On Wednesday 25 March, the European Commission presented the reallocation of Cohesion policy funds for the period 2021–2027, following the regulatory review (see EUROPE 13712/5). €34.6 billion is being reallocated to meet five urgent strategic priorities: competitiveness; defence; affordable housing; water management; energy infrastructure.
“Continuing to invest according to priorities set in 2019 and 2020 was no longer possible. The world has changed and it continues to change. New investment needs had emerged”, explained Raffaele Fitto, the European Commission’s Executive Vice-President responsible for Cohesion and Reforms, at a press conference.
The funds were redirected as follows: - €15.2 billion to boost competitiveness through critical technologies, innovation and development of skills; - €11.9 billion to strengthen defence industrial capabilities, military mobility and civil preparedness; - €3.3 billion for affordable and sustainable housing, promoting social inclusion; - €3.1 billion for resilience in the water sector, to strengthen sustainable resource management; - €1.2 billion to enhance energy security and industrial decarbonisation, by supporting quality jobs as part of the green transition.
A method based on dialogue. The Executive Vice President praised the method used for this reassignment, centred on dialogue between the various parties. “The Commission worked with great dedication to process hundreds of amendments, allowing projects to start now. This is perhaps the most important message, dialogue. Before launching this initiative, we met ministers, regional presidents, mayors, the European Parliament and the Committee of the Regions”, he stressed.
Even more favourable treatment has been given to the regions bordering Russia, Belarus and Ukraine, given the considerable challenges they have faced since the start of Russia’s war of aggression in 2022.
To reallocate these funds, several types of financial incentive have been offered to Member States, including a higher pre-financing rate of 1.5% on top of the regulatory rate of 0.5%. This rate can be as high as 9.5% for reprogrammed funds in the eastern border regions. New investments also benefit from higher EU cofinancing rates, up to an additional 10% in each category of regions. Thanks to these measures, Member States should benefit from higher liquidity and lower pressure on national budgets. Finally, programmes that reallocate a certain level of funds to the new priorities benefit from an additional year of eligibility of funds.
In addition, two Member States, Austria and Luxembourg, have not reallocated their resources.
Kata Tüttő, President of the European Committee of the Regions, welcomed the “flexibility with regional ownership” of this reallocation. “2027+: flexibility in national envelopes without regional ownership: this is how Cohesion Policy disappears”, she said deploringly on X. (Original version in French by Anne Damiani)