The policy shift of the Structural Funds towards local authority networks constitutes an EU attempt to redirect local economic development policies towards the European level. This article reviews key EU documents on urban policy, outlines the organizational mode of networking initiatives and comments on their effect on disparities. EU involvement in urban Europe, it is argued, rests on local governance structures and does not address the underdeveloped competitiveness of lagging urban areas as a policy objective. The relevance of this argument to cities in Portugal and Greece and to the debate on EU spatial intervention in Central and Eastern Europe is discussed.