master thesis - the institutionalisation of financial arrangements in the eea agreement
DESCRIPTION
In relation to the signing of the EEA agreement in 1992 one decided to establish a financial mechanism which implied that the EFTA/EEA states contributed to the poorer regions of the European Economic Area. In this thesis it will be described how this arrangement was continued and how the Norwegian expenditure has increased almost 1500 per cent from 1992 to 2010. Today, Norway is responsible for 97 per cent of the contributions which means annual expenditures of 349 million EUR for the period 2009-2014.Since the establishment of the EEA agreement, the EFTA/EEA states have become dramatically fewer and less populous. The opposite is true for the EU which has experienced three enlargements since the signing of the EEA agreement. With this in mind it is easy to conclude that asymmetric relations must have been the reason for the continuation and the increase of financial commitments from the EFTA/EEA states to the EU. However, if one looks at each of the negotiation rounds for the new periods of support one finds that there are too many puzzles for the conclusion of asymmetric relations to be justified.This thesis illustrates that there are several possible explanations for the emergence, the continuation and the growth of contributions from the EFTA/EEA states to the EU. The most convincing approach is that of path dependence. The Norwegian political actors were surprised when demands for a continuation of the first financial arrangement were revealed by the EU in 1998. Today, the Norwegian political arena sees the financial arrangement as an integral part of Norway’s relationship to the EU. This illustrates that it is possible to speak of an institutionalisation of the financial arrangements in the EEA agreement.TRANSCRIPT
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Student Name: Tom Oddgeir Johnsen
Student Registration Number: 0850242
Supervisor: Ulf Sverdrup
BI Norwegian School of Management
GRA 1903 Master Thesis
“The institutionalisation of financial
arrangements in the EEA agreement”
Exam code and name:
GRA 1903
Hand in date: 01.12.10
Campus: BI Oslo
Program:
Master of Science in Political Economy
This thesis is a part of the MSc program at BI Norwegian School of Management. The school
takes no responsibility for the methods used, results found and conclusions drawn.
ii
TABLE OF CONTENTS
1.0 Introduction ....................................................................................... 1
1.1 Methodology ..................................................................................................... 4
1.2 Structure ........................................................................................................... 7
2.0 Theories .............................................................................................. 8
2.1 Realism / Rationality ....................................................................................... 8
2.2 Normative ....................................................................................................... 16
2.3 Path Dependence ............................................................................................ 17
3.0 Financial Arrangement from the EFTA/EEA to the EU/EEA ... 20
3.1 The trend over the years ............................................................................... 20
3.2 The Creation of the Financial Mechanism .................................................. 24
3.2.1 The Formalities ...................................................................................... 24
3.2.2 The Swiss Say No to the EEA Agreement ............................................ 26
3.2.3 EXPLANATION ................................................................................... 26
3.2.3.1 Asymmetry and Power ................................................................ 26
3.2.3.2 Strategy and Tactics .................................................................... 28
3.2.3.3 Domestic Factors in Norway ....................................................... 28
3.2.3.4 Solidarity ..................................................................................... 30
3.3 The Financial Instrument 1999-2003 - The Continuation of the Financial
Arrangement ........................................................................................................ 31
3.3.1 EXPLANATION ................................................................................... 34
3.3.1.1 Asymmetry and Power ................................................................ 34
3.3.1.2 Strategy and Tactics .................................................................... 35
3.3.1.3 Domestic Factors in Norway ....................................................... 36
3.2.1.4 Solidarity ..................................................................................... 37
3.3.1.5 EU Politics ................................................................................... 38
3.3.1.6 Path Dependency ......................................................................... 39
3.4 The EEA and Norwegian Financial Mechanisms 2004-2009 ..................... 42
3.4.1 EXPLANATION ................................................................................... 46
3.4.1.1 Asymmetry and Power ................................................................ 46
3.4.1.2 Strategy and Tactics .................................................................... 47
iii
3.4.1.3 Domestic Factors in Norway ....................................................... 49
3.4.1.4 Solidarity ..................................................................................... 52
3.4.1.5 Norway as a Free Rider ............................................................... 54
3.4.1.6 Bilateral Relation and Soft Power ............................................... 56
3.4.1.7 EU Politics ................................................................................... 57
3.4.3.8 Path Dependence ......................................................................... 58
3.5 The EEA Financial Mechanism and Norway Grants 2007-2009 .............. 60
3.5.1 EXPLANATION ................................................................................... 63
3.5.1.1 Asymmetry and Power ................................................................ 63
3.5.1.2 Strategy and Tactics .................................................................... 64
3.5.1.3 Domestic Factors in Norway ....................................................... 65
3.5.1.4 Solidarity ..................................................................................... 66
3.5.1.5 Bilateral Relation and Soft Power ............................................... 67
3.5.1.6 EU Politics ................................................................................... 68
3.5.1.7 Path Dependence ......................................................................... 68
3.6 The EEA and Norwegian Financial Mechanisms (2009-2014) .................. 69
3.6.1 EXPLANATION ................................................................................... 73
3.6.1.1 Asymmetry and Power ................................................................ 73
3.6.1.2 Strategy and Tactics .................................................................... 74
3.6.1.3 Domestic Factors in Norway ....................................................... 75
3.6.1.4 Norway as a Free Rider ............................................................... 76
3.6.1.5 Bilateral Relation and Soft Power ............................................... 77
3.6.1.6 EU Politics ................................................................................... 79
3.6.1.7 Path Dependence ......................................................................... 80
3.7 The Long-Term Perspective ......................................................................... 83
3.7.1 Asymmetry and Power .......................................................................... 83
3.7.2 Strategy and Tactics .............................................................................. 84
3.7.3 Domestic Factors in Norway ................................................................. 85
3.7.3.1 Political ........................................................................................ 85
3.7.3.2 Collective Action ......................................................................... 88
3.7.4 Solidarity ............................................................................................... 89
3.7.5 Norway as a Free Rider ......................................................................... 90
3.7.6 Bilateral Relation and Soft Power ......................................................... 93
3.7.7 EU Politics ............................................................................................. 94
3.7.8 Path Dependence ................................................................................... 95
4.0 Conclusion ........................................................................................ 98
5.0 References ...................................................................................... 100
iv
6.0 Appendices ..................................................................................... 110
7.0 End Notes ....................................................................................... 113
Summary
In relation to the signing of the EEA agreement in 1992 one decided to establish a
financial mechanism which implied that the EFTA/EEA states contributed to the
poorer regions of the European Economic Area. In this thesis it will be described
how this arrangement was continued and how the Norwegian expenditure has
increased almost 1500 per cent from 1992 to 2010. Today, Norway is responsible
for 97 per cent of the contributions which means annual expenditures of 349
million EUR for the period 2009-2014.
Since the establishment of the EEA agreement, the EFTA/EEA states have
become dramatically fewer and less populous. The opposite is true for the EU
which has experienced three enlargements since the signing of the EEA
agreement. With this in mind it is easy to conclude that asymmetric relations must
have been the reason for the continuation and the increase of financial
commitments from the EFTA/EEA states to the EU. However, if one looks at
each of the negotiation rounds for the new periods of support one finds that there
are too many puzzles for the conclusion of asymmetric relations to be justified.
This thesis illustrates that there are several possible explanations for the
emergence, the continuation and the growth of contributions from the EFTA/EEA
states to the EU. The most convincing approach is that of path dependence. The
Norwegian political actors were surprised when demands for a continuation of the
first financial arrangement were revealed by the EU in 1998. Today, the
Norwegian political arena sees the financial arrangement as an integral part of
Norway’s relationship to the EU. This illustrates that it is possible to speak of an
institutionalisation of the financial arrangements in the EEA agreement.
GRA 1903 Master Thesis 01.12.10
1
1.0 Introduction
In the Norwegian parliament, the Storting, there was no discussion when
Proposition 160 S (2010-2011) was up for debate the 28th
of October 2010. This
proposition confirms the agreement that the EFTA/EEA states will provide 1788.5
million EUR, of which Norway is responsible for 97 per cent, to 15 EU member
states from 2009-2014. The Norwegian Minister of Foreign Affairs, Mr Jonas
Gahr Støre from the Labour Party (Ap) and the Chairman of the issue, Mr Petter
N. Myhre from the Progress Party (FrP) both held their compulsory short
speeches. A Representative from the Ap, Mrs Eva Kristin Hansen (2010), was the
only one that took the opportunity to speak. However, she told the (empty)
Storting that the only controversial part of the Standing Committee of Foreign
Affair and Defence’s (SCFAD) Recommendation No. 22 S to the Storting (2010-
2011) (2010) on the proposition was caused by an editorial mistake. The session
lasted for five minutes. This thesis will put forward some of the reasons for this
recent scenario in the Storting.
One might understand this as a consequence of the increasing asymmetry between
the EFTA/EEA as it has become smaller and the EU as it has become larger. The
EFTA countries at the time of the negotiations of the EEA agreement in the
beginning of the 1990s consisted of seven countries representing 34 million
inhabitants. At the same time, the EU consisted of 12 countries which represented
348 million people. Thus, the relationship was one of 1: 10. The asymmetry of
today’s relationship has increased tenfold from 1: 10 to 1: 100. If one believes that
international relations are led by law-like determinism then one can explain the
negotiation results by only looking at the asymmetric relations. The size of the
first five year financial arrangement was about 120 million EUR compared to
today’s five year contribution of 1788.5 million EUR from EFTA/EEA to the EU.
This represents an increase of nearly 1500 per cent. It is tempting to put forward
an argument based on asymmetric relations for explaining the situation in
Norway’s Storting the 28th
of September 2010. However, it ignores several
puzzles that one only can be aware of if one looks at the history of the financial
arrangements.
GRA 1903 Master Thesis 01.12.10
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The asymmetric relationship between the EFTA/EEA and the EU serves as a
structural factor in the negotiations. Still, the pattern one observes is one of path
dependence. It starts with the expectations and patterns that are created as a
marginal part of the EEA agreement through the initial establishment of the
Financial Mechanism (FM) (1994-1998) in accordance with Protocol 38 (see
Appendix 1). The legal basis was established through Article 115 of the EEA
agreement on which the right to contributions have been based. No one on the
EFTA/EEA side expected the arrangement to continue after 1998 but it did. In
1994 it would be unthinkable to imagine contributions on the current scale. It
would be unacceptable to tell Norway’s population in 1994 that they would have
to contribute at the same level of EU members ten years later.
The negotiations on the financial contributions from the EFTA/EEA states to the
EU for the period 2009-2014 lasted from September 2009 to the 18th
of December
2009. This is the shortest duration of a series of several negotiations between the
EFTA/EEA and the EU on financial contributions stretching from negotiations
connected to the EEA agreement itself till today (see Appendix 2). This is not a
perfect proxy for the complexity of the negotiations. However, it indicates that the
financial contributions have become an institutionalised part of Norway’s
relationship to the EU. Norwegian politicians do no longer lament the fact that
Norway has to contribute. Rather, Norwegian politicians instead argue that
Norway should be expected to contribute at a reasonable level and the Norwegian
interests must be reflected in the channelling of the support. The principle of
contributions is accepted. The principle has become institutionalised.
There are several ways of trying to explain the development. Broadly one can
argue that the developments can be seen from an institutional, normative or
rational perspective. There are good reasons to be sceptical to all the answers
based on these perspectives as they cannot easily be falsified. Yet, the normative
explanation is the least convincing even though the financial arrangements are
often profiled as acts of solidarity. A great puzzle for the normative explanation is
the fact that the EFTA/EEA states in most of the negotiations have been reluctant
to contribute. Yet, one should be careful with this type of counterargument as it
can be stretched to the absurd. If the EFTA/EEA states were driven by solidarity –
GRA 1903 Master Thesis 01.12.10
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why not contribute 90 per cent of GDP? Clearly, this cannot only be considered
an action based on solidarity but also insanity. However, there are convincing
reasons to believe that the EFTA/EEA states were not primarily concerned with
the normative aspect of these contributions. Still, normative rhetoric is a great way
to legitimise the contributions.
The rational perspective is convincing in many ways. One can interpret every
negotiation based on asymmetrical relation as a venue for power politics or
rational adaptation by the weaker part. There are also indications that certain
actors within the EU took advantage of this asymmetry. However, there are many
that have pointed to the limitations of rationality. Some even argue that human
beings are predictably irrational (Ariely 2008). There are those that argue in
favour of a view implying that actors have bounded rationality as a mean for
explaining behaviour. A main weakness of any type of explanations is that
watering down or tweaking the rationality conditions also means reducing their
explanatory value as the explanations cannot be falsified. A puzzle for the strict
rationality model is that the EFTA/EEA states did not increase their contribution
in 1999 as the asymmetry to the EU had increased drastically. Nevertheless, the
EFTA/EEA states, especially Norway, had important rational incentives for
accommodating the EU.
The path dependence perspective is convincing and plausible. However, it is
difficult to prove. The argument here is that the creation and continuation of the
FMs created expectations and precedence for new FMs which no actors expected
with the start of the EEA agreement. Still, path dependent theories do not explain
the institutions occurrences in the first place. Path dependent theories can end up
in infinite regresses. A challenge for this type of argument is to show that the path
chosen in the previous turn has a causal independent effect on the availability of
other paths. Yet, an explanation model based on a path dependent argument
provides one with a valuable alternative explanation which to a greater degree
takes into account the full time frame from 1992 to 2014 instead of just looking at
the beginning and the end.
GRA 1903 Master Thesis 01.12.10
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1.1 Methodology
It is common in social sciences to make a distinction between qualitative and
quantitative research. This master’s thesis will be a qualitative research paper.
