EU Cohesion Policy, the risks of centralisation

The temptation to centralise the management of EU cohesion funds is a mistake, argues economist Andrés Rodríguez-Pose, who has edited a report on the future of this policy for the European Commission. An interview

The European Commission is considering a revolution in the overall architecture of the next EU budget, which will cover the seven-year period 2028-2034. The model for allocating and managing European funds, such as cohesion funds, could undergo strong centralisation: "that would be a terrible mistake", Andrés Rodríguez-Pose, professor of Economic Geography at the London School of Economics, tells OBCT.

Rodríguez-Pose chaired the high-level group of specialists established by the European Commission specifically to outline possible reforms of cohesion policy. The group's work lasted about a year, and in February 2024 a report  was presented, providing guidelines that are more relevant than ever.

As also highlighted by President of the European Economic and Social Committee Oliver Röpke, the push towards centralisation in the management of cohesion funds - along the lines of the National Recovery and Resilience Plans - could undermine citizens' trust in the EU institutions.

According to Rodríguez-Pose, "one of the great strengths of cohesion policy is its strong democratic roots". We interviewed him.

What should be the guiding principles of the future EU cohesion policy, in your opinion?

Cohesion policy is necessary not only to create a fairer system of development for the whole European Union, but also to foster growth and competitiveness. A competitive Europe cannot be built if the potential that is distributed across the various territories is not activated: many of the dynamic sectors are not necessarily found in large cities.

Therefore, we need territorial policies that improve the capacity and efficiency of institutions, so as to ensure better implementation of public policies and promote greater overall economic development. It is essential that cohesion funds do not become a tool to deal with emergencies, but remain a tool that creates the necessary conditions to promote development: the role of cohesion policy is not to repair problems, but to trigger dynamism.

Compared to when cohesion policy was created, the challenges today are different. There is not only a need to address the lack of development, but also to respond to the needs of regions that are stagnating in terms of economic growth, productivity and job creation, as well as those where opportunities for citizens are lacking.

In what directions should cohesion policy evolve?

Cohesion policy must continue to invest in the potential of regions that are lagging behind in development, but also in those struggling with processes of stagnation. I am referring to regions that are considered rich, but that in fact have not grown for decades because they are affected by the so-called “development trap”.

Today in the EU there are 60 million people living in places where GDP per capita is lower than in 2000, and 75 million people living in areas where annual GDP growth has been less than 0.5% in these decades. Around a third of the EU population lives in places that are increasingly perceived as having no future – there are many of them in Italy too, in regions such as Valle D'Aosta, Piemonte, Lombardia. Should we wait for Cremona, Pavia or Biella to become like Calabria in terms of development before investing European funds there? To counter the risk of permanent decline, targeted interventions are needed.

We cannot forget the need to intervene to support social categories that have fewer opportunities, such as women, young people and members of minorities. These people are found in all territories: when we talk about Paris or Brussels, for example, we think of rich and prosperous regions, but in fact even in these cities there are areas where there are fewer opportunities than in the rest of Europe.

Could greater coordination between cohesion policy and other EU policies help?

Yes, greater coordination is needed. If we want to have a functioning single market, a green and digital transition and a more competitive and innovative Europe, we cannot leave large parts of the EU excluded from these processes.

The green transition is a clear example. It is necessary and must be done quickly, but it will involve very tough measures that will only have a positive impact in the long term. Many regions will have problems making the transition, because they will face huge risks of job losses and their capacity to benefit from new investments is insufficient.

What do you think about the idea of ​​applying a model similar to the one introduced with the NRRP to the cohesion funds, i.e. a single national programme for each State and investments linked to reforms?

At a time when discontent with European integration is growing enormously, it would be a big mistake to move towards a  – ​​real or perceived – top-down policy. First of all, this type of approach is not necessarily more effective – in fact, it is usually quite the opposite. Furthermore, if citizens are not included and feel that their voice is not heard, the intervention will be less successful.

In contrast, cohesion policy currently encourages citizen participation and coordination at a horizontal level. This allows the demands of the population and economic and social agents to be channelled more inclusively. This type of policy does require much more time, but there are mechanisms to facilitate targeted interventions and deploy the potential of the territories.

The Recovery and Resilience Facility [underpinning the NRRPs, ed.] worked because it was an emergency programme for an emergency situation. If that becomes the principle underlying the policy, the gap between citizens and decision-makers will continue to grow. We will see much less effectiveness in interventions, more disaffection towards the EU and an erosion of the capacity to maintain our economic and social model. At that point we can say goodbye to our hope of becoming more competitive, compromising our ability to address global challenges.

What are your expectations for the European Commission's upcoming proposal on the future EU budget?

I expect the Commission to treat cohesion policy as a tool for the development of the entire European Union. Europe cannot be competitive if its territories do not all move at the same pace. If the policy only benefits the most dynamic areas, we would first of all have an economic problem – we would be wasting the potential of many areas – but also a political and social one. In a fragmented society, you cannot do business and grow.

The European Commission should focus on building a more transparent, simplified governance for cohesion policy which allows for the use of funds in a much more flexible way than is the case today. Improved governance should also include transparent channels for integration, participation and cohesion at a horizontal level – within individual regions and between different regions – and at a vertical level between local, regional, national governments and the European Union.

Finally, we should avoid making cohesion policy a tool to subsidise or compensate areas that do not benefit from European integration as much as they expected – we have made this clear in our report. This is a development policy that must make all EU regions more dynamic, potentially also in the new member states.

Could today's cohesion policy withstand an enlargement of the EU to new members?

Enlargement is a huge challenge for the entire European Union, which requires a comprehensive rethinking of the EU's forms of intervention.

Cohesion policy was created precisely to facilitate growth and territorial development, gradually integrating new member states that are poorer than the rest of the Union. However, it would not be possible to apply cohesion policy to an enlarged Europe with the criteria we have now – it would mean taking almost all the investments of cohesion funds from the current member states to allocate them to the new members. A scenario that is not ideal, neither from a political nor a social and economic point of view.

This article is published in the context of the project "Cohesion4Climate" co-funded by the European Union. The EU is in no way responsible for the information or views expressed within the framework of the project; the sole responsibility for the content lies with OBCT.