From Convergence to Competitiveness and Crisis: The Evolving Thematic Priorities of EU Cohesion Policy

Introduction

As one of the longest-standing and most politically salient features of European integration, EU Cohesion Policy represents the Union's primary long-term investment instrument. Absorbing approximately one-third of the total EU budget, its financial scale is matched only by its strategic ambition. This report undertakes a comprehensive deep-dive into the history and evolution of the thematic priorities that have guided this monumental expenditure. The concept of "Thematic Priorities" is not a single, static program but rather the dynamic framework of thematic concentration that the EU has employed over successive programming periods to align its vast financial resources with shifting strategic goals.

The history of Cohesion Policy is a compelling narrative of adaptation, reflecting a persistent tension between its foundational treaty-based objective of solidarity—reducing economic, social, and territorial disparities—and its instrumentalization to advance EU-wide competitiveness and, more recently, to serve as a frontline crisis-response mechanism. From its nascent origins in the Treaty of Rome as a principle of "harmonious development," the policy has morphed into a complex, multi-layered governance system. Its trajectory has been shaped by successive EU enlargements, paradigm shifts in economic thought, and a series of profound external shocks that have tested the Union's resilience and redefined its priorities.

This report argues that the evolution of Cohesion Policy's thematic focus can be understood as a journey through three distinct, though overlapping, eras. The first was an era of genesis, where a vague principle of solidarity was gradually forged into a structured policy with defined instruments and governance principles. The second was an era of strategic alignment, where the policy was explicitly harnessed to serve overarching EU agendas like the Lisbon Strategy and Europe 2020, a process often termed "Lisbonisation." The current era is one of crisis and transformation, where the policy has been repurposed as a flexible tool to manage shocks—from financial crises to pandemics and war—while simultaneously being tasked with driving the EU's ambitious twin transitions towards a green and digital future.

This analysis will proceed chronologically, examining the thematic frameworks of the 2000-2006, 2007-2013, 2014-2020, and 2021-2027 programming periods. It will then dissect the impact of major disruptions—enlargement, the 2008 financial crisis, Brexit, the COVID-19 pandemic, and the war in Ukraine—on the policy's priorities and implementation. Following an assessment of the policy's outcomes, including a discussion of its effectiveness and the distribution of its benefits, the report will conclude with a forward-looking analysis of the post-2027 framework, synthesizing key debates and official recommendations to project the future trajectory of this cornerstone of the European project.

I. The Genesis of Cohesion: From the Treaty of Rome to Thematic Concentration

The journey of EU Cohesion Policy from an abstract ideal to a cornerstone of the EU budget is a story of reactive evolution, political compromise, and gradual architectural construction. Its early development reveals the foundational tensions and governance principles that continue to shape its implementation today.

The Foundational Mandate: A Principle Without a Policy

The legal and moral underpinning of Cohesion Policy is rooted in the 1957 Treaty of Rome. The preamble declared the signatory states "anxious to strengthen the unity of their economies and to ensure their harmonious development by reducing the differences existing between the various regions and the backwardness of the less favoured regions". This language established a clear mandate for solidarity and territorial equity.

However, for nearly two decades, this mandate remained largely aspirational. The prevailing economic logic of the time trusted that interregional trade, spurred by the creation of the common market, would naturally iron out regional imbalances. Consequently, the treaty established only one limited instrument to support this goal: the European Investment Bank (EIB), created in 1957 to provide loans and guarantees but not direct grant funding. This initial structure reveals a foundational tension that has persisted throughout the policy's history: a conflict between the stated ideal of solidarity and the dominant neo-liberal logic of market integration. While the Treaty of Rome articulated a goal of cohesion, the lack of robust financial mechanisms or political will suggests that this goal was secondary to the primary project of establishing a free-trade area. The policy's interventionist logic was, from the outset, at odds with the free-market principles of competition policy, positioning cohesion as a compensatory, rather than primary, driver of European integration.

The First Instruments: Reactive Policy-Making

The establishment of the first major cohesion instrument, the European Regional Development Fund (ERDF) in 1975, was not a proactive strategic decision but a reaction to a confluence of pressures. The 1973 oil crisis exposed economic vulnerabilities across the Community, while the accession of the United Kingdom and a comparatively poor Ireland in the same year introduced significant new regional disparities. The ERDF was created, in large part, to allay British discontent over its minimal returns from the heavily agricultural-focused Community budget, which disproportionately benefited countries like France.

This origin story exemplifies a recurring theme in the policy's history: the use of cohesion funding as a political bargaining chip or "side-payment." Time and again, the expansion of cohesion instruments and budgets has been used to secure agreement from less-developed or disaffected member states for major steps in deeper European integration, such as the Single Market and the European Monetary Union (EMU). The initial focus of the ERDF was on overcoming basic physical barriers to economic development, with funding directed towards fundamental infrastructure projects.

The 1988 Delors Reform: Architecting the Modern Policy

The 1988 reform, championed by Commission President Jacques Delors in the run-up to the 1992 Single Market, was a watershed moment that established the modern architecture of Cohesion Policy. This reform doubled the policy's budgetary resources and, more fundamentally, introduced four core principles that continue to govern its implementation:

Concentration: The principle of focusing the majority of financial resources on a limited number of objectives and, geographically, on the poorest regions to maximize impact.
Programming: The requirement for Member States and regions to develop multi-annual strategic plans, known as Operational Programmes, which outline development priorities and planned investments.
Partnership: The obligation to involve sub-national actors—including regional and local authorities, economic and social partners, and civil society bodies—in the design, implementation, and monitoring of the programmes.
Additionality: The rule that EU funds must supplement, rather than replace, a member state's own public structural expenditure, ensuring that EU support provides genuine added value.

This reform signaled a significant strategic shift. The policy moved beyond simply financing individual infrastructure projects towards a more integrated, place-based approach aimed at fostering endogenous development potential. The thematic focus evolved from overcoming physical barriers to more complex goals like redesigning manufacturing clusters in regions undergoing industrial transition.