There are many drawbacks and strengths connected to the qualitative method. The
social sciences have at times been inspired to become more “scientific” or
“formal” through introducing quantitative methods. Qualitative research is often
contextual and particular. Thus, one often cannot generalise findings from such
research. This means that a weakness with qualitative research is its perceived
irrelevance. What is the use of research if one cannot generalise from it? There are
also weaknesses connected to quantitative studies. It is not without reason that the
former British Prime Minister, Benjamin Disraeli (1804-1881), reportedly once
said that “there are three kinds of lies: lies, damned lies, and statistics.” Neither is
it a coincidence that the scholar Ed Leamer wrote an essay called “Let‟s take the
con out of econometrics” in 1983. A strength of qualitative studies is one of the
weaknesses of quantitative studies. This is the context of the variables. In other
words, scholars that believe in the qualitative methods have a tendency to have
serious doubt about quantitative research’s conclusions. Scholars that believe in
quantitative methods doubt the significance of qualitative research. Others argue
in favour of mixing qualitative and quantitative methods. Why not mix the
strengths of the two methods? This is an exciting approach but one is also left
with the weaknesses of both methods
There is an article called “Small N and Big Conclusions” by Lieberson (in
Andersen 1997: 60). This problem is something that should be kept in mind when
it’s tempting to draw large conclusions from qualitative research. However, “big
conclusions” is something that is a general challenge for science. For instance,
Ernst Haas (1958) presented a Grand Theory of integration with his neo-
functionalism. His work does have the problem of the Small N and the weakness
of the Big Conclusion. Nevertheless, the research of Haas has inspired new
approaches to integration and also has the scientific quality of being falsifiable.
Andersen (1997: 128) has a broad concept of generalisation. He argues that the
question of generalisation is not a dichotomy, but rather about degrees. This is a
GRA 1903 Master Thesis 01.12.10
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wise formulation. Limited generalisation is perhaps the modest aim of this
master’s thesis. It would be brilliant if this thesis can illustrate something
generally about Norwegian foreign policy.
Andersen (1997) advices that one should let the phenomenon that one studies
decide the methods one uses in order to study it. The existing data for the purpose
of this study is a combination of primary and secondary sources. The primary
sources are official documents, articles and speeches written by the actors
themselves. The secondary sources are books, news articles and reports that can
shed light on the case I have chosen. The third source of data is based on an
interview I conducted with the EU’s Chief Negotiator in the negotiations on the
Eastern enlargement Mr Percy Westerlund. I have therefore used three types of
data. This method is called triangulation1. The concept is defined by Denzin
(2009: 297) as “the combination of methodologies in the study of the same
phenomenon”. As Yin (2003: 98) argues, “any finding or conclusion in a case
study is likely to be much more convincing and accurate if it is based on several
different sources of information”. The broad range of sources at my disposal
means that the validity of the master’s thesis will improve.
Unfortunately, mainly Norwegian sources are available. An important reason for
this is that the negotiations between EFTA/EEA states and the EU are not exactly
breaking news internationally. Furthermore, some official information (minutes
from the Storting’s EEA Committee) about the latest negotiation round might be
classified when this master thesis is due. Finally, it should be declared that not a
lot of scholarly attention has been given to the subject. Exceptions can be found.
Arnesen et al. (2001) wrote about the disagreement between Norway and Spain in
1998/1999. Gjessing Værnes (2006) and Sverdrup (2004) covered the negotiations
caused by the first Eastern enlargement of the EU. The most recent negotiations
were finalised six months ago. In other words, it is still new and little attention has
been given to the continuation and increase of Norwegian contributions through
the FMs 2009-2014.
1 The notion of triangulation comes from navigator’s method of combining data in order to find an
object position (Smith 1975 in Jick 1979: 602).
GRA 1903 Master Thesis 01.12.10
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Many of the sources in this master’s thesis will be first-hand accounts from the
actors themselves. A problem with analyses of “as if” situations is that they are
subjective. The author cannot enter the mind of the person expressing his or her
opinion. The author cannot know whether what is said is sincere. Sometimes, just
like the rhetorical action insight implies, normative discourse can be used
strategically. Elster (1991: 4) has also shown that arguments can be made that are
not sincere but part of a self-interested motivation. The problem is exacerbated by
what Elster (1998) has called the “civilising effect of hypocrisy”. It is natural for a
Norwegian negotiator or politician to hold that it is because of heartfelt solidarity
that Norway provides a large amount of financial contributions to the poor
member states in the EU. It will be favourable to hold that it is because of altruism
that Norway has increased its effort after each negotiation that has taken place on
the question of EFTA/EEA contribution. The opposite motivation is not flattering
for the people in question or their political entity. However, it is in order to
analyse the rhetoric of the actors and not in order to present a psychoanalytic
interpretation that one studies discourses.
I have translated the quotes and gathered the Norwegian versions in the end notes.
The translated quotes are denoted as My Translation (m.t.). The reason that the
originals are included is threefold. Firstly, a Norwegian audience will know
whether the quotes are misinterpreted or wrongly translated. Secondly, it is done
because I find it necessary for the transparency of the research. Thirdly, as a
reader I would have personally appreciated it. It is considerable amounts of text
and a substantial part of the sources to this text.
As far as sources are concerned the descriptive element of this paper relies heavily
on news paper articles. For past occurrences it is invaluable to have access to
news articles. A plus of this type of sources is that they provide a chronological
overview of the time period. It is hard work to find the proper information but it
would be considerably harder if the author did not have access to the “Atekst”
search engine. The web page has been a great help.
GRA 1903 Master Thesis 01.12.10
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The referred to sums of the financial arrangements are theoretical. This means that
the disbursement of support can be lower or higher in any given year than the
average of the period. It would be chaotic and confusing if the real numbers were
used.
The focus of this paper is primarily on Norway and the EU. Thus, several issues
are ignored. For instance, this thesis will not go into depth with regard to domestic
politics in Iceland or Liechtenstein. The author could perhaps have given more
attention to Switzerland. However, the country is included in certain sections of
the paper.
Some explanations shed light on some of the negotiation rounds. These
explanations are included in the parts of the discussion in which they are relevant.
The fact that all explanations do not fit in with regard to all the negotiation
outcomes adds to the fact that an eclectic approach is preferable if one wants to
explore an issue.
In this thesis it will consistently be referred to Euros (EUR) instead of ECU and
the EU instead of the EC. The exchange rate from 2004 is 1 EUR = 8.0
Norwegian Kroner (NOK). However, this is not very relevant in the text. The part
in which the conversion has been made is largely where only numbers in NOK
were available. This is more or less confined to the section about the comparison
of EEA and Norwegian FMs with other policy areas.
1.2 Structure
The first part will be about the theoretical underpinnings of this thesis. The second
part will describe and provide explanations for the emergence, the preservation
and the increase of the size of the EFTA/EEA contribution to the EU. The third
and last part of the thesis will be concerned with looking at the developments of
part 2 in a long term perspective.
GRA 1903 Master Thesis 01.12.10
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2.0 Theories
In this paper the idea is not to explicitly describe each negotiation round and
analyse the outcomes based on an approach of negotiation logics. For instance, I
will not elaborate on game theoretical insights in order to understand each
negotiation round. The objective of this thesis is not to test specific theories or
contribute to the formal understanding of negotiations. Instead it is based on the
assumption that no single theory can provide the precise answer to our questions.
2.1 Realism / Rationality
Thucydides (1972) is famous for having written the basic realist tenet “the strong
do what they can and the weak suffer what they must”. This reflects the view that
relations between states is built upon power. This is the approach in which one
nearly can count numbers of soldiers in order to illustrate a state’s strength.
Furthermore, from this perspective institutions only exist if they serve the states’
purpose.
It is proven that small states can achieve their objectives in encounters with larger
actors. A well known example of one of the EFTA/EEA states is the so-called
Cod Wars between Iceland and Great Britain in the 1950s and 1970s. The
conflicts were about coastal zones and fish. Iceland was dwarfed by the British
naval force and their resources. Yet, Iceland did not back down in these conflicts.
The resoluteness of the Icelandic position was so that the British had to withdraw
from the conflicts or use violence. The latter option would have large
consequences for the British as Iceland was a NATO ally and that Iceland had
important NATO bases on their soil. Great Britain chose to accept Icelandic
demands and withdrew from the conflicts (Habeeb 1988). This and many other
examples point to the fact that small countries can have bargaining power greater
than their economic or military power would imply.
Realism has changed and become more complex in later years. This is especially
true after the Cold War ended and a new “structure” of world politics emerged. In
the realist perspective it is important that the state system will always strive for a
GRA 1903 Master Thesis 01.12.10
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balance of power. This balance represents equilibrium. The term equilibrium is
derived from economics which is the social science that has moved the furthest
toward formal mathematics2. The equilibrium is not a physical entity but merely a
result of several assumptions. These assumptions are unrealistic but models are
there to be used and not to be believed. This crude realism will be assumed when
the paper revolves around questions of sheer asymmetry and power.
A less strict model is presented as an alternative by Allison and Zelikow (1999).
A simplified rational model assumes that a) X is the action of the state; b) The
state is a unified actor; c) The state has a coherent utility function; d) The state
acts in relation to threats and opportunities and e) The state’s action is value
maximising (or at least is assumed to be) (Allison and Zelikow 1999: 27). The last
point is important. An excellent description of bounded rationality is presented by
Allison and Zelikow (1999: 20) who state that it
“recognizes inescapable limitations of knowledge and computational ability of the agent[...]rather
than labelling actors who misperceive a situation as “irrational”, the model accepts the values,
beliefs, and stereotypes of the decision maker, irrespective of the accuracy of his views.”
Thus, one can assume that the “state” acts rationally despite it not always
achieving its desired outcomes. An action is not irrational simply because the
outcome is not optimal. When one is showing that an action is rational one
speculates on the goal that the government is pursuing when it chooses a certain
policy. One presents an explanation of an action and how this action was a
plausible choice with regard to the government’s objective (Allison and Zelikow
1999: 15).
One can assume that different states have different characteristics and that their
identity lays out the foundations of their actions (Dunne 2008: 110). Lundestad
(1985) argues that there has always been a considerable tension in Norwegian
foreign policy between enthusiasm for international cooperation and scepticism
toward concrete international cooperation. It is difficult not to agree when it
comes to the EU. Mr Lundestad refers to this as “national internationalism”i.
2 There are strands of economics that are not part of the formalisation of economics (See for
instance the Austrian School and specifically the short but brilliant paper by Hayek (1945) called
“The Use of Knowledge in Society”.
GRA 1903 Master Thesis 01.12.10
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However, there might also be some truth to the argument that certain areas of
Norway and especially the strongholds of aid and missionary work, there is a
sense that Africa is closer than Brussels or Paris. A Norwegian tradition is to be
more positively inclined to cooperation with faraway places than places close to
home (Gullestad 2004). It has been argued that Norwegian foreign policy is not
different to other states’ foreign policy. It is a rational adaptation to the external
environment given Norway’s attributes (Nyhamar 2001: 187).
It is true that the rationalist explanation can be stretched far. However, there are
many reasons that the simplified rational model does not hold in the real world.
First of all, it is presumably so that the state is not a unitary actor. State interest is
one that is made up of many different interests and the weighting of these.
According to Allison and Zelikow (1999: 257), to understand a government
decision from what the authors see as a government model, one has to “identify
the games and players, to display the coalitions, bargains and compromises, and
to convey some feel for the confusion” (Allison & Zelikow, 1999: 257). Putnam
(1988: 432) describes how state centric approaches are implausible. Executives,
legislatures and central decision makers are often in disagreement about what the
national interest is and what the external context demands. This disagreement can
be just as prevalent between these actors as among them. In Norwegian politics, it
seemed legitimate for the most prolific anti-EU parties (the Centre Party and the
Socialist Left) to argue against the Proposition No. 3 to the Storting (2003-2004)
(2003) on the first Eastern enlargement of the EU when the parties were in the
opposition. However, these two parties did not question the Proposition No. 72 to
the Storting (2006-2007) (2007) on the second Eastern enlargement of the EU or
Proposition No. 160 S (2009-2010) (2010) to the Storting on the FMs 2009-2014
when they were in government.
Putnam (1988: 434) describes the two level games as consisting of a national and
an international level. At the former level, domestic pressure groups seek to
influence the government which in turn is reliant on coalitions of these groups for
power. At the latter level, the government seeks to come to agreements which will
maximise its ability to benefit its domestic pressure groups. The other side of the
coin is that the government seeks to make sure adverse consequences for these
GRA 1903 Master Thesis 01.12.10
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domestic pressure groups of international events are minimised. In such a view it
becomes the objective for the Norwegian government to please key actors. To
quote Putnam (1988: 445):
“when the costs and/or benefits of a proposed agreement are relatively concentrated, it is
reasonable to expect that those constituents whose interests are most affected will exert special
influence on the ratification process”.
The phenomenon is more general feature of politics instead of only negotiations.
For instance, Adam Smith (1987: 286) wrote that “the regulations of Commerce
are commonly dictated by those who are most interested to deceive and impose
upon the public”. The approach is based on a notion that general politics, not only
negotiations, is about power struggles between different interests. It is difficult to
write about interest groups without mentioning Mancur Olson’s seminal book
called “The Logic of Collective Action” from 1965. One of the insights of the
book is that some groups in society might be politically stronger than their
economic power would imply (Olson 1965). Typically, small groups with greater
incentives to participate and concentrated interests can be more effective than
large groups with diffuse interests. This is why one observes that consumer
groups typically have less influence and profile than a business interest segment.
This effect might be somewhat undemocratic as the minority can have more
power than the majority. However, the logic of collective action does not always
dominate and there are ways for larger groups to overcome their collective action
problems. However, narrow groups often have more power than their economic
might justifies.
