On Tuesday 15 July, the Danish Presidency of the Council of the European Union reached a provisional agreement with the European Parliament’s negotiators on the elements of the mid-term review of cohesion policy in order to better respond to current and emerging strategic challenges, particularly in the fields of defence and security (see EUROPE 13667/15).
This agreement introduces new rules amending the regulations relating to the European Regional Development Fund (ERDF), the Cohesion Fund, the Just Transition Fund (JTF) and the European Social Fund Plus (ESF+).
The changes will give Member States and regions greater flexibility to redirect funds towards new objectives, in particular defence industrial capacity building, military mobility, water resilience, affordable housing, decarbonisation, strategic technologies and energy infrastructure.
The reform includes increased support for EU regions bordering Russia, Belarus and Ukraine.
In order to inject liquidity quickly into these new priorities, the negotiators agreed on the possibility of applying a co-financing rate 10 percentage points higher than the usual rates, as well as 20% one-off pre-financing for amounts reallocated in 2026.
MEPs secured several adjustments to the new priorities.
For example, civil preparedness investments will be eligible for support and dual-use infrastructure (civil and military) will be prioritised in the funding of the defence industry and military mobility.
With regard to affordable housing, the sustainability of the housing stock will be taken into account, while water resilience priorities will be aligned with the dedicated European strategy, particularly with regard to investments in irrigation and desalination.
In order to ensure that cohesion policy maintains its focus on small and medium-sized enterprises and less favoured regions as a priority, it was agreed that the strategic technological investments of large companies will only be supported in areas where the gross domestic product (GDP) per capita is below the EU average.
Finally, the agreement introduces rule of law conditionality, ensuring that funds frozen because of breaches of the Union’s values cannot be reallocated to the new priorities. (Original version in French by Lionel Changeur)