New priorities, including simplification, are necessary — but they must not overshadow what defines the European Union, Anelia Stefanova, strategic area leader for energy transformation at CEE Bankwatch Network told EU Perspectives.
Monitoring—and often challenging—international financial institutions such as the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD), the World Bank, as well as EU funds and other public finance mechanisms, is what CEE Bankwatch Network focuses on, among other things.
Rather than a single NGO, it is a non-governmental network with 17 member groups in 14 countries across central and eastern Europe and the Caucasus, with staff and offices in Brussels and 13 other European cities. It is one of the largest networks of grassroots environmental and human rights organisations in the region, working on issues of public finance and development. Anelia Stefanova, the group’s strategic area leader for energy transformation, spoke last week to EU Perspectives about the promises and perils of the next long-term EU budget.
From the angle of Bankwatch’s work, do you consider the current simplification agenda dominating Brussels this year—and the related trade-offs, as proposed by the Commission—as a force to good, or not, and why?
Let me first outline how it works. Our work is based on two pillars. One focuses on the recovery and cohesion funding. We monitor the current EU budget and the NextGenerationEU facility in this period, but we are also looking at the next multi-annual financial framework. The second pillar is a just transition. We provide support for regions that are phasing out fossil-fuel industries. At the moment that means coal, shale oil, peat, and also parts of the cement and chemical sectors.
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The Commission talks about simplification, which concerns the areas you mention full well. What do you make of the simplification drift?
The Commission indeed proposed a new approach under the title of simplification. In principle we all agree that simplification is necessary. Bankwatch has monitored public spending for 25 years, and we know there are problems—misused funds, or funds not reaching those who need them most. Governments often work in silos, without looking at the holistic and innovative projects with positive impact on people’s lives.
This variety of funds that exists now can be cumbersome, especially for local authorities and small-scale beneficiaries in central and eastern Europe. You can see that the balance of EU funding still favours big public entities, banks and large industries. So, yes, some different approach was necessary. But simplification and the integration of new priorities should take place while keeping core EU principles in mind.
Which principles are missing?
If we speak about simplification and about integrating new concerns—geopolitical and economic—it should not happen without taking into account, and enforcing, certain European principles. Our main concern is that the Commission proposal is still missing a guarantee for better enforcement of those principles—transparency, participation, climate and environmental safeguards.
Another disappointment, shared by civil society and researchers, is the overall size of the budget. Local authorities tell us the same: if we are to embrace new priorities, we also need a higher European budget to tackle them. Trade-offs between security or defence and social aspects are short-sighted. Already, in the name of defence and security, we see social aspects being undermined—and in the longer term that is also a security issue.
Let us get specific. Defence spending is rising. How will Bankwatch monitor that money?
In fact, it is a broader issue about preparedness and about using instruments that could have dual use, but also about more efficient and transparent spending. We know that defence is often of interest to very large companies—frequently American ones—and not necessarily based in the region. Governments are already redefining some cohesion or recovery money in the name of defence. We fear the same old, non-transparent approach. Right now there is no clear definition, so defence is still treated as a purely military aspect and exempt from impact assessments or public discussion. That must change.
Is that a trend that you expect to grow?
We can already see it. As we monitor the current budget, these new priorities are being passed down to national level, and spending is shifted. Old-style defence policy, with no transparency, is repeating itself in the next budget. Unless we insist on impact assessments and public scrutiny, we will face the same problems again.
Some would say that, given Russia’s war on Ukraine, secrecy is justified. Do you disagree?
We need a broader discussion on preparedness. Ukraine shows that, in an active war, well-prepared local authorities and civil-society actors complement the role of the state. Security is not only military. In our countries the narrative on migration is loud, but the real action on integration or on poverty is weak.
About 10.68 per cent of people in the European Union live in energy poverty. In Bulgaria or Romania, it is a quarter of the population. If not addressed properly, that polarises society. So, yes, this is also a security issue.
What does Bankwatch’s work actually do?
Bankwatch is a special kind of stakeholder. Because we have expertise in public finance, we have tried to democratise the process in central and eastern Europe. Our colleagues sit on national monitoring committees, so there are mechanisms to promote discussion and supervise government decisions. That can reduce maladministration. At local level we work with authorities and, in Brussels, we are in several Commission expert groups. We see—at that level and beyond—that environmental and social issues are interconnected. You cannot have a transition if it is not fair. A lot of change happens locally, so you must empower local actors. We also cooperate with city networks such as ICLEI or Energy Cities, and with trade unions.
What would you consider your organisation’s greatest achievement?
On EU funding, our engagement with local actors to help them develop decarbonisation plans and to leverage extra funding is one of our greatest successes. We work in about 30 just-transition regions—three in Czechia, five in Poland and so on. We help municipalities define strategies and obtain finance, showing that public money can make a real difference and identifying where the bottlenecks are.
Another success is with the Recovery and Resilience Facility. That fund was created quickly, under covid pressure, with little transparency. Bankwatch demanded more openness and monitoring. We contribute to the establishing of monitoring committees which can scrutinise the funds by different stakeholders and experts. Poland is a good example: there is now a real, open discussion between stakeholders on budget priorities.
Could you name one concrete example of what that looks like on the ground?
In Partizánske, Slovakia, we have been collecting data and laying the groundwork for a modernised district heating system together with local auhorities. This small city is now setting a trend for new generation of district heating that combines efficiency, geothermal, and renewable sources to phase out expensive gas use.
Back to the upcoming EU legislation—what, in your view, is the biggest risk?
We are very concerned that the just-transition element is now marginal. In the previous period there was a special fund with special attention to these regions. Now it is buried. Often these regions are isolated or disadvantaged. Karlovy Vary is famous, but the surrounding municipalities are the poorest in the country. GDP per region can be misleading; the city may look rich while the periphery struggles. These regions are losing industrial jobs without proper discussion about the future. Workers need reskilling, local authorities need capacity. We hope Parliament and member states will push the Commission to restore that support.
Is there anything else you would change?
Biodiversity is another worry. Support for restoration and for nature-based solutions is crucial for social well-being and for business, yet it is not prominent. Clean air, clean water and restored land also make regions more attractive for investment and help people stay in the regions. We need those measures to stay visible in the budget.
What shape will Bankwatch’s effort take?
We will keep monitoring, analysing and making recommendations. We will work with local authorities, cities and trade unions to make the energy transition real in people’s lives. And we will keep insisting that transparency and social justice are not optional extras but core European principles—even when the money is labelled “defence”.
