Rethinking the Governance of the Cohesion Policy Funds: Is the Recovery and Resilience Facility a Model?

The Cohesion Policy Funds (CPF) have faced continuous criticism about their effectiveness in reaching specified performance objectives, while at the same time advancing broader EU policy goals. The "performance-based financing" model of the Recovery and Resilience Facility (RRF), the EU’s €723 bn response to the COVID-19 pandemic, where payment is based on the fulfilment of milestones and targets, rather than reimbursement of eligible costs, is often presented as a superior alternative and possible inspiration for the future of the CPF and other programmes funded through the Union budget. It is therefore crucial to understand more precisely how the RRF governance model differs from that of the CPF, how this model has been working out in practice, and whether it lives up to its promises. To answer these questions, the chapter first reviews the existing governance model of the CPF, focusing on the strengths and weaknesses of the goal-setting, implementation, and monitoring process. It then examines the design and practical experience of the RRF’s performance-based financing model, based on the findings of an in-depth study of the drafting, implementation, and monitoring of National Recovery and Resilience Plans in eight Member States, drawing attention to both its strengths and weaknesses. The chapter concludes by proposing recommendations for reconciling the beneficial features of the RRF financing model, in terms of advancing specific performance objectives and broader EU policy goals, with those of the existing CPF model, in terms of its place-based focus and commitment to participation of key stakeholders, through a multi-tiered system of "diagnostic monitoring".