The theories about two level games and the logic of collective action are
important for the understanding of this thesis. The Norwegian connection to the
EU can be seen as a national compromise. Some basic truths about Norwegian
foreign policy were clear before the time any EEA agreement was established.
“Bondeforliket” of 1930 was a compromise made between the Ap and the
Farmer‟s Party (former name of the Centre Party (Sp)). Really, it was a
compromise between the centre and the periphery. The compromise between
industry and agriculture in corporative Norway is not the subject of this paper.
However, along with societal fault lines between the Norwegian centre and the
periphery, “Bondeforliket” is central for understanding agriculture’s strong
GRA 1903 Master Thesis 01.12.10
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position in Norwegian politics. Not only does the compromise have consequences
for Norwegian domestic politics. In Norwegian World Trade Organisation (WTO)
policy, one sees that it is grouped with other countries that heavily protect their
domestic farmers. In the negotiation leading up to the EEA agreement, agriculture
was kept outside of the agreement’s framework. Seafood was also left out of the
agreement. This has a lot to do with the Norwegian political goal of controlling its
national resources but also has something to do with arguably the most important
fault line in Norway of the centre vs. the periphery (Rokkan 1987).
This compromise is not to be stirred too much. It is important for the economic
and the political scene in Norway not to compromise the fragile status quo in
which business and seafood industry gets market access to Europe, the agriculture
sector and natural resources are protected from European actors and the political
scene keeps the peace through not talking about the “EU question”.
A less state-centric approach is the basis of the assumptions of a heterogeneous
state. Most importantly with the more liberal approach one sees a plethora of
interests inside a state and the influence of these for the state’s actions. It should
be noted that multi-level governance or activism by interest groups toward other
authorities than the state has been kept out of this paper. An important reason for
this is simply not to complicate matters. It can be shown that organisations in
Norway have influenced member states. For instance, the Director of the
Norwegian Seafood Federation3, Mr Geir Andreassen, held that his organisation
had lobbied substantially toward the governments of the Baltic states and Poland.
He argued that Polish dissent proved that some of the accession countries had
finally come to the conclusion that they were interested in larger fish tariff quotas
(Pedersen 2003). However, the coupling between domestic organisations in
Norway and member states in the EU or the EU itself was not decisive. There is a
tradition in Norway toward corporative solutions. Thus, the ties between the
Norwegian state and the organisations within it are strong. This means that
connections that are directed away from the national government and directly with
other governments or the EU level plays a lesser part in Norway.
3 Fiskeri- og havbruksnæringens landsforening
GRA 1903 Master Thesis 01.12.10
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The general message from Joseph Nye’s concept of soft power is that states can
no longer rely only on carrots and sticks in order to reach ones foreign policy
goals. In today’s international environment, countries can as well achieve their
goals and exert influence without “tangible threats or payoffs” (Nye 2004: 5).
Ham (2002: 252) argues that we have in fact moved in to a post-modern world
where geopolitics and power has been substituted with images and influence. The
value-agenda has become central in Western international politics. This
development has turned many countries’ foreign policy focus towards public
diplomacy as a way of achieving soft power through a positive and credible image
and reputation. Today the international political debate is to a greater degree than
before about peace, democracy and human rights. The political discourse revolves
around values such as justice, human rights and democracy – and not explicitly
about national interests. The increased transparency in international politics and
the increased influence of the media creates pressure on states to play positive
parts in the international community even if they initially lack motivation for this.
Value-promoting diplomacy has become more important than ever before
(Matlary 2002).
The benefits of possessing soft power should not be underestimated. It is
ultimately “not just a question of image, public relations, and ephemeral
popularity[…]it is a form of power – a means of obtaining desired outcomes”
(Nye 2004: 129). Soft power creates political capital which at a later stage can be
“used” in the international community. One thing that can be “bought” through
this political capital can be important positions in international organisations, or a
personal talk with the President of the United States. According to Nye (2004:
112), Norway “has developed a voice and presence out of proportion to its modest
size and resources”. This attention and representation is priceless for a country
that I have illustrated face the danger of being totally overlooked.
Leonard and Small (2003: 1) argue that public diplomacy for Norway is about
overcoming the country’s “invisibility”. Considering the fact that Norway has
half the population of Paris this is obviously very challenging. As Nye (2004:
106) argues the international situation today is characterised by a “paradox of
GRA 1903 Master Thesis 01.12.10
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plenty”. There are so many channels of information that it is very hard to get ones
message out and thus it is very hard to gain attention and visibility. This leads to
what Keohane and Nye (2001: 223) call a “poverty of attention”. Today countries
need to work on their images in order to get access and publicity. This is
especially true for small countries. Thune and Larsen (2000: 81) posit that small
states on an international market have to promote themselves through other means
than military force. They have to pursue a positive image in order to get access to
positions in international organisations and international assignments. In other
words, soft power is a mean in order to obtain access.
The influential American Robert Kagan (2009) recently published the book “The
return of history and the end of dreams”. The message of the book is that a
diplomat from the 19th
century Europe would recognise the world today. The
international scene is anarchic and states seek power. One can argue that this
book and its ideas are more about large revisionist empires and the decline of the
US. However, one witnessed that Denmark’s Fogh Rassmussen was awarded the
top job in NATO after a period in which Denmark not exactly appeared as the
globe’s best citizens4. The country was a part of the coalition of the willing
though. Further, the Economist recently wrote about how in 2003 Bono, the singer
of the rock band U2 and central figure in development debates, wanted more
countries to be like Canada. Years later the Canadians were not elected to have a
seat in the Security Council in the UN although they fought hard for it (The
Economist 2010). As Robert Kagan puts it, maybe the hope of a different
international order after the Cold War was “a mirage” and that “the world has not
been transformed?” Matlary (2002) argues that access to the EU has become one
of the most important interests of Norwegian “realpolitik”.
The paper will not explicitly be about the timing and the technicalities of the
negotiations. Still, the agenda have been described as “one of the most important
structural aspects of any negotiation as well as a significant determinant of
negotiating power and influence” (Pendergast 1990: 135). In other words, the
agenda-setting power is important. For instance, it is described as the main source
4 Denmark supported the US led invasion of Iraq and received much blame from Muslim countries
in relation to the Mohammed drawings.
GRA 1903 Master Thesis 01.12.10
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of power for the EU presidency (Tallberg 2004). Agenda-shaping power consists
of three elements: agenda-setting, agenda-structuring and agenda-exclusion.
Agenda-setting power is the ability to introduce issues of concern on the agenda.
Agenda-structuring power refers to what aspects of the agenda one wants to
emphasise. Finally, agenda-exclusion power revolves around the ability to prevent
issues from being on the agenda (Tallberg 2003). This is an important aspect of
EU power, especially in 2004.
Every negotiation that is not one-off in the wide sense that the parties will never
meet again is affected by the “shadow of the future”. Iterated games can make
negotiation parties employ a tit-for-tat strategy which in turn promotes
cooperation (Axelrod 1984: 13). This is important for internal EU politics and
could have just as easily be included in an institutional view. However, in this
thesis the EU politics will be treated in its own section as a determinant of the
negotiations. On the one hand, the EU countries should appear more united and
socialised as time goes by. On the other hand, as the EU consists of more
members the interests of these members is more likely to clash. This will be an
element of the thesis.
The relationship between the EFTA/EEA and the EU is based on the fact that the
two actors meet continuously and therefore has every incentive to cooperate when
negotiating. Norway is crucially dependent on the EU as it seeks access to its
decision and its many cooperation programs not envisioned in the EEA agreement
and Norwegian membership therefore reliant on goodwill from the EU. Putnam
(1988: 455) argues that the more dependent one is on the other the greater the
effect of the shadow of the future. Hopmann (1996: 114) argues that the player
who stands to lose the most from the non-agreement will gain the least in an
eventual agreement. Put differently, the actor with the worst BATNA (Best
Alternative to a Negotiated Agreement) stands to gain the least in negotiations. In
Norway’s case its BATNA is non-existent at the time being. It is also important to
remember that the EU is a coalition and as Hopmann (1996: 252) argues “the
coalition member with the most restrictive position tends to define the position of
the coalition”. This is not the case in the EFTA/EEA because Norway decided to
GRA 1903 Master Thesis 01.12.10
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shoulder the expenses by establishing a separate arrangement when it’s the
increase in EU demands were substantial in 2004 and later.
2.2 Normative
The notion that norms matter is a possible explanatory element for the paper. In
2002, the Norwegian Ministry of Foreign Affairs (NMFA) released a report on the
history of Norwegian foreign aid. This report argued that “Norwegian foreign aid
has to a greater degree than for many other countries, been founded on idealistic
motivesii” (NMFA 2002 m.t). Most countries in the world consider themselves
unique and morally good. However, what makes the Norwegian tradition
“special” is the sense of duty when it comes to altruistically spreading good
throughout the world. To some degree this is a thought that Norway shares with
its Scandinavian neighbours. “Scandinavian exceptionalism” is a term that has
been used when referring to the values of the Scandinavian countries. Some
authors argue that this ideal has been more prominent in Norway than in the other
Scandinavian countries. Characterisations such as “humanitarian great power”iii
(m.t.) have appeared in discussions about Norway’s role in the world (Leira et al.
2007: 10f).
Norwegian self-images are maintained and strengthened through rhetoric and
actions. This self-image has a historical heritage. Knut Frydenlund, former
minister of foreign affairs, explains in his book from 1982 that the Norwegian
ideals “have something to do with Wergeland and Bjørnson – they have something
to do with [Norwegian] history, tradition and the wish to live up to the recognition
that Fridtjof Nansen achieved for Norway through his work for refugees after the
first world war”iv
(Leira et al. 2007: 11 m.t). One of the conclusions of the
Norwegian “Report on power and democracy” of 2003 was that the self-image as
a moral and “humanitarian great power” has become a national symbol and a part
of Norwegians’ identity. One can imagine that identity is something that is created
through repeated actions (Wendt in Ross 2006: 207). This process is self-
reinforcing as Norwegian actors construct an image of Norway as a country that
honours its expressions of solidarity and feel obliged to act in accordance with
their identity. Norway becomes an actor that sees what it ought to do as affected
GRA 1903 Master Thesis 01.12.10
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by what Norway is. This self-image is primarily maintained for the Norwegians
themselves5, but it is also for the rest of the world to see (Leira et al. 2007: 9).
Furthermore, there should be no doubt that the discourse in the debates on the
issue of the enlargement to a great extent evolved around normative
considerations. However, this can be an example of the civilising effects of
hypocrisy.
Since the end of the Cold War, Norway’s external image has become increasingly
important. This image is built on certain characteristics of Norway as a nation.
The special traits that are presented are that Norway is a small country promoting
peace, and that it is a country that is generous and therefore gladly shares its
economic surplus with other countries through aid and peace efforts. There is in
fact also a broad domestic support for the general perception that Norway is an
altruistic and selfless actor (Leira et al. 2007: 9). A survey conducted in 2005
showed that 92 per cent of the Norwegian respondents strongly agreed to the
statement “Norway is a rich country that shares its resources with others through
humanitarian aid and promoting peace” (m.tv). The same survey showed that 36
per cent strongly agreed with the statement “Norway is a nation that does not
contribute enough to development and peace” (Leira et al. 2007: 11 m.tvi
). In
other words the Norwegians see their own country as a fair, generous and peaceful
nation. Furthermore they are in favour of an even more active and generous
foreign policy. This does not have to imply a great deal as voters are notoriously
in favour of wanting more of something and being against any cuts in the public
service. However, in the Norwegian political scene it is potentially poisonous to
be opposed to international commitments and aid.
2.3 Path Dependence
The idea of path dependence has existed for a while. Tolstoy (quoted in David
1985: 333) once wrote that “every action of theirs, that seems to them an act of
their own free will, is in a historical sense not free at all, but in bondage to the
5 I must acknowledge that as a Norwegian I see Norway through Norwegian lenses. This might
make me biased in some respects. I try to be as objective as possible, and I hope my awareness of
the potential bias can to some degree remedy the bias itself. At the same time it is a strength of the
author that he is Norwegian and can be more intimate with the Norwegian discourse.
GRA 1903 Master Thesis 01.12.10
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whole course of previous history”. The theory has its roots in economics and
represents a critique to the neoclassical premise in which efficient equilibriums
take care of anything. The essence of path dependence is that there are certain
feedback and lock-in effects that can lead to inefficient long-term solutions. Paul
David (1985) is famous for having shown that the QWERTY keyboard was an
example how the market could end up preferring inferior solutions. The efficient
solution would be if everyone started using a keyboard design was called the
Dvorak Simplified Keyboard (DSK). Historical accidents causes the path taken in
certain areas to condition possible paths in other areas or historical actions can
limit the options of future actions. In David’s words, “one damn thing leads to
another” (David 1985: 332). Liebowits and Margolis (1990) show in their essay
“Fable of the Keys6” that that the story of the QWERTY is suspect. Nevertheless,
the theory is still around in many shapes and forms. Further, the insight is valid
and important although one of the most well known examples might be wrong7
Paul Pierson (2000) illustrates why path dependence is more prevalent in politics
than economics. The political world does not have the same strong incentives for
efficient solutions and learning as economics. There exists a status quo bias that
makes political institutions particularly prone to path dependence. As Pierson
(2000: 251) writes “particular courses of action, once introduced, can be almost
impossible to reverse“. With a lack of such resources as time, knowledge and
information, it would be very costly and cumbersome to propose fundamental
changes.
A student of comparative politics will recognise that Rokkan (1987) presents path
dependent arguments. The understanding of European party systems is based on
understanding the historical fault lines of countries’ societies. In Norway’s case
most fault line revolve around the centre-periphery dimension. Questions of the
Norwegian approach to the EU have a tendency of causing the types of conflicts.
