The Brief – Curtain lifts on EU fight on multi-billion regional funds

In a rare occasion of open and far-reaching political conflict in Brussels, a German fiscal hawk and a Portuguese Socialist, both in high positions, clashed this week over the EU’s second-biggest pot of cash: its ‘cohesion policy’.

The EU capital is known as a “compromise machine”. Most political conflicts, in particular those about money, are settled behind closed doors, by people who know they will be very soon meeting again (as they do so regularly) and are therefore willing to give in with no one having to lose face.

For observers, such as journalists and voters, it is therefore often difficult to find out who is actually fighting for what, who gave in where, and why a certain deal was struck.

Not this week.

On Monday evening after 7 pm, at an event organised by economic think-tank ZEW, a Portuguese Socialist and Germany’s most famous Fiscal Hawk clashed publicly in what could be one of the most decisive conflicts for the EU’s 2028–2034 finances.

What was this fight – involving German Finance Minister Christian Lindner (FDP/Renew) and outgoing Cohesion Commissioner Elisa Ferreira (aligned with the Portuguese Socialist Party/S&D) – about?

In short: Power and Money.

The European Commission, to be precise, its secretariat general as well as its unit for spending, DG BUDG, is considering a far-reaching reform to the EU’s cohesion policy, which includes structural funds for regions, as well as social programmes.

Cohesion policy currently makes up a third of the EU’s overall spending, amounting to almost €400 billion in the current seven-year period that ends in 2027.

This could deprive DG REGIO, the unit so far led by Ferreira, of its role of negotiating the disbursement of the funds with regional governments, which have also sounded the alarm bell as they fear losing their influence.

But the conflict goes deeper.

At its heart, the question of what cohesion policy should actually achieve is not solved. While the programme has five official policy aims, the list reads almost like a comprehensive outline of the raison d’être of any government, ever:

Job creation, business competitiveness, economic growth, sustainable development, and improvement to citizens’ quality of life.

“Since its inception, we have seen an inflation of cohesion policy objectives from being green, inclusive, smart and close to citizens through to addressing the impact of Brexit and introducing broad support for large enterprises,” Lindner complained.

“Don’t we need cohesion policy to be focused on the objectives laid down in the treaty?” he asked with the innocence of a schoolboy, while also suggesting that cohesion policy might be “overfunded” given its “sluggish” absorption rate.

To help Lindner make his points, his ministry commissioned an extensive report from the ZEW Leibniz Centre for European Economic Research. And boy, did those researchers back his arguments.

“I wouldn’t want to see cohesion as a general EU policy way of spending money,” Päivi Leino-Sandberg, a professor at the University of Helsinki and co-author of the report, said at the event.

“And I would actually much rather see even a bigger EU budget, but a smaller cohesion budget,” she added. (Mark my words, Lindner will soon forget he ever heard the first part of the sentence.)

Ferreira, for her part, politely (“very sincerely”) thanked the researchers and Lindner for their “contributions” to the debate, but then went on for twenty minutes to counter their arguments.

The tension was palpable when she addressed the points one by one, including by pointing out that “we already reduced – or tried to reduce – the policy objectives to five, down from more than ten, to indeed refocus interventions on where they most matter.”

Sluggish absorption should rather be addressed through “administrative capacity building”, not by cutting funds, she argued.

Ultimately, “the future of cohesion policy needs to be informed by a wide range of viewpoints and a lot of evidence”, she said, thanking the German Länder (regions) in particular for their support of her view.

In another subtle jab at Lindner, she said she looks forward to Germany’s “final position”, suggesting she expects Economy Minister Robert Habeck (Greens) to be more aligned with her views than Lindner is.

While evidence and research can indeed be of great help, the size and aims of cohesion policy will in the end be a political decision – and the debate has only begun.

To maximise transparency and accountability, we can only hope for it to stay as public as it was on Monday and not be dragged back into Brussels’ numerous backrooms. European democracy can only benefit from it.

The Roundup

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The Court of Justice of the European Union (ECJ) found that the European Commission was wrong to restrict access to COVID-19 vaccine purchase contracts to citizens, in a decision handed down on Wednesday (July 17).

Ahead of the European Parliament’s vote on Ursula von der Leyen’s bid to lead the Commission for another five years, Italian Prime Minister Giorgia Meloni is keeping her cards close to her chest but will listen carefully to what von der Leyen says about the Green Deal in her parliamentary address.

The EU Court of Justice upheld the European Commission’s decision to designate TikTok’s parent company Bytedance as a gatekeeper under the Digital Markets Act on Wednesday (17 July), dismissing all arguments presented by the company.

Draft committee arrangements of the European Parliament’s biggest groups, seen by Euractiv, show that some heavyweight lawmakers surprisingly secured only substitute status due to the high demand for seats in the environment (ENVI) and industry (ITRE) committees.

Look out for…

• Meeting of the European Political Community, in Blenheim Palace in Oxfordshire, UK
• European Commission President Ursula von der Leyen gives a statement to the plenary session of the European Parliament about her candidacy, in Strasbourg, France
• Commissioner Iliana Ivanova participates in the plenary session of the European Parliament
• Commissioner Helena Dalli meets MEPs Robert Biedroń (S&D, PL) and Marc Angel (S&D, LU)

 [Edited by Zoran Radosavljevic/Rajnish Singh]