The Maastricht Treaty and the Cohesion Fund

The next major evolution came with the 1993 reform following the Maastricht Treaty, which established the Cohesion Fund, operational from 1994. Its creation was largely the result of political pressure from Spain, which sought additional support to meet the convergence criteria for joining the EMU.

The Cohesion Fund introduced a distinct, second tier to the policy. While the Structural Funds (ERDF and the European Social Fund, ESF) targeted specific regions (classified at the NUTS 2 level), the Cohesion Fund targeted the poorest Member States as a whole—those with a Gross National Income (GNI) per capita below 90% of the EU average. Its funding was specifically directed towards large-scale projects in the fields of environment and trans-European transport networks (TEN-T).

The establishment of the Cohesion Fund cemented a dual logic within the policy framework. The ERDF and ESF operate on a regional basis, addressing sub-national disparities, while the Cohesion Fund operates on a national basis, aiming to accelerate the convergence of entire national economies. This dualism can create coordination challenges and potential tensions. For instance, national-level infrastructure priorities financed by the Cohesion Fund may not always align perfectly with the specific, place-based development strategies being pursued by individual regions within that same country using ERDF funds. This inherent tension between national and regional development priorities has been a subject of ongoing debate, with some analyses, such as the influential Sapir Report, even suggesting that cohesion efforts should be focused entirely at the national level, leaving regional policy to the Member States. The persistence of both approaches within the same policy umbrella reflects a fundamental compromise between supporting the macroeconomic convergence of poorer countries and tackling specific, localized pockets of underdevelopment.

II. The Era of Strategic Agendas: The "Lisbonisation" of Cohesion Policy (2000-2013)

The turn of the millennium marked a pivotal ideological shift for Cohesion Policy. No longer solely a tool for solidarity and redistribution, it was explicitly instrumentalized to serve the EU's broader strategic goals of global competitiveness and sustainable growth. This process, which scholars have termed the "Lisbonisation" of Cohesion Policy, fundamentally altered its thematic focus and governance, setting a course that continues to this day.

The 2000-2006 Period: The Dawn of Competitiveness

The programming period from 2000 to 2006 was framed by the "Agenda 2000" reforms and, most significantly, by two new EU-wide strategies. The Lisbon Strategy, launched in March 2000, set the ambitious goal for the EU to become "the most competitive and dynamic knowledge-based economy in the world". A year later, the Gothenburg Agenda added a crucial sustainable development dimension to this vision, emphasizing the need to balance economic, social, and environmental pillars.

Funding during this period was structured around three main Objectives:

Objective 1: Focused on promoting the development and structural adjustment of regions lagging behind, defined as those with a GDP per capita below 75% of the EU average. This objective was the policy's centerpiece, absorbing nearly 70% of the total €213 billion budget.
Objective 2: Targeted the economic and social conversion of areas facing structural difficulties, such as regions of industrial decline, struggling rural or urban areas, and fisheries-dependent communities.
Objective 3: Supported the adaptation and modernization of education, training, and employment policies and systems, operating horizontally across regions not covered by Objective 1.

The thematic priorities were guided by three broad pillars: regional competitiveness, economic and social cohesion, and the development of urban and rural areas. Key investment areas included modernizing transport and energy infrastructure, promoting the information society through new services and user training, supporting SME competitiveness through business services and networking, developing human capital, and protecting the environment.

This period marked the clear beginning of the policy's "Lisbonisation." The traditional objective of reducing disparities was increasingly conflated with, and at times subordinated to, the EU-wide goal of enhancing competitiveness. Cohesion Policy was no longer justified merely on grounds of solidarity; it was reframed as a crucial instrument for transforming the EU's less-developed regions into contributors to the Union's collective economic ambitions. This pivot was not without tension, as the goals of pure cohesion and pure competitiveness can sometimes embody antagonistic rationales.

The 2007-2013 Period: Deepening the Focus on the Knowledge Economy

The reform for the 2007-2013 programming period, with a substantial budget of €347 billion, deepened and formalized the alignment with the Lisbon Strategy's focus on growth and jobs. The funding architecture was simplified into three new objectives, replacing the previous structure:

Convergence: The successor to Objective 1, this continued to target the least-developed Member States and regions. Investment priorities were explicitly linked to the knowledge economy, including physical and human capital, innovation, adaptability to change, environmental protection, and administrative efficiency. This objective commanded the lion's share of the budget, at 81.5% of the total.
Regional Competitiveness and Employment: This objective, the successor to Objectives 2 and 3, applied to all other regions across the EU. Its priorities were to strengthen competitiveness and attractiveness by promoting innovation, entrepreneurship, environmental protection, accessibility, and the development of inclusive labor markets.
European Territorial Cooperation: This objective, building on the previous INTERREG initiative, was designed to foster cross-border, transnational, and interregional cooperation to promote common solutions for shared challenges.

A key feature of this period was the introduction of "earmarking," a mechanism to ensure that a significant portion of Cohesion funds was directly invested in Lisbon-related priorities. For regions under the Convergence objective, at least 65% of funds had to be allocated to the Lisbon strategy; for the more developed regions under the Regional Competitiveness and Employment objective, this figure rose to 82%.

This led to a tangible shift in investment patterns. There was a marked pivot away from traditional "hard" infrastructure towards "soft" investments in knowledge and human capital. For example, the programmes for this period allocated a massive €85 billion to knowledge and innovation, including improving the innovation capacity of businesses and disseminating new technologies. A further €19 billion was dedicated to enhancing SME competitiveness. The focus on sustainability, driven by the Gothenburg agenda, also intensified, with investments in renewable energies and energy efficiency increasing fivefold compared to the 2000-2006 period.

