is based on the presentations made at this conference by the EC`s representatives. The conference title: ”Lansarea la nivel naţional a procesului de programare a fondurilor europene destinate unei dezvoltări inteligente, incluzive şi durabile 2014 – 2020” and presentation <<“Ambitious but realistic” proposals issued by the Commission in June 2011 for the Multiannual Financial Framework (MFF) 2014-2020>>. 2 Idem, pg. 6

107 5. Promoting climate change adaptation, risk prevention and management 6. Protecting the environment and promoting resource efficiency 7. Promoting sustainable transport and removing bottlenecks in key network infrastructures 8. Promoting employment and supporting labour mobility 9. Promoting social inclusion and combating poverty 10. Investing in education, skills and lifelong learning 11. Enhancing institutional capacity and an efficient public administration Regarding the institutional arrangements, the Commission had stated that “Operational Programs will constitute the main management and monitoring unit under the Cohesion Policy. Member States will have the flexibility to choose the appropriate level of programming (...). Operational Programs with support from the Cohesion Fund shall be drawn up at national level. The main unit for management and reporting within an operational program shall continue to be a priority axis3. Thus the EU money were to follow a clear national policy cycle imposed by the EU itself, but the institutional arrangements were to be settled by each Member State. Moreover, the EC involvement in the day to day management decreased compared with the 2007 - 2013 period, as shown by the decision to grant the European Commission only an observer role in the Monitoring Committees of each Operational Program (it enjoyed veto power previously)4. I will develop this topic in my PhD thesis. As for the scope of this paper, it is important to note that EU established clear policy goals, but let the decision about the institutional arrangement to be made by the Member States, with minimal involvement from its side.

A description of the Process in the Early days. The beginning of Ministry for European Affairs (MAEur)

Romania started managing the Cohesion Funds 2007 - 2013 through a structure called The Authority for Coordination of Structural Instruments (ACIS), while the Managing Authorities (MA) were subordinated directly to the Line Ministries (e.g.: MA Transportation, subordinated to Transportation Ministry; MA Environment, subordinated to Environment Ministry and so on). During the first years, the general assumption was that EU funds were to function on a sort of autopilot, without any top level political input. Surely, this proved to be a huge mistake. ACIS was too weak in the administrative and political pyramid, as it was led by a Secretary of State that had no real political leverage over the ministers that it was supposed to coordinate. Between 2010 - 2011, this administrative model had shown its limits, as weekly scandals concerning the low capacity of the country to absorb EU funds were occuring in the Romanian media. Who was to blame for this situation? Apparently no one, since the head of ACIS was traditionally a second level official unknown to the public opinion. Traian Băsescu, the president at the time, decided to step-in and lobbied the government that he was controlling to appoint Leonard Orban in charge of the EU funds. Orban had previously been the first EU Commissioner from Romania and at the moment was presidential advisor on EU Affairs. He carried out some credibility in Brussels, so Băsescu bet on his capacity to convince the EU Commission to allow some of the Operational Programs to continue, as these had been suspended several times until that date. A new structure – the Ministry for European Affairs (MAEur) - was to be created, taking over ACIS. Here is the reasoning behind the ministry’s founding, as stated in the Government Emergency Ordinance5:

3 Idem, pg. 17-18 4 Delia Ciorogariu, "Regional Policy of the European Union - Theories and Practice", Academy of EconomicStudies Phd Thesis, 2011 5 Emergency Ordinance no. 78 from September 21, 2011

108 "Considering the low degree of absorption of structural and cohesion funds, it is imperative that the Ministry of European Affairs co-ordinate the process of absorption of funds in order to accelerate this process and remove any malfunctions. (...) Taking into account that the failure to adopt immediate measures by emergency ordinance would lead to real difficulties in the optimal functioning of the Romanian Government's relationship with the European structures, considering that the mentioned elements are of public interest and constitute an extraordinary situation…”. According to its founding act, MAEur "fulfills the role of coordinating authority for structural instruments, having the responsibility to coordinate the preparation, development, harmonization and functioning of the legislative, institutional, procedural and programmatic framework for the management of structural instruments”. MAEur had two major responsibilities regarding the EU cohesion funds:

To coordinate the funds for 2007 – 2013, while solving the systemic crises inherited

