I. Introduction

In an increasingly competitive world, the European Union’s external spending¹ stands as a critical component of its influence and commitment to global development, humanitarian assistance, and geopolitical stability. As the EU navigates an evolving geopolitical landscape marked by emerging powers, shifting alliances, and complex international changes, the need for vigilant oversight of and robust investigative mechanisms into its external expenditures is more urgent than ever. The growing volume and complexity of spending come with an evolving set of risks, demanding renewed emphasis on oversight and accountability. This article analyses current and new challenges faced by investigations into the EU external spending, the tools available to explore the intricate web of international financial flows, potential fraud risks, and the evolving landscape shaped by both technological advances and political priorities. By examining these developments, the article aims to provide a comprehensive outlook into the future of investigative practices in monitoring the integrity of EU external expenditure, underscoring the need for adaptive investigative measures in an ever-changing geopolitical environment.

We will trace the trajectory of EU external spending, from historical patterns to new geopolitical demands. Then, we will turn to the investigative lessons learned and the novel risks that call for adapted anti-fraud strategies. The discussion will highlight the effects of financial shifts and global uncertainties on EU aid. Last but not least, we will assess the concrete investigative responses required to protect EU funds in today’s global landscape, safeguard integrity and maintain public trust.

II. Evolving Dynamics: Global Shifts and their Implications

The world is undergoing profound change. The concept of multilateralism – long championed by the European Union – is currently grappling with a serious crisis. A growing number of international actors are turning away from cooperative approaches toward more competitive ones. Tensions are escalating, regional conflicts intensifying, and trade disputes becoming more frequent. Meanwhile, the rules on which the international order is based are increasingly coming under discussion.

External spending policies and priorities are also undergoing changes, reshaping the traditional landscape of development cooperation donors. New actors are emerging, most notably the BRICS countries (Brazil, Russia, India, China, South Africa), in recent years acting in cooperation through their own development bank, the New Development Bank.² Amongst these actors, China stands out as the most prominent. The EU’s Global Gateway³ and China’s Belt and Road Initiative⁴ both aim to expand global infrastructure links, but they differ sharply in approach, transparency, and underlying values. Russia’s involvement in this sector is more limited but follows another distinctive approach: Russia often makes its assistance contingent upon military and security components, an approach that is uncommon in traditional development cooperation.⁵

Whilst these emerging actors have, for the most part, a different thematic and geographical focus, the BRICS countries do share some common features in their approach to development cooperation policy.⁶ Notably, they reject conditionalities and follow a policy of political non-interference.⁷ This is in strong contrast to the EU’s development cooperation policy that puts a strong emphasis on reform requirements or adherence to values like democracy, the rule of law, human rights, good governance, sustainable development, transparency, and accountability.⁸ The new, emerging actors also tend to align their development cooperation policies more closely with their foreign policy objectives.⁹ As a result, the increasingly competitive world order, driven by conflicts, has had a significant impact on these countries’ development cooperation policies.

Whilst new actors are emerging, traditional key players in the field of development cooperation are scaling back. The most recent example is the United States, which is drastically reducing its development cooperation engagements under the current government,¹⁰ moving away from the values-driven, multilateral approach it once shared with the EU in order to a focus on its own economic interests and national security.¹¹

As a result, the role of the European Union as an advocate and protector of a values-driven, multilateral development cooperation policy has never been more important. Since transparency and accountability are at the core of the values the EU champions,¹² institutions and bodies dedicated to upholding them play a crucial role in this mission: the European Court of Auditors (ECA), the European Anti-Fraud Office (OLAF), and the European Public Prosecutor’s Office (EPPO).

Within the EU’s anti-fraud architecture, OLAF has the unique role of protecting EU funds spent externally. Its mandate is to investigate the correct use of EU money wherever it is sent, including to third countries, as explained in a 2019 eucrim article by Claire Scharf-Kröner and Jennifer Seyderhelm.¹³ Since its creation in 1999,¹⁴ OLAF’s international activities and partnerships have steadily grown, expanded, and matured, as also detailed in a 2024 eucrim article by Lukáš Jelínek and Clemens Kreith.¹⁵ OLAF’s mandate, expertise, and experience in conducting international investigations are a key asset for the EU in its mission to uphold the transparency and accountability of the EU’s development and humanitarian aid, as well as foreign policy and security financing.

