Grosse, Tomasz Grzegorz

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Policy Documentation Center

What future
for cohesion policy?
Tomasz Grzegorz Grosse
No. 1
January 2008
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l Poland should join the discussion about the future of
cohesion policy as soon as possible. 
l Poland should aim at maintaining the largest possible
budget of this policy, but it should also propose changes
regarding the content and management methods thereof.
l Proposals for changes in cohesion policy should take into
consideration the strategic objectives of Polish diplomacy
on European arena. This requires determination of
priorities and negotiation tactics as well as coordination of 
actions promoting Polish position.
l Proposals regarding a reform of cohesion policy should
address the development goals of Polish economy. Top
priority should be assigned to supporting its
innovativeness and competitiveness on external markets.
l Moreover a proper coordination is needed between
cohesion policy and other European policies: rural
development policy and innovation policy.
THE INSTITUTE OF PUBLIC AFFAIRS
I N S T Y T U T S P R A W P U B L I C Z N Y C H
A discussion on the future of cohesion policy has been already initiated within European
institutions. In late 2007 Danuta Hübner, the Commissioner for regional policy, started
official consultations on that issue. Presently DG regional policy is collecting opinions of
the member states, territorial governments, social and economic partners and NGOs, with a
view to presenting an initial concept for cohesion policy reform in the fifth cohesion report
in spring 2008. This is a good example of how programme discussions are shaped in Europe:
they usually commence much ahead of time.
Expectations of the largest payers
The discussion on the future of cohesion policy is affected by several factors. First ofall, the largest payers aim at limitation of spending on this policy. One of the ways toattain this goal is a postulate to target the policy instruments solely at the
least-developed regions, and to decrease the available financial assistance for areas in
transition (due to improvement of economic development indicators). It must be also borne
in mind that according to available forecasts, the GDP per capita in Mazowsze region in
2013 will significantly exceed 90% of EU-27 average. Therefore the years after 2013 will be 
most likely the last programming period seeing participation of some Polish regions under
transitional arrangements. It is also likely that there will be attempts at partial
re-nationalisation of this policy, i.e. transferring its tasks to the member states. Other ideas
leading to savings also surface in this context. It is worthwhile mentioning among them the
proposal of gradual transition from not-repayable subsidies from Union budget to banking
products, i.e. increasing the role of bank loans in cohesion policy. As an example, there are
concepts of replacing Union funds fully financed from the EU budget with funds partially
renewable from return on investment loans. This is linked to introduction of financial
management methods derived from private sector and gradual replacement of civil servants
work with specialised structures of commercial financial institutions.
Another proposal is an attempt at limiting cohesion policy spending in instances when
this would entail delocation of businesses from other European countries. Such
solutions were already introduced for 2007–2013 period for some measures supporting
investments for entrepreneurs. There is also the so-called globalisation fund, limiting
adverse social and economic outcomes relating to liberalisation of world trade and
delocation of business activity to third countries. The described phenomena are likely to
intensify in the future. This means that there will be attempts at introducing restrictions in
delocation of business activity to the least-developed regions, which are covered with
cohesion policy measures. This is an even broader problem, one concerning economic
rivalry on the common market. This gives rise to such fundamental questions as: to what
extent should Union policies support firms in under-developed areas of Europe? How far
can they go in restricting free competition on the common market and weakening the market
advantage between enterprises from the richest regions and those originating from the
least-developed areas? Some politicians from the best-developed countries try to limit
cohesion policy support for enterprises, particularly in innovative economy segments, and
suggest that this policy should be targeted exclusively at basic infrastructure and social
measures.
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Institute of  Public Affairs Analyses &  Opinions, 1
The saved cohesion policy funds might be transferred to other development goals,
particularly those connected to innovation policy. This trend to reinforce development of
modern economy in Europe is already visible in the budget for the years 2007–2013. It is
manifested in an increase in budget for the Seventh Framework Programme (compared to
the sixth one), as well as in introduction of a new Competitiveness and Innovation
Framework Programme. It must be borne in mind that the basic calculation each member
state makes before undertaking a discussion on a future EU budget is an assessment of the
facility to take advantage of European funding, i.e. to „regain” the largest possible portion of 
own membership contribution.
Another possibility is to „reallocate” the financing of the existing cohesion policy to
objectives relating to new political challenges faced by the Union in early 21st century. It
has been long postulated that the role of budget priorities relating to development of the
European foreign policy and defence capacities be increased. Some completely new
proposals for actions might surface in the discussion on a future EU budget, e.g. ones
relating to counteracting climate change in Europe, solving demographic problems or
integration of immigrants. Some of the aforementioned actions might be included into
cohesion policy being created, thus changing its substantive direction and the geographic
distribution of funding. They might also give rise to completely new European policies and
thus compete with  cohesion policy for a share of the EU budget.