MAEur

To prepare the programming for 2014 - 2020

The scope of our paper regards the latter point, but occasional observations regarding the former point shall be included, when it is relevant in the discussion. Since the launch of the intergovernmental consultation process for the 2014-2020 programming, MAEur had publicly assumed the role of coordinator, as proclaimed explicitly at the launching conference in January 26, 20126. The role of ”coordinator” is traditionally blurry in the Romanian administration. The public institutions understand the subordination as a clear hierarchical relation while the so-called ”coordination” tends to be largely ignored. The memorandum proposed by the MAEur itself shows the limits of this sort of coordination. Here is the official document diagram of the process: Management of the programming process7:

6 Delia Ionică, MAEur official, process coordinator, presenting: "The methodological guidelines and the timetable for the preparation of programming documents and the institutional framework for cohesion policy 2014-2020", At the conference: "Launching the programming process of European funds for smart, inclusive and sustainable development - 2014-2020", January 26, 2012. 7 Annex 1 to the CIAP Regulation, adopted in July 19, 2012

109 THE ROLE OF VARIOUS INSTITUTIONS IN THE PROGRAMMING PROCESS MANAGING AUTH/ MANAGING MAEur/ ACIS INTERMEDIARY AUTHORITY AUTHORITY  coordinate, draw up, set the timing of actions  proposals to  elaboration  Operational Program MANAGEMENT the  horizontal level coordination Government coordination  submission of  coordinate the  submission of documents to ACIS consultation documents to ACIS  consultations process  consultations  coordinate the negotiations with the Commission Line Ministries, Regional Development Agencies, Local / MANAGING AUTH/ Regional Public MA/ MAEur - ACIS INTERMEDIARY Authorities, Economic, AUTHORITY Social, Academic, and Civil Society CONTRIBUTION Organizations (data, experience)  Negotiations with EC  Specialist structures suggestions  Proposals to the within ministries Government  National public  Local / regional public organizations authorities  ADRs  Organizations in the  Local authorities economic, social,  Igniters /beneficiaries of academic and civil major projects society MANAGING AUTH/ MANAGING IMPLEMENTATION MAEur INTERMEDIARY AUTHORITY AUTHORITY

In order to organize the inter-ministerial consultations it had to "coordinate", MAEur had proposed an organizational scheme around an Interinstitutional Committee for the elaboration of the Partnership Agreement (CIAP), including 16 ministries and 11 other central government agencies and institutions7. Under CIAP were functioning several other committes:

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One third of the members of these consultative committees were to be academic partners or active members of the civil society, like NGOs, foundations, unions, business associations, chambers of commerce, consultancy firms, big investors, banks and other business associations. Unfortunately, this arborescent structure proved to have had an informative role rather than a real deliberative function in the process.

"It was important for everyone to be at the table, to create a framework for dialogue. Only by doing so, the frustration can be expressed, that is why this was planned wrong all along." – MAEur official in an interview with the author.

Moreover, MAEur had developed the working rules in sucha way that its authority and ownership of the process dissipated rather than grew. The CIAP Regulation, adopted on 19 July 2012, stipulated that the MAEur was to provide the CIAP presidency, secretariat and coordination, while for all the other thematic, consultative and regional committees, MAEur shared responsibility equally with a line ministry. Thematic advisory committees were organized on sectoral domains and each was coordinated "in partnership" by the MAEur and with the respective line ministry, for example, CCT Transport "is coordinated in partnership by the Ministry of European Affairs and the Ministry of Transport and Infrastructure also provides the secretariat of the committee8. There were ten such thematic committees, so the MAEur coordinated and provided the secretariat with ten line ministries. In addition to these sectoral committees, there were also two consultative committees: The Advisory Committee on Regional Development and the Advisory Committee on Territorial Cohesion. Both were coordinated in partnership by MAEur and the Ministry for Development (MDRAP), so obviously there was an overlapping of competencies between the two. Furthermore, there was also the Regional Development Council, one for each of Romania's eight development regions.