Effective international investigations depend on strong partnerships.¹⁶ Yet, the global landscape is in constant flux: Long-standing allies may change course, and new actors may emerge. In response to these changes, the EU is reshaping its external spending priorities, which are now centred on global engagement, sustainable prosperity and competitiveness, democracy, social fairness and quality of life, climate resilience, and food security.¹⁷ While the Union pursues common goals with longstanding partners, such as the United States, regarding security and defense,¹⁸ OLAF, the EU’s internationally active investigative office, demonstrates agility in adapting to the complex and evolving environment in which it operates.

In the context of these developments, it is not only important to look for potential new partners, but also crucial to intensify and further advance relations and cooperation with existing partners in candidate countries, third countries, and international organisations. OLAF already has multiple tools to foster its international relationships, including anti-fraud provisions in international agreements, administrative cooperation arrangements with partners in third countries, and regional partner networks to enhance cooperation and knowledge exchange,¹⁹ e.g., through the InvestigAid conference.²⁰ Given the changing geopolitical context, it is essential to leverage all these tools to their fullest extent – and to develop new ones.

III. The Future of the EU’s External Spending: New Priorities and Challenges

1. Past and present trends in the EU’s external spending

EU external spending dates back to the Treaty of Rome in 1958²¹ and the establishment of the European Development Fund (EDF)²² in 1959, which were designed to support territories governed by European powers.²³ Over time, nominal spending reached around €100 billion, which, when adjusted for inflation, is equivalent to over €140 billion.

Initially focused on development aid, the European Economic Communities (EEC), predecessor to the European Union (EU), expanded the scope of external spending through conventions, such as Yaoundé²⁴ and Lomé.²⁵ This expansion served to support former colonies in Africa, the Caribbean, and the Pacific (ACP countries) and broadened the EEC’s scope to include development, regional stability, and trade-based aid. The EU further extended cooperation beyond former colonies through initiatives like the 1995 Barcelona Process,²⁶ focusing on Mediterranean countries, and later supported Central and Eastern European countries during their EU accession process after the fall of the Soviet Union.²⁷

The EU’s 2007-2013 Multiannual Financial Framework (MFF) introduced diverse, new financing instruments targeting different regions and objectives, including development cooperation, neighbourhood partnerships, pre-accession assistance, and crisis response.²⁸ The 2009 Treaty of Lisbon endorsed²⁹ formalised development cooperation as a central objective of the EU’s external action and underlined the importance of consistency in the EU’s external policies.

The 2021-2027 MFF allocates around €100 billion for "Neighbourhood and the World" activities, 6-7% of the total EU budget. It consolidated many previous instruments, including the EDF, into one single instrument: the Neighbourhood, Development and International Cooperation Instrument – Global Europe (NDICI-GE). Other instruments remain with a separate, specific focus, for instance on security and defence³⁰ and on humanitarian aid.

The European Commission’s proposal for the 2028–2034 MFF aims to streamline spending while nearly doubling the EU’s external action budget to €200 billion through the “Global Europe Instrument”. This instrument is dedicated to development, candidate countries, crisis response, and flexible aid for Ukraine.³¹

2. New priorities in the EU’s external spending

In its communication on the 2028-2034 MFF, the European Commission acknowledges the need to respond to growing geopolitical tensions, which are closely linked to rising security threats,³² and to address the resulting global trend of aligning development cooperation policies with foreign policy objectives.³³ Many of these challenges require policies with a significant external spending dimension, including the following:

• Continued support for Ukraine and all other candidate countries;

• Growing demand for humanitarian aid, particularly due to the crisis in the Middle East;

• Strengthened border and migration management programmes;

• Increased investment in security and defence.

