Cohesion, defence chapter enters mid-term review

From the correspondent in Strasbourg – The EU is trying to breathe new life into its cohesion policy, the main expenditure chapter of the EU budget earmarked for regional development, which in the current programming period (2021–2027) is worth more than €390 billion. It does so by incentivising member states to reprogram the use of European funds, shifting them to the Union’s new priorities in the changed global geopolitical environment.

Five priorities were outlined today (April 1) by Raffaele Fitto, executive vice president of the Commission with responsibility for Cohesion and Reform, for the mid-term review of the EU cohesion policy: competitiveness, defence (with special attention to regions along the eastern border), housing, water resilience, and energy transition.

Speaking from the EU Parliament plenary in Strasbourg, the Melonian commissioner stressed that “the current programs were discussed between 2019 and 2022, the partnership agreement was signed in 2022, and implementation is starting now,” but that “since then, the world has changed significantly” and the strategic objectives of EU spending need to be reviewed. The legislative proposal will now have to be discussed and approved by the community co-legislators, Parliament and Council.

The Berlaymont claims that the plan is quite generous. Projects linked to the five priorities will enjoy pre-financing rates of 30 per cent in 2026 and co-financing of up to 100 per cent from Brussels. If the redirected resources exceed 15 per cent of the total amount allocated to the programs in question, the EU will put an additional 4.5 per cent prefinancing on the table (which becomes 9.5 per cent in the case of eastern regions). National governments should identify by June the projects in their respective NRRPs that are in danger of not being completed by their natural deadline in August 2026 and consider reallocating unused funds to the above priorities.

Specifically, as far as the defence sector is concerned—around which the controversy had centred, both at the European and Italian levels—the creation of two dedicated objectives within as many instruments, namely the European Regional Development Fund (ERDF) and the Just Transition Fund (JTF), is envisaged. On the one hand, shifting resources currently dedicated to jobs and growth to defence productive capacity building; on the other hand, supporting the construction of strategic dual-use infrastructure, military and civilian. The Commission will also submit a legislative proposal to include defence among the “strategic sectors” identified by the Step Platform, which are dedicated to clean technologies.

Today the #Commissione approved the proposal for the modernization of cohesion policy.
Five new priorities: competitiveness, defense, water management, energy efficiency, housing policies to meet the diverse needs of European regions. From the regions… pic.twitter.com/bBkMsfZleA

– Raffaele Fitto (@RaffaeleFitto) April 1, 2025

Brussels urges the Twenty-Seven also to double the funds for affordable housing (from 7.5 billion to 15 billion) and increase those for water resilience (currently amounting to 13 billion) to address drought challenges and those caused by floods and extreme weather events. As for energy transition, projects related to the construction of so-called interconnectors and related transmission systems, as well as recharging infrastructure, may be financed with cohesion funds.

All this, Fitto tirelessly repeated, will happen in any case on a voluntary basis and will respect “the specific needs of the territories.” It will be up to the chancelleries to decide independently whether to make use of the flexibility offered to them by Brussels according to the challenges their regions face. Still, they will not be forced to revise their cohesion plans. Moreover, he remarked that there would be no “pseudo-centralisation of cohesion funds,“ as some press rumours had anticipated in recent months.

Reactions were quick to come, and they were far from unanimous. The chair of the Committee of the Regions, Kata Tüttő, received positively the fact that Fitto “listened to local and regional leaders,” who had called for “flexible tools” to invest in “affordable housing, water resilience, energy security, and local preparedness in times of crisis, including defence and all dimensions of security.”

Less enthusiastic Valentina Palmisano, an M5S MEP who sits on the REGI committee: the revision proposed by Fitto “smells like a rip-off because, among other things, on military mobility, there is 100 per cent EU funding, while on other spending chapters, such as schools, health and labour, national co-financing remains.” It would be, she says, a matter of turning cohesion funds “into a tool to serve the defence industry and the militarization of the European economy,” a move she brands as “masochistic.”