Thomas Schwab / Jul 2025
European Commissioner for the Budget, Piotr Serafin. Photo: European Union, 2025
In 1985, Mark Knopfler famously sang about “money for nothing and chicks for free”, poking fun at the perceived glamour and ease of rock star life — a misperception magnified by MTV's flashy visuals. Fast-forward 40 years, and the EU appears to be caught in a similar illusion, this time with its Cohesion Policy.
A leaked draft regulation proposes to merge Cohesion Policy funding, the CAP, and other instruments into a singular European Economic, Territorial, Social, Rural and Maritime Sustainable Prosperity and Security Fund. Behind the lengthy title lies an even more sweeping change: the transformation of cohesion into a centralised, performance-based megafund, resembling the Recovery and Resilience Facility (RRF).
From Solidarity to Conditionality: A Shift in Policy Logic
The core mechanism of the proposed fund resembles the Recovery and Resilience Facility: Member States submit national reform and investment plans, the Commission approves them, and funding is disbursed contingent on meeting pre-defined milestones — often aligned with reforms identified through the European Semester.
This approach raises fundamental policy concerns:
- Undermining regional ownership: Reform-linked funding is by nature a centralised mechanism. It risks marginalising regional and local actors, who are vital to territorial cohesion.
- Political deflection: Linking EU funding to politically sensitive domestic reforms (e.g. tax systems, labour markets) may fuel national discontent and deepen the perception of EU overreach. Would unpopular national reforms — say, abolishing Ehegattensplitting in Germany — be effectively “mandated” by Brussels?
- Instrumentalising solidarity: Conditionality shifts cohesion from a solidarity-based investment strategy to a transactional instrument — potentially distorting the purpose of EU structural funding.
Fragmentation Risk: 27 Plans, One Fund, Little Integration
While the draft regulation retains national and regional planning mechanisms — 27 in total — the integration logic of Cohesion Policy is compromised. The inclusion of an Interreg plan is welcome and acknowledges the importance of cross-border cooperation but could remain insufficient as a counterbalance in reality.
Moreover, the rhetorical reaffirmation that:
“Regions will remain at the centre of the Fund, with the partnership principle and multi-level governance as the underlying elements,”
is not supported by robust implementation guarantees. The proposed expansion of the European Code of Conduct on Partnership is vague and lacks enforcement mechanisms. Without a clear operational framework, partnership risks becoming a formalistic box-ticking exercise. We outlined in April in a Policy Brief how this issue could be overcome.
Simplification? A Misleading Promise
A key argument for reform is simplification — reducing 540 programmes to 27. However, this claim is misleading:
- National plans will be complex, thematic, and multi-channelled, echoing the complexity of policy goals.
- Sectoral differentiation will likely remain or reappear through implementation rules.
- Instead of simplification, we risk replacing policy coherence with administrative centralisation.
What emerges is a façade of simplicity masking a more fragmented and technocratic policy landscape.
Juste Retour and the Politicisation of Funding
The new fund structure may amplify the dynamics of juste retour, where Member States seek to maximise financial returns from Brussels before defining strategic priorities. This undermines the EU’s ability to promote shared European objectives and shifts focus from impact to absorption.
The proposed loan facility adds another layer of political risk. While flexibility is needed for crisis response, safeguards must be introduced to prevent opportunistic or politicised use of funding under the guise of "resilience" or "emergency flexibility."
Dire Straits or a New Direction?
While the intention to improve delivery and coherence is laudable, this proposal risks hollowing out the territorial logic, democratic legitimacy, and participatory character of Cohesion Policy.
Policymakers should ask:
- Does this new fund strengthen or weaken the EU’s territorial cohesion objective?
- Are the proposed governance structures truly multi-level, or merely formalistic?
- How will conditionality be balanced with ownership and subsidiarity?
Without stronger guarantees for regional inclusion, transparent governance, and genuine simplification, this reform could result in more fragmentation, not less — and undermine the long-standing consensus around EU cohesion as an investment in solidarity, not just structural adjustment.
Dire Straits may have had a hit with “Money for Nothing” — but the debate in the next weeks and months will judge whether the proposal by the Commission in its current form strikes the right chord.