Path dependence is also about the economic term increasing returns. This means
that actors tie their expectations to a certain reality and make choices and
6 A funny pun on Mandeville’s influential “Fable of the Bees” from 1714.
7 Ronald Coase (1974) shows how lighthouses did not represent a good example of a public good
but it is still widely used in order to exemplify public goods.
GRA 1903 Master Thesis 01.12.10
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investment based on this. One should consider the EEA agreement as a reality that
creates increasing returns both for Norwegian political and economic actors.
The path dependence concept of this paper is related to the signing of the EEA
agreement and the establishment of the first FM from the EFTA/EEA states to the
poorer regions of the EEA. However, the main focus will be on the fact that the
arrangement continued in 1999. Pierson (2000: 52) writes that explanations based
on path dependence “provide an important caution against a too easy conclusion
of inevitability, „naturalness‟, or functionality of observed outcomes”.
Nevertheless, one should be careful as one might be tempted to commit the fallacy
of seeing things too much in a causal chain. One must be careful by providing the
explanation that post hoc, ergo propter hoc (A happened before B, therefore A
caused B). In hindsight, a given outcome can sometimes seem inevitable.
However, path dependency theory reminds us that the options available at later
stages of negotiations are limited by decisions made at earlier stages.
There is a view among realists that institutions only appear because they are in the
interests of the actors. In the view of the theory of path dependence this might be
true. However, path dependency implies that some institutions emerged because
some actors thought that it was the most effective. Later actions and possible
utilities are shaped by these prior actions. The institutions and organisations that
were created are hard to get rid of or change when they have first been
established. It is for instance possible to argue that the NATO is a remnant from
the Cold War which has redefined itself to a situation in which it is obsolete.
GRA 1903 Master Thesis 01.12.10
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3.0 Financial Arrangement from the EFTA/EEA to the EU/EEA
There have been established several financial arrangements. We can distinguish
between five programmes:
1) The Financial Mechanism 1994-1998
2) The Financial Instrument 1999-2003
3) The EEA and the Norwegian Financial Mechanisms 2004-2009
4) The EEA Financial Mechanism and Norway Grants 2007-2009
5) The EEA and the Norwegian Financial Mechanisms 2009-2014
The magnitude and timeline of the different arrangements is shortly described in
table 1.
Table 1.
8,9,10
,11
,12
Million EUR
3.1 The trend over the years
One sees that the sum involved have increased dramatically. In 1994, Norway
was only committed to pay approximately 22.5 million EUR per year. In the
period 2009-2014, the yearly support is about 349 million EUR. Evidently, the
extent of the contributions has exploded. The greatest increase occurred in relation
to the first Eastern enlargement of the EU and the EEA. Bulgaria and Romania
8 EFTA is the EFTA/EEA states.
9 According to Report No. 1 to the Storting (2005-2006), Norway was reimbursed 8 million EUR
as projects were not finalised. 10
Sources for the period 1994-2003: EFTA (2002: 47), 2004-2009: Proposition No. 3 to the
Storting (2003-2004) (2004: 10-11), 2007-2009: Proposition No. 72 to the Storting (2006-2007)
(2007: 6), 2009-2014: Proposition 160 S (2009-2010) (2010: 3-4). 11
A separate Norwegian Financial mechanism for the periods 2004-2009 and 2009-2014. A
separate Norway Grants for the period 2007-2009. 12
Beneficiary States 1994-1998: Great Britain (only Northern Ireland), Greece, Ireland, Spain and
Portugal. Beneficiary States 1999-2003: Greece, Ireland, Spain and Portugal Beneficiary States
2004-2009: Cyprus, Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Malta, Poland,
Portugal, Slovakia, Slovenia and Spain. Beneficiary States 2007-2009: Bulgaria and Romania.
Beneficiary States 2009-2014: Bulgaria, Cyprus, Czech Republic, Estonia, Greece, Hungary,
Latvia, Lithuania, Malta, Poland, Portugal, Romania, Slovakia, Slovenia and Spain.
1994-1998 1999-2003 2004-2009 2007-2009 2009-2014
Norway EFTA Norway EFTA Norway EFTA Norway EFTA Norway EFTA
Contribution 112.25 119.25 113.6 119.6 1134 600 136 72 1745 988.5
Tot.
Contribution
119.25 119.6 1167 140 1788.5
Beneficiary
States
5 4 13 2 15
GRA 1903 Master Thesis 01.12.10
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received support at the same level in the period 2007-2009. With the drastic
increase in 2004 (about 1000 per cent) it is easy to overlook the increase agreed to
in the period 2009-2014. From contributing yearly about 285 million EUR,
Norway would in the period 2009-2014 contribute with about 349 million EUR.
This represents a yearly increase of 64 million EUR or 22 per cent.
The expectation was that seven states would contribute to the first FM. Because of
the results of several referenda this shortly became three states. At the same time
the number of beneficiary states has increased. From going to 5 of 15 countries in
1994, the contributions for the period 2009-2014 go to 15 of 27 countries. This
means that a third of the EU states were covered by this support in 1994. The
current corresponding number is about 56 per cent.
Today, Norwegians are among the largest contributors to EU redistribution per
capita (see Appendix 3). Again, it must be made clear that the contributions from
the FMs do not in any way go through the EU budget. One should also note that
the sums referred to do not include administration costs of the EU (which
represents around 5 per cent of EU expenditures) or lost revenue because of EU’s
“own resources”13
. However, it does not include Norwegian administration costs
with regard to the EFTA. In 2000, before the first Eastern enlargement,
Norwegians contributed with about 5 EUR per head per year. This increased to
about 47 EUR per capita with the first Eastern enlargement. After Bulgaria and
Romania joined the EU and the EEA this figure had increased to about 59.3 EUR.
Through the period 2009-2014, Norwegians will be paying about 72.7 EUR per
capita in order to finance the EEA and Norwegian FMs 2009-2014. This is under
half of what the Swedes had to pay per capita in 2008. This is also less than the
average Dane, Dutch and German. However, the Norwegian contribution is
greater per capita than in the rest of the EU members. Further, the Norwegian
contribution per capita and as a per cent per capita is about twice as large as the
Swiss contribution.
13
This is a marginal sum derived from import duties but it especially has an impact for the
Netherlands as the port of Rotterdam serves as a hub for sea transport.
GRA 1903 Master Thesis 01.12.10
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The picture is less surprising of one looks at the nominal net contribution to the
EU in 2008 (see Appendix 4). Seen from this perspective, Germany is by far the
greatest net contributor to the EU budget. If one looks at the sum that Norway
pays through the FMs one finds that Norway is a small contributor. This is not
astonishing as Norway is a small country. Norway made available 284.8 million
Euro through the FMs in 2008.
If one looks at the contribution in 2008 as a share of GDP one gets a different
perspective again (see Appendix 5). This type of overview shows that the
Netherlands was the largest net contributor to the EU budget with 0.45 per cent of
GDP. More relevant in comparison to the EFTA/EEA states is that Sweden was
the second largest contributor to the EU budget in 2008 if one look at the share of
the GDP. The Swedish net expenditure represented 0.44 per cent of its GDP. In
2008, Norway’s contribution represented 0.10 per cent of GDP. In 2010, the
corresponding number will be 0.13 per cent of GDP.
This kind of support is vulnerable to criticism as the beneficiary states are
perceived as middle-income countries. Thus, one of the largest news papers in
Norway, Verdens Gang14
, can publish stories about Norwegian money going to
renovation of old castles in the Baltic states in order to use these as educational
facilities. At the same time it is reported that public Norwegian educational
facilities face underinvestment (Haugan and Brugrand 2008). The EEA
beneficiary states receive support in areas which are not part of what one sees as
traditional for bilateral aid. In Vårt Land15
one could read that Norwegian money
go toward renovating churches in EU countries all the while a number of
Norwegian churches were not fully renovated (Hoel 2007). The yearly
contribution toward conservation of European cultural heritage in the period
2004-2009 was about 51 million EUR. In comparison, the Norwegian Ministries
of Culture and the Environment planned to spend about 169 million EUR in 2010
for the purpose of conserving cultural heritage. This is one of the largest priority
sectors and was awarded 22 per cent of the grants of the FMs 2004-2009.
14
One of the largest news papers in Norway. 15
A Norwegian news paper with a Christian profile.
GRA 1903 Master Thesis 01.12.10
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Another Norwegian policy sector that has received some media coverage in the
wake of the FMs is the High North. Comparisons have been made between the
sums paid to eligible EU states and the sums directed toward policies in the High
North (Bjørnbakk 2008). The total sum of money in order to support initiatives in
the High North in 2010 is 125 million EUR. Included in this sum is the Ministry
of Foreign Affairs which in 2010 will spend 37.5 million EUR in this area. In
comparison, Romania, a country which is of little strategic importance for
Norway, will receive 61.2 million EUR in 2010. The corresponding number for
Poland is 115.6 million EUR.
When it comes to bilateral aid, many of the EU countries are placed high in an
overview of the largest recipients. Poland has become the largest recipient of
Norwegian bilateral aid. This is a paradox as the country is much richer than the
second largest recipient, Tanzania. The bilateral aid directed toward the eligible
EU states represents approximately the same sum provided in bilateral aid to
Africa. The bilateral aid through the FMs represent more than the combined
Norwegian bilateral aid to Asia, Latin America and the Middle East.
Table 2.
Proposition 1 S (2010-2011) (NMFA 2010a) and NMFA (2010b)
Beneficiary States Annual Financial Mechanisms 2009-2014/Bilateral aid 2009
Poland €115,620,000
Tanzania €91,367,125
Afghanistan €90,980,250
Palestinian Authority €78,593,625
Sudan €72,272,125
Mozambique €63,102,625
Romania €61,190,000
Uganda €52,835,000
Malawi €49,933,375
Zambia €49,202,375
Pakistan €36,549,125
Nepal €35,558,375
Hungary €30,660,000
Sri Lanka €27,672,625
Czech Republic €26,360,000
Bulgaria €25,320,000
Financial Mechanisms €357,700,000
Bilateral aid 2009 €573,328,250
UN 2009 €900,000,000
World Bank Group 2009 €184,000,000
GRA 1903 Master Thesis 01.12.10
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3.2 The Creation of the Financial Mechanism
The main negotiations at the time of the establishment of the FM 1994-1998
evolved around the EEA agreement itself. The reason an instrument such as the
FM was included in the EEA agreement is not something that has received much
scholarly interest. The aim of a more active regional policy became increasingly
important for the EU in the 1980s as Greece, Portugal and Spain became
members. Reducing economic and social disparities was already a goal of the
Community when the EEA agreement was negotiated on. The EU Structural
Funds reportedly assisted poorer regions with approximately 108.5 billion EUR in
the period 1989-1993 (Helle 1993). It was in the backdrop of this that the EEA
agreement was negotiated on. As the aim of reducing regional disparities became
an EU goal it made sense that a similar objective was to be included in the EEA
agreement.
3.2.1 The Formalities
The negotiated EEA agreement included Article 115 which corresponded to the
EU’s goals of reducing disparities. In Article 115 it was agreed that:
“With a view to promoting a continuous and balanced strengthening of trade and economic
relations between the Contracting parties, as provided for in Article 1, the Contracting Parties
agree on the need to reduce the economic and social disparities between their regions. They note in
this regard the relevant provisions set out elsewhere in this Agreement and its related Protocols,
including certain of the arrangements regarding agriculture and fisheries”.
The FM 1994-1998 was included in Protocol 38 of the EEA agreement. It did not
refer to Article 115 of the EEA agreement. The aim of the FM was to assist the
eligible regions in order to further their “development and structural adjustment”
(Protocol 38 Article 1). This is more moderate than Article 115 which spells out
the general goal of reducing the disparities between the regions of the EEA.
The FM 1994-1998 consisted of 500 million EUR in grants and 1500 million
EUR in loans with interest rebates of two per cent16
. The FM officially began in
January 1994 and lasted until 31st of December 1998. It was set up by Austria,
16
It is complicated to precisely establish the value of the entire Financial Mechanism. According
to EFTA (2002), the value of the entire arrangement was 660 million EUR. If one is to believe the
calculations of the Norwegian government, the value was 650 million EUR (Proposition No.3 to
the Storting (2003-04) 2003: 21).
GRA 1903 Master Thesis 01.12.10
25
Finland, Iceland, Liechtenstein, Norway, Sweden and Switzerland. However,
Austria, Finland and Sweden became EU members before the EEA agreement
came into effect. The Swiss voted no to the EEA agreement altogether17
. The
target countries/regions were Greece, Ireland, Northern Ireland, Portugal and nine
regions of Spain (Protocol 38).
The funding states decided to set up a Financial Mechanism Committee (FMC)
that was responsible for the fund’s management and allocation. The European
Investment Bank (EIB) was responsible for the administration of the FM 1994-
1998 (Proposition No. 100 to the Storting (1991-1992) 1992: 355). EIB charged
0.5 per cent of each disbursement as payment (Court of Auditors 2003: 318
footnote 16). The FMC was established consisting of representatives from the
EFTA/EEA states. The FMC’s objectives were to appraise the use of the
resources provided by the FM. The FMC was assisted by the Financial
Mechanism Secretariat (FIS). This agency was formally part of the EFTA
apparatus (EFTA 2002: 45).
Internally in the EFTA/EEA it was agreed that the distribution of payment
obligations would be decided on the basis of the Gross National Income (GNI) the
last three years (Særskilt vedlegg 1992: 443). The EU would decide on the
distribution of the support among the eligible region (Protocol 38 Article 4 (1)).
