Disunity in Unity: The Battle Over EU Cohesion Funding and the Future of Regional Solidarity

By Șerban Gabriel FlorinJuly 3, 2025

Abstract

As the European Commission prepares to unveil its new seven-year budget on July 16, a major rift has emerged between Commission President Ursula von der Leyen and a majority of EU member states over the restructuring of nearly €400 billion in cohesion funding.

In a sharp and coordinated letter, 14 governments—among them Italy, Spain, and Poland—have pushed back against the proposed reforms, warning that cuts to regional funding risk undermining economic convergence and the EU’s core values of solidarity.

This article unpacks the political, economic, and institutional dynamics of the unfolding clash, contextualizing it within the history of EU cohesion policy, the post-pandemic budgetary landscape, and broader questions about the balance of power within the Union.

Introduction: Cohesion as Contention

The European Union has long prided itself on the ideal of cohesion: the process of reducing economic and social disparities across its regions.

This ambition, enshrined in the Treaty on the Functioning of the European Union, has taken material form in one of the Union’s largest spending areas—cohesion policy, currently accounting for about one-third of the total EU budget.

Yet, as of July 2025, this foundational pillar is under intense pressure. President Ursula von der Leyen, nearing the end of her term, has proposed a sweeping overhaul to how the EU allocates and manages cohesion funding.

Citing the need for simplification, efficiency, and digital modernization, the Commission aims to restructure existing allocations under the 2028–2034 Multiannual Financial Framework (MFF).

This has triggered a sharp backlash. Fourteen member states issued a joint letter on July 1 warning that the proposed reforms could erode support for the EU in less affluent regions and widen inequalities.

This unprecedented coalition includes states from across Europe’s geographic and political spectrum, suggesting that the fault lines are not merely economic—but also institutional and political.

Historical Context: The Evolution of Cohesion Policy

The EU’s cohesion policy dates back to the Single European Act of 1986, which formalized efforts to balance the effects of market integration. Over time, the policy grew in both size and scope. Key milestones include:

• The Delors Packages (1988–1993), which established the first structured multi-annual budgets and increased structural fund allocations.

• The 2004 and 2007 enlargements, which significantly expanded the EU’s geographic and economic disparities.

• The 2014–2020 MFF, which formalized the current framework for European Structural and Investment Funds (ESIF).

• The 2021–2027 budget, which allocated over €370 billion to cohesion programs, including €200 billion to the least-developed regions.

Cohesion funding became not only a tool of redistribution but also of political legitimacy. For poorer or transition economies—particularly in Eastern and Southern Europe—it symbolized the tangible benefits of EU membership.

However, criticisms have mounted over time regarding the complexity, inefficiency, and political instrumentalization of cohesion funds.

The European Court of Auditors has repeatedly flagged poor absorption rates, misuse, and lack of strategic alignment with broader EU goals, such as the Green Deal and Digital Transition.

The Commission’s Rationale: Simplification or Retrenchment?

In defending the proposed overhaul, von der Leyen’s Commission has emphasized:

1. Simplification and Harmonization: The new model aims to streamline bureaucratic procedures and align funding with results, reducing administrative burdens on both Commission and national authorities.

2. Strategic Alignment: Funds would be more tightly linked to EU-wide priorities—especially climate resilience, digitalization, and competitiveness.

3. Performance-Based Allocation: A shift from geography-based formulas (GDP per capita) toward performance and thematic contributions to EU objectives.

4. Flexibility and Crisis Response: Inspired by the flexibility of the NextGenerationEU pandemic recovery fund, the overhaul includes contingency mechanisms for responding to emergencies and geopolitical shocks.

But critics argue these justifications mask a re-centralization of power in Brussels and a retreat from redistributive solidarity. The letter from the 14 member states reflects fears that the new system would lead to:

• Less predictable and politically-driven allocations;

• A de-emphasis on regional equity in favor of policy performance metrics;

• More technocratic oversight at the expense of local needs.

In short, the Commission sees reform as modernization; many member states see it as marginalization.

Who Opposes the Overhaul—and Why?

The opposition is both geographically diverse and politically heterogenous, including governments on the left, center, and right. Among the signatories:

• Italy and Spain: Both are net recipients of cohesion funds and face persistent regional inequalities (e.g., Mezzogiorno, Andalusia).

• Poland and Hungary: The two largest Eastern recipients and vocal defenders of national sovereignty.

• Slovakia, Bulgaria, Romania: Countries still reliant on cohesion funds to meet infrastructure and social development goals.