This "Lisbonisation" was more than just a thematic reorientation; it represented a profound governance shift. By requiring regional and national authorities to align their multi-annual Operational Programmes with EU-level strategic objectives, the Commission used Cohesion Policy as a powerful tool of "Europeanization". It steered regional policy-making from the top down, embedding EU priorities at the local level through a decentralized delivery system that relied on the partnership principle. This process created a complex multi-level governance system where EU, national, and regional actors became bound together in the pursuit of common, EU-defined goals. This was not a one-way street; the process also involved a "Cohesionisation" of the Lisbon strategy, as the practicalities of implementing the strategy through cohesion instruments influenced its own evolution. This demonstrates that the policy is far more than a simple financial transfer; it is a sophisticated mechanism for diffusing EU norms and objectives across all levels of government, a hallmark of the Union's unique political architecture.

III. Formalising Focus: The 11 Thematic Objectives of the Europe 2020 Era (2014-2020)

The 2014-2020 programming period marked a further evolution in the governance of Cohesion Policy, moving towards a more rigid and explicit thematic framework. With a budget of €351.8 billion, the policy was directly and systematically linked to the EU's new ten-year overarching strategy, Europe 2020, which aimed to foster "smart, sustainable, and inclusive growth".

A New Architecture: The 11 Thematic Objectives (TOs)

To ensure a strong alignment with the Europe 2020 strategy, the legislative framework, primarily Regulation (EU) No 1303/2013, established a common menu of 11 Thematic Objectives (TOs). This framework was designed to concentrate funding on areas that would deliver the highest benefits to citizens and contribute most effectively to the EU's strategic goals. A key feature of this reform was that these 11 TOs applied across all five European Structural and Investment (ESI) Funds—the ERDF, ESF, Cohesion Fund, the European Agricultural Fund for Rural Development (EAFRD), and the European Maritime and Fisheries Fund (EMFF)—creating a Common Strategic Framework for the first time.

The 11 Thematic Objectives were:

Strengthening research, technological development and innovation (R&I)
Enhancing access to, and use and quality of, information and communication technologies (ICT)
Enhancing the competitiveness of small and medium-sized enterprises (SMEs)
Supporting the shift towards a low-carbon economy in all sectors
Promoting climate change adaptation, risk prevention and management
Preserving and protecting the environment and promoting resource efficiency
Promoting sustainable transport and removing bottlenecks in key network infrastructures
Promoting sustainable and quality employment and supporting labour mobility
Promoting social inclusion, combating poverty and any discrimination
Investing in education, training and lifelong learning
Enhancing institutional capacity of public authorities and efficient public administration

The Principle of Thematic Concentration

The most significant innovation of the 2014-2020 period was the introduction of mandatory thematic concentration. This principle required Member States and regions to concentrate a minimum share of their allocated funding on a limited subset of the 11 TOs. The goal was to prevent a "sprinkling" of funds across too many priorities and to ensure a critical mass of investment in areas deemed essential for the Europe 2020 strategy.

The concentration requirements were differentiated by fund and by the level of regional development:

European Regional Development Fund (ERDF): Funding was heavily concentrated on the first four "smart growth" objectives. In more developed regions, at least 80% of ERDF funds had to be allocated to R&I, ICT, SME competitiveness, and the low-carbon economy. In transition regions, this threshold was 60%, and in less developed regions, it was 50%. Furthermore, a specific ring-fencing for the low-carbon economy (TO4) was introduced, requiring a minimum of 20% of ERDF funds in more developed regions, 15% in transition regions, and 12% in less developed regions to be dedicated to this priority. This represented a clear shift away from traditional "hard" infrastructure towards innovation and green investments.
European Social Fund (ESF): The ESF focused primarily on TOs 8 through 11, covering employment, social inclusion, education, and institutional capacity. A crucial element of thematic concentration for the ESF was the requirement for each Member State to allocate at least 20% of its total ESF resources to promoting social inclusion and combating poverty (TO9).
Cohesion Fund: Investments from the Cohesion Fund were concentrated on TOs 4, 5, 6, 7, and 11, covering the low-carbon economy, climate change adaptation, environmental protection, sustainable transport, and institutional capacity.

This move towards mandatory spending targets marked a significant evolution in the European Commission's ability to steer the policy. Whereas previous programming periods suggested priorities and encouraged alignment through earmarking, the 2014-2020 framework legislated minimum spending percentages. This reflects a deeper desire for control from the center and a direct response to criticism that funds were too often used for projects that were not aligned with overarching EU goals. It represented a hardening of the "Lisbonisation" trend into a more prescriptive, top-down governance model. However, this increased focus on mandating financial inputs did not automatically guarantee better outcomes. Some analyses have suggested that despite the increased prominence and funding for innovation, its impact on the productive potential of lagging regions has been limited, highlighting a persistent challenge in translating financial allocations into tangible, transformative results.

IV. The Current Paradigm: Five Policy Objectives for the Twin Transitions (2021-2027)

The current 2021-2027 programming period represents the most recent evolution of Cohesion Policy's thematic framework. It is characterized by a drive for simplification, a consolidated strategic focus, and an explicit mandate to serve as the primary investment vehicle for the European Union's flagship political projects: the European Green Deal and the digital transformation.

Simplification and Strategic Focus: The 5 Policy Objectives (POs)

With a total budget of €392 billion for the seven-year period, the regulatory framework for 2021-2027 streamlined the previous structure. The 11 Thematic Objectives of the previous period were consolidated into five broader, more integrated Policy Objectives (POs). This was a deliberate move aimed at simplifying the policy architecture and breaking down the "silos" that had sometimes formed around the individual TOs, encouraging a more holistic approach to development.

The five Policy Objectives for 2021-2027 are:

PO1: A more competitive and smarter Europe by promoting innovative and smart economic transformation (covering innovation, digitalisation, and SME support).
PO2: A greener, low-carbon transition towards a net-zero carbon economy and a resilient Europe (covering energy transition, renewable energy, circular economy, and climate change adaptation).
PO3: A more connected Europe by enhancing mobility and regional ICT connectivity.
PO4: A more social and inclusive Europe by implementing the European Pillar of Social Rights (covering quality employment, education, skills, social inclusion, and equal access to healthcare).
PO5: A Europe closer to citizens by fostering the sustainable and integrated development of all types of territories, including a stronger role for local development strategies and urban initiatives.

