IN 30 SECONDS
- What is happening? The European Commission is currently examining abolishing the Directorate-General for Regional Policy to free funds and redirect them to defense, according to EU sources consulted by Moncloa.com.
- Who is pushing the measure? A group of Eastern flank Member States and France, concerned about the bloc’s military capacity, are pressuring Brussels to make security spending a priority in the next Multiannual Financial Framework.
- What impact does it have for Spain? Our country has historically been the main recipient of regional funds and could see up to €8.5 billion per year in investments for autonomous communities such as Extremadura, Andalusia or Castilla-La Mancha at risk.
The debate that the College of Commissioners had been cooking up in the silent corridors of the Berlaymont has jumped this week to the offices of the permanent representations. Brussels is studying eliminating the Directorate-General for Regional Policy (DG REGIO), the executive arm that distributes tens of billions of euros every year in structural and cohesion funds, to redirect a substantial portion of that money toward defense. The pressure exists and the EU sources consulted by Moncloa.com confirm it: on the table there is a working draft that contemplates merging DG REGIO with other services or even its outright disappearance within the next Multiannual Financial Framework (MFF) 2028-2034.
The idea is not new, but the conviction with which it is being handled now is. The war in Ukraine has transformed the bloc’s budgetary policy in barely four years. If in 2020 the Twenty-Seven created Next Generation EU to exit the pandemic, by 2026 the priority is defense. And the money has to come from somewhere.
Why is the DG for Regional Policy under the spotlight?
The EU’s financial architecture is based on two pillars: the common agricultural policy (CAP) and the cohesion policy. This latter, managed by the DG REGIO, accounts for roughly a third of the community budget, with around €60,000 million per year allocated to roads, wastewater, digitalization of SMEs, or the energy transition in the most disadvantaged regions. The Commission needs to increase military spending, and cohesion is the largest non-mandatory heading. The temptation to cut there is strong.
At the heart of the Commission there are two opposing positions. The first, defended by several economically oriented commissioners, argues that cohesion funds have lost effectiveness and that eliminating DG REGIO would streamline management and save resources. The second, which has the backing of the Commissioner for Cohesion (still in office) and several southern states, warns that territorial cohesion is not just a budget line, but a founding principle of the Treaties (Article 174 of the TFEU).
We observe a clear tension between the efficiency of the bureaucratic machinery and fidelity to the Union’s fundamentals.
How much money is at stake for Spain?
Our country has historically been the leading beneficiary of regional policy funds. Only in the 2021-2027 period, Spain is allocated €34,000 million from the European Regional Development Fund (ERDF) and the Cohesion Fund, to which another €4,800 million from the European Social Fund Plus are added. Disappearing the DG REGIO would not necessarily mean eliminating all that money, but it would lose its institutional umbrella and, most likely, a significant portion would be redirected toward military expenditures.
Communities such as Extremadura (more than 20% of their public investment derived from these funds), Andalusia, Castilla-La Mancha or Galicia would be left without the main engine of convergence. In practical terms, that means fewer roads, fewer aids to the digitalization of rural SMEs, and fewer energy efficiency projects. The impact on depopulated Spain would be devastating.
In Moncloa, calculations have been made. Spanish government sources consulted by this outlet point to a drastic cut in cohesion opening a gap of between €6.5 billion and €8.5 billion annually in territorial investment. That would force compensation with the national budget or accept a retreat in convergence toward the European average that had not been seen since the 1990s.
Eliminating DG REGIO is not just a change of organization: it would be the first stone to bury cohesion policy under the continent’s security priorities.
The Axis of European Power
The struggle taking place in Brussels goes far beyond administrative reorganization. It reflects the clash of models that has run through the Union since the outbreak of the war in Ukraine. In the Franco-German axis, Paris and Berlin share the urgency to spend more on defense, but disagree on the method. France seeks an autonomous European budget to fund joint military capabilities; Germany prefers that the increase be channeled through national budgets, though it is willing to move money from cohesion to please its eastern partners.
The countries of the Eastern flank (Poland, the three Baltic states, Romania) are the most hawkish. They demand a massive shift from cohesion to defense and, under Warsaw’s leadership, consider DG REGIO a vestige of the 20th century that no longer matches current threats. On the other side, the Cohesion Alliance, led by Spain, Italy, Portugal, and Greece, argues that cutting regional funds would break the balance that sustained the eastern enlargement in 2004 and undermine confidence in the European project.
The frugal northern countries (the Netherlands, Austria, Denmark, Sweden) watch with interest a debate that also allows them to reduce the total EU budget bill. If cohesion is thinned, they would not need to increase their national contributions to finance defense. It is a zero-sum game that leaves the poorer regions as the main bargaining chip.
The closest historical precedent is the 2005 agricultural cut, when an enlargement to the East forced a reform of the CAP, but then cohesion funds remained shielded. Now, for the first time, the principle itself is being questioned. The difference is substantial: the Russian military threat has elevated defense to a European public good, while cohesion is perceived as a redistributive policy that benefits only a few.
For Spain, the political and economic cost is unaffordable without a counterpart. If Brussels eliminates DG REGIO, Moncloa will have to choose between increasing its deficit to maintain investments or accepting that southeastern Spain falls behind the EU’s average income. Neither option is easy for a government already strained by fiscal rules.
The final decision will not be taken before the formal presentation of the draft of the next MFF, scheduled for autumn 2026. Until then, the game is played in the corridors of the Council, where each Member State tries to save its own. But the board is already tilted. And the balance, for now, does not favor cohesion.