In said communication, the Commission also presents its ideas for the operational design of the next MFF. It calls for “greater focus and simplification”³⁴ and highlights the need to measure EU spending by its value for money and tangible results, while safeguarding accountability.³⁵

IV. Challenges for Anti-Fraud Investigations

1. Lessons learned from past and present fraud trends in the EU’s external spending

The European Union, together with its Member States, is the world’s largest donor of external aid and development cooperation.³⁶ In its 26 years of looking into irregularities, fraud, and corruption in the EU’s external spending framework, OLAF has witnessed the emergence of a number of key trends and fraud risks: insufficient transparency in funding allocation, conflicts of interest, and inadequate accountability mechanisms in project implementation. Increasingly complex financial instruments and multi-layered partnerships further complicate oversight and create vulnerability to mismanagement and corruption.

An ongoing, persistent trend is the manipulation of documentation, e.g., inconsistencies or falsifications in invoices and accounting records, particularly in cross-border cases. In one investigation, a migration law and enforcement project in West Africa was found to have forged invoices for shipments from Europe that were never delivered. Conflicts of interest can arise when individuals involved in preparing tender documents fail to disclose prior engagements or affiliations that may compromise their impartiality (e.g., a senior expert drafts terms of reference for an infrastructure project in the Balkans but is discovered to be a former employee of the winning bidder). Other red flags include unexplained increases in personal wealth, advantages, or influence among those managing financial processes (e.g., a procurement officer is invited to luxury cruises despite having a modest declared income). OLAF has also observed the repeated misuse of financial instruments like bank guarantees, where entities exploit disreputable financial institutions to submit unrealistically low bids (e.g., an IT contract in the Middle East is backed by a guarantee that had been declined by the bank in reality, thereby gaining an unfair competitive advantage).

Another recurrent pattern identified by OLAF involves overlapping project timelines and inconsistencies in recorded working hours, suggesting the fraudulent allocation of human resources or double funding. Project managers may be listed as full-time employees on multiple infrastructure projects implemented across different continents by different beneficiaries, with no plausible explanation for the workload. The repeated listing of the same personnel across multiple projects may also signify fictitious labour costs or an unrealistic workload.

On a systemic level, OLAF notes a growing disregard for due diligence, such as the failure to verify the legitimacy of financial instruments or the legal and compliance status of participating entities. Investigations frequently uncover low-quality deliverables or outright non-implementation, revealing weaknesses in monitoring and accountability. Here, the role of external consultancies and third-party actors in grant distribution and project delivery often creates layers of opacity that facilitate financial irregularities, e.g., an intermediary subcontracting project funds to an excluded partner in Eastern Europe without prior agreement.

These lessons learned highlight the need for robust oversight mechanisms, adaptable investigative tools, and strong relations with international partners to safeguard the EU’s financial interests. In practice, this includes early detection of parallel investigations into similar allegations as well as active information sharing, such as the disclosure of information on former employers, beneficiary relations, and current engagements.

2. New challenges for international investigations and how to tackle them

The new priorities of the EU’s external expenditures³⁷ will also have an impact on anti-fraud investigations. When larger amounts of funds are shifted to new areas and types of funding, new structures emerge, generating a greater potential for fraud, corruption, and other irregularities. As policy priorities shift, investigative frameworks must keep pace in tandem and quickly address the changing risks and emerging challenges.

Experience shows that investigators receive the first allegations of irregularities about a year or two after a spending mechanism has been implemented. While fraudulent schemes and threats cannot be completely eradicated in today’s globalised and highly technical world, the focus must be on foresight and planning to allow investigators to find information, transfer it into intelligence, and use it as effective evidence in their cases.

The following three sub-sections explore how technological shifts, international collaboration, and operational limitations are reshaping the risk landscape and investigative response in EU external spending.

a) Emerging technologies

Predictively, there will be a heightened focus on leveraging advanced technologies, particularly artificial intelligence (AI), to enhance the efficiency and effectiveness of investigations into external spending. As Konstantinos Bovalis and Georg Roebling explain in a recent eucrim article on OLAF’s work on artificial intelligence,³⁸ AI can facilitate real-time data analysis, anomaly detection, and predictive modelling, enabling investigators to identify potential fraud patterns and areas of concern more swiftly.³⁹