8 Idem, pg 5 - 6

111 A baroque consultation structure has been created in which the MAEur executive authority has been diluted, with the probable and acknowledged intention that everyone should be on board. All the verbs9 used by the MAEur to self-establish its powers underlined its character of a supporting authority providing expertise, rather than public policies decision-maker. An explanation of this self-limitation shall be included in the conclusions section of this paper: What was CIAP doing according to MAEur: . "Organizes consultations and negotiations within the CIAP to obtain the partners' agreement on the thematic strategic objectives of the Partnership Contract/ Agreement and the specific objectives of the programming documents; . Ensures ex-ante evaluation of programming documents, including strategic evaluations. . Drafts the final draft of the Partnership Contract / Partnership Agreement and, in collaboration with the authorities with implementing responsibilities, the programming . documents, taking into account the contributions of the partners and the remarks and comments of the European Commission; . Submits to the Government, for endorsement, final drafts of the Contract / Partnership Agreement and the programming documents; . Participate with the authorities that has implementation responsibilities in the negotiations with the European Commission, for its approval of the Partnership Contract / Partnership Agreement and of the programming documents; . Develops the Communication and Promotion Strategy of the Partnership Contract / Agreement and Programming Documents and coordinates the implementation process." The same CIAP Regulation proposed by the MAEur has stated a consensual decision-making and a quorum of two-thirds for the working sessions. According to this regulation, CIAP meetings could only take place in the presence of ⅔ of the total number of members. If the quorum didn’t constitute the meeting could be rescheduled, without a participation limit. Decisions were to be taken by consensus, but if no consensus was reached, the simple majority rule applied. There was also a complicated procedure for written consultations, which apparently required the agreement of all parties, but a last paragraph (Article 8 (8) of the Regulation) de facto canceled the possibility of blocking, saying that: “in the absence of a written reply from the members sent to the permanent secretary within 5 calendar days from the (re) transmission date, the documents shall be deemed to be agreed.” The process has been designed so that it could not be blocked by the lack of participation and involvement of other ministries and authorities which were part of the committes. But in the case of involvement, the consensual decision would completely annul the role of the MAEur and the minister's ability to decide on the process he "coordinated". When it came to the policy substance of the intergovernmental consultations, the government memorandum (submitted by MAEur) made a proposal which was to have serious consequences about the capacity to reform the system: the (then) current Managing Authorities for the Operational Programs were in charge to prepare the documents and set the agenda for the future: “Until the establishment of the subsequent CIAP programs to be funded in the upcoming programming period, i.e. until the appointment of future Managing Authorities, preparation of future programming documents will be ensured by the current Managing Authorities, in

9 idem, pg. 7

112 cooperation with Intermediate Authorities and other relevant institutions on various areas of competence. The permanent coordination of the activities held at the level of the structures involved in the programming process will be carried out by the Programming Group consisting of the coordinators of the Managing Authorities or of the programming departments within the Managing Authorities and coordinated by MAEur10. According to the officials we interviewed, the Managing Authorities were focused on functioning to manage the 2007 - 2013 programs and they showed limited availability to work for the preparing the future period. Moreover, when some energy was invested in programming exercise, the default position of the Management Authorities was that nothing should change. Thus MAEur created some veto players11 in the system it was coordinating. CIAP, which was supposed to be the main consultation point for the process only met twice in 2012, on August 23 and November 2. Analyzing the minutes of these meetings it is visible that the process is largely one way: MAEur informing the ministries and agencies about its plans and discussions with the European Commission, with very limited input from the rest of the administration. The whole consultation process has shown lack of interest and ownership from line ministries or, at least, from the political leadership of these ministries. Sectoral public policy strategies on which the Operational Programs should have been based were delayed or had only been formally ticked, which has forced MAEur to come with a memorandum in the government to request more serious involvement from the line ministries. The same has happened on the so-called ex-ante conditionalities - conditions that had to be fulfilled by December 2016, otherwise leading to the suspension of EU funds. There were several such Government memorandums adopted by the government in 2012 – 2015 demanding the political involvement of line ministers in solving this critical issue. The same happened in 2016, when most of the conditionalities were resolved last minute, MEF permanently pushing line ministries under the mandate of the author of this paper. I will elaborate the work method of line ministries on sectoral strategies and ex-ante conditionalities in my PhD thesis - the subjects are relevant for the administrative capacity to direct European funds towards strategic policy objectives. Back to the working of MAEur, the political turmoil of 2012 made its mark on the efficiency and the credibility of the entire project. Leonard Orban, the Minister for European Affairs, was a protégé of the Romanian president Traian Băsescu, in-office at the time. Although he was seen as a non-political figure, a technocrat with credibility in Brussels, Orban’s position in the Government and his capacity to lead the process were depending on the support of the President. And it was the President himself who was at the center for that year long political crisis. In April 2012, the Democrat-Liberal Party Government (PDL – the party that had won the presidential election) fell after a negative vote in the Romanian Parliament. The popularity of the President and of PDL were low following the austerity measures taken during the Government’s mandate. Several PDL Members of Parliament defected to a united opposition block, called the Social Liberal Union (USL), which brought together the left-wing Social Democrat Party (PSD) and the right-wing National Liberals (PNL). Having no other option, Traian Băsescu has accepted to appoint an USL government led by the social democrat leader Victor Ponta, which was voted by the Parliament. Victor Ponta kept Leornard Orban as Minister for European Affairs, but his position was weakened since the new government was openly hostile to the President and most of the line ministers were not seeing Orban as being on their side (as it was previously the case). Ponta also appointed as his special

