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The Money Farmers: How Eastern Europe Oligarchs and Populists Milk the E.U. for Millions

The Money Farmers: How Eastern Europe Oligarchs and Populists Milk the E.U. for Millions

CSAKVAR, Hungary — Under Communism, farmers labored in the fields that stretch for miles around this town west of Budapest, reaping wheat and corn for a government that had stolen their land.

Today, their children toil for new overlords, a group of oligarchs and political patrons who have annexed the land through opaque deals with the Hungarian government. They have created a modern twist on a feudal system, giving jobs and aid to the compliant, and punishing the mutinous.

These land barons, as it turns out, are financed and emboldened by the European Union.

Every year, the 28-country bloc pays out $65 billion in farm subsidies intended to support farmers around the Continent and keep rural communities alive. But across Hungary and much of Central and Eastern Europe, the bulk goes to a connected and powerful few. The prime minister of the Czech Republic collected tens of millions of dollars in subsidies just last year. Subsidies have underwritten Mafia-style land grabs in Slovakia and Bulgaria.

Europe’s farm program, a system that was instrumental in forming the European Union, is now being exploited by the same antidemocratic forces that threaten the bloc from within. This is because governments in Central and Eastern Europe, several led by populists, have wide latitude in how the subsidies, funded by taxpayers across Europe, are distributed — even as the entire system is shrouded in secrecy.

 

A New York Times investigation, conducted in nine countries for much of 2019, uncovered a subsidy system that is deliberately opaque, grossly undermines the European Union’s environmental goals and is warped by corruption and self-dealing.

 

 

 

 

Europe’s machinery in Brussels enables this rough-hewed corruption because confronting it would mean changing a program that helps hold a precarious union together. European leaders disagree about many things, but they all count on generous subsidies and wide discretion in spending them. Bucking that system to rein in abuses in newer member states would disrupt political and economic fortunes across the Continent.

This is why, with the farm bill up for renewal this year, the focus in Brussels isn’t on rooting out corruption or tightening controls. Instead, lawmakers are moving to give national leaders more authority on how they spend money — over the objections of internal auditors.

The program is the biggest item in the European Union’s central budget, accounting for 40 percent of expenditures. It’s one of the largest subsidy programs in the world.

Yet some lawmakers in Brussels who write and vote on farm policy admit they often have no idea where the money goes.

One place it goes is here in Fejer County, home to Hungary’s populist prime minister, Viktor Orban. An icon to Europe’s far right and a harsh critic of Brussels and European elites, Mr. Orban is happy to accept European Union money. The Times investigation found that he uses European subsidies as a patronage system that enriches his friends and family, protects his political interests and punishes his rivals.

 

State Land Sold to Viktor Orban’s Relatives.

Mr. Orban’s government has auctioned off thousands of acres of state land to his family members and close associates, including one childhood friend who has become one of the richest men in the country, the Times investigation found. Those who control the land, in turn, qualify for millions in subsidies from the European Union.

“It’s an absolutely corrupt system,” said Jozsef Angyan, who once served as Mr. Orban’s under secretary for rural development.

The brazen patronage in Fejer County was not supposed to happen. Since the earliest days of the European Union, farm policy has had outsized importance as an immutable system of public welfare. In the United States, Social Security or Medicare are perhaps the closest equivalents, but neither of them is a sacrosanct provision written into the nation’s founding documents.

The European Union spends three times as much as the United States on farm subsidies each year, but as the system has expanded, accountability has not kept up. National governments publish some information on recipients, but the largest beneficiaries hide behind complex ownership structures. And although farmers are paid, in part, based on their acreage, property data is kept secret, making it harder to track land grabs and corruption. The European Union maintains a master database but, citing the difficulty of downloading the requested information, refused to provide The Times a copy.

In response, the Times compiled its own database that, while incomplete, supplemented publicly available information on subsidy payments. This included corporate and government records; data on land sales and leases; and leaked documents and nonpublic land records received from whistle-blowers and researchers.