The principle of thematic concentration is maintained and strengthened. The majority of investments from the European Regional Development Fund (ERDF) and the Cohesion Fund are required to be directed towards PO1 and PO2, reinforcing the focus on smart and green priorities. For example, the Cohesion Fund specifically supports PO2 (A greener Europe) and PO3 (A more connected Europe).

Driving the Green Deal and Digital Decade

The design of these five Policy Objectives is not arbitrary; it is explicitly engineered to deliver on the EU's paramount political priorities for this decade: the European Green Deal and the agenda for A Europe fit for the Digital Age.

PO2 ("A Greener Europe") serves as the primary financial instrument for the green transition at the regional level. It encompasses a wide range of investments aimed at achieving the EU's goal of climate neutrality by 2050, including support for clean energy, energy efficiency, the circular economy, biodiversity protection, and sustainable industry. Similarly, PO1 ("A Smarter Europe") provides the investment backbone for the digital transformation, supporting digitalisation in businesses and public services, as well as research and innovation in advanced technologies.

This framework solidifies Cohesion Policy's role as the main investment engine for the EU's most ambitious and transformative projects. It has evolved beyond being merely a compensatory policy or a tool for general competitiveness. It is now positioned as the financial bedrock for achieving the Union's long-term strategic autonomy and sustainability. This elevates the policy's importance to an unprecedented level but also places immense pressure on its ability to perform and deliver measurable results in these highly complex and challenging domains.

New Instruments: The Just Transition Fund (JTF)

A key innovation within the 2021-2027 framework is the creation of the Just Transition Fund (JTF). While part of the broader Cohesion Policy family, the JTF is a new, dedicated instrument established by its own regulation. Its purpose is to address the socio-economic costs of the climate transition in the territories most heavily impacted.

The JTF specifically targets regions with a high concentration of fossil fuel-related activities (such as coal mining) or carbon-intensive industries (like steel, cement, or chemicals) that will face significant restructuring challenges. For example, in Sweden, the JTF's €155 million allocation is focused on supporting the transition in the steel industry in Norrbotten, the mineral industry in Gotland, and the metal industry in Västerbotten. The fund supports economic diversification, the creation of new firms, the upskilling and reskilling of workers, and investments in clean energy technologies to mitigate job losses and create new opportunities.

The establishment of the JTF is a tacit and significant acknowledgement by the EU that its flagship Green Deal policy, while necessary, will inevitably create new regional disparities and produce economic "losers." The JTF represents a return to the original compensatory logic of Cohesion Policy, but with a crucial twist: it is not compensating for the effects of market integration, but for the disruptive consequences of the EU's own ambitious green policy agenda. It is a purpose-built tool designed to ensure the transition is "just" and that "no person and no place [is] left behind", an essential component for maintaining the political and social consensus required for such a profound societal transformation.

Table 1: Evolution of Thematic Priorities in EU Cohesion Policy (2000-2027)

Feature	2000-2006	2007-2013	2014-2020	2021-2027
Overarching EU Strategy	Lisbon Strategy / Gothenburg Agenda	Relaunched Lisbon Strategy (Growth & Jobs)	Europe 2020 Strategy (Smart, Sustainable, Inclusive Growth)	European Green Deal / A Europe fit for the Digital Age
Main Funding Structure	3 Objectives (Objective 1, 2, 3)	3 Objectives (Convergence, Regional Competitiveness & Employment, Territorial Cooperation)	11 Thematic Objectives (TOs) under a Common Strategic Framework	5 Policy Objectives (POs)
Key Thematic Focus (Keywords)	Regional Competitiveness, Social Cohesion, Infrastructure, Human Capital	Knowledge Economy, R&D, Innovation, SME Competitiveness, Energy Efficiency	Thematic Concentration on: R&I, ICT, SMEs, Low-Carbon Economy, Employment, Social Inclusion	Twin Transitions: Green & Digital, Competitiveness, Social Resilience, Territorial Development
Key Instruments	ERDF, ESF, Cohesion Fund	ERDF, ESF, Cohesion Fund	ESI Funds (ERDF, ESF, CF, EAFRD, EMFF)	ERDF, ESF+, Cohesion Fund, Just Transition Fund (JTF)

V. Disruptions and Adaptations: Cohesion Policy as a Crisis Response Tool

While Cohesion Policy is designed as a long-term structural investment policy, its recent history has been defined by its adaptation to a series of profound external shocks. These disruptions have not only reshaped its implementation and priorities but have increasingly transformed its core purpose, turning a strategic development instrument into a flexible, multi-purpose crisis management tool.

The Shock of Enlargement (2004 onwards)

The accession of ten Central and Eastern European (CEE) countries in 2004, followed by Bulgaria and Romania in 2007 and Croatia in 2013, fundamentally altered the economic and social geography of the Union. As these new Member States were, on average, significantly less developed than the EU15, they became the new focal point of Cohesion Policy.

This led to two major impacts. First, a massive eastward shift of funding occurred. From 2004 onwards, the majority of cohesion funds were allocated to CEE countries, which began receiving substantially larger amounts per capita than the traditional beneficiaries in Southern Europe. For the 2007-2013 period, Poland became the single largest recipient of cohesion funding, a dramatic change from previous periods. This rebalancing made Cohesion Policy a critical driver of public investment and modernization in the new Member States.

Second, enlargement created a significant "statistical effect." The entry of poorer countries lowered the overall EU average GDP per capita. This meant that some regions in older member states, particularly in Spain and Italy, which had previously qualified for the highest level of support (Objective 1), suddenly found their GDP per capita to be above the new, lower 75% threshold. Even though their own economic situation had not improved, they lost their eligibility, creating a new category of "phasing-out" regions that received transitional support.

