EU Commission Proposes Using ESF Funds for Defense and Security Investments

A series of proposals to revise the EU’s cohesion policy, allowing funds such as the European Social Fund (ESF) to be used for investments in defense and security, was presented today (April 1, 2024). The European Commission is revising its cohesion policy, encouraging member states to invest in European strategic priorities like defense, affordable housing, energy transition, water resilience, and decarbonization. Among other things, this proposal will allow member states to use current cohesion funding to build resilient infrastructure for military mobility. It will also support the productive capabilities of small and large enterprises in the defense sector across all EU regions. Programs in eastern border areas affected disproportionately by Russia’s war against Ukraine will benefit from preferential pre-financing if they allocate at least 15% of their total funds to new strategic priorities. Financial incentives are provided within these strategic priorities, with up to 30% pre-financing for cohesion projects and higher advance payments for programs transferring at least 15% of their funds to these priorities. The EU funding for investments in strategic priorities will cover up to 100% of costs in all regions. Executive Vice President Rafael Fitó emphasized the need for urgent action to strengthen competitiveness, accelerate energy transition, enhance defense, ensure affordable housing, and improve water resilience. The proposed amendments to cohesion policy legislation aim to reduce bureaucracy, optimize financing conditions, and extend investment opportunities. These changes will be discussed by the European Parliament and Council as part of the 2025 midterm review, with the goal of completing the reprogramming process with member states and regions by 2025 so that new programs can begin implementation in early 2026.