Beneficiary states and their share (table 3):
Beneficiary States Financial Mechanism
1994-1998 Grants
Financial Mechanism
1994-1998 Loans
% of total support
Spain €227.0 mill. €681.0 mill. 45.4 %
Greece €121.5 mill. €364.5 mill. 24.3 %
Portugal €105.0 mill. €315.0 mill. 21.0 %
Ireland €35.5 mill. €106.5 mill. 7.1 %
UK (NI) €11.0 mill. €33.0 mill. 2.2 %
TOTAL €500.0 mill. €1500.0 mill. 100.0 %
(EFTA 2002: 47)
17
This meant that updates of the EEA Agreement had to be made.
GRA 1903 Master Thesis 01.12.10
26
The main goal of the FM (1994-1998) was limited compared to future
arrangements. It is simply stated that “the Financial Mechanism shall provide
financial assistance to the development and structural adjustment” of the eligible
regions (Protocol 38 Article 1). The contributions were directed toward projects
which put an emphasis “the environment (including urban development), on
transport (including transport infrastructure) or on education and training.
Among projects submitted by private undertakings, special consideration shall be
given to small and medium-sized enterprises” (Protocol 38 Article 4 (2)).
3.2.2 The Swiss Say No to the EEA Agreement
The story about the FM 1994-1998 could end here. However, only the final result
has just been described. In December 1992, the Swiss rejected the EEA agreement
in a referendum. As a consequence of the result in Switzerland the agreement
formally had to be renegotiated. The EU member Spain wanted more favourable
terms in a new EEA agreement now that the Swiss were no longer a part of it. At
least the Spanish wanted the size of the Financial Mechanism to remain untouched
despite of the Swiss No. An agreement was reached. The outcome implied that the
EFTA/EEA states had to make up for 2/3 of the total Swiss contributions (NTB
1993). Specifically, Norway had to increase its annual contribution to the
Financial Mechanism by 4.2 million EUR annually (Ramberg 1993).
3.2.3 EXPLANATION
3.2.3.1 Asymmetry and Power
The EFTA countries at the time of the negotiations of the EEA agreement
consisted of seven countries representing 34 million inhabitants. At the same time,
the EU consisted of 12 countries which represented 348 million people (Emerson
et al. 2002: 39). However, on the 6th
of December 1992 the voters of Switzerland
rejected the EEA agreement. This was a heavy blow for the EFTA/EEA as an
organisation. It lost its most powerful member in economic terms. In 1992, when
the EEA agreement was negotiated on, the relationship of the original EFTA and
the EU was 1: 10. In this regard there was a clear power asymmetry. After the
GRA 1903 Master Thesis 01.12.10
27
Swiss rejection of the EEA agreement, this asymmetry increased to about 1: 13.
The remaining EFTA/EEA states agreed to compensate for the Swiss share. No
further changes occurred when Austria, Finland and Sweden became EU members
as it was agreed that a situation like the one after the Swiss EEA exit would not
happen again. Most importantly, the Spanish would receive more from Austria,
Finland and Sweden as they became EU members with the financial obligation
that followed.
In the first negotiations it was Spain and Portugal that created the most problems
for the EFTA/EEA when it came to the negotiations. This might have an
explanation in the EU’s history. According to Moravcsik and Vachudova (2003:
43), the rural countries of the first enlargements of the EU were “forced to accept
agricultural arrangements not particularly well suited to their particular
comparative advantages, and often involving lengthy transition periods”. Such
arrangements have a tendency to create grudges, and Greece did not hesitate to
threaten with vetoing the Iberian enlargement. Greece was bought off with
regional funds. This taught Spain a lesson that made it emulate Greece with regard
to the future EFTA enlargement when it became an insider (Preston 1997). It
should not come as a surprise that it was Spain that caused challenges to the
EFTA/EEA states. It should be noted that the Portuguese and the Spanish have a
reputation for using pressure in order to get their way (Bal 2004).
Further, from an asymmetric driven view one would expect Sweden to be the
toughest negotiator of the EFTA states in the talks on adjustment of the EEA
agreement. However, one observed that Norway and Sweden were the most
forthcoming when it came to renegotiating the FM 1994-1998. Instead, it was
Finland that appeared to be the toughest negotiator in the EFTA. This indicated
that it was something more than asymmetric relations in play in the negotiations.
Further, one can pose the question of whether the level of contributions represents
the asymmetric relationship between EFTA/EEA and the EU.
The EFTA/EEA’s key for calculating the level of contributions is based on the
countries’ GDP. This is fundamentally a “fair” way of deciding the contributions.
GRA 1903 Master Thesis 01.12.10
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This means that the richer countries in the EFTA/EEA pay more than the poorer.
It is strange if size only matters between the EFTA/EEA and the EU if it does not
also apply internally in the EFTA/EEA.
3.2.3.2 Strategy and Tactics
If one looks behind the deterministic explanation of asymmetric relations one
finds a more complex story. After the Swiss rejection of the EEA agreement, the
Spanish demanded that the remaining EFTA/EEA states compensated for the lost
Swiss share of the FM 1994-1998. If this was not compensated Spain threatened
not to ratify the EEA agreement (NTB 1992). The Finnish chief negotiator, Mr
Veli Sundbæck, stated that Spanish calls for increased contributions from the
remaining EFTA/EEA states were “unreasonable and illogical”vii
(Haugli 1993
m.t.). In the end, the compensation was agreed to. If it was not for Spanish
threats, the Swiss share of the FM would likely have disappeared from the EEA
agreement. Although it was not a discussion of large sums of money, the Spanish
were hard bargainers. However, the Swiss were responsible for 28 per cent of the
grants and loans of the FM 1994-1998 (Rønningsbakk 1993). Seen in this light,
the Swiss share was considerable. The remaining EFTA/EEA states settled on
compensating 2/3 of the Swiss share. The outcome shows that Spain used power
in order to get its demands fulfilled but also that this result was not inevitable.
3.2.3.3 Domestic Factors in Norway
3.2.3.3.1 Political
On the 4th
of February 1993, the leader of the Norwegian FrP, Mr Carl I. Hagen,
shrugged at the projected increases in the Norwegian contributions18
(Salvesen
1993). He commented that the Norwegian government gambled with the EEA
agreement because of calls for what Mr Hagen considered insignificant extra
funding. The leader of the Conservative Party of Norway (Høyre), Mrs Kaci
Kullmann Five, held that Mr Hagen had completely submitted to EU demands
(Salvesen 1993). However, only two days later, the Norwegian Minister of
Foreign Affairs, Mr Bjørn Tore Godal from the Ap explained that even though
18
Actually, he said that Mr Godal should “get his finger out”. Norwegian: “Carl I. Hagen[...]ber i
en pressemelding om at handelsminister Bjørn Tore Godal 'får ut fingeren'”.
GRA 1903 Master Thesis 01.12.10
29
Norway was principally against the increase, it was ready to raise its contributions
to the FM in order to save the EEA agreement. The Swedes were not pleased with
the Norwegian comment as it worsened the negotiation position of the EFTA
states (Fyhn 1993). Days later, it was the Finns who were annoyed by Norwegian
and Swedish indications, by Mr Godal and Swedish Prime Minister Mr Carl Bildt,
that they were willing to increase their contributions to the EU (Haugli 1993).
Although this reportedly was a matter of principles, it seems that the pragmatism
of keeping the status quo of the EEA agreement was the main objective of
Norway. The EEA agreement was a compromise at the Norwegian domestic
political scene. It was the first of the EFTA states to accept the principle of
“compensation”. It is not hard to see how this was seen as a small price for
keeping the national peace in Norway and not having to go through a costly new
negotiation with an uncertain end. The Spanish demands appeared to be nothing
else but a call for a couple of million EUR more to the poorer regions of the EU
for five years. This was seen as a small price to pay in order to preserve the
precious status quo. In the negotiations in the early 1990s, the agreement on a FM
drowned in the focus on the EEA agreement itself. The accusation from the “No
to EU19
” side was that the Norwegian government paid in order to prevent a
renegotiation of the EEA agreement or a new ratification in the Storting (Ramberg
1993). It has been argued that the outcome can be seen as a way for the
EFTA/EEA states to prevent opening of new negotiations with regard to
agricultural agreements (Vogt 1993). In any case, a dreaded scenario of
renegotiation of the EEA agreement was in the EFTA/EEA states’ calculations.
Equally important, the EU issue was highly contentious in Norway. Thus, many
politicians wanted to avoid such a debate at that moment in time. As the
EFTA/EEA states came to an agreement with Spain, this scenario did not
materialise.
3.2.3.3.2 Collective Action
It is argued that the FM 1994-1998 was established in the EEA agreement as a
consequence of the EFTA/EEA states refusing to liberalise their agricultural
19
“Nei til EU” - the Norwegian organisation against Norwegian EU membership.
GRA 1903 Master Thesis 01.12.10
30
market (Laursen 1991: 552). A similar explanation is that the EEA agreement
would merely stimulate trade in industrialised goods, thus the EU member states
that profited on trade in agricultural goods sought something in the EEA
agreement for them as well (Norberg et al. 1993). The result was the inclusion of
the FM in the EEA agreement. At the same time agriculture and fish were
excluded from the agreement’s framework. In this manner, the fishermen and
farmers’ interests were adhered to. At the same time, Norwegian businesses and
industry were provided the opportunity to take part in the internal market. The
financial burden was put on the tax payer which in contrast to the other key actors
is not particularly organised and has little individual incentive to do so (Olson
1965). This sum was not great and represented only about 5 EUR per capita per
year. The same was true for the tax payers in Iceland (3.5 EUR) and Liechtenstein
(about 5 EUR). The Norwegian farmers, fishermen and businesses/industry
received acceptable solutions while the burden of the tax payer was limited.
3.2.3.4 Solidarity
There was an element of solidarity with the beneficiary states with regard to
democratic reform and a path to democratic rule after long periods of dictatorship.
This was especially true in the case of Portugal and Spain. However, there were
little indications that solidarity played a great part in the first financial
arrangements. The FM 1994-1998 was not even intended to reduce disparities in
the EEA. Rather, it was about ensuring the functioning of the internal market and
the structural adjustment of the beneficiary states. It is also argued that the
communities traditionally most inclined to support traditional aid have an aversion
against Catholicism (Gullestad 2004). This adds to the argument that the financial
contributions from the EFTA/EEA should not be seen as aid.
3.2.3.5 Path Dependence
This is a story seldom told but in many ways it was a signal to the EFTA/EEA
states what waited them in future negotiations with the EU. Norway was
principally against increasing their contributions to the EU. However, the concern
for a pragmatic relationship to the EU was pressing. It was an indication to Spain
that one was ready to accept contributions in return for the EEA agreement. In this
GRA 1903 Master Thesis 01.12.10
31
sense it was a very important round of negotiations because the later rounds
would be structured similarly. The arguments and the foundations of the
disagreements would be different but in essence later negotiations would remind
of the first round. Also, it was only later that one started to refer to this
arrangement as the FM 1994-1998.
The Referenda in 1994 – Only Norway rejects EU membership
The EFTA/EEA was perhaps seen as a waiting room for EU applicants. However,
shortly after the finalisation of the negotiations on the EEA agreement most of the
signatory states became EU members. Austria held a referendum on the issue of
EU membership on the 12th
of June 1994 in which 66.4 per cent said yes to EU
membership. On the 16th
of October 1994, result from a referendum showed that
54.6 per cent of Finns voted for EU membership. Sweden decided to join the EU
after a referendum on the 13th
of November 1994 which gave a majority of 52.2
per cent in favour of EU membership. The 28th
of November 1994, Norway voted
not to join the EU by 52.2 per cent (Tvedt 2009). The Commission ended up
representing Austria, Sweden and Finland in the FMC. One can say that the
EFTA/EEA that signed the EEA agreement was a very different organisation than
the one that existed as a result of the EEA agreement. Not only had the
EFTA/EEA become fundamentally smaller with regard to inhabitants. It had also
become less important as a market and a partner for the EU
3.3 The Financial Instrument 1999-2003 - The Continuation of the
Financial Arrangement
At the end of the agreement on the FM (1994-1998) it was seemingly expected by
the politicians in the EFTA/EEA states that the financial arrangement would end.
However, this was not the view of the former arrangement’s largest benefactor.
Spain demanded that the EFTA/EEA countries continued their support. The EU
GRA 1903 Master Thesis 01.12.10
32
formally demanded further contributions on the 25th
of September 1998. There
were calls from the recipient countries to make a similar arrangement as the FM
for the period 1994 to 1998 a permanent feature of the EEA agreement. The 5th
of
October 1998, the EU “invited” the EFTA/EEA countries to discuss future
contributions toward poorer regions in the EEA. State Secretary Roman de
Miguel, from the Spanish Ministry of Foreign Affairs, held that Spain saw this as
a continuation of the existing FM. However, the Norwegian position was that it
was not obliged to continue its contributions (Bjellaanes 1998b).
The negotiations lasted from the 6th
of October 1998 to the 20th
of April 1999. The
formal agreement was made the 22nd
of May 2000. It was finally decided that the
EFTA/EEA was to finance a new mechanism. Iceland, Liechtenstein and Norway
agreed to establish a new financial mechanism called the Financial Instrument
which was to last from 1999 to 2003. This was done through Article 19 in
Protocol 31 of the EEA agreement. The detailed regulation is found in Appendix 4
to Protocol 31. The final sum of contributions ended at 119.6 million EUR20
which was to be disbursed to Ireland, Greece, Portugal and Spain21
. Norway was
responsible for approximately 95 per cent of the total sum. This means that
Norway contributed with 113.6 million EUR. This represents a marginal net
increase from the previous arrangement. There were still long lasting processes
ahead which meant that it was not until 1st of January 2001 that the mechanism
was launched (Proposition No. 3 to the Storting (2003-2004) 2003: 21).