Enlargement was arguably the policy's greatest test, demonstrating the EU's commitment to its principle of solidarity on an unprecedented scale. However, it also created a new and enduring political dynamic of clear "winners" (the CEE countries) and relative "losers" (older cohesion countries that saw their share of the budget diminish), a dynamic that continues to shape fierce negotiations over the EU's multi-annual budget. The current debate on the potential accession of Ukraine and other candidate countries has revived these very same concerns about financial sustainability and the fairness of allocation formulas.

The 2008 Financial Crisis and Austerity

The global financial crisis of 2008 and the subsequent sovereign debt crisis brought a decade of steady regional convergence in the EU to an abrupt halt. As national governments were forced to implement severe fiscal consolidation and austerity measures, public investment plummeted across the continent. In this context, Cohesion Policy was transformed into a critical economic lifeline. It became the major source of public investment for many Member States, particularly in the south and east. In the EU13, it financed an average of 41% of all government capital investment, with this figure rising to over 50% in several countries.

The EU responded by introducing flexibility into the policy, accelerating payments from the 2007-2013 programmes and extending the spending deadlines for the 2000-2006 programmes to inject liquidity into struggling economies. However, this came with a significant trade-off. The crisis was used as a justification to strengthen the link between Cohesion Policy and the EU's broader economic governance agenda. The 2014-2020 framework introduced macroeconomic conditionality, a controversial mechanism that allows the European Commission to suspend cohesion funds for a Member State that is not complying with the EU's economic rules, such as those under the Stability and Growth Pact and the European Semester.

This development was a double-edged sword. On one hand, the policy's role as an investment backstop during the austerity years was crucial for preventing an even deeper collapse in public infrastructure and services. On the other hand, it created a path dependency where the policy was seen as a flexible, counter-cyclical tool. This came at the cost of a more intrusive link with macroeconomic surveillance, making access to development funds conditional on national fiscal discipline. This fundamentally blurred the line between long-term regional development and short-term economic management, transforming the policy from a pure development instrument into a tool of EU economic enforcement—a tension that continues to define it.

The Rupture of Brexit

The 2016 decision of the United Kingdom to leave the EU represented a different kind of shock. Financially, it meant the loss of a major net contributor to the EU budget, creating a budgetary hole that put downward pressure on all major spending policies, including cohesion. For the UK itself, it meant the dismantling of a well-developed, multi-level governance system for regional policy that had been built over decades, leaving a significant policy vacuum.

The impact on the EU27, however, was more political and paradoxical. The Brexit vote was driven, in no small part, by a sense of discontent and alienation in many of the UK's post-industrial, "left-behind" regions—the very types of areas Cohesion Policy is designed to support. This starkly illustrated that financial transfers alone are insufficient to counter a rising "geography of discontent". The realization that decades of cohesion funding had failed to foster a stronger sense of European identity or belonging in these regions served as a wake-up call for the EU. It highlighted that the political and social dimensions of cohesion are just as critical as the economic one. This has influenced subsequent debates on the future of the policy, with a greater emphasis on making it more visible, people-centric, and effective at addressing citizens' perceptions of being ignored or left behind.

The COVID-19 Pandemic

The COVID-19 pandemic in 2020 was an unprecedented public health and economic shock that threatened to dramatically widen regional inequalities. Regions heavily dependent on tourism, culture, and contact-intensive services, as well as those with a high share of vulnerable SMEs, were hit particularly hard.

The EU's response was swift and relied heavily on the flexibility of Cohesion Policy. Through the Coronavirus Response Investment Initiative (CRII and CRII+) and the Recovery Assistance for Cohesion and the Territories of Europe (REACT-EU) package, Member States were given unprecedented freedom to reprogramme their 2014-2020 funding. Billions of euros were rapidly redirected to support national healthcare systems, finance job maintenance schemes (short-time work), and provide liquidity support for struggling businesses.

This response cemented Cohesion Policy's new role as the EU's go-to crisis-response fund. While widely praised for its speed and effectiveness in the short term, this has ignited a fundamental debate about the policy's core identity. Is Cohesion Policy a long-term, strategic instrument for structural change, or is it a short-term emergency fund? This constant "fire-fighting" and repurposing of funds risks fragmenting the policy, diverting it from its primary mission of fostering long-term convergence, and potentially undermining the strategic planning that is central to its design. This dilemma—how to maintain a long-term vision while needing to react to a seemingly endless series of short-term crises—has become a central challenge for the post-2027 framework.

The War in Ukraine and the Geopolitical Turn

Russia's full-scale invasion of Ukraine in February 2022 triggered another crisis, this time geopolitical and humanitarian. Once again, Cohesion Policy was adapted. The Cohesion's Action for Refugees in Europe (CARE) initiative provided Member States, particularly those on the EU's eastern border, with maximum flexibility to use cohesion funds to support the reception and integration of millions of Ukrainian refugees.

More profoundly, the war has caused what the EU's own Strategic Compass calls a "tectonic shift in European history," forcing a radical reassessment of security and defence. This geopolitical turn is now bleeding directly into Cohesion Policy. As part of its mid-term review of the 2021-2027 funds, the Commission has proposed legislative changes to allow cohesion funding to be used for investments in the defence industry and for building military mobility infrastructure.

This represents the newest and perhaps most profound shift in the policy's purpose: the "securitization of cohesion." The proposal to use a fund traditionally dedicated to development, solidarity, and civilian infrastructure for military-related purposes pits the policy's foundational goals against new, urgent geopolitical imperatives. This has created significant political tension. Proponents argue it is a pragmatic use of available funds to address an existential threat. Opponents, including the European Committee of the Regions, have called the idea of diverting development funds to defence a "catastrophic mistake" that could gut the policy of its core purpose and undermine the multi-level governance partnership at its heart. The outcome of this debate will be a defining feature of the post-2027 policy, determining whether its soul remains rooted in regional development or is reshaped by the demands of hard security.