10 Memorandum adopted by the Romanian Government on June 8, 2012 at the proposal of the minister of European affairs, Leonard Orban, with Theme: "Approval of the actions and documents regarding the preparation of the access and implementation of the European funds in the period 2014-2020", p.4 11 Here and somewhere else in this paper we use the veto player concept in the sense of George Tsebelis, ”Veto Players: How Political Institutions Work”, Princeton University Press, 2002 113 adviser Eugen Teodorovici, a member of the Parliament from his party with long experience in the EU funds area, as he previously had worked as director of the ISPA12 before 2007 accession. After new conflicts between the President and the Government and with USL`s popularity at all time high levels, the opposition started the procedures to impeach the President in the summer of 2012. The USL controlled Parliament voted to impeach the President on July 6 of 2012, but this was not the end of the political crisis, as The Romanian Constitution stipulates that the impeachment must be validated through a referendum. Băsescu’s supporters boycotted the referendum and USL failed to get enough Romanians to vote thus the referendum was invalided and Băsescu came back as head of state. This chaotic evolution made the government function as a caretaker with a weakened general capacity to think and execute long term strategies, essential for programming the 2014 - 2020 EU funds. On December 9 2012 parliamentary election, USL won an overwhelming majority, which forced President Băsescu to appoint again as prime-minister his archenemy Victor Ponta. The second Ponta government brought the dismantle of the Ministry for European Affairs, at the end of 2012. However the idea to have a separate ministry to deal with EU funding was actually strengthened in the new formula: Ponta created the Ministry for European Funds (MFE) and appointed his trustee Eugen Teodorovici as minister. The short lived MAEur was thus dismantled, with its European Affairs wing to be moved back to the Foreign Affairs Ministry and its EU funds wing being elevated to the level of a separate ministry. The newly created MFE took over the same role as coordinator of the 2007 - 2013 EU cohesion budget for Romania and also coordinator of the programming process for 2014 - 2020. However the political importance of the new ministry increased due to Teodorovici`s influence around the prime-minister. The new minister had also a different style, being more assertive in the relation with his colleagues in the cabinet and taking over personally the task of obtaining political support for the changes he wanted to make.

The first real centralization of the Managing Authorities

MAEur had been ineffective because it had a coordination role over the Managing Authorities (MA) with no real leverage over them, as these remained subordinated to the line ministries. The paradox was that with MAEur, the system had a new institution which was seen as responsible for the absorption of the EU funds but not actually in charge of the system.

”We thought initially that bringing the old ACIS to the ministerial level we will increase the capacity of the system and create a political leverage. It was a desperate move back in 2011 because the Operational Programs were suspended and it was a sort of a deal in Brussels with Basescu and Orban to have someone in charged at the high level. But after we created MAEur, Orban was receiving all the criticism, it seemed like we were guilty for not performing but we had no actual leverage over the Management Authorities. We were accountable for the mistakes made by others. We felt the need to take over the Management Authorities under our umbrella but it was impossible politically under Orban. Teodorovici managed to do this because he had a stronger political backing due to his relation with Victor Ponta” (director in MAEur, later in MFE, interviewed for this paper)

12 Instrument for Structural Policies for Pre-Accession (ISPA) was a financial instrument used but the EU to assist its future members to prepare for accession. In Romania, it dealt mostly with infrastructure and environment. Teodorovici experience at ISPA was crucial, according to one of out interviews in the later establishing of the Operation Program Large Infrastructure (POIM) for 2014 - 2020, which also centralized infrastructure and environment projects. 114