It was on the account of the countries’ GNI that the internal commitments among
the EFTA/EEA states were decided upon. This was the same method as in the
mechanism from 1994-1998 (Proposition No. 6 to the Storting (2000-2001) 2000).
In Appendix 4 (11) to Protocol 31, one can read that if not mentioned otherwise,
the new arrangement “will be conducted along the same lines as those followed in
the administration of the outgoing Financial Mechanism”. Thus, it is assumed that
the distribution key of the resources is based on an internal EU method in this
period as was the case for the previous arrangement.
20
The support took form exclusively as grants and not as grants and loans as the previous
mechanism. 21
Northern Ireland in 1999.
GRA 1903 Master Thesis 01.12.10
33
The beneficiary states and their share (table 4):
Beneficiary States Financial Instrument 1999-2003 % of total
Spain €70.2 mill. 58,70 %
Greece €22.1 mill. 18,48 %
Portugal €21.3 mill. 17,81 %
Ireland €5.5 mill. 4,60 %
U.K (N.I)22
€0.5 mill. 0,42 %
TOTAL €119.6 mill. 100,1 % (because of
rounding)
(EFTA 2002: 50)
The main goal of the agreement can be read in Protocol 31 Article 19 (1). The aim
was to reduce “the economic and social disparities in the EEA through a financial
contribution by the EEA EFTA states”. The support was to be directed to the areas
of “environment, including urban renewal, reduction of urban pollution and
securing the European cultural heritage, transport, including infrastructure, and
education and training, including academic research”. It was also agreed that the
goal was to allocate at least 2/3 of the resources to projects to the environment (as
widely defined as above) (Appendix 4 (4) to Protocol 31). As one can observe, the
aims of the new arrangement was more in line with the goal in Article 115 of the
EEA agreement. The phrase was that one was to “provide assistance” in the FM
94-98. In the arrangement from 1999 to 2003 one was to “reduce disparities”.
This can be interpreted as a significant change. The aim of the Financial
Instrument was more in line with article 115 of the EEA agreement and geared
toward the goal of reducing social and economic disparities. Furthermore, the
goals were broadened so that now, at least formally, it was easier for actors in the
beneficiary states to qualify for support.
The EFTA/EEA states wanted a larger role in the new arrangement. The Financial
Instrument Committee (FIC) was established in order to steer the financial
arrangement for the period 1999-2003 (Appendix 4 to Protocol 31 Article 7). The
FIC was responsible for deciding on which projects were to be supported. The
GRA 1903 Master Thesis 01.12.10
34
Financial Instrument Secretariat (FIS) was set up in order to assist the FIC and to
administer the arrangement. The FIS was formally part of the larger EFTA
secretariat (EFTA 2002: 50). The FIS reviewed applications for the FIC. The EIB
would merely assist the beneficiary states with identification and appraisal of
project applications23
(Proposition No. 6 to the Storting (2000-2001) 2000). One
agreed that 0.5 per cent of each payment was to be provided to the EIB in order to
cover its costs for project appraisal and monitoring. The FIS calculated that it
would have to commit 1 per cent of the mechanisms resources to administration
(Proposition No. 6 (2000-2001) 2000). The complexity of the application
procedure seems greater compared to the arrangement in 1994-1998. At least the
Norwegian description and ownership of the mechanism was greater than before
as the EIB played a smaller role (Proposition No. 6 (2000-2001) 2000).
3.3.1 EXPLANATION
3.3.1.1 Asymmetry and Power
In 1998/1999, the EFTA/EEA side represented about 5 million people and the EU
side represented roughly 375 million people. The asymmetry of the relationship
had risen dramatically to about 1: 75. This is compared to 1: 10 when the FM
1994-1998 was created and 1: 13 when it was adjusted because of the Swiss
rejection of the EEA agreement in 1992. Thus, it is a puzzle that the EU side did
not increase its demands now that the asymmetry had increased drastically. It is a
weak argument to point to the fact that the EU did not demand an increase in the
negotiations.
Many countries, and especially the Nordic ones who had negotiated the FM 1994-
1998, initially supported the Norwegian view that the financial arrangement was
intended to be temporary. This implies that there is more than mere asymmetry
that conditions different countries’ approach to one another. There is basis for
questioning the explanatory clout of the “power asymmetry” thesis for the
negotiations leading up to the Financial Instrument 1999-2003. It appears that the
23
The EIB was reluctant to continue the task. According to a diplomat, the reason was that the
Norwegians paid too close attention to how the sums were being spent by the EIB. However,
Spanish pressure made the EIB turn in the question (Johnsen 1999).
GRA 1903 Master Thesis 01.12.10
35
negotiation in 1998/1999 is close to the “Black Swan” (see Popper 1963) of the
asymmetry theory’s explanatory power with regard to the EFTA/EEA-EEA/EU
relation. However, the explanations are not dichotomous. It would be wrong not
to assume that the asymmetric relationship between EFTA/EEA and the EU
served as important context.
3.3.1.2 Strategy and Tactics
The argument about asymmetric relation is ill-suited to explain the outcome of the
negotiations in 1998/1999. This does not mean that national interests and the will
to pursue them were irrelevant. The negotiations leading up to the creation of the
Financial Instrument 1999-2003 show that some countries are willing to exert
considerable pressure to get their way. The Spanish wanted the financial
arrangement from the period 1994 to 1998 to continue. Spain’s ambassador to the
EU, Mr Javier Elorza Cavengt, argued that this was a matter of principles. Mr
Cavengt argued that Spain would cancel the EEA agreement if its principle of the
permanence of the financial arrangement was not adhered to (Otterdal 1998b).
The atmosphere was not helped by the fact that the Spanish later on blocked
Norwegian initiatives for taking part in several programs24
(NTB 1999; Otterdal
1999; Vollebæk 1999). Schengen and the Fifth Framework were the most notable
programs that Norway wanted to be part of but the membership was complicated
by Spain.
A diplomat from a Nordic EU country was surprised by the speed and strength
that the Spanish chose to pursue the issue. The Spanish demanded that the Council
of Ministers declared that a permanent aim of the EEA agreement is to reduce the
economic and social disparities in the EEA (Otterdal 1998c). The Icelandic Prime
Minister, Mr David Oddson, held that the demands and behaviour from Spain
could be considered extortion. The Norwegian Prime Minister, Mr Kjell Magne
Bondevik from the Christian Democratic Party (KrF), commented that he did not
disagree with Mr Oddson’s comments (Bjellaanes 1998c).
24
The programs in question were three cultural exchange agreements, one employment program,
one establishment of a common European office for the evaluation and supervision of medicines,
the EU Fifth Framework program and the Schengen agreement.
GRA 1903 Master Thesis 01.12.10
36
The Spanish did not want less contribution than in the previous arrangement and
they wanted it to be permanent. Norway did not want to continue paying the
Swiss share of the arrangement and according to the article by Bjellaanes (1998d);
the Icelanders were even less ready than the Norwegians to contribute to a new
financial arrangement. In the end the principle of the permanence of financial
arrangements based on Article 115 in the EEA agreement was not accepted by the
EFTA/EEA states. This can be interpreted that there were limits to what could be
achieved through threats as a strategy. However, it is not self-evident that the
Spanish were sincere when they claimed that a continuation of financial
arrangements was a matter of principle. There are tactical reasons to represent
ones interest as one of principle. The party claiming that its demand is a matter of
principles can demand more in turn for backing down from its demands compared
to demands merely based on interest (Elster 2007: 423). Spain did not receive
much of an increase in the new arrangement. Apparently, such an increase was not
called for either. One can argue that the reason the Spanish received a satisfactory
result was that they argued on the basis of principles. The principle was not
accepted but the Spanish received what they wanted – a continuation of
redistribution in the EEA. It is fair to assume that the arrangement would not be
continued if there were no demands for it.
Mr. Blankenborg (2003) argued that in retrospect the smart thing to do in 1999
was probably to pay more in the period 1999-2003 as this would take away the
argument that Norway had contributed little until then.
3.3.1.3 Domestic Factors in Norway
3.3.1.3.1 Political
The Spanish blockade of Norwegian membership in different programs was a
challenge for the political scene in Norway. Apart from the hectic negotiations in
the wake of the Swiss rejection of the EEA agreement, this was the first
Norwegian encounter with an EU logic of supporting the member state with the
most aggressive stance. This appeared to be a surprise for the Norwegian political
actors. It also became apparent how tightly integrated Norway was to Europe.
Complications in Norwegian part taking in European cooperation programs
GRA 1903 Master Thesis 01.12.10
37
revealed that Norway was reliant on a good relationship with the EU members.
Still, the sum involved was limited and therefore not very controversial. For the
political sphere one might assume that the contribution to the EU was seen as a
marginal sum in order for cooperation with the EU to run smoothly and in order to
prevent any disruptions.
3.3.1.3.2 Collective Action
One can interpret the negotiations leading to the Financial Instrument 1999-2003
in line with the insights of collective action. The main interests in these
negotiations were farmers, fishermen, businesses/industry and tax payers. In no
fundamental way did this agreement touch upon anything but the Norwegian tax
payers’ wallets. The limitation of access for agricultural products in the
EFTA/EEA states was preserved. Iceland and Norway kept the tariff quotas for
fish into the EU market that they were given after the EU enlargement of the
former EFTA states. The Norwegian businesses and industries’ access to the
European market was also preserved. One can argue that the status quo was
maintained.
3.2.1.4 Solidarity
Solidarity was not mentioned when the continuation of the financial arrangements
was negotiated on in 1998/1999. Mr Bondevik from the KrF was the Norwegian
Prime Minister during these negotiations. In many ways Mr Bondevik, being the
leader of the KrF represents a Norwegian movement with a tradition of Christian
missionary work. As Matlary (2002) points out, long before soft power was even
“invented”, religious communities and organisations from Norway have worked
abroad promoting “Christian” values. However, one can question to what extent
Greece, Ireland, Portugal and Spain were seen as poor countries. Further,
according to Gullestad (2004) the Catholic countries of Europe have long been
looked at with suspicion by many of the pious Protestant Christian communities
of the Bible Belt of Norway and stronghold for the Norwegian KrF.
GRA 1903 Master Thesis 01.12.10
38
3.3.1.5 EU Politics
It can be argued that the lack of serious conflictual stances in the EU increased
Spanish willingness to be tough bargainers in the two first negotiation rounds. The
Portuguese, who obviously had sympathies with the Spanish position, is also
known for its willingness to use “power” in negotiations (Bal 2004: 136). It has
been pointed to in this thesis that some of this aggressiveness comes from Iberian
experiences with regard to its own accession negotiation with the EU (Preston
1997). Also one ought to remember that there is a general “shadow of the future”
inside the EU. This means that member states that do not share the interest of
other member states might end up supporting a view not shared. This is because
the member states meet all the time, and support for a member state in one
instance might ensure the support for one’s own view in the next instance. As an
EU member it does not make sense to have a tough stance of something that is not
in the state’s interest. Right or wrong does not always matter as much as national
interests. The Norwegian political scene learnt an important lesson from the time
leading up to the agreement on the Financial Instrument 1999-2003. In the Report
No. 27 to the Storting (2001-2002) (2002: 10 m.t.) it was written that “other EU
countries support the demands from other EU members”viii
in clashes of interests
with the EFTA/EEA countries. This was also evident from the fact that Finland
and Sweden, original signatories of the EEA agreement and thus the FM 1994-
1998, changed their stance from supporting Norway’s interpretation of the issue to
backing down.
The negotiations between the EFTA/EEA and the EU have a tendency to be
coupled with EU budgetary issues. Mr Berg commented that he saw a clear
connection between the Spanish demands in 1998 and the conflicts inside of the
EU regarding the Structural Funds (Johnsen 1998c). Arnesen et al. (2001) explain
that some of the context was that the EU at the time was launching its own
negotiations on the budget through the Agenda 2000. The German Minister of
Foreign Affairs, Mr Joschka Fischer, stated that “Agenda 2000 is an enormous
task for the German Presidency, and we would like to see the EFTA contributions
in the light of this”ix
(Johnsen 1998d m.t.). This was a contentious issue internally
in the EU. In other words, the EFTA/EEA states’ negotiations are coupled with
the EU’s internal distribution. One should also have in mind the shadow cast by
GRA 1903 Master Thesis 01.12.10
39
the future Eastern enlargement. There is much evidence that the older beneficiary
states, at least Spain, have been very concerned with future contributions. The
Prime Minister of Norway, Mr Bondevik, commented that it would be much
easier to discuss future contribution to the accession states in Central and Eastern
Europe if the EU accepted the Norwegian view of no legal commitment for such
support in the EEA agreement (Bjellaanes 1998c). In 1998, when the Norwegians
linked the contributions to future eastern enlargements, the Spanish were furious
(Bjellaanes 1998e). Mr Cavengt made clear that “our [Spain’s] money is not going
to the countries in the east. They are not even EU members yet”x (Bjellaanes
1998e m.t.). Reportedly, other member states of the EU also found the Norwegian
comments to be unhelpful (Bjellaanes 1998a). Not only are there indications that
these negotiations are coupled with internal budgetary debates in the EU but the
EU appears to be concerned about external actors seemingly contributing to
disrupting compromises made between the EU member states.
3.3.1.6 Path Dependency
Mr Eivinn Berg, Norwegian ambassador to the EU from 1986 to 1996 and central
person in the negotiation team on the original EEA agreement, stated that:
“the Financial Mechanism was never seen as a lasting arrangement[…]there was no doubt about it.
