When cohesion policy is discussed in Ukraine, the focus is almost always on the territorial dimension: disparities between Kyiv and the regions, between large cities and the periphery, and between donor communities and recipient communities. This is understandable – territorial asymmetry is the most visible, and it is the easiest basis on which to build political rhetoric. But there is another component that is discussed far less often: institutional cohesion, meaning the extent to which public authorities at different levels and across different agencies act in a coordinated manner on issues concerning territorial development. And it is precisely the lack of this coordination, rather than merely a lack of resources, that most often explains why even regional development reforms that are sound in conception fail to produce a systemic effect in Ukraine.
What the EU Means by Institutional Cohesion
Article 174 of the Treaty on the Functioning of the European Union usually describes economic, social, and territorial cohesion as a single, indivisible objective of the Union. This formulation itself suggests that the issue concerns not only indicators of territorial development, but also the way in which decisions concerning that development are made. In European discourse – both academic and political – the term “territorial governance” is used to describe this approach. The concept combines two elements: a place-based approach and multi-level governance – coordinated interaction among institutions at different levels in decision-making concerning a territory. European Commission documents define territorial governance as the process of organizing and coordinating the actions of different actors aimed at developing territorial capital in such a way as to strengthen, rather than undermine, cohesion at different levels.
At the same time, “institutional cohesion” is not a term that has a single established definition in the European Union. Researchers, as well as the Commission’s own documents, have repeatedly acknowledged that the concept of territorial cohesion remains multidimensional and that it is precisely the governance dimension that is the most difficult to formalize – unlike, for example, economic or social indicators, which can be reduced to specific metrics. This is rather an indication that what is at issue is the quality of the process, not a static indicator: how consistently different levels of government coordinate their actions, rather than something that can be measured by a single index.
At the strategic level, this approach was given practical expression in the Territorial Agenda 2030, adopted by the Member States in December 2020. The document explicitly calls for strengthening the territorial dimension of policies at all levels of governance and emphasizes that balanced territorial development requires not only financial support, but also coordinated action by governments, regions, and communities around a shared spatial vision.
For the European Union, territorial cohesion is essentially the result, while institutional coordination is the instrument through which that result is achieved. In Ukrainian discourse, this sequence is often reversed: we discuss the desired result – balancing development – while barely addressing the question of whether the system of government has the capacity and procedures required to achieve that result.
From a regulatory perspective, this approach is enshrined in the Common Provisions Regulation (EU) 2021/1060, which establishes the common rules for cohesion funds for the current programming period. The Regulation is based on the principle of multi-level governance and the partnership principle: decisions on the allocation of resources and territorial development priorities are not to be made unilaterally by a single agency, but through coordinated interaction among the national, regional, and local levels, as well as social and economic partners. This is not a procedural formality, but a mechanism that requires the territorial impact of decisions to be taken into account already at the preparation stage – when making corrections is not yet costly.
The Ukrainian Approach: Sectoral Logic Instead of Territorial Logic
Ukraine’s decision-making system has historically been structured according to a sectoral principle. Ministries and agencies formulate policies within their respective sectors – infrastructure, energy, education, healthcare – while the territorial impact of these decisions largely remains outside the scope of attention during the preparation stage. A decision made in one sector may imperceptibly exacerbate disparities created by decisions in another, and at the decision-making level no one is actually required to identify this.
The weakness of horizontal coordination adds to the problem – both among central government authorities and among bodies at the same level: between regional state administrations and between territorial communities within the same region. Each actor optimizes its own indicators and rarely has an institutional incentive to coordinate its actions with its neighbors. As a result, even formally sound legislation – such as the Law “On the Principles of State Regional Policy” – does not guarantee that its practical implementation will be territorially coordinated.
Why the “Right” Financial Instrument Does Not Solve the Problem on Its Own
A good example is the State Fund for Regional Development. The very idea of a centralized financial mechanism to support regions is entirely consistent with European practice. The problem lies elsewhere: if the mechanism for allocating funds and making decisions around it does not provide for sustainable procedures of coordination among different levels of government and is not integrated into the logic of strategic territorial planning, then even a perfect formula for distributing funds will not close the main gap – between those who formulate policy and those who are responsible for its territorial outcome. A financing instrument is merely a consequence of the institutional architecture. It cannot replace that architecture.