However, Teodorovici’s new job was not an easy one either, as new public scandals appeared on the agenda in 2013 with some Operational Programs being suspended and with the absorption rate being critically low. Following these critical moments, Teodorovici had managed to convince Ponta to allow the transfer of some Managing Authorities to the MEF, in 2014. The transfer process was not lean, nor lacked incidents, as each line minister was discontent with this decision to abandon the resource of funds and thus of influence. The biggest problem was at the Ministry of Transportation, a powerful and traditionally key ministry in the Romanian government. For MEF to take over MA Transportation from the Ministry of Transportation required two events according to an interview with a former MEF official who witnessed the events: a) A major new blockage linked to the EU funds managed by MA Transportation, which again showed the vulnerability of the system: on the political responsibility side of the MEF and, on the other hand, on the true power of another ministry. b) Dan Sova's exit from the government. Șova was minister for Projects of Infrastructure and a politically powerfull figure. However, he was accused of corruption by the National Anticorruption Directorate and had to resign from the Government. After his departure, the new minister of Transportation gave in to Teodorovici's persistence.

"Teodorovici has clearly stated that MEF must have subordinated AMs and began to take them gradually. The first were MA Competitiveness and Human Capital, which worked the worst, had a very poor absorption and was a clear justification. Then he convinced Ponta to take over AM Environment and MA Transport. While Sova was there, he did not want to hear about that, plus the good relationship with Ponta he had. At the Ministry of Environment there was a Hungarian minority minister who gave up relatively easy (even his people were surprised how easily they gave up)”. - interview with former MEF official

However, not even Teodorovici could complete the transfer process because the largest MA – Regional Operational Program (POR) was subordinated to the Ministry of Development (MDRAP). MDRAP controls all funding that supports the local councils and city halls in the country, so it is the most politically powerful minister in Romania. The general tendency is for political parties to name important political figures within the party to lead MDRAP. This is an unwritten rule of polics in Romania: who controls MDRAP controls the party apparatus in the territory, so the political base. Victor Ponta appointed Liviu Dragnea to MDRAP. Dragnea was number two in PSD, a Ponta rival- collaborator who succeeded in replacing him at the party's presidency later on. It is not clear whether Ponta and Teodorovici have tried or not (in order to avoid a conflict with Dragnea) to take over MA POR from MDRAP, as additional interviews are needed to clarify this point. It is, however, the key point of the system: as will later be seen in this paper, the MEF was not even then able to take over the management of regional funds from MDRAP, so that Romania has de facto until today a double-headed leadership of the system European funds.

Preparing the management system for 2014 - 2020: the political limits of the real centralization

The present paper has covered until this point the way in which initially MAEur had centralized the ”coordination” function for spending the 2007 - 2013 Cohesion Funds in Romania. Later on the MEF took over a considerable share of the Managing Authorities, continuing and giving real substance to this centralization process. At the same time, the government was working on the Partnership Agreement for 2014 - 2020 funding and a decision was to be made about how the management system was going to be drafted. By July

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2012, MAEur prepared a very interesting document in which it proposed13 five scenarios for organizing the management system. In a diplomatic manner, the document stated the necessity to reform the system, stating that ”it is necessary to consolidate the national coordination mechanism for managing the EU funds and to eliminate the serious deficiency from the current system14. Moreover ”the current approach to the implementation of structural instruments has encountered sometimes insurmountable difficulties in ensuring horizontal coordination and the existing structures have shown low administrative capacity, failing to overcome the difficulties encountered in implementation15. The MAEur therefore describes five working scenarios (the wordings of each scenario are the original ones in the MAEur document):

1. Operational programs and management distributed at the level of ministries

2. Maintaining 7 operational programs and single coordination

3. Limited number of Operational Programs and Single Coordination

4. Multiply the number of OPs and distributed management at the level of ministries

5. Reduced Operational Programs and double-headed coordination

Scenario 1 was in fact the continuation of the existing situation, with each line ministry controlling one MA, remaining the same structure. Scenario 2 would have been the maximum option, with all MAs passing through the MAEur (although in the name of the scenario there is talk of "coordination," in the description of each of them it is clear that the MA should be at MAEur. Scenario 3 would be something similar, but with fewer Operational Programs. Scenario 4 involved a radical change in the management vision of the European funds system, and it was obviously only a theoretical possibility, as there was no serious debate on the regionalization of Romania. Scenario 5 was actually the proposal supported by Orban, who, according to the interviews, knew that it would be very difficult for the MAEur to win a battle with MDRAP to take over the MAs from this ministry. After Orban's departure from the government, Teodorovici gradually reached this scenario 5, handing over the MAs from the 2007 - 2013 period, which corresponded to the double-headed centralization MFE - MDRAP, according to the scenario 5 elaborated by Orban. This shows that he intelligently assumed the political limits in which he could move himself if he had more political support (as Teodorovici later had).