Blockchain is also expected to increase transparency and traceability in the allocation and utilisation of EU funds. Digital record-keeping systems that allow shared access to transaction data can make complex financial flows more transparent and support smoother cooperation between investigative teams and external partners in joint or parallel cases.⁴⁰

Future investigators must combine complex digital evidence with traditional investigative work and present their findings clearly to the competent authority. New technologies like generative AI, blockchain, nanotechnology and neurotechnology harbour both opportunities and risks, requiring careful handling to ensure that synthetically developed, deep faked, or tampered records do not enter evidence files. Investigators must learn to assess AI-generated output critically, which will help pave the way for its legal acceptance as evidence in court, as was the case with fingerprints and digital documents in the past.

Fraudsters are early adopters of emerging technologies, often operating without legal or geographic constraints, which poses a significant threat to the integrity of financial systems. In contrast, investigators work within legal frameworks and may lag behind in their technical proficiency for detecting complex financial fraud schemes. Addressing this gap requires significant investment in capacity building as well as in training and recruitment of professionals capable of leading data-driven investigations that combine cyber forensic knowledge with financial expertise to trace illicit financial flows across digital and physical domains.

b) Cross-border collaboration

As outlined in Section III, the EU faces a magnitude of global challenges that require policies with a significant external spending dimension. Strong relations with international partners are especially important for conducting efficient international investigations. As discussed in Section II, the changing global world order calls for establishing new partnerships and strengthening existing ones – both essential priorities given the critical policy areas linked to external spending.

Successful investigations will increasingly need to involve local experts who understand the specific context of the case. As a result, in addition to technological literacy, there will likely be an even greater emphasis on cross-border collaboration and information sharing among EU Member States, third country law enforcement, and other international partners. Enhanced communication channels and joint investigative efforts can help address the transnational nature of spending-related challenges.

The use of public-private partnerships would especially allow investigators to better tackle emerging risks. For instance, banks and OLAF, working together in a task force to tackle a fraud scheme, while respecting data-sharing limits, may be able to strengthen their cross-border cooperation to uncover complex criminal networks. Although such collaborations depend on trust and legal frameworks, they are a powerful way to strengthen international cooperation.

c) Tackling enhanced risks with limited resources

Funding for international aid is being reduced and shifted into new areas, and the general trend towards simplification will likely lead to reduced oversight in order to speed up aid delivery. Just as oversight is becoming more politicised, this simplification risks weakening accountability. Investigative bodies face resource constraints and reduced political support when their work is more essential than ever.

Investigative reports are only effective if their findings are properly implemented and used to uphold the rule of law. Active learning from investigative results strengthens internal control systems and informs future investigations, particularly during times of weaker oversight.

Likewise, when facing resource constraints, prioritising investigations with the greatest potential impact is crucial. Using data analytics and clear selection criteria – such as financial thresholds, geopolitical sensitivity, or repeated irregularities – can help focus resources on high-risk cases to maximize financial recovery, deterrence, and systemic change. Strong coordination and early intelligence sharing between partners and investigative units also improve targeting and prevent fragmented or low-priority investigative pursuits.

V. Conclusion

As global dynamics shift rapidly, the European Union is positioned as a powerful donor and partner. EU external spending is becoming increasingly vital, propelled by urgent demands such as providing urgent aid to neighbouring countries like Ukraine, dealing with regional conflicts, and managing migration crises.

At the same time, ensuring oversight in the current landscape of EU external spending is increasingly burdened by complex challenges and competing interests. The persistent tension between innovative and streamlined financial practices, on the one hand, and the need for rigorous accountability, on the other, requires adaptive and resilient investigative approaches.

Embracing technological advancements like AI, intensified international cooperation, and the effective use of increasingly limited resources will be pivotal in safeguarding the integrity of and public trust in external aid.

Amidst tumultuous and rapidly shifting geopolitical conditions, the EU’s Anti-Fraud Office (OLAF) remains committed to conducting investigations – jointly and in parallel – through effective global partnerships. By continuously identifying developing threats, flagging risks, and detecting gaps in internal control mechanisms, investigators can foster an ethos of transparency and help spending bodies, economic operators, and other international recipients of funds refine their oversight mechanisms.