The Cohesion Policy, often described as the European Union’s (EU) main investment instrument within its Multiannual Financial Framework (MFF), seeks to promote balanced development across Member States by reducing economic, social, and territorial disparities between regions. It accounts for roughly one third of the 2021-2027 EU MFF, with €392 billion allocated to the design and implementation of targeted projects.
The Central and Eastern Europe (CEE) countries are among the main beneficiaries, due to existing structural and historical deficiencies, including lower levels of economic development, weak infrastructure connectivity, and a high share of less developed regions.
There are four main funds that make up the Cohesion Policy:
- The Just Transition Fund (JTF) supports regions most affected by the transition to climate neutrality.
- The European Regional Development Fund (ERDF) supports the social and economic development of regions.
- The Cohesion Fund (CF) finances environmental and transport investments in lower-income Member States.
- The European Social Fund Plus (ESF+) aims to support jobs and create a fair and inclusive society in EU countries.
The latest mid-term review of the Cohesion Policy expands the policy’s emphasis from its long-term goal of addressing regional inequality toward a more flexible approach aligned with immediate needs arising from recent crises (the COVID-19 pandemic and the war in Ukraine). While the increasing flexibility of Cohesion Policy spending may be seen as potentially diluting its core objective, it also offers CEE countries an opportunity to capitalise on available funding and redirect resources towards strategic priorities such as defence, competitiveness and decarbonisation, by channelling investments in industrial transformation, dual-use infrastructure and energy-related investments.
These amendments could therefore open up opportunities to support industrial transformation in CEE, where industry accounts for 21%-33% of national GDP. Two of the main challenges faced by heavy industry in CEE countries are rising energy costs and tight public budgets, leading to delayed investment in industrial modernisation and decarbonisation. In this context, the mid-term review may offer an opportunity to redirect funding to these pressing needs.
The authors thank the two reviewers, Mihnea Cătuți and Sabina Strîmbovschi, for their valuable feedback, which significantly contributed to the development of this commentary.
Izabela Manea, EPG Research Assistant
Izabela Manea is a Research Assistant in the Data Analytics department, focusing her efforts on infographics and data storytelling to make research reports more accessible and impactful.
With an academic background in Sociology, she is currently pursuing a Master’s degree in Public Policy and Administrative Management at the University of Bucharest. Her core interests lie in policy making, particularly within the domains of environmental policy, sustainability, and good governance.
Contact:izabela.manea@epg-thinktank.org