Regional Policy in the EU: What Ukrainian communities should expect

From a conversation with Yurii Tretiak, Director of the Centre for Cohesion and Regional Development at Civil Society Institute, as part of the course “EU Integration: Impact and Opportunities for Communities” by the Сities4Сities initiative and the Swedish-Ukrainian Polaris Programme, “Supporting Multilevel Governance in Ukraine.”

About EU Cohesion Policy

Upon Ukraine’s accession to the EU, the European Union’s Cohesion Policy – which accounts for nearly one-third of the EU’s seven-year budget – will become a key component of Ukraine’s regional development policy. 

The European Union’s Cohesion Policy aims for harmonious, sustainable, smart, and inclusive development across EU regions, specifically for:

• Reducing regional development disparities among EU countries.
• Unlocking the competitive potential of less developed regions.
• Engaging all stakeholders in regional development.

It is implemented through the European Structural and Investment Funds (ESIF), which allocate financial support to regions. The most funding is directed to regions where GRP per capita is below 75% of the EU average. Given the impact of the war and the significant decline in regional economies, once Ukraine joins the EU, we could claim a significant amount of funding for the subnational level (regions and communities).

In 2021-2027, the European Union intends to spend €372.6 billion under the Cohesion Policy across 5 policy objectives:

1. A more competitive and smarter Europe by promoting innovative and smart economic transformation and regional ICT connectivity (€73 billion)
2. A greener, low-carbon economy, transition to a clean, zero-carbon economy, and climate change mitigation (€92 billion) 
3. A united (more connected) Europe through improved mobility (€40 billion)
4. A more social and inclusive Europe, implementing the European Pillar of Social Rights (€111 billion)
5. A Europe closer to citizens through sustainable and integrated development of all types of territories (€19 billion)

There are reasons to believe that after 2027, Cohesion Policy will remain one of the EU’s top priorities, despite the numerous new challenges Europe faces, such as the need to develop a common security policy in response to Russia’s war against Ukraine.

But it’s not that simple – in order to maximize the benefits of European integration, we need to do a lot of homework at both the national and local levels. Otherwise, Ukraine will simply not be able to access cohesion policy funds or implement a sufficient number of projects with the allocated funds.

It is also worth noting that structural funds are aimed precisely at changing the structure of the regional economy from a resource-based one to a more competitive and innovative one, so communities and regions should start aligning their strategies and priority projects with the EU’s cohesion goals.

Administrative Capacity

In 2025, Ukraine has an ambitious goal: to open negotiations on the majority of EU legislative chapters, including Chapter 22, which regulates EU cohesion policy. Under this chapter, the EU does not require Ukraine to transpose numerous EU legislative acts into Ukrainian law. Moreover, Ukrainian legislation in the field of regional policy already largely aligns with the principles and requirements of cohesion policy.

Ukraine’s primary task is to build high administrative capacity to operate within both European and Ukrainian legislation and to manage EU structural funds.

After Ukraine’s accession to the EU, Ukrainian communities will submit projects not to the European Commission, but to specially established national management bodies in Ukraine. Thus, competition for EU funds will take place among Ukrainian communities within the country or its individual regions, rather than with communities from other European states.

In Poland, for example, a separate ministry – the Ministry of Funds and Regional Policy – has been established for this purpose, employing 1,114 civil servants. Additionally, institutions managing European funds were established in each of the 16 voivodeships. They are responsible for announcing calls for proposals, evaluating applications, monitoring implementation, and assessing 16 regional programmes. During the 2014–2020 planning period, by 31 December 2021, a total of 4,993 project proposal calls were announced – 777 under national programmes (16%) and 4,216 under regional programmes (84%). 

By comparison, Ukraine’s relevant ministry responsible for regional development consists of just over 400 civil servants. Therefore, a major challenge for Ukraine is to recruit, train, and retain a sufficient number of civil servants capable of effectively administering the investment of European funds into the development of Ukrainian communities and regions.

Public Investment Management System

In 2024, the Ukrainian government launched a public investment management reform.  It is known that starting in 2026, certain changes will take place in public investment management at local and regional levels. The creation of such a system is also envisaged under the Ukraine Facility – a €50 billion assistance programme provided by the European Union to Ukraine until 2027.

The Verkhovna Rada has already approved amendments to the Budget Code (No. 12245), which define key changes affecting local and regional levels (effective from 1 January 2026).

The public investment management reform includes:

• A capital expenditure prioritisation system at the government level, concentrating financial resources on the most critical projects;
• Project selection for state funding based on uniform rules and criteria;
• The creation of a single portfolio of investment projects for international donors. 

The core principle of this system is that public investments (including EU funds) must be tied to strategies. Moreover, the same system must be implemented not only at the national level, but also at regional and local levels. 

To determine priority investment projects in communities, investment councils will need to be established. Each community and region will have to prepare its own project portfolio and medium-term public investment programmes. 

Ukraine Facility and communities

The Ukraine Facility has allocated over €1 billion to finance the “recovery, reconstruction, and modernisation needs of subnational authorities, particularly local self-government”.

The Ukraine Plan (the document outlining the allocation of Ukraine Facility funds) specifies that these funds should be directed towards:

• Improving access to safe and high-quality education, including pre-school education under the new legislation;
• Strengthening the healthcare sector;
• Restoring and rebuilding (new construction, reconstruction, major repairs, restoration) damaged/destroyed social infrastructure;
• Reinforcing energy infrastructure;
• Constructing, reconstructing, restoring, modernising, and upgrading damaged/destroyed transport infrastructure in line with Ukraine’s National Transport Strategy until 2030.

Unfortunately, the development of regional development programmes (based on Ukraine’s Law “On the Principles of State Regional Policy”) and their financing under EU Cohesion Policy rules, including through these funds, has not yet taken place. 

Key tasks for local and regional levels

Ukraine’s readiness – and that of its communities – for EU fund investment largely depends on the existing institutional infrastructure and capacity at the national level, which still needs to be strengthened. There are also specific steps communities can take to prepare for the opportunities under EU Cohesion Policy, including:

1. Developing and updating development strategies (accounting for wartime challenges and EU integration prospects);
2. Strengthening institutional capacity – training personnel in project management, financial planning, monitoring, and evaluation;
3. Formulating high-quality public investment projects and submitting them to the Unified Project Portfolio;

The interests and needs of communities should be taken into account, including access to funds for co-financing European projects. Cooperation between the government and local self-government associations can play a significant role in this process. A successful example of community and regional access to co-financing is the Revolving Fund established in Montenegro. This fund provides revolving financing for the initial costs of all community projects that win competitive calls (regardless of the project’s funding source).   

Register for the Cities4Cities course “EU Integration: Impact and Opportunities for Communities”. This course will enhance your confidence in engaging with European-level initiatives, help you negotiate more effectively with international partners, and enable you to define your development priorities more clearly for the coming years.

The course is supported by Sweden’s flagship programme for Ukraine Polaris “Supporting Multilevel Governance in Ukraine”.

Cities4Cities | United4Ukraine are partner initiatives that joined forces in September 2022. Cities4Cities was founded by the city of Sindelfingen (Germany) under the patronage of the Congress of Local and Regional Authorities of the Council of Europe. United4Ukraine was initiated by SALAR International and the city of Lviv, with support from the Swedish International Development Cooperation Agency (Sida). Since 2024, Cities4Cities | United4Ukraine has been part of Sweden’s flagship programme for Ukraine Polaris “Supporting Multilevel Governance in Ukraine”.