EU Commission defends Spain over alleged misuse of €10 billion in recovery funds

BRUSSELS — The European Commission has defended Spain in a row over its alleged misuse of €10 billion of EU funds.

In a letter sent on Wednesday, seen by POLITICO, the EU executive dismissed allegations that Spain violated EU rules — dealing a blow to frugal Northern European politicians which jumped on the story to criticize EU joint debt.

The Spanish court of auditors claimed earlier this month that the country's government used part of its EU recovery funds to plug a hole in its pensions system and finance social expenditure — which is not permitted by the rules.

But, in a letter to two MEPs — Daniel Freund from the Greens and Andreas Schwab from the European People’s Party — the Commission said that it found no evidence of wrongdoing by the Spanish government.

“The Commission verified that the relevant milestones and targets had been delivered before the related disbursements were made,” wrote EU budget commissioner Piotr Serafin and the two commissioners overseeing the recovery fund, Valdis Dombrovskis and Raffaele Fitto.

The EU executive argued Spain’s recovery plan — which outlines reforms and conditions to unlock the money — contains no pension expenditure, which is not eligible under the scheme.

The letter added that shuffling funds across the national budget — one of the accusations levied by the auditors — “is by its nature, a matter of domestic accountability.”

“They do not call into question the lawful use of NextGenerationEU funds under EU law,” the Commission wrote.

After the letter was sent, Freund told POLITICO in a written response that the “Commission response clarifies this. This seems to be a question of Cashflow management.” He added: “Case closed.”