What Institutional Cohesion Consists of in Practice
At the practical level, institutional cohesion rests on at least four elements. For each of them, the European Union’s experience already offers a specific instrument – one that should be viewed not as an abstract “best practice,” but as material for analysis: what can be transferred into the Ukrainian context and what cannot.
First – mandatory coordination procedures. The most institutionalized instrument in this area is the European Code of Conduct on Partnership, which has been in effect since 2014 and is enshrined in the Common Provisions Regulation. It requires Member States to involve regional and local authorities, economic and social partners, and civil society in the preparation, implementation, monitoring, and evaluation of cohesion programs – not as a formal consultation, but as a mandatory element of the entire programming cycle. In practice, this is implemented through program monitoring committees, where representatives of different levels of government and partners jointly make decisions on project selection criteria and adjustments to priorities. There is also a contrasting example: where this principle was not applied – in the Recovery and Resilience Facility (RRF), created during the COVID-19 pandemic – regions were practically excluded from the preparation of national plans, and this was subsequently identified in analyses as one of the mechanism’s institutional weaknesses. The contrast is revealing: vertical coordination does not emerge on its own; it arises only when the relevant requirement is built into the architecture of the instrument itself.
Second – cross-cutting mechanisms for assessing territorial impact. Within the ESPON research network, a Territorial Impact Assessment (TIA) toolkit has been developed and tested – a methodology that makes it possible, already at the stage of preparing a sectoral decision, to assess how it will affect different types of territories: metropolitan areas, peripheral regions, and border areas. The instrument was tested on specific sectoral directives, including those concerning renewable energy and the energy efficiency of buildings, in several Member States – and made it possible to identify territorially uneven consequences of decisions that appeared entirely neutral at the national level. In Ukraine, no such assessment exists: decisions by sectoral ministries are not subject to a mandatory territorial impact assessment.
Third – the institutional capacity of regions and communities. Here, the European Union’s experience provides an important caveat: the formal right to partnership does not in itself guarantee genuine participation. Studies of the application of the partnership principle have repeatedly found that most regions are formally involved in the process, but this does not always translate into real influence over decisions. The Code of Conduct leaves Member States considerable discretion in determining whom to regard as a “partner” and how much weight to give that partner’s position. For the Ukrainian context, the conclusion is straightforward: creating consultative formats – working groups and public councils – does not in itself constitute institutional cohesion if their participants lack analytical resources and genuine influence over the preparation of decisions.
And finally, what holds all of this together – a clear and consistent distribution of powers. The previous three instruments operate not as a substitute for the distribution of competences among levels of government, but within its framework. Without a clear delineation of who is responsible for what, neither coordination procedures nor impact assessment methodologies can produce results – coordination is possible only when it is clear whose position is being coordinated and within what scope of authority. Therefore, this is not merely the fourth item on the list, but the condition without which all the others remain a formality.
Conclusion
As long as the discussion of cohesion policy in Ukraine revolves primarily around how much funding should be allocated and where it should go, the key question remains unanswered: does the decision-making system have the institutional capacity to ensure that these funds and decisions are territorially coordinated rather than random? Without an answer to this question, any regional development reform – whether financial or legislative – risks remaining technically correct but systemically ineffective. Therefore, analysis of the institutional architecture – the distribution of powers, coordination procedures, and the capacity of territories – should be conducted not after, but in parallel with the analysis of the financial and legislative instruments of cohesion policy. This, in fact, is the subject of further analytical work within the assessment of the harmonization of Ukraine’s regional development policy with the approaches of the European Union.
This article was produced within the framework of the project “Cohesion Policy in Ukraine: A Step Towards the European Union,” implemented by the NGO “Institute of Civil Society” with the support of the European Union and the International Renaissance Foundation as part of the joint initiative “Joining the EU Together.” The content of this article represents the position of the authors and does not necessarily reflect the position of the European Union or the International Renaissance Foundation.
Source: Institute of Civil Society
