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“Dalligate” and Horizon 2020: the EU could lose more than a commissioner

Amid allegations of bribery and threats of legal action against the European Commission, the controversy surrounding the former EU health commissioner from Malta, John Dalli, has become an unwelcome distraction for budget discussions in Brussels.

“Dalligate” began last week when, on Tuesday (16 October), the European Commission released an unexpected statement that: “Commissioner John Dalli has today announced his resignation as a member of the Commission, with immediate effect.”

According to the statement, Dalli “decided to resign in order to be able to defend his reputation and that of the Commission”, following an investigation by the EU’s anti-fraud office, OLAF. The Commission said the investigation found that a Maltese entrepreneur had approached a tobacco company, Swedish Match, to request payment in exchange for influence on tobacco legislation being prepared by Dalli. “The OLAF report did not find any conclusive evidence of the direct participation of Mr Dalli but did consider that he was aware of these events,” said the Commission.

The following morning, Dalli contradicted the Commission’s version of events in a recorded interview. Dalli said the Commission president, Jose Manuel Barroso, had asked for his resignation in a face-to-face meeting on Tuesday evening. However, Dalli “refuted categorically” the allegation that he was aware of the activities between his associate and the tobacco industry. He later wrote to European Commission president Jose Manuel Barroso to say he had been deprived of his right to defend himself, as he was only given 30 minutes to resign and had not been permitted to read the OLAF report.

According to Dalli, his departure may halt progress on the Tobacco Products Directive to introduce stricter requirements on cigarette packaging and flavouring, which was approaching its final stages but may now have to begin again in 2015. The mystery surrounding these events has been further fuelled by the fact that OLAF’s report has not been made public, and also by a report from three anti-tobacco lobbying agencies of targeted break-ins at their offices in Brussels within 48 hours of the resignation.

But perhaps most concerning for those in the EU capital is the announcement by Dalli at a press conference on 24 October that he may pursue legal action. “From Mr Barroso, I want vindication of my name,” said Dalli, who said he will be forming a plan of action including legal recourse.

So what is “Dalligate” likely to mean for policymakers approaching the final stages of crucial budget negotiations in Brussels?

The last time Brussels was embroiled in a scandal of this scale was over a decade ago when, in 1999, allegations of corruption against the Commission were launched by a whistle-blower’s report. The claims focused particularly on former French prime minister, Edith Cresson, who had been in office as the EU research commissioner since 1995.

Following a report by a Committee of Independent Experts, the entire Commission resigned en masse. Cresson was later charged with fraud, forgery and abuse of confidence by Belgian authorities, and in 2006, the European Court of Justice declared that Cresson acted in breach of her obligations as a European commissioner by employing a friend on the Commission’s payroll.

The Cresson affair indicates policymakers are unlikely to emerge unscathed from this latest episode. Although the Commission has confirmed that there is no evidence that Dalli acted illegally, it is well known that the tenure of staff is largely determined by political trust and respect. Barroso’s rapid eviction of Dalli may have been an attempt to avoid a repeat of mass resignation. But Dalli’s unwillingness to go quietly means this plan may backfire, and allegations of misconduct within the Commission could have disastrous consequences.

The scandal could not have come at a worse time for the Commission, as it attempts to defend its proposals for spending from 2014 to 2020 against cuts being suggested by member states. The Horizon 2020 research budget, which the Commission has set at €80 billion, is under threat from countries arguing it needs to be reduced to €60bn in line with austerity.

The outcome of this debate is largely in the hands of the Council of Ministers and the European Parliament, but the Commission must be on hand to support its proposal and advocate spending for research. It must also be seen as a trusted partner by ministers, to warrant an increase in spending as national budgets are being cut across the board.

The events of “Dalligate” mean the Commission could now be defending itself and its budget against the Council and Parliament on two fronts—a political and a moral one. This could prove costly, both for the future of the Commission and for the future of research in Europe.