Von der Leyen centralizes the EU budget: cohesion policy in danger of being eliminated

Ursula von der Leyen, the president of the European Commission, wants to centralize the allocation of funds from the EU budget in the period 2028-2034, which would lead to the cancellation of the financing of cohesion policy projects, which would affect both the member states of Eastern and South-Eastern Europe, as well as the future member states - Ukraine, Moldova, but also those from the Western Balkans.

According to a document obtained by the Polish publication Rzeczpospolita, von der Leyen's proposal provides for a fundamental change in the structure of EU funds, by eliminating the current 530 operational programmes, of which 398 are dedicated to cohesion policy. In their place, the president of the European Commission wants to introduce only 27 national operational programs, one for each member state. Each program will manage all the spending that was, until now, allocated to cohesion and agricultural policy, including subsidies for farmers. In this way, funds will be distributed centrally, with national governments having more control over their allocation. This move is justified by the President of the Commission under the slogan of "simplification" and "flexibility". Simplification involves reducing the number of programs and managing them at national level, while flexibility refers to the introduction of an "annual review" of the multiannual budget. This review would allow funds to be redistributed to other sectors if circumstances warrant.

von der Leyen's proposal is heavily criticized by some member states, who claim that this plan amounts to the elimination of the EU's regional policy. According to the quoted source, the representatives of these states show that traditionally the cohesion policy aimed to reduce economic and social disparities between the richer and poorer regions of the Union, that structural funds were distributed according to the needs and specificities of the regions, and the authorities were involved in the planning and execution process. Now, however, this principle is threatened by the centralization proposed by Brussels.

Experts consulted by the Polish daily state that in the scenario suggested by von der Leyen, national governments would have the power to decide how the funds are allocated, which may lead to the funds being used for political purposes. For example, if a central government is of a certain political color, it might decide to allocate funds only to politically loyal regions, marginalizing the others. This is seen by many as a vulnerability of the proposed new system.

A hypothetical example is Poland, where the Law and Justice Party (PiS), once back in power, may no longer allocate EU funds to opposition-run regions or cities. In turn, Brussels could reduce the funds intended for Poland if it did not agree with the policies promoted by the PiS government.

• Public-private partnership, a financing solution in the absence of allocations from the cohesion policy

Ursula von der Leyen's plan also calls for stricter control over how EU funds are spent. A novelty is the conditioning of the allocation of money on the implementation of reforms at the central level, even if these reforms are not directly related to the regions. This change would strengthen the influence of Brussels and weaken the autonomy of the regions in managing the funds. Many believe that this new mechanism could lead to inconsistent investment in certain regions, as local planning will become increasingly difficult.

Although many countries may welcome this centralization proposal, from the perspective of better management of funds at the national level, European regions and countries with a strong regional structure, such as Poland, Germany, Romania and Belgium, are vehemently opposed these changes.

We remind you that Ionel Scrioşteanu, secretary of state for road transport infrastructure within the Ministry of Transport, recently told Ziarul BURSA that, in the absence of European funds for cohesion policy, the Romanian state will have to turn to other sources of funding, including to the public-private partnership for the realization of several infrastructure projects.

Ionel Scrioşteanu specified: "From my point of view, the public-private partnership is no longer an option, but an obligation that we must create. We absolutely need to move on to accessing private money in the area of transport infrastructure. I could not name a project or another, one field or another, but even in the investment plan, in the financing part, in the financing chapter, we have included this possibility since 2020. Meanwhile, considering the financial developments, I think it becomes an obligation and Romania must seriously think about the public-private partnership part, regardless of the field: naval, road, railway, air. (...) I now estimate that, three years earlier than the maximum term for absorption of European funds for transport, we will finalize the allocated sums. That is, in the year 2027, on the current multiannual European financial framework, the money allocated to Romania for the Transport Program will be spent in full, without waiting for the maximum term of another 3 years, as in the previous financial framework. Then there will be a need for public-private partnership, financing from the state budget, other sources of financing, so that there is continuity in the financing of infrastructure projects. The region of Moldova, the region of Oltenia still need investments in the road infrastructure, which should be carried out to the end".

In the absence of cohesion funds after 2027, the financing solution through public-private partnership is also seen as viable by Gabriel Budescu, general director of the National Road Investment Company.

The head of CNIR recently told us: "We take into account any form of financing, including public-private partnership. It is normal to analyze everything that can mean funding for a work and to put on the government the studies showing where each project can be financed: from the state budget, from European funds, from a public-private partnership, from a mix of financing. I had a meeting with partners from the USA, Poland and the Czech Republic in Prague, and I found that in the USA the public-private partnership is a mix of funds: private funds and state funds also enter, the government also enters, and the private sector and the authorities local. There are 7 or 8 financiers who enter this mix, not like here where the public-private partnership has been treated so far only between the state and private. I believe that financing through public-private partnership is the future, but we also need to think about the legislation in such a way that it is fair and we need to adapt a bit as contracting authorities. For example, colleagues in the USA are much more open, they have decision-making power and they don't always start from the suspicion that someone has an interest".

We note that for the period 2021-2027, our country has 29 billion euros allocated to the cohesion policy, ranking fourth in the EU, after Poland - with an allocation of 72.3 billion euros, Italy - 39.4 billion euros and Spain - 33.7 billion euros.

The debates on the new multiannual budget for the period 2028-2034 will start next year, under the Polish presidency of the rotating presidency of the EU Council, a mandate that will start on January 1, 2025. Although it was initially expected that the draft budget would be presented in June 2025, there are the possibility of its postponement. Journalists from Rzeczpospolita say that Poland's representatives intend to raise this issue during this country's presidency of the EU Council and place it in a broader context of economic security and stability. From this point of view, Poland emphasizes the importance of maintaining the cohesion policy as an essential regional tool.

The debate on this topic will continue intensively in the coming years, and the results will be essential for the future of the European Union, in a context of global political and economic crisis.