We even had a working group on the issue. Its opinion was clear. I cannot understand that it can be
interpreted differently”xi
(Johnsen 1998c m.t.).
This quote is derived from a central person in the negotiation on the establishment
of the original EEA agreement and it points to the Norwegian officials’ surprise
by the Spanish demands for a continuation of financial arrangements in 1998. It
appears that the EFTA/EEA side was genuinely surprised by the EU demands for
future financial arrangements. Reportedly, the Norwegian Minister of Foreign
Affairs, Mr Vollebæk from the KrF, was puzzled by the Spanish demand. He
claimed that “such a claim must be in breach of the EEA agreement. But we will
of course look at the issue and study in what way the demand has emerged”xii
(Johnsen 1998a m.t.).
The Norwegians assumed that the arrangement would be a temporary part of the
EEA agreement. Also, the Swedes and Finns, who were part of the designing of
GRA 1903 Master Thesis 01.12.10
40
the EEA agreement on the EFTA side, argued that the original FM was a
temporary instrument. The Spokesperson for the Finnish EU delegation, Mr Rergo
Kemppinen, held that the Finns wanted to ensure the consensus in the Union.
However, he was also of the opinion that the EU had to respect its obligations in
the EEA agreement. Finland, an original signatory of the EEA agreement,
supported the Norwegian view the FM was temporary (Johnsen 1998b). As time
passed, even the Finns and Swedes had to concede that EU loyalty was more
important than the interpretation of articles in the EEA agreement. A Nordic
diplomat argued “there is a limit to what extent we can support Norway which is
not part of the Union”xiii
(Bjellaanes 1998d m.t.).According to an EU diplomat,
France, Greece and Portugal favoured Spanish calls for permanent financial
support from the EFTA/EEA states. The three Nordic countries plus Germany and
Great Britain initially supported the Norwegian position. On the one hand, legal
experts in the EU Commission and the EUs civil service tended to have sympathy
with the Norwegian position. On the other hand, the legal office of the EU
Council of Ministers tended to interpret the EEA agreement more in line with the
Spanish demands (Bjellaanes 1998a). The latter is arguably the most important in
unanimous decisions on negotiation mandates.
From Spain’s view, article 115 made clear that the arrangements for reduction of
disparities in Europe had to be an integral part of the EEA agreement. Spain’s
ambassador to the EU, Mr Javier Elorza Cavengt, argued that this was a matter of
principles. He said:
“If one wants to wage war for 200 million NOK annually, go ahead. For us it is about an important
principle that is founded both in the Treaty of the EU and in the EEA agreement. The money is of
lesser importance”xiv
(Otterdal 1998b m.t.).
He continued by claiming that the legal team of the Council of Ministers
supported the Spanish position. Mr Cavengt argued that Spain would cancel the
EEA agreement if its principle of the permanence of the financial arrangement
was not accepted (Otterdal 1998b). There are reasons to believe that the roots of
this demand is to be found in the EEA agreement and the interpretation and
expectation created by the establishment of the FM 1994-1998. Whether the
Spanish demand was legally right or wrong is of lesser importance.
GRA 1903 Master Thesis 01.12.10
41
The Norwegian EU ambassador, Mr Einar Bull, was quick to hold that there was
no legal basis in the EEA agreement that justified Spanish claims. Mr Bull argued
that a continuation of the present arrangement was not possible. It was instead
argued that if such support were to continue, one had to set up a new arrangement
which had to be based on new negotiations and ratifications (Otterdal 1998a).
It seems that the Spanish became more pragmatic as time passed. After a bilateral
meeting in Madrid between Norway and Spain at the at the 15th
of December
1998, the Spanish Minsters of Foreign Affairs, Mr Abel Matutes, said that he was
willing to reach a compromise deal with Norwegians. This was interpreted to
mean a Spanish divergence from previous legal arguments (Thoresen 1998). Still,
the Norwegian side was annoyed by continuous Spanish threats despite the fact
that Norway showed good intentions in the negotiations (Johnsen 1998e).
The 21st of April 1999 Mr Bull could report that the EFTA/EEA and the EU had
reached an agreement on a new financial arrangement. Mr Bull stated that “we
agree that this is a new arrangement and not a continuation of Protocol 38 in the
EEA agreement”xv
(Nordrum 1999). The EFTA/EEA states did not have to pay
for the Swiss share. However, the sum was adjusted for inflation (Bjellaanes 1999
m.t.). This increase compensated for the Swiss share.
It appears that the solution with regard to article 115 of the EEA agreement served
as precedence. Although there is no explicit legal obligation for the EFTA/EEA to
continue their support there is still demand for them to do so. The creation of the
FM 1994-1998 created expectations that this was a permanent, or at least a
“permanent temporary feature”, of the EEA agreement. With the continuation of a
similar arrangement the expectations became greater and it can be interpret as
Norwegian admission of its obligation to contribute with a financial arrangement
for the EEA. The aim of the Financial Instrument was in line with the wording of
the article 115 of the EEA agreement. This indicates that the financial
contribution had become a de facto part of the EEA agreement. Finally, in 1999,
Mr Bull made it clear that Norway “follows the EU‟s own policy for reducing
disparities”xvi
(Bjellaanes 1999b). This implies that Norway is willing to increase
GRA 1903 Master Thesis 01.12.10
42
its support when the EU increases its support. One can interpret the outcome of
the negotiation round leading up to the establishment of the Financial Instrument
as a defining moment with regard to the financial arrangements.
3.4 The EEA and Norwegian Financial Mechanisms 2004-2009
In mid-2001 there were, with the pending enlargement of the EU and the end of
the period for the Financial Instrument 1999-2003, calls for continued
contributions from the EFTA/EEA states. The enlargement of the EU also means
an enlargement of the EEA. This is regulated by Article 128 of the EEA
agreement. Thus, the EEA agreement had to be extended with the accession of
new EU member states. Not surprisingly it was the Spanish that were first in
revealing a heightened EU ambition for the EFTA/EEA contributions. The
Spanish Prime Minister, Mr José María Aznar, said that it was inevitable that
Norway had to contribute to the eastern enlargement (Lund 2001). The Norwegian
official, Mrs Oda Sletnes, who would play a key role in the negotiations, argued
that the statement by Mr Aznar had to be seen as an important signal for Norway
(Anda 2001).
The negotiations leading up to the EEA and Norwegian FMs 2004-2009 started
the 9th
of January in 2003 and were finalised the 6th
of June the same year. The
formal agreement was made the 3rd
of July 2003 (Proposition No. 3 to the Storting
(2003-2004) 2003: 9). The final agreement made sure that the EFTA/EEA states
were to contribute with 600 million EUR to reductions of social and economic
disparities in accordance to the newly made Protocol 38 A. Iceland and
Liechtenstein were responsible for about five per cent of the contribution in the
EEA FM. In addition, a Norwegian FM was established which implied that
Norway was to contribute with 567 million EUR. This meant that Norway was
responsible for about 97 per cent of the total EFTA/EEA contributions of 1167
million EUR. The Norwegian mechanism came about as a result of the drastically
increased demands from the EU negotiators coupled with a little willingness from
the other two EFTA/EEA states to increase their contributions. Norway’s total
GRA 1903 Master Thesis 01.12.10
43
contributions amounted to approximately 226.8 million EUR per year, or 1134
million EUR for the entire period (Proposition No. 3 to the Storting (2003-2004)
2003: 22-23). This represented an increase of about 1000 per cent in the
Norwegian contributions in the period 2004-2009 compared to 1994-1998 and
1999-2003.
The EFTA/EEA states also received compensation for worsened terms of trade as
a consequence of the loss of Free Trade Agreements (FTAs) with the Central and
Eastern European countries (CEECs). Tariff quotas for fish were provided to
Iceland and Norway. The Norwegian tariff quota for 2004-2009 is valued at
approximately 90 million EUR or 18 million EUR per year (NMFCA 2010). This
represents about 7.9 per cent of the value of the Norwegian contribution. Tariff
quotas for agricultural products were provided to the EU but the magnitude of
these was negligible (Proposition No. 3 to the Storting (2003-2004) 2003).
The distribution of the share of the beneficiary states was decided by an EU
method used for internal redistribution. Thus, it was decided that Ireland and
Northern Ireland were to receive no more funds from the EFTA/EEA FMs.
However, Greece, Spain and Portugal would continue to receive support but only
from the EFTA/EEA mechanism. The Norwegian mechanism was reserved for
the new member states. The EFTA/EEA states ended up using a method based on
Gross Domestic Product (GDP) instead of GNI when it came to deciding the
distribution of payment obligations (Proposition No. 3 to the Storting (2003-
2004) 2003: 23).
The beneficiary states and their share (table 5):
Beneficiary States Financial Mechanisms 2004-2009 % total grants
Poland €558,630,000 47,97 %
Hungary €135,057,000 11,57 %
Czech Rep €110,910,000 9,50 %
Slovakia €70,329,000 6,03 %
Lithuania €67,257,000 5,76 %
Latvia €53,760,000 4,61 %
Spain €45,840,000 3,93 %
GRA 1903 Master Thesis 01.12.10
44
Greece €34,260,000 2,94 %
Estonia €32,760,000 2,81 %
Portugal €31,320,000 2,69%
Slovenia €18,594,000 1,59 %
Cyprus €4,662,000 0,40 %
Malta €3,621,000 0,31 %
Total €1167,000,000 100,11% (rounding)
The emphasis of the arrangements depends on what sort of mechanism one is
considering. The main aim of the EEA FM is to reduce “economic and social
disparities in the European Economic Area” (Protocol 38 A Article 1). The grants
from the mechanism would be channelled toward
“(a) protection of the environment, including the human environment, through, inter alia,
reduction of pollution and promotion of renewable energy;
(b) promotion of sustainable development through improved resource use and management;
(c) conservation of European cultural heritage, including public transport, and urban renewal;
(d) human resource development through, inter alia, promotion of education and training,
strengthening of administrative or public service capacities of local government or its
institutions as well as the democratic processes, which support it;
(e) health and childcare.”
Furthermore, academic research that targeted one or more of the mentioned
priority sectors was eligible for support (Protocol 38 A Article 3 (1-2)).
The main aim of the Norwegian mechanism is broader than what is the case for
the EEA FM. It shares the aim of the EEA FM in the sense that it is established in
order to reduce “social and economic disparities in the European Economic
Area”. Additionally, the Norwegian mechanism aims to “contribute to the
consolidation of the capacity of the new member states to take fully part in an
enlarged European Economic Area internal market” (Agreement Article 1 2003).
The Norwegian FM is channelled to projects in the same areas as the EEA FM.
However, these areas would be given priority:
- “Implementation of Schengen acquis, support of National Schengen Action plans as well
as strengthening the judiciary,
- Environment, i. a. with emphasis on strengthening the administrative capacity to
implement relevant acquis and investments in infrastructure and technology with priority
given to municipal waste management,
GRA 1903 Master Thesis 01.12.10
45
- Regional policy and cross-border activities,
- Technical assistance relation to implementation of acquis communautaire”
(Agreement Article 3 2003)
The bilateral aspect of the support appears to be an important element. However,
it is not mentioned in Protocol 38 A or in the Agreement on the Norwegian
mechanism. The bilateral element is emphasised if one looks at the Memoranda of
Understanding (MoUs) and the Recommendation No. 103 (2003-2004) (2003: 4).
For instance, at page 2 in the Memorandum of Understanding (MoU) (both on the
EEA and Norwegian mechanisms) of Poland, it is written:
“WHEREAS the EEA Enlargement Agreement and the EEA Financial Mechanism/Norwegian
Financial Mechanism will strengthen relations between the EFTA States and the Republic of
Poland to the mutual benefit of their peoples”
Furthermore, in the Recommendation 103 (2003-2004) (2003: 4 m.t.) one can
read that “Norwegian contributions must also promote Norwegian interests in the
EU and strengthen our connections with the new member states”xvii
. In addition
to the bilateral element, the MoU have described cross-cutting aims that are not
mentioned in Protocol 38 A or the Agreement (2003). At page 2 from both of
Poland’s MoUs it is written that:
“WHEREAS the enhanced co-operation between Norway and the Republic of Poland will
contribute to securing a stable, peaceful and prosperous Europe, based on good governance,
democratic institutions, the rule of law, respect for human rights and sustainable development”.
In the agreement made in 2004, the Parties included a formal reference to the
arrangements’ continuation. It was settled that one was to evaluate the need for
continued future support “in light of economic and social disparities in the
EEA”xviii
(Proposition No. 3 to the Storting (2003-2004) 2003: 11 m.t.).
Furthermore, it was written in Protocol 38 A Article 9 that:
“at the end of the five-year period and without prejudice to the rights and obligations under the
agreement, the Contracting Parties will in the light of Article 115 of the agreement review the need
to address economic and social disparities within the European Economic Area”.
This is the first occurrence of both parties concluding that there is some
automaticity in the EFTA/EEA contributions to reduction of disparities within the
GRA 1903 Master Thesis 01.12.10
46
EEA. It is difficult to interpret this as anything else than a conditional acceptance
from the EFTA/EEA side that one is committed to contribute to the economic and
social cohesion in the EEA.
3.4.1 EXPLANATION
3.4.1.1 Asymmetry and Power
In 2001, the former Norwegian Ambassador to the EU, Mr Bull, stated that
Norway and the EU are “David and Goliath” in negotiations (Johnsen 2003)25
.
The Norwegian chief negotiator, Mr Bjørn Grydeland, pointed to the difficulties
with regard to the great asymmetry of the negotiation parties:
“We [Norway] must realise that these negotiations will be demanding. An EU with ten new
member states will be 100 times the combined size of the EFTA/EEA states with regard to
inhabitants”xix
.
