Good afternoon, everyone. Thank you for joining us today and for your attention.

I am pleased to announce that the College has approved today the Commissions new initiative to modernize the Cohesion Policy.

Cohesion Policy is central to European policy, accounting for one-third of the EU budget. Its main goal is to reduce disparities among European regions and promote balanced development.

The first principle of Cohesion Policy is shared management. This proposal resulted from extensive consultations.

At the start of this mandate, I initiated consultations with all Member States and stakeholders involved in implementing cohesion policy.

I sent a letter to the Ministers of Cohesion and met them. I also met with all European ministers responsible for Cohesion Policy.

I visited 8 Member States and met with Prime Ministers, Ministers, and notably, Mayors and regional presidents.

Being on the ground is crucial to understanding the different needs of European regions. Cohesion Policy will continue to provide tailored solutions that address local needs.

For example, in Greece, I met with island mayors, and in Finland, I visited Lappeenranta, meeting representatives of eastern border regions.

I also met with the European Parliament, the REGI Committee, the Plenary session of the Committee of the Regions, and the Council of the EU on cohesion. We discussed the future of cohesion policy, especially in the context of the next MFF debate.

The current Cohesion Policy programs were discussed between 2019 and 2021 and signed in 2022. Since then, the world has changed significantly, and Member States, regions, and territories face new challenges.

Traditional challenges like housing and water management have intensified, and new challenges such as competitiveness, defense, security, and resilience have emerged.

We propose targeted changes to the European Regional Development Fund and the Cohesion Fund Regulations.

These changes provide increased opportunities for Member States and regions to direct funding to emerging priorities now. Timing is essential.

• Member States and regions wishing to seize this opportunity must submit their program amendments within two months of the revised legislations entry into force.
• The Commission will assess and engage with authorities to adopt the revised programs within two months of submission.

The reprogramming process is expected to be completed by the end of 2025, allowing updated program implementation from 2026 onwards.

We highlight in our proposals five priorities:

Competitiveness: We offer the possibility for increased investments in strategic technologies.

Defense: We propose that Member States and regions can use Cohesion funding to support certain defense actions, such as support to companies in the defense sector or critical infrastructure protection. Specific incentives are also provided to eastern border regions facing the dual challenge of increased security and economic revival.

Affordable Housing: We aim to tackle the housing investment gap and double Cohesion Policy funding for affordable housing as per the Presidents Political Guidelines. In all my meetings with Mayors and Ministers, housing is a priority and important to push in this direction. 75% of people live in cities, creating overpopulation issues, while rural areas face depopulation.

Water Resilience: We have seen regions facing water scarcity while others are affected by floods. We propose changes to encourage investments in water resilience, including digitization of water infrastructure and mitigation of drought and desertification impacts.

Energy Transition: The proposals support an increased focus on the energy transition, particularly for energy interconnectors and recharging infrastructure.

To achieve these goals, we will provide incentives and remove barriers that prevent efficient and timely fund utilization.

First, increased pre-financing and co-financing:

• Investments in each of the five strategic priorities will benefit from 30% pre-financing rates.
• Investments in these priority areas will also be eligible for an EU co-financing rate of up to 100%.
• Cohesion programs that allocate at least 15% of their funds to the five strategic priorities will benefit from pre-financing of 5% (compared to the current level of 0.5%).
• For eastern border regions, this pre-financing will be 10%, with an EU co-financing rate of up to 100%.

Second, more flexibility in allocating and implementing EU Cohesion funds:

• In all my meetings with stakeholders, there is a wide call for more simplification and flexibility.
• We are already taking first steps in this direction with this proposal.
• We are simplifying the use of the Just Transition Fund.
• To ensure that implementing authorities have time to amend their programs and complete the new investments, we are proposing to extend the date for eligibility by one year, to 2030, only for those programs which allocate at least 15% of their funds to the five strategic priorities.

The Regulation is accompanied by a Communication which explains very clearly what the purpose of this work is, the actions we are taking, as well as the road map for the future.

The Communication explains the principles of Cohesion Policy, which we all respect. We are working to modernize it, we are modernizing the method, and adding simplification.

In the coming months, we will work on specific areas, like the Urban agenda, to support cities, and on the outermost regions.

Finally, I want to clarify an important point to prevent misunderstandings and incorrect information regarding the communication.

With this regulation, the Commission is giving Member States and regions the opportunity during the Mid Term Review to adapt their current programs to invest in priority areas according to their territories needs. That is what we are doing. It is on a voluntary basis and up to the Member States and regions to decide if they want to take this opportunity. The resources of cohesion remain at the disposal of Member States and regions.