The Times confirmed land deals that benefited a select group of political insiders, visited farms in several countries, and used government records to determine subsidy payments received by some of the largest of these beneficiaries. The Times investigation also built on the work done by Hungarian journalists and others who have investigated land abuses despite a media crackdown by Mr. Orban’s government.

 

                                                                     WHAT WE FOUND

How oligarchs, Mafia figures and populists get rich off the European Union

  1. Farm subsidies helped form the basis for the modern European Union. Today, they help underwrite a sort of modern feudalism in which small farmers are beholden to politically connected land barons.
  2. The European Union provides $65 billion to farmers each year. It’s the largest line item in the E.U. budget and one of the biggest subsidy programs in the world.
  3. The centerpiece of the program is that people get paid based on how much land they farm. The system is supposed to help hard-working farmers and stabilize Europe’s food supply.
  4. But in former Soviet bloc countries, where the government owned lots of farmland, leaders like Hungary’s prime minister, Viktor Orban, have auctioned off land to political allies and family members. And the subsidies follow the land.
  5. A company formed by the Czech prime minister, Andrej Babis, collected at least $42 million in subsidies last year.

 

Even as the European Union champions the subsidy program as an essential safety net for hardworking farmers, studies have repeatedly shown that 80 percent of the money goes to the biggest 20 percent of recipients. And some of those at the top have used that money to amass political power.

Image.

In the Czech Republic, the highest-profile subsidy recipient is Andrej Babis, the billionaire agriculturalist who is also the prime minister. The Times analysis found his companies in the Czech Republic collected at least $42 million in agricultural subsidies last year.

Mr. Babis, who denied any wrongdoing, is the subject of two conflict-of-interest audits this year. The Czech government has, in recent years, ushered in rules that make it easier for big companies — his is the biggest — to receive more subsidies.

“The European Union is paying so much money to an oligarch who’s also a politician,” said Lukas Wagenknecht, a Czech senator and economist who used to work for Mr. Babis. “And what’s the result? You have the most powerful politician in the Czech Republic, and he’s completely supported by the European Union.”

In Bulgaria, the subsidies have become welfare for the farming elite. The Bulgarian Academy of Science has found that 75 percent of the main type of European agricultural subsidy in the country ends up in the hands of about 100 entities.

This spring, the authorities carried out raids across the country that exposed corrupt ties between government officials and agricultural businessmen. One of the largest flour producers in the country was charged with fraud in connection with the subsidies and is awaiting trial.

In Slovakia, the top prosecutor has acknowledged the existence of an “agricultural Mafia.” Small farmers have reported being beaten and extorted for land that is valuable for the subsidies it receives. A journalist, Jan Kuciak, was murdered last year while investigating Italian mobsters who had infiltrated the farm industry, profited from subsidies and built relationships with powerful politicians.

 

Despite this, proposed reforms are often watered down or brushed aside in Brussels and many other European capitals.

European Union officials dismissed a 2015 report that recommended tightening farm-subsidy rules as a safeguard against Central and Eastern European land grabbing. The European Parliament rejected a bill that would have banned politicians from benefiting from the subsidies they administer. And top officials swat away suggestions of fraud.

“We have an almost watertight system,” Rudolf Mögele, one of Europe’s top agricultural officials, said in an interview earlier this year.

Unstated is that, while audits can catch incidents of outright fraud, rooting out self-dealing and legalized corruption is far more difficult. The European Union seldom interferes with national affairs, giving deference to elected leaders.

Few leaders have attempted such widespread, brazen exploitation of the subsidy system as Mr. Orban in Hungary. At rallies, he deploys a false narrative that Brussels wants to strip away farm aid and use it to bring in migrants, and that he alone can stop it.

Farmers who criticize the government or the patronage system say they have been denied grants or faced surprise audits and unusual environmental inspections, in what amounts to a sophisticated intimidation campaign that harkens to the Communist era.

Culled from : The New York Times

 

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