Mr Grydeland also stated that the EU had become more powerful than before
compared with the EFTA/EEA states (Skard and Ellingsen 2003a m.t.). The
relationship post-accession would increase to 1: 100 as Mr Grydeland stated.
Based on this one would expect an increase in the contributions. The final sum of
the FM was ten times higher than in the previous round. This does resonate
perfectly with a focus on power asymmetry if one only looks at snapshots of the
realities in the negotiations on the EEA agreement in the early 1990s and the
negotiation on financial contributions from the EFTA/EEA in relation to the
Eastern enlargement. Such a perspective does seemingly provide a good answer to
why the increase was precisely tenfold. However, the relation between the
EFTA/EEA and the EU at the time of the negotiations in 1998/1999 was 1: 75.
Thus, there is no perfect fit between the tenfold increase in the EFTA/EEA
contributions and increase in the asymmetry from the agreement of the Financial
Instrument in 1999 and the negotiations of the financial mechanisms in
2003/2004. The power asymmetry had increased drastically in the round of
1998/1999 without an increase in the sum of contributions.
25
Commenting on the final result, Rossavik (2003e) argued that the negotiations were like David,
without a sling and stones, against Goliath.
GRA 1903 Master Thesis 01.12.10
47
There are indications that the Poles did not feel that their interests were
emphasised in the negotiations. Poland even brought the negotiations to a halt
when “everyone” expected the agreement to be made. This indicates that more
than the EU’s size changed with the new countries entrance into the EU. The EU
was not a united block which the approach of asymmetry implicitly is based on.
One observes that the argument based on an increased power asymmetry has
weaknesses in explaining the outcome of the agreements of the period 2004-2009.
However, it should not be underestimated as a structural factor. The fact remains
that there is a 1: 100 relationship in the size of the EFTA/EEA and the EU/EEA
regardless of whether one thinks it is crucial or not. An argument of this thesis is
that there is a lack of reasons to believe the law-like determinism of seeing the
outcome as direct effect of the asymmetric relationship.
3.4.1.2 Strategy and Tactics
A more convincing explanation can be found if one concentrates on the tactics
and strategies of the EU in these negotiations. In past negotiations one observed
that certain countries made unilateral threats and statements. In the negotiations in
2003/2004 it was the EU as an entity that made it clear that the EFTA/EEA states
had to contribute. According to the Proposition No. 3 to the Storting (2003-2004)
(2003: 22 m.t.) it became apparent that “the EU side would raise questions of the
continuation of the EEA agreement”xx
if the EFTA/EEA side was not willing to
agree to a substantial increase of the contributions. From the Norwegian side it
was emphasised that “the future survival of the EEA agreement was the reality of
the negotiations”xxi
(Proposition No. 3 to the Storting (2003-2004) (2003: 13
m.t.)). There was no explicit threat against Norway in the negotiations as
forwarded by Spain in 1998. Nevertheless, the signal was clear: “pay more money
or something bad will happen”. It appears that the situation was seen as dramatic
among Norwegian negotiators. In a proposition to the Storting, the Norwegian
government claimed that there was “no realistic alternative to the EEA agreement
for us [Norway] to promote our [Norwegian] interests vis-à-vis the EU”xxii
(Proposition No. 3 to the Storting (2003-2004) 2003: 12 m.t). Seen from this
perspective it should not be surprising that the EFTA/EEA satisfied EU demands.
GRA 1903 Master Thesis 01.12.10
48
One can argue that the EU demands came as a surprise for the Norwegian
negotiators who came to be compensated for loss of FTAs with the CEECs. At the
same time, a future EU enlargement to the CEECs was a very likely development
that the respective authorities had prepared themselves for. What was one to
expect? If the EU demanded the same amount of money to the accession states as
Spain received in annually from 1999-2003 one would end up at a demand of 182
million EUR per year, or 910 million EUR for the entire period. One had probably
drawn out such scenarios in the Norwegian Ministry of Foreign Affairs. Thus, to
hold that the Norwegian negotiators were completely surprised by the magnitude
of the EU’s demands does not seem plausible.
A crucial goal for the Norwegian negotiators was parallelism of the EU and EEA
enlargements. This is argued for by the Norwegian government in Proposition No.
3 to the Storting (2003-2004) 2003: 14 m.t.): “in order to maintain a coherent
common market it is very important that the two agreements enter into effect
simultaneously”xxiii
. An important element of the negotiations was therefore that
the EU and the accession states finished their negotiations before they met
EFTA/EEA states to discuss the criteria for EEA accession of the new states
(Proposition No. 3 to the Storting (2003-2004) 2003: 25). This had at least three
important consequences. First of all, the EFTA/EEA states met an EU part
consisting of 25 states. This considerably reduced the “win-set” of the EU
(Hopmann 1996). The compromises had already been made and this makes the
mandate given to the negotiation team by the Council inflexible. Secondly, it also
increased the number of veto players on the EU side (Tsebelis1995). Thirdly, time
became an issue. Rossavik (2002a) reported in late October 2002 that the
Norwegian authorities several times had called for negotiations on an extended
EEA agreement. The EU had indicated that Norway had to wait for several
months for the negotiations to start. Mr Jan Petersen (2002c) told the Storting’s
EEA Committee that the negotiations would start when the EU was done with
negotiating its enlargement. In Proposition No. 3 to the Storting (2003-2004)
(2003: 14 m.t.) one can read that “the review [of the extended EEA agreement]
had to be carried out in a short amount of time – from the relevant texts from the
EU enlargement was made available for the EFTA side at the end of the year
[2002] and until the end of the negotiations of the EEA enlargement [June
GRA 1903 Master Thesis 01.12.10
49
2003]”xxiv
. This clearly illustrates the time strain of the relevant Norwegian
authorities. Threats are more powerful and credible if the party making it has a
long time horizon as the EU had in the negotiation with the EFTA/EEA. The party
with a shorter time-horizon might be willing to admit material concessions in
return for speeding up the process (Elster 2007: 421). It is plausible that the
EFTA/EEA side was vulnerable to anything resembling threats in these
negotiations. The fact that this is an impression that one gets from reading
Proposition No. 3 strengthens the explanatory power of this perspective.
3.4.1.3 Domestic Factors in Norway
3.4.1.3.1 Political
An indication that Norwegian politics with regard to Europe is an important
element in any understanding of the development of the financial arrangements
can be observed by the fact that central political actors in Iceland were more
outspoken than those in Norway. The Icelandic Chief Negotiator, Mr Johannsson,
remarked that the support for Icelandic EU membership had dwindled from 60 to
20 per cent because of the EU demands. He continued by stating that the EU had
to “come back to earth” in order for the negotiations to go anywhere (Anda
2003a). Stronger language was used in Dagbladet where Johannsson argued that
the EUs demand was “based on an absurd method of calculation which provides
absurd figures”xxv
(Skard and Moe 2003b m.t.). According to the Secretary
General of the Icelandic Ministry of Foreign Affairs, Mr Gunnar Gunnarsson,
based on the initial demands the Icelanders for a long time thought that the EU
wanted to get rid of the EEA agreement. Mr Gunnarsson also stated that he was
disappointed by the EU’s conflictual behaviour (Nielsen 2003b).
There was little political opposition in the Storting to the outcome of the
negotiation. SV and the Sp were not pleased with the outcomes. The Sp made calls
to rely on the WTO rules for compensation in 2004. There have also been
consistent calls for a study of alternatives to the EEA agreement. Mr Bjørn
Jacobsen (2004 m.t.) from the SV characterised the outcome of the negotiations as
“poor”xxvi
and reasoned that this was because the government had put the
Norwegian negotiators in a tough position by emphasising the lack of alternatives
GRA 1903 Master Thesis 01.12.10
50
to the EEA. According to Mrs Åslaug Haga (2004), the leader of the Sp, she saw
no reason to suspect the Norwegian negotiators for not doing their job. However,
she argued that the result was worse than one could expect with regard to fish.
According to Mrs Haga, Norway only received compensatory tariff quotas for
three out of the 30 products that the Norwegian side demanded. She contrasted
this to the outcome of similar negotiations with the EU membership of Austria,
Finland, Portugal, Spain and Sweden in which Norway received compensation
“for all the quotas we [Norway] asked for”xxvii
.
The Norwegian authorities were criticised for being very secretive about the
agreement. The 21st of May 2003, Anda (2003d) wrote in Dagens Næringsliv that
the media had known every detail of the agreement for six weeks. The Norwegian
authorities had decided not to comment on the deal. It was commented that this
prevented a public debate about the result, and that this was “embarrassing” for a
country that cherishes transparency. According to Mr Grydeland, this was a
conscious information strategy which was blessed by the Office of the Prime
Minister of Norway, Mr Bondevik (Anda 2003d). The agreement was confirmed
by Norwegian authorities the 11th
of June 2003 (Anda 2003e).
In the negotiations one observed a tendency toward a 50/50 solution. This might
be a conscious strategy by the EU negotiators. In any case, it is a clever way of
making life easier for Norwegian politicians. It is much easier to accept an
outcome that one has bargained down 50 per cent than to accept the same
outcome outright. As a politician one can hold that there was a lot of give and
take, and finally one managed to end up at an outcome half of what was
demanded. The sense of compromise is also something that creates more of a
constructive negotiation. In the political debate in the Storting, most politicians
were pleased with the Norwegian negotiators. Mr Inge Lønning (2004) from
Høyre even went so far as saying that he felt some admiration for the result that
the Norwegian negotiators had managed to achieve in the negotiations. However,
it appears that the EFTA/EEA side was puzzled by the magnitude of the demand
from the EU when the negotiations on the period 2004-2009 started. It is likely
that one in later negotiations was more expectant of a steep increase.
GRA 1903 Master Thesis 01.12.10
51
3.4.1.3.2 Collective Action
A vital introduction to the negotiations on the period after 1999-2003 was tariff
quotas for fish. In the past these had not been part of the negotiations on financial
arrangements. Formally, these negotiations were still separate from the
negotiations on financial arrangements. However, these negotiations were de facto
intertwined. Thomas Schelling (1980: 32) shows that compensation is possible
when two negotiations take place simultaneously. One can interpret that this is an
important element of what happened when fish quotas became entangled in the
negotiations from 2004.
Already in 2000, the EU ambassador to Norway, Mr Gerhard Sabathil, made clear
that the EU was under no obligation to offer Norway compensation for losses of
FTAs in the case of Eastern enlargement of the EU (Aftenposten 2000). Mr Jan
Petersen (2002b) told the Storting’s EEA Committee in September 2002 that the
EU would not accept claims for compensation for existing trade in fish to the
CEECs through FTAs. However, the Commission opened for negotiations on
market access for fish already in the first meeting of the negotiations (Petersen
2003). The concession might be a way for the EU to “throw Norway a fishbone”
as Frank Rossavik (2002b) called it. A source in the EU Commission confirmed
that the Commission could provide quotas if the EFTA/EEA party paid (Rossavik
2003a). This means that the fisheries’ sector could be provided tariff quotas if
Norway decided to substantially increase the country’s financial contributions. Mr
Blankenborg (2002) told Mr Petersen from Høyre that the Ap would support the
use of financial mechanisms as bargaining chips. The EU side demanded some
compensation for historical levels of free trade between the EFTA/EEA and the
CEECs. The outcome was marginal tariff quotas on certain specific agricultural
products. This did not in any way threaten the Norwegian agricultural sector.
The outcome of the negotiations leading up to the FMs in the period 2004-2009
can be interpreted through sticking to the four basic interests in Norway. The
farmers continued to be protected, the fishermen received tariff quotas and
reassurance that foreign investment in the Norwegian fishing fleet was not an
GRA 1903 Master Thesis 01.12.10
52
issue, the business/industry received continuation of access to a European market
which now was substantially enlarged. The ones that bore the financial costs were
the tax payers. The Norwegian people went from providing about 5 EUR per
capita per year to the EU to providing about 47 EUR per capita per annum. This
represented a tenfold increase compared to past periods. The extra financial
burdens put on the Icelandic and Liectensteinian tax payer were smaller but
substantial. The corresponding numbers were about 17 EUR and 21 EUR per year
respectively.
3.4.1.4 Solidarity
There are reasons to believe that the values and norms of the government headed
by Mr Bondevik at the time of the negotiations in 2003/2004 had significance for
the Norwegian views, if not the results, on the question of financial contributions
to the CEECs. Mr Bondevik (2004) wrote an article in Aftenposten, one of the
largest newspapers in Norway, where he called for an even more value-oriented
foreign policy than in the past. He argued that the Norwegian foreign policy
“ought to develop into an ever stronger tool for promoting overarching goals as
peace, freedom, reconciliation, democracy, human rights, poverty reduction and
environmental sustainability”xxviii
(m.t). In the Prime Minister’s traditional speech
on New Year’s Eve he claimed that Norway ought to be a nation of solidarity
(Nordlys 2005). Mr Petersen of Høyre, has argued that Norway’s international
contributions demonstrate a set of Norwegian values implying that Norway has an
obligation of helping other human beings to achieve a safer and a more worthy
life (Harbo 2005). It is fair to assume that Mr Bondevik and Mr Petersen were
important actors in drafting Norwegian positions prior to and during the
negotiations.
It is plausible that both Mr Bondevik and Mr Petersen put considerable emphasis
on the moral dimension of increased Norwegian contributions with the first
Eastern enlargement of the EU. In the Storting there was some critique of the
Norwegian negotiation strategy, but very few questioned the purpose itself or the
virtue of the contributions. Norwegian foreign policy has traditionally emphasised
values, and as we have seen this can also be said about the Bondevik government.
GRA 1903 Master Thesis 01.12.10
53
The broad picture is that there exists a Norwegian foreign policy tradition of