Table 2: Cohesion Policy as a Crisis Response Instrument

Crisis/Disruption	Nature of the Shock	Key EU Response Mechanism	Main Thematic Focus of Response	Long-Term Impact on Policy
2008 Financial Crisis	Financial / Economic	European Economic Recovery Plan (EERP); Macroeconomic Conditionality	SME liquidity, Public Investment Lifeline, Structural Reforms	Strengthened link to economic governance and the European Semester; policy becomes a tool of fiscal enforcement.
COVID-19 Pandemic	Public Health / Economic	CRII / CRII+ / REACT-EU	Healthcare Systems, Job Retention (short-time work), SME working capital	Cemented role as a flexible crisis fund; sparked debate on flexibility vs. long-term goals.
War in Ukraine	Geopolitical / Security / Humanitarian	CARE; Mid-term review proposals	Refugee Support, Military Mobility, Defence Industry Investment	The "Securitization of Cohesion"; fundamental debate on using development funds for defence priorities.

VI. Winners and Losers: A Territorial and Sectoral Analysis of Funding Shifts

The continuous evolution of Cohesion Policy's thematic priorities and its adaptation to external shocks have produced clear distributional consequences. Analyzing these shifts reveals a complex landscape of geographical and sectoral "winners" and "losers," though the reality is more nuanced than a simple zero-sum game.

The Eastward Drift: A Geographical Rebalancing

The most dramatic distributional shift in the policy's history has been geographical. Prior to the 2004 enlargement, the primary beneficiaries of cohesion funding were the less-developed regions of Southern Europe, often referred to as the "Cohesion Four": Spain, Portugal, Greece, and Ireland, along with Italy's Mezzogiorno.

The accession of the CEE countries triggered a decisive and permanent eastward drift of funds. In the 2007-2013 programming period, Poland emerged as the single largest beneficiary, receiving €59.7 billion, followed by Spain (€31.5 billion) and Italy (€25.7 billion). However, on a per capita basis, the intensity of the funding was far greater in the new Member States. The Czech Republic (€2,326 per capita), Hungary (€2,223 per capita), and Estonia (€2,186 per capita) received allocations that dwarfed those of older, larger Member States like France (€213 per capita) or the UK (€159 per capita). This trend of CEE countries being the primary recipients continued and consolidated in the 2014-2020 period, where Cohesion Policy became the dominant source of public investment for many of these nations, financing critical infrastructure upgrades and economic modernization.

The clear geographical winners have been the CEE Member States, for whom Cohesion Policy has been a transformative engine of development and integration into the Single Market. The relative losers have been the Southern European states, which have seen their share of the total budget shrink, and numerous regions in wealthier Member States that, due to the "statistical effect" of enlargement, no longer qualify for significant support.

However, this narrative is incomplete without considering the "hidden winners": the net contributor countries themselves. Studies have shown that these countries, such as Germany, Austria, and formerly the UK, benefit significantly from economic spillovers. Their firms often win public procurement contracts for large infrastructure projects financed by cohesion funds in recipient countries, and they benefit from increased exports of goods and services to these growing markets. One analysis estimated that for every euro the UK contributed to Cohesion Policy, it received returns equivalent to 41 cents through these indirect economic channels. This demonstrates that the policy is not merely a one-way transfer from rich to poor but a powerful mechanism for integrating the entire Single Market. It creates demand and builds capacity in the EU's periphery, which in turn creates business opportunities and export markets for the EU's core, binding the Union together in a web of mutual economic benefit. This helps explain the policy's enduring political support even among net contributors.

Table 3: Top Member State Recipients of Cohesion Funding (2007-2013)

Rank	Member State	Total Allocation 2007-2013 (€ billion)	Per Capita Allocation 2007-2013 (€)
1	Poland	59.70	1,563
2	Spain	31.54	746
3	Italy	25.65	443
4	Czech Republic	23.70	2,326
5	Germany	23.45	284
6	Hungary	22.45	2,223
7	Portugal	19.15	1,857
8	Greece	18.22	1,656
9	Romania	17.32	777
10	France	12.74	213
Source: Synthesized from data presented in Nordregio analysis. Note: Data for the 2014-2020 period is not available in a comparable tabular format in the provided materials, but narrative sources confirm the continuation of this geographical trend.

Thematic Rebalancing: From Asphalt to Innovation

Alongside the geographical shift, there has been a profound thematic rebalancing of investment priorities. Early periods of the policy, particularly before the 2000s, were dominated by investments in "hard" infrastructure. The primary goal was to overcome physical barriers and connect peripheral regions, leading to a heavy focus on building roads, railways, and other basic networks.

The launch of the Lisbon Strategy marked the beginning of a decisive pivot. The 2007-2013 and 2014-2020 periods saw a dramatic increase in funding directed towards "soft" and "green" priorities. The sectoral winners of this shift have been areas related to the knowledge economy and sustainability. Research and development (R&D), innovation support, SME competitiveness, the digital sector, and the low-carbon economy (including renewable energy and energy efficiency) have seen their share of the cohesion budget grow exponentially. The sectoral losers, in relative terms, have been traditional transport infrastructure projects. While still receiving a very significant share of funding—especially through the Cohesion Fund, which remains focused on TEN-T networks—their proportion of the overall Cohesion Policy budget has declined as the new priorities have claimed a larger slice of the pie.

This thematic evolution reflects a parallel evolution in economic development theory. The early focus on infrastructure was consistent with exogenous growth models, which emphasize the role of physical capital investment in driving development. The later shift towards R&D, skills, and innovation aligns with modern endogenous growth theories, which argue that long-term prosperity is driven by knowledge, human capital, and a territory's capacity for innovation.

However, the policy has struggled to keep pace with this theoretical ambition in practice. While the thematic focus has successfully shifted, the policy's tangible impact in these new, more complex fields has been questioned. Multiple analyses have found that the increased support for innovation has had a limited effect on the productive potential and productivity growth of lagging regions. This suggests a significant gap between the policy's strategic goals and its capacity to effectively implement programmes in sophisticated areas like R&D and technology diffusion. Simply allocating money to "innovation" does not guarantee that transformative innovation will occur, pointing to persistent challenges related to institutional capacity, governance, and the difficulty of fostering genuine innovation ecosystems in regions that lack them.