• Portugal and Greece: Southern economies recovering from long-term structural shocks and climate pressures.

What unites them is not ideology but a shared interest in preserving a rules-based, predictable funding model tied to regional development indicators. Many also express concern that a performance-based model may penalize less developed regions precisely for their underdevelopment—a perverse effect for a policy meant to counteract such disparities.

A “Big Ugly Bill”: Committee of Regions Strikes Back

The Committee of the Regions (CoR), an EU advisory body representing subnational authorities, has labeled the new budget a “Big Ugly Bill.”

Its President, Vasco Alves Cordeiro, has sharply criticized the Commission’s “top-down” approach and warned of a backlash from regional governments across Europe.

From the CoR’s perspective, the Commission's proposals represent a denial of subsidiarity, threatening the EU’s multilevel governance model. They argue:

• Local authorities are best placed to know regional needs;

• The Commission’s proposals treat regional development as a technical problem instead of a political mandate;

• There is a growing disconnect between Brussels' strategic vision and the on-the-ground realities of struggling communities.

The CoR has called for an emergency summit between regional leaders and the Commission, warning that EU legitimacy itself is at stake.

The Broader Political Calculus: Von der Leyen’s Legacy or Gamble?

President von der Leyen, who has led the Commission since 2019, is looking to shape her legacy ahead of the 2026 European elections. Her administration has prioritized:

• Green and digital transitions;

• Geopolitical autonomy (especially post-Ukraine war);

• Technocratic efficiency in governance.

But this reform effort risks alienating key allies—especially in the European People’s Party (EPP) and Renew Europe blocs—if it leads to fragmentation within the Council.

Moreover, von der Leyen faces diminishing political capital.

After intense criticism of her handling of COVID-19 vaccine procurement and digital market regulations, many national leaders see this budget reform not as a collaborative policy effort but a final power grab.

Some analysts view her push as a tactical move to bind the hands of her successor, ensuring continuity for Commission-centered governance even in a less centralized post-2026 political landscape.

Post-Pandemic Realities: Austerity Returns?

Underlying the budget debate is a deeper fiscal and ideological shift.

During the COVID-19 crisis, the EU suspended strict budgetary rules and launched NextGenerationEU, a massive debt-financed stimulus package.

This marked an unprecedented move toward fiscal union and interregional solidarity.

However, as pandemic fatigue set in, inflation surged, and interest rates rose, austerity logic is creeping back into Brussels discourse.

The European Central Bank, under Christine Lagarde, has warned against fiscal overheating, while the Commission has reactivated Stability and Growth Pact rules in 2024.

The cohesion funding reform can thus be read as part of a quiet return to neoliberal budgetary orthodoxy:

• Smaller, leaner regional transfers;

• Conditionality over solidarity;

• Investment aligned with strategic “missions” rather than social correction.

This trend is especially worrying for regions still facing long-term deindustrialization, demographic decline, and climate vulnerability.

The proposed cuts or restructuring may deepen existing cleavages, both within countries and across borders.

Implications for EU Integration and Legitimacy

If adopted, the overhaul would mark a paradigm shift in the EU’s approach to territorial development. Some of the implications include:

1. Erosion of Regional Legitimacy

Local and regional actors may perceive the EU as moving away from its promise of “leaving no region behind,” potentially fueling Euroscepticism.

2. East-West and North-South Fractures

The proposed changes would exacerbate long-standing divides between net contributors and net recipients, reinforcing the perception of a “two-speed Europe.”

3. Centralization vs Subsidiarity

The Commission's proposals challenge the very principles of subsidiarity and shared governance that underpin EU federalism. This may lead to a new round of competence battles between Brussels and national capitals.

4. Strategic Alignment vs Democratic Input

Performance-based funding risks privileging technocratic targets over democratic responsiveness. Critics warn this may create a legitimacy deficit, especially in poorer regions that lack the administrative capacity to meet benchmarks.

Conclusion: Towards a New Territorial Contract?

The EU is at a crossroads. As it prepares to unveil its 2028–2034 budget, the debate over cohesion funding is not just about money. It is about who the EU is for, how it governs, and whose voices count.

The clash between von der Leyen and the 14 opposing member states underscores the fragile balance between efficiency and equity, centralization and subsidiarity, strategy and solidarity.

The future of European integration may well depend on how this balance is struck.

A reform that modernizes cohesion policy without undermining its redistributive core is possible—but it will require a genuine territorial contract between Brussels, national governments, and regional authorities.

Otherwise, the EU risks turning cohesion into contention—and solidarity into symbolism.