In her mission letter to Commissioner-designate for ‘Cohesion and Reforms’, Elisa Ferreira, President Ursula von der Leyen outlined a broad, strategic direction for the future of EU Cohesion Policy and structural reforms. Beyond the headlines, which focused on the overhauled Commission governance structure and reshuffling of policy portfolios, it remains to be seen whether the new Commission can instil a real sense of purpose and conviction across the European Union’s (EU) multi-level policy community, especially in the area of ‘Cohesion and Reforms’.[1] Based on the priorities mentioned in Ferreira’s mission letter, the EU’s much-needed, place-based investment drive risks being swept aside to accommodate a top-down EU reform logic. This could create significant tensions across the different layers of the EU’s governance machinery concerning the effective delivery of regional investment programmes. At a time of heightened global unrest, the EU project needs to foster greater harmony and support across its territories. An imposed reform agenda is unlikely to engender either greater internal harmony or the necessary political will to implement much-needed reforms.
Structural reforms are one of three areas underpinning the EU’s economic policy coordination. As well as focusing on economic growth and job creation, they also seek to address challenges that are linked to demographic transitions and public finances. Since the financial crisis, the economic health of the EU has been a cause for concern, with an uneven recovery across the Union’s territories. Accelerating the pace of structural reforms has been widely acknowledged as a key condition for strengthening economic resilience. However, the route to achieving this – and the role that the EU should play – remains the subject of considerable debate.
At the same time, and in a nod to those member states seeking a cut in the next Multiannual Financial Framework (MFF), Cohesion Policy faces the prospect of slimming of priorities and reduced ambition for overall delivery. Correspondingly, the policy’s new, increased proximity to the Union’s reform agenda could see the latter playing a much more prominent role across EU regional development policies and investment than has previously been the case. The top-down approach to structural reforms thus risks distancing the regions from EU investment decisions that directly affect them.
The mission letter also puts forward the creation of a new Directorate-General to oversee the EU’s reform agenda, underpinned by a not insignificant €25 billion budget[2] - a 100-fold budget increase compared to the current programme. Overseen by a Vice-President in charge of ‘financial stability’, this raises significant questions about the purpose of Cohesion Policy in the post-2020 period.
This proposed direction signals a significant change in trajectory with a stronger EU reform logic setting the framework for local and regional investment decisions. Distancing the regional level from the wider objective of EU investment will not only affect their ownership of this agenda, but it also risks poor definition and targeting of investment decisions. Notably absent from the mission letter are the foundations upon which the EU’s reform agenda is grounded: it does not mention the European Semester, or the EU’s economic governance framework – the traditional ‘starting points’ for EU investment and reforms. It is through these EU policy mechanisms that decisions are taken, mostly after a dialogue involving the Commission and member states. This top-down approach has, however, long been criticised by the wider Cohesion Policy community.[3]
Creating stronger links between the European Semester, economic governance and Cohesion Policy without a corresponding upgrade to the EU’s multi-level governance system would almost certainly distance the regions from the investment decisions that directly affect them. Furthermore, this would seem to run counter to the statement in von der Leyen’s Political Guidelines: “Economic governance and democratic accountability must go hand in hand if we want to strengthen ownership of our common decisions”. [4]
The negative legacy[5] of the Union’s recent structural reforms agenda could create a straitjacket for local and regional authorities at a time when place-based disparities – with a ‘growing spatial disconnect’[6] - are high on the EU’s political agenda, with no silver bullet in sight. Limiting and discouraging the Union’s regions – those closest to territorial challenges such as climate change, social inequality and fragmentation – from taking a decisive role in determining necessary reforms could be politically costly and counter-productive.
The EU project has reached a point where the collective support of its regions and territories is essential for its long-term future. Yet, the appetite for championing this seems to have been in steady decline across member states under the Juncker Commission. The mission letter indicates a very real possibility of a highly centralised post-2020 cohesion agenda, removed from the ethos of an ‘EU of the Regions’. Indeed, the added value of the policy – as a source of EU-championed, local renewal – risks being eroded and replaced by a ‘budget transfer’ mentality, creating further distance between the EU’s more- and less-developed regions.
However, the Cohesion and Reforms agenda need not be consigned to the ‘bad policy’ scrapheap. But to avoid this scenario, the Commission will have to draw lessons from the EU’s recent experience with the structural reform agenda, underpinned by the following to-do list:
- champion the voice and role of EU regions, positioning them at the centre of the reform agenda, where they have, hitherto, only played a marginal decision-making role in the European Semester;[7]
- set out an EU architecture and multi-level governance structure to underpin a strengthened cohesion and reforms agenda, with clear foundations in the European Semester;
- make the structural reform agenda more visible, with a clear definition of its enabling function, investment orientation and compatibility with the core purpose and values of Cohesion Policy;
- generate greater ownership and ‘line of sight’ between Cohesion Policy’s operational programmes and the ‘Annex D’ priorities from the 2019 Country Reports,[8] which highlight member state and regional-level disparities;
- reinforce the links between cohesion, reform and the rationale for a stronger territorial dimension to targeting EU investment. A focused ‘outreach’ function could significantly improve the collection of data and evidence on regional needs, disparities, inequalities and ‘places left behind’[9], as well as monitoring the extent, location and effects of fragmentation and disengagement challenges.
President von der Leyen has set out a ‘geopolitical’ course for her new Commission. How can the forthcoming Commissioner for Cohesion and Reforms respond in a way that contributes to this mission? The EU – as a global region – needs to resuscitate its international leadership by demonstrating its ability to harness the collective heft of its regions. An enabling reform agenda that targets Cohesion Policy investments can play an important role in supporting the regions to successfully tackle difficult transitions, such as climate change and the digital revolution. This is an agenda that EU regions can rally behind, collectively own and deliver. It offers a more positive approach to reform, which Cohesion Policy will need in the post-2020 period.
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[1] von der Leyen, Ursula (2019), “Mission Letter to Commissioner-designate for Cohesion and Reforms Elisa Ferreira”.
[2] European Commission, “EU Budget: A Reform Support Programme and an Investment Stabilisation Function to strengthen Europe's Economic and Monetary Union”, Press release, 31 May 2018.
[3] See Huguenot-Noël, R., Hunter, A. and Zuleeg, F. (2017), “Can the EU Structural Funds Reconcile Growth, Solidarity and Stability Objectives?”, Brussels: European Policy Centre.
[4] von der Leyen, Ursula (2019), ”Political Guidelines for the next Commission”.
[5] See Huguenot-Noël, R., Hunter, A. and Zuleeg, F. (2018), “Research for REGI Committee - Future links between structural reforms and EU cohesion policy”, Brussels: European Parliament.
[6] European Parliament, research service (2019), “Regional inequalities in the EU”.
[7] European Committee of the Regions (2019), “The European Semester and Cohesion Policy: aligning structural reforms with long-term investments”.
[8] See European Economic and Social Committee (2019), “European Semester: above all, links with EU funding require structured civic involvement”.
[9] European Parliament, research service (2019), “Regional inequalities in the EU”.