VII. Assessing the Impact: Debates on Effectiveness and Accountability

Evaluating the true impact of a policy as vast and multifaceted as Cohesion Policy is an inherently complex endeavor. Decades of implementation have generated a rich body of analysis from both academic researchers and institutional auditors. This scrutiny reveals an unsettled debate on the policy's effectiveness and persistent concerns about accountability and administrative performance.

The Academic View: An Unsettled Debate

The academic literature assessing the macroeconomic impact of Cohesion Policy is characterized by varied, and often inconclusive, results. There is no definitive consensus on its effectiveness in generating growth or accelerating convergence.

On one hand, macroeconomic simulation models, such as HERMIN and QUEST, which are often commissioned by the European Commission, tend to produce positive results. These models estimate that cohesion funding has a significant positive impact on the GDP of recipient regions. For instance, the HERMIN evaluation of the 2000-2006 period estimated that funding equivalent to one percent of a region's GDP could generate GDP increases of between 1.1% and 4.2% by 2020. More recent modeling by the JRC suggests that every euro invested during the 2014-2027 period will generate €1.3 of additional GDP by 2030.

On the other hand, a large body of independent econometric research presents a more skeptical picture. Many of these studies find no statistically significant positive impact of cohesion funds on regional growth, while others conclude that any positive impact is conditional on other factors, such as the quality of national and regional institutions, sound macroeconomic policies, or the level of human capital in the recipient region. Some studies even find evidence of negative effects, potentially due to the crowding out of more productive private investment or inefficiencies in public spending.

This lack of academic consensus stems from a fundamental methodological challenge: the near impossibility of establishing a credible counterfactual. It is intractable to know with certainty what would have happened in a given region in the complete absence of the policy. This "methodological impasse" means that it is difficult to isolate the causal effect of cohesion funding from the myriad other factors that influence regional economic development. As a result, the policy's perceived success often becomes a matter of political narrative and debate as much as of scientific fact. The reliance on simulation models by proponents and the inconclusive findings of empirical studies by skeptics creates a vacuum that is often filled by political positioning, weakening the policy's defense against critics in high-level budgetary negotiations.

The Auditor's Verdict: A Persistent "Material Level of Error"

While academics debate the policy's economic impact, the European Court of Auditors (ECA) focuses on the legality and regularity of its spending. For years, the ECA's annual reports have consistently found that Cohesion Policy spending is affected by a "material level of error," meaning the level of irregular expenditure is regularly above the 2% materiality threshold deemed acceptable. In 2022, the error rate for cohesion spending reached a peak of 6.6%.

The ECA has identified several root causes for these persistent problems:

Complexity and Red Tape: The auditors have repeatedly pointed out that the policy is governed by rules that are often excessively complex. This leads to a significant administrative burden for programme authorities and beneficiaries, increasing the likelihood of errors and non-compliance.
Ineffective Control Systems: The ECA has found shortcomings at all layers of the "control pyramid." This includes inadequate verifications by the Member States' managing authorities, weaknesses in the work of national audit bodies, and insufficient oversight from the European Commission. Common errors include declaring ineligible expenditure, non-compliance with public procurement rules, and breaches of state aid law.
Weak Performance Measurement: Despite a growing emphasis on a "results orientation" in the regulations, the ECA has found that this has had little noticeable difference on how funds are actually allocated and disbursed. Performance monitoring and evaluation frameworks are often weak, hindering evidence-based policymaking.
Absorption Issues: A chronic challenge for the policy is the slow absorption of funds. Delays in adopting regulations and approving programmes at the start of a funding period often lead to a rush to spend money at the end, which can compromise the quality of projects.

The ECA's findings reveal a fundamental assurance-performance paradox. The immense complexity of the rules and the multi-layered control systems are designed to provide assurance to the EU taxpayer that money is being spent legally and correctly. However, this very complexity creates administrative bottlenecks, stifles innovation, and leads to the high error rates it is meant to prevent. This, in turn, hinders the policy's overall performance and effectiveness. The constant call for simplification is a direct attempt to resolve this paradox. Yet, the need for simplification often conflicts with the equally strong demand from budgetary authorities for robust financial control, especially in a policy area with such a high documented error rate. Finding a sustainable balance between these two competing demands—simplicity for performance and complexity for assurance—remains one of the greatest challenges for the future of Cohesion Policy.

VIII. The Future of Cohesion: Navigating Post-2027 Challenges and Opportunities

As the European Union looks towards its next multi-annual budget cycle, the debate over the future of Cohesion Policy post-2027 is already well underway. The policy stands at a crossroads, shaped by decades of evolution, a series of profound crises, and a new set of geopolitical and strategic challenges. Its future form will be determined by a series of critical debates on its budget, its mission, and its governance.

The High-Level Group's Blueprint for Reform

In a significant move to steer the debate, the European Commission established a High-Level Group of specialists on the Future of Cohesion Policy in January 2023. Chaired by Professor Andrés Rodríguez-Pose, the group brought together experts from academia, politics, and civil society to reflect on how the policy could be modernized.

The group's final report, published in February 2024, provides a comprehensive blueprint for reform. It argues that cohesion is more necessary than ever to tackle the EU's structural challenges, including economic stagnation in many regions, growing polarization, and a lack of opportunities that fuels a "tide of discontent". The report makes several key recommendations for a revamped post-2027 policy, urging it to be:

More place-based and people-based: Moving away from "one-size-fits-all" approaches and tailoring investments to the unique needs and potential of each region. This includes a stronger focus on social policy, human capital development, and tackling inequalities affecting vulnerable groups.
Performance-based and simplified: Streamlining administrative procedures to reduce red tape while strengthening the focus on achieving measurable results and tangible benefits for citizens.
Governance-focused: Reinforcing the core principles of shared management and partnership to ensure the involvement of regional and local authorities and civil society, and making institutional capacity-building a key investment priority.
Focused on its core mission: While acknowledging the need for flexibility, the report stresses that the policy should remain fundamentally concerned with its original mission of driving long-term, sustainable development and reducing disparities, rather than being constantly diverted to short-term crisis management.

