THE GREAT COHESION REWRITE: Reform or Regression? PART II

By: Olaia Mujika Anduiza

Estimated reading time: 5 minutes

At the beginning of December, I wrote about the need to reform cohesion policy as outlined in the 2021–2027 Multiannual Financial Framework (MFF). Today, I look at the European Commission’s plans to overhaul this policy, published in July 2025 alongside the proposal for the 2028–2034 MFF.

The context is key: the Commission is aiming for a budget that is simpler, more flexible, and more effective. Within this broader push, cohesion policy is set for a major redesign in the same direction.

Five key ideas behind the cohesion policy reform

A single heading, many cuts:

The Commission proposes merging Cohesion Policy into a new umbrella fund that also encompasses the Common Agricultural Policy (CAP), rural development, maritime and fisheries programmes, and migration and border management tools. Thus, policies that were previously separate would now be combined under a single budget heading.

Although individual budget lines remain, each area faces a notable cut: cohesion and the CAP, which once represented about one-third of the EU budget each, would together fall below 40% of total resources.

When it comes to cohesion, €218 billion is reserved for less developed regions, with co-financing rates tied to development levels and a guarantee that they receive no less than in 2021–2027. Nevertheless, Member States can still decide how to allocate funds across agriculture, rural development, cohesion and migration after the mandatory minimums for Cohesion are met, setting the stage for competition between several areas.

In short, the Commission has ended fund fragmentation by grouping all instruments under a single heading despite their diverging objectives. Then again,  the funds are substantially reduced for each area and there is increased competition among them for resources.

Bye partnership, hello centralization:

Of the €1,062.22 billion assigned to this new heading, more than €800 billion would flow through “National and Regional Partnership Funds”. Marketed as simplification, this effectively abolishes regional programmes and shifts control to national governments, which would receive flexible lump-sum envelopes with no obligation to involve regional authorities.

This confirms fears of centralization, despite broad support for regional participation (including from the Commission and Parliament), given that cohesion policy depends on place-based planning and multilevel governance. 

This decision is speculated to deepen economic divides between core and peripheral regions. Centralized allocation would slow project approvals and payments, disrupting investment planning and cash flow for firms dependent on EU co-financing. Moreover, due to the expected bargaining process, businesses in politically weaker or less influential areas could face reduced funding.

The consequences are enormous. Individual regions would no longer have direct access to the €319 billion, which they currently receive from the Cohesion Policy, forced instead to negotiate with national governments. 

Additionally, as partnership plans would become optional, regions could lose not only their direct allocations and planning powers but even their involvement in the management of cohesion funds. If approved, the reform would mark the start of an era in which regions face greater uncertainty and far less say over how cohesion funds are used.

Pay-out by performance:

The envelopes would also carry conditionalities tied to reforms modelled on the Recovery and Resilience Facility. Disbursement would depend on proven reform milestones and results, with proportional suspension possible in cases of rule-of-law disputes or other conflicts. This could be a useful step toward resolving earlier problems linked to the assessment.

Still, structured as it is, conditionality could trap regions in the consequences of their central governments’ failures, undermining the fundamental goal of cohesion policy.

Flexibility over purpose:

The proposal suggests adjusting the Cohesion Policy to respond more effectively to crises, turning the Policy into a flexible instrument for immediate priorities. Concretely, it allows resources to be rapidly reallocated to “geopolitical hotspots”.

This worsens one of the problems mentioned in The Great Cohesion Rewrite: Reform or Regression Part I: adding short-term goals to the core long-term purpose for which Cohesion Policy was created (correcting structural imbalances that neither the market resolves nor national governments consistently address) can ultimately undermine that original mission.

In a nutshell

In essence, the Commission is proposing less money for cohesion, greater centralization, a shift toward crisis-driven priorities, and tighter accountability mechanisms.

Thus, it does not effectively resolve the identified problems. First, key structural weaknesses already noted in previous assessments are not addressed, such as the roots of regional disparities. Second, the policy reform also introduces new distortions that undermine overall effectiveness, like budgetary limitations and centralization of management. 

It is no surprise that several actors have reacted negatively. The Committee of the Regions (CoR) unanimously rejected it, with President Kata Tüttő strongly criticising it. In October, CoR members, joined by MEPs such as S&D leader Iratxe García, protested outside the European Parliament against this proposal. 

In the European Parliament, the EPP, S&D, Renew, and Greens/EFA have all criticised the Commission’s approach, with the Socialists threatening to reject the Budget if this proceeds unchanged. The EPP remains divided, with its leader clearly acknowledging the Commission to make concessions.

Finally, even before the proposal’s publication, fourteen member states (including Spain, Italy, Poland, and Greece) signed a joint declaration against centralized budgets and in favour of regional allocation. Following the proposal, opposition continued and expanded, with Germany joining the critics.

Ursula von der Leyen is currently rushing to calm Parliament leaders by tweaking her proposal for the next EU budget. She proposes a greater role for Parliament in budget negotiations, some powers returned to regional authorities, and a new “rural target” requiring governments to dedicate parts of their EU funds to agriculture.

The coming months will bring intense negotiations between the Parliament, the Council, and the Commission, with regional authorities and other stakeholders pushing hard to preserve a policy they view as essential for balanced development across Europe. This represents a crucial test of the Union’s resolve to reduce disparities, sustain long-term investment, and ensure that no region is left behind.