Objectives of beneficiaries and of the European
Commission
Future cohesion policy will be largely shaped by the positions of  the biggestbeneficiaries of EU assistance and of the European Commission, which is to proposeguidelines for a future cohesion policy. Attention will be paid to the positions of new
member states, particularly Poland, which is the biggest beneficiary of EU budget in the
years 2007–2013. Moreover Polish diplomacy will have a significant influence over the
formulation of a new cohesion policy, inter alia when Poland assumes the rotary presidency
in the Union in 2011. Many beneficiaries of cohesion policy focus mainly on maintaining as
far as possible the status quo of this policy or on securing for themselves maximum
assistance in transitional periods.
On the other hand, the European Commission will most likely aim at maintaining the size of
cohesion policy budget and securing for itself the biggest possible influence on the
programming and methods of implementation of this policy. This is evidenced by attempts
at increasing the Commission’s role through control over some kinds of spending on Lisbon
priorities. One can also expect that the Commission will make attempts at restricting
decentralisation of cohesion policy administration to the level of member states. This
purpose is served by the postulate to strengthen broad social partnership when investments
are deployed. On the other hand, decentralisation of policy management to the level of
regions is left up to decisions of individual member states; a large percentage of national
governments insist on this solution.
It is Commission’s aim to have Lisbon Strategy objectives better addressed in a new
cohesion policy. In Commission’s opinion this shall provide an opportunity to improve
What future for cohesion policy? 3
Analyses &  Opinions, 1 Institute of  Public Affairs
the efficiency of Lisbon Strategy implementation and an argument against limitation of
cohesion policy size. This is evidenced by the communication of December 2007, where
closer ties between National Reform Programmes (implementing the said strategy) and
cohesion policy instruments are suggested. The communication also proposes strengthening
of Lisbon priorities, particularly investments ensuring development of knowledge and
innovation, supporting SMEs, stimulating employment growth. It must be borne in mind,
however, that Lisbon strategy also covers flexibly the traditional objectives of cohesion policy 
pertaining to expansion of ecological, transport, energy and other infrastructure. This signifies 
that references to Lisbon objectives only partly serve the purpose of changing the substantive
profile of cohesion policy, while they are to some extent merely marketing and promotional
measures, with aim to facilitate approval of the Commission proposal by member states.
Assessment of the outcome so far
Assessment of the outcomes of implementation of existing cohesion policy measuresand effectiveness of absorption of funds by member states and regions is of centralsignificance for a debate on new cohesion policy. It is notable that many experts
from independent research centres as well as European institutions critically assess the
implementation results of the existing cohesion policy instruments. Recently the European
Court of Auditors presented a report (2007) criticising the usefulness of individual measures 
of this policy.
Experts frequently make a charge that cohesion policy hardly stimulates sustainable
economic development of under-developed areas, which stems from inner potential for
growth and innovation. Critics point out that cohesion policy not infrequently serves solely
the purpose of redistribution of incomes, improvement of living conditions of citizens and
political goals, including those related to improvement of the social image of European
integration (the discussion on this topic is presented in more detail in: T.G. Grosse,
Innowacyjna gospodarka na peryferiach?, the Institute of Public Affairs, Warsaw 2007).
Some critics also express doubts whether new member states are capable of full absorption
of cohesion policy assistance funds. The quoted arguments are most frequently used by
politicians aiming at limitation of the budget and the scope of cohesion policy. Regretfully,
such arguments are  much less frequently used in attempts to reform the policy.
Main questions for the future
Thus we can point out a few fundamental problems concerning the future of cohesion policy, 
which are currently discussed in European institutions:
1. Should cohesion policy budget be decreased, and should measures be introduced that
marginalize significance of this policy, e.g. through its partial renationalisation? 
2. What substantive direction should cohesion policy assume? Should it be limited solely to
infrastructural measures and social development (e.g. pertaining to prevention of
unemployment)? Or perhaps we should continue increasing the significance of objectives
related to Lisbon strategy, particularly those supporting development of innovative
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Institute of  Public Affairs Analyses &  Opinions, 1
economy? Should we add new objectives, e.g. ones pertaining to effects of climate change or
allowing for easier assimilation of emigrants? Should rural development policy continue to
be excluded from cohesion policy?
3. What should be the area of cohesion policy influence: should it cover all countries or only the
poorest ones? Should structural assistance be targeted more at areas selected due to their
specific development problems?
4. How should cohesion policy be managed? Should we strengthen decentralisation (to member 
states and their regions), or on the contrary – should we strengthen the role of the European
Commission and other Community institutions? Should the principle of single-fund
operational programmes be maintained? How can the role of public-private partnership be
enhanced? How can territorial cooperation (e.g. between cities and rural governments) and
integrated planning be enforced?
Conclusions and recommendations
1. It must be assumed that the maintenance of cohesion policy in its present shape is highly
unlikely. Moreover, the absence of changes would be quite disadvantageous for Poland,
because it might lead to gradual marginalization of this policy. Therefore Poland should
promptly and assertively join the discussion on the future of cohesion policy. We should not
limit ourselves just to defending its budget, but propose changes as concerns its content and
implementation. This does not imply that Polish position should be excessively critical
towards the present cohesion policy. On the contrary, we have important positive outcomes
of the existing policies and should present them during European debate. For instance,
a far-reaching decentralisation has been important for effectiveness of cohesion policy
implementation in Poland. We should also stress the successful improvement of the
absorption of European assistance funds. 