Key Debates for the Next Multiannual Financial Framework (MFF)

The High-Level Group's report provides a strategic framework, but the final shape of the post-2027 policy will be forged in the political negotiations over the next MFF. Several key battlegrounds have already emerged:

Budget Size: The overall financial envelope will be fiercely contested. Regional associations and political groups like the Socialists and Democrats are calling for the budget to be maintained at its current level (at least one-third of the total EU budget) or even increased, especially if the policy is expected to take on new tasks. Conversely, some net contributor Member States, concerned about new EU priorities like defence and migration and demanding greater efficiency, may push for a smaller allocation.
Flexibility vs. Long-Term Mission: This is the central strategic dilemma. A powerful consensus is emerging that the policy must be able to respond to unforeseen crises, as it has done for the pandemic and the war in Ukraine. However, there is deep concern that making it a permanent crisis-response tool will undermine its primary purpose as a stable, long-term investment policy for structural change.
New Thematic Priorities: There is strong pressure to formally integrate new strategic priorities into the policy's remit. The most prominent and controversial of these is defence, with proposals to allow cohesion funds to support the defence industry and military mobility. Other emerging priorities include enhancing support for affordable housing, improving water resilience in the face of climate change, and boosting investments in strategic technologies to enhance EU competitiveness.
Governance Model: The success of the temporary Recovery and Resilience Facility (RRF), with its centralized, performance-based model linked to national plans and reforms, has sparked a debate about the future governance of Cohesion Policy. Some propose adopting a similar model, which could lead to a re-nationalization of the policy and weaken the role of regional and local partners. This is strongly opposed by regional authorities and proponents of the current shared management system, who argue that the partnership principle is essential for the policy's legitimacy and effectiveness.

Strategic Foresight and Future Trajectory

In an attempt to move beyond reactive crisis management, the EU is increasingly seeking to embed Strategic Foresight into its policymaking processes. This discipline aims to explore possible futures, anticipate long-term trends, and help policymakers act in the present to shape a desired future, rather than simply reacting to events. For Cohesion Policy, this means trying to design a framework that is resilient and adaptable enough to handle future shocks while still pursuing its long-term goals.

The post-2027 policy is therefore likely to be a complex hybrid. It will almost certainly retain its core principles—a place-based approach, shared management, and a primary focus on convergence—due to the strong political constituency supporting them. However, it will also have to accommodate the new realities. The unwavering commitment to the twin green and digital transitions will be non-negotiable and will likely intensify. It is also highly probable that the policy will incorporate greater built-in flexibility and new thematic windows or envelopes for strategic priorities like defence, competitiveness, and crisis response.

This points towards a future where Cohesion Policy may cease to be a singular, monolithic policy. Instead, it could evolve into a broader "Cohesion Framework" that houses multiple, distinct but related instruments under a single legislative and budgetary umbrella. This framework might include: a core fund for long-term regional convergence, a permanent crisis-response and flexibility reserve, a dedicated fund for just transition (an expanded JTF), and specific envelopes for strategic EU-level priorities. Such a structure would formalize the fragmentation that is already occurring de facto. It would be a pragmatic solution to reconcile the many contradictory demands being placed on the policy, allowing it to maintain its large budget and political centrality. However, it would also make it an even more complex policy to govern, manage, and evaluate, posing significant challenges for transparency, coordination, and accountability in the decades to come.

Conclusion

The history of EU Cohesion Policy's thematic priorities is a testament to its remarkable capacity for evolution. Born from a simple, almost vague, treaty principle of solidarity, it has matured into the European Union's most significant long-term investment policy and a sophisticated tool of multi-level governance. Its journey reflects the broader story of European integration itself: a continuous process of adaptation to new members, new economic paradigms, and unforeseen crises.

The analysis reveals a clear trajectory. The policy's initial focus on basic infrastructure gave way to a more strategic "Lisbonisation," where its vast resources were harnessed to boost the competitiveness of the knowledge-based economy. This was followed by a period of formalized thematic concentration under the Europe 2020 strategy, which embedded priorities like innovation and the low-carbon economy into the very fabric of the regulations. Today, the policy is the designated engine for the EU's twin green and digital transitions, a mission that elevates its strategic importance to an unprecedented level.

However, this evolution has been punctuated and profoundly shaped by a series of shocks. Successive enlargements shifted its geographical focus eastwards, testing the limits of EU solidarity. The 2008 financial crisis transformed it into a vital source of public investment, a but at the cost of linking it to macroeconomic conditionality. The COVID-19 pandemic and the war in Ukraine have cemented its role as a flexible crisis-response mechanism, raising fundamental questions about its core identity. The latest push to incorporate defence spending represents the "securitization of cohesion," a profound challenge that pits its traditional development goals against new geopolitical realities.

This has created a set of enduring tensions that will define the policy's future post-2027. The first is the foundational tension between solidarity and competitiveness—between reducing disparities and boosting EU-wide growth. The second is the operational tension between its role as a long-term structural policy and a short-term crisis fund. The third is the emerging strategic tension between regional development and geopolitical security.

The path forward, as sketched by the High-Level Group and emerging policy debates, points towards a more complex, hybrid future. Cohesion Policy will likely remain a cornerstone of the EU project, retaining its place-based approach and shared management principles. Yet, it will also become more fragmented, incorporating new priorities and greater flexibility. The ultimate challenge will be to manage this complexity—to ensure that in trying to be everything to everyone, Cohesion Policy does not lose sight of its original and most vital mission: to foster a more harmonious, equitable, and prosperous Union for all its citizens, regardless of where they live.