European Commission (EC) President Ursula von der Leyen is seeking to centralize oversight of a regional fund worth almost €400bn ($468bn), as part of efforts to tighten control over the Union’s budget.
The EC president is considering whether to scrap one of the Commission’s oldest services, overseeing almost a third of European Union (EU) spending, or to restructure it entirely “in [her] own image”, Politico reported on 13 May.
In von der Leyen’s sights is the Directorate-General for Regional and Urban Policy (DG REGIO), the commission department responsible for regional development.
The DG REGIO’s budget is almost €400bn ($468bn), which is intended to help poorer EU Member States to catch up.
But senior EU officials claim that the Union’s pandemic recovery fund proved that using the DG as a cohesion mechanism is outdated as Brussels can move money faster through centralized control. Whereas before the pandemic, regional funds were managed jointly by national governments and regions, COVID-19 saw national governments negotiate directly with the commission.
As von der Leyen seeks to restructure the EU executive more broadly, it appears the president wants to standardize that model, thereby tightening control of the Union’s budget.
Power Grab
This is not the first time the German politician has attempted to redirect regional money to centralized control. In 2024, she was accused of a power grab as she sought greater personal control of €400bn in funds intended for poorer Member States, aiming to redirect the money toward defense and competitiveness.
With regards to DG REGIO, there are now two proposals on the table, one to scrap it, the other to completely restructure it.
The first proposal would see the creation of a new body – DG INVEST – that would take responsibility for overseeing regional and social funds as well as the future competitiveness fund von der Leyen is angling for. “If you build a structure from scratch, you shape it in your own image”, one official told Politico.
However, senior officials say scrapping one of Europe’s oldest services is unlikely. They believe a merger is on the cards, between DG REGIO and the Reform and Investment Task Force, known as SG REFORM.
The task force manages COVID-19 recovery funds and sits close to von der Leyen through the Secretariat-General. The merger would create the new investment-focused structure the EC president wants.
However, Lubica Karvasova, vice chair of the European Parliament’s REGI Committee, argued the ideas are “a failure to understand what cohesion policy is really about”. She said moves to an overly centralized model will meet resistance, if other departments are strengthened at DG REGIO’s expense.
But the anticipated retirement next year of Director-General Themis Christophidou is fueling talk that DG REGIO could be killed off, two commission officials are reported to have said.