2. Proposals for changes in cohesion policy should take due account of the strategic goals of
Polish diplomacy on European arena in a broader perspective. The Union is a structure of
communicating vessels; not infrequently actions in one area have impact on others, and less
important goals are sacrificed for the sake of attaining the fundamental ones. A good example 
is the problem of a further enlargement of the European Union to the east and south
(accession of Croatia is scheduled for as early as 2010). Since potential new member states
would be poor countries, this would most likely affect Polish interests as a beneficiary of
cohesion policy. Therefore policy pursued at the European level requires coordination and
prioritizing of individual goals. This will become particularly necessary when plans are made 
for Polish Presidency in the European Union in 2011.  
3. Proposals regarding a reform of cohesion policy should address the development goals of Polish
economy. It seems that support to development of economy that is innovative and competitive on
external markets should be of central importance. Hence cohesion policy should – to a larger
extent than it does now – stimulate development of such economy in least-developed regions, by
building on their internal resources: scientific and research infrastructure, staff of researchers and
well-educated employees, innovative local undertakings, intra-regional cooperation networks
support (including financing) to regional development etc. Cohesion policy may also support
regional innovation systems and improve efficiency of their ties with national innovation
What future for cohesion policy? 5
Analyses &  Opinions, 1 Institute of  Public Affairs
systems. It should also provide for better preparedness of Polish entities for participation in EU
innovation policy. Considering such multitude of tasks, proposals to limit cohesion policy solely
to objectives relating to development of basic infrastructure and counteracting unemployment
seem least suitable for Poland.
4. It is also highly important for Poland to develop proper negotiation tactics, in particular to
convince the biggest payers to maintain a large budget of the policy. To this end, regions of
the net contributors should also be allowed to participate in a reformed cohesion policy. This
purpose can be also served by gradually increasing the inclusion of Lisbon goals into
cohesion policy. We should also enable conditional approval for new objectives of cohesion
policy, e.g. those pertaining to counteracting adverse effects of climate change, demographic
problems or inflow of emigrants. It seems that concessions made by Poland on that issue
should be compensated for by an greater support for development of innovative economy.
One should also point out that problems relating to climate change and excessive
immigration will increasingly affect Poland in the future.
5. Proper coordination of cohesion policy instruments with other European policies is also of
enormous importance. This concerns first of all the relation of cohesion policy and rural
development and innovation policies. The exclusion of rural development policies from the
cohesion policy (in 2007–2013 period) was a serious mistake. It resulted in the allocation of
European assistance funds for rural areas mainly to tasks related to modernisation of
agricultural and food sector as well as the improvement of incomes and living conditions of
rural residents. On the other hand, it hardly contributed to changes in economic activity
profile and to ensuring sustainable development. When debating a new cohesion policy, we
should aim at increasing the assistance for rural areas, albeit targeted differently than the
instruments of rural development policy (currently available under CAP). This concerns
support for innovative development strategies, including diversification of economic activity 
in rural areas. A new cohesion policy should be also better coordinated with EU innovation
policy. We should increase the support for the development of innovative economy in
least-developed areas of Europe, e.g. better prepare entrepreneurs and researchers from those 
regions for the participation in the European innovation policy.
6. Compared to other new member states, Poland’ implementation of cohesion policy entailed
a relatively high participation of voivodeship (regional) governments. Likewise, Poland
should support further decentralisation of this policy, both at the national and regional levels.
6 What future for cohesion policy?
Institute of  Public Affairs Analyses &  Opinions, 1
Dr To masz Grze gorz Gros se, is an ex pert of the In sti tu te of Pu b lic Af fa irs spe cia li sing   in co he sion po li cy
is su es. He re cen t ly pu b li s hed a book ti t led In no wa cyj na go spo dar ka na pe ry fe riach? (In no va ti ve eco no my in
pe ri p he ries?) (2007). He is pre pa ring for print a book de vo ted to fu tu re of Eu ro pe an in te gra tion ti t led: Eu ro pa na
roz dro ¿u (Europe at crossroads).
Ana lyses & Opi nions
No. 1(80)*, January 2008
Se ries Edi tor: dr Ja cek Ku cha r czyk
Series Coordinator: Rafa³ Za³êski
Analyses & Opinions is a series of policy briefs highlighting pressing issues and presenting policy recommendations.
Se ries is pre pa red with the sup port of Trust for Ci vil So cie ty in Cen tral and Ea stern Eu ro pe.
*More is su es of Ana ly ses & Opi nions are ava i la b le in the Po lish ve r sions at www.isp.org.pl
Co py right Fun da cja In sty tut Spraw Pu b li cz nych
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