13 ”Scenarii posibile privind procesul de programare 2014 - 2020”, document presented by MAEur at CIAP session in July 2012, internal document of the ministry. 14 idem, pg1. 15 idem, pg2. 116

"Scenario 5 – with Mas shared between the two ministries - it was clear that it was the only realistic form of centralization and Orban said, <>. Orban wa convinced this was a battle not worth fighting "- interview with the former MEF.

Institutional architecture for 2014-2020

Half a year after the creation of the Ministry of European Funds, it has proposed to the government a memorandum entitled: "Preliminary consultation document on the 2014-2020 Partnership Agreement", presenting an organizational chart that has been adopted.

NAME OF OPERATIONAL MANAGING INTERMEDIATE AUTHORITY PROGRAM AUTHORITY Cohesion Policy

Ministry of Transportation OP Large Infrastructure MEF Ministry of Environment Ministry of Energy Ministry for Education OP Competition MEF Ministry for Research Ministry for Communications OP Technical Assistance MEF - OP Regionals MDRAP Regional Development Agencies OP Human Capital MFE Ministry of Labor and Social Protection Ministry of Education OP Administrative Capacity MDRAP - Cross-border programs MDRAP - Common Agricultural Policy National Rural Development Program Agriculture Agriculture Ministry Ministry MDRAP for public infrastructure projects in rural areas Direct Payments Program Agriculture Direct Payments Agency (APIA) Ministry OP for Fishing Agriculture - Ministry

CONCLUSIONS

This diagram is one still used by the Ministry for European Funds in present days (with a short interlude in which the MEF was formally integrated under MDRAP in 2017). MEF has taken over five Operational Programs and has created the largest one by combining Environment and Transportation in the Large Infrastructure Operational Program - POIM. MDRAP has remained with its programs in 2007 - 2013 and the double-headed leadership of the EU Funds area has created major problems with the implementation. The explanation provided by the interviews has a purely political basis: there is no functional logic in separating the two ministries, other than the political force of MDRAP. In the PhD thesis, I will detail how this separation created problems in the system after the signing of the Partnership Agreement with the European Union (2015). Another conclusion to be drawn from the above diagram is to impact of maintaining the Intermediate Authorities (IA) at the line ministries. After

16 Referring to Liviu Dragnea 117

2015, they had to receive delegated powers from the MEF (from each Managing Authority, MA, in the field). These delegations have long been delayed and, in fact, the fight between MEF and line ministries has shifted from controlling the MAs to what powers and how wide line ministries should maintain through the IAs. Centralization by taking MAs but leaving IAs to line ministries has proven to be an emergency solution that then lowered the line ministries' resistance to centralization but it created further problems later on. In 2016, as Minister of the European Funds, we continued centralizing by taking over two of the IAs at the MEF, because I was convinced that the solution of separating the subordination of MAs and IAs was only creating additional problems. Was the centralization started in 2011 and continued as descripted before a good idea afterall? One MAEur-MEF interviewed official said that if they were to review the centralization process now, it was not a good idea:

"If you ask me, it would have been better to stay as it was, because the resistance was very powerfull, it was too big to function. We have come to the situation where we have at the MEF the Managing Authority, but the IAs from the Transportation behave as if they were MAs and they accept no suggestion from us and they have political support from the Transportation Minister. There were permanent conflicts between the MEF and the other ministries that remained with the IA" - interview with a former MAEur – MEF official.

In this paper, I tried to explain the historical trajectory and the decision-making process that made the European funds management system 2014-2020 look the way it looks today. Further on, I will analyze the way this system works and draw conclusions and recommendation for the future European funds system programming, after 2020. This last direction will be the main theme of my PhD thesis.

