European Commission President Ursula von der Leyen is restructuring access to European Union funding. The monies, €1.2 trillion over seven years, will be made available to member states—subject to compliance with a new regime of conditions.
To date it is unclear whether the new conditionality will be based solely on meeting strictly economic reform targets, or if the changes will increase the use of ‘rule-of-law‘ blackmail by Brussels.
Cohesion funding, intended to promote European economic convergence, will be increasingly tied to the demands of the Commission. For instance, “addressing the gender gap” will be a precondition for accessing social housing monies; likewise organic farming for agricultural funds. ‘Strings attached’ will be the norm; officially at least, so-called unproductive subsidies—what the document calls the current system—will be out.
The Commission’s proposal involves merging at least 12 different research, defence, and innovation budgets into a single “European Competitiveness Fund.” The new budget commissioner, Piotr Serafin, has been instructed to develop “a plan for each country linking key reforms with investments.”
An internal document seen by Politico sets out how budgets will be allocated over the 2028 to 2034 period. Whereas currently, the funding is spread across some 530 programmes, the new document proposes to combine it in a single pot. Even if this is presented as new money doled out by presidential generosity in the future, it is worth remembering it will still be from the same EU cash reserves—or perhaps from the additional borrowing advocated by Mario Draghi in his competitiveness report.
If all goes to plan, a new ad hoc steering group will oversee the process, under the president’s direct authority. Members will be von der Leyen and Eurocrats drawn from the Secretariat General and the budget department. Anyone else involved will be merely a designated “guest,” regardless of the electoral support they may receive.
Losing power in this process are the Directorates General (DGs)—the Brussels equivalent of ministries—which would see their relationship with different industries or regions replaced by the Commission dealing directly with their former clients. Such departments now stand accused of being careless with cash and imposing too few stipulations on what the EU gets in exchange for its funding. Localities and regions also stand to lose the greater autonomy they often enjoy at present when dealing with the DGs.
In contrast, European capitals could well face tougher-than-usual negotiations, as the Commission’s proposed funding model envisages face-to-face talks with individual member states. Existing concerns such as farm subsidies and social housing will be in the mix, but they stand to be eclipsed by other priorities, including EU expansion, green-tinged industrial policy, and defence. The overall size of the budget could also increase markedly, with Ukrainian accession and settling post-COVID debts of more than €300 billion.
Politico’s Gregorio Sorgi describes the documents as a “power grab,” a view reinforced by his anonymous interviewees. Sure enough, the reorganisation of funding disbursements into a single ‘pot’ will include mechanisms to pressure countries into implementing economic reforms if they want to access the EU’s cash.
EU member states will need to unanimously approve the new budget by the end of 2027 at the latest.