ANNEX - Calendar of the Romanian Government`s internal consultations on establishing priorities and EU funding management system for 2014 - 2020 EU budget

ACTIO DATE N

1. The European Commission publishes the legislative package for The October 2011 Cohesion Policy 2. The Romanian Government sends to the Commission the first version November 2011 of the document which shares responsibilities for ex- ante conditionalities. 3. Public launching of the Programming Process for 2014 - 2020 January 26, 2012 Cohesion Funds 4. First Government Memorandum: „Approval of the actions and June 13, 2012 documents regarding the preparation for access and implementation of EU funds during 2014 - 2020”. 5. Transmission of the first official letters regarding the programming June 23, 2012 activities’ timetable, including the ex-ante conditionalities. 6. Preliminary reunion of the Inter Institutional Committee for the July 17, 2016 Partnership Agreement (CIAP) coordinated by the Ministry for European Affairs (MAEur). 7. The 1st official inter-institutional discussion regarding the programming July 26, 2016 scenarios 8. The First official reunion of CIAP coordinated by the Ministry of August 23, 2012 European Affairs (MAEur).

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This Committee was to meet only three more times on the November 2, 2012 following dates. 14 March, 2013 June 11, 2013 9. The 2nd official inter institutional discussion regarding the September 7, 2012 development priorities for Romania and the organization scenarios for the operational programs. 10. The first reunions of the 12 Consultative Committees coordinated by August – September, 2012 the ministries, to work as separate sections of CIAP. 11. Government approval of the Note regarding “The Development of October 22, 2012 Sectoral Strategies by the Line Ministries in the context of EU programming process for 2014 - 2020” 12. Closing of the Technical Assistance Contract “Development of the November 2, 2012 growth requirements for Romania, 2014 - 2020” 13. CE Submission of the document entitled “CE Position regarding the November 5, 2012 development of the Partnership Agreement and the programs for Romania, for 2014 - 2020 (Position Paper) 14. Internal Government approval of the Memorandum regarding “The November 9, 2012 fulfillment of Ex-ante conditionalities in the context of preparation and approval of the EU funds programming documents allocated for Romania during 2014 - 2020” 15. Organizing of several bilateral reunions with the line ministers to December 4, 2012 elaborate action plans in order to fulfill the ex- ante conditionalities. January 8 - 10, 2013 16. Transmission of a confidential letter to the Prime Minister of December 5, 2012 Romania on the organization of the management and control system for 2014-2020 period 17. The first informal dialogue reunion with representatives of European January 31, 2013 Commission, Brussels. The discussions were focused around the Negotiation Box project - a negotiation document that forms an inventory of problematic aspects stemming from the Position Document, which requires clarification in the informal dialogue with representatives of the European Commission. The meeting was attended by representatives of the EC and the Romanian authorities involved in the programming process. 18. Transmission of the Negotiation Box to the European February 19, 2013 Commission. 19. Transmission of Memorandum proposals to the responsible ministries February 28, 2013 for approval of action plans to meet ex-ante conditionalities and action plans projects 20. Drafting an internal Government Note on "Activities needed to speed March 6, 2013 up the programming of European funds allocated to Romania in the financial exercise 2014-2020” 21. Approval of the first action plans for the fulfilment of the ex- ante March 2013 conditionalities through the Government Memorandum. 22. Several reunions as part of the informal dialogue with the EC March 19 - 21, 2013 / May 2013 23. Government approval of the Memorandum "Consultative document June 12, 2013 regarding the Partnership Agreement" (which also contains the (prepared since March 2013) institutional structure proposed for the 2014- 2020 operational programs management) 24. Government approval of the Memorandum "Approval of the main July 9, 2013 measures to accelerate the preparation of European and Investment Structural Funds (EISF) programming and implementation documents", which includes creating a working group for the establishment of the management system and other horizontal elements, by August 31, 2013

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25. Approval of Government Emergency Ordinance no. 9/2014 for the February 28, 2014 approval of measures for streamlining the structural instruments management system - two management authorities are taken over by the MFE 26. Approval of the Partnership Agreement (PA). The PA contains the July 9, 2014 plans for unfulfilled ex-ante conditionalities, extremely general 27. The approval of Government Emergency Ordinance no. 85/2014 for December 22, 2014 the approval of measures to streamline the structural instruments management system - two others MAs are taken over by the Ministry of European Funds. The current management system is thus established. 28. Government Decision no. 1183/2014 regarding the nomination of the January 7, 2015 authorities involved in the management and control system of EU structural and investment funds 2014-2020 29. Government Decision no. 398/2015 establishing the institutional July 3, 2015 framework for the coordination and management of EU structural and investment funds and for ensuring the continuity of the institutional framework for the coordination and management of structural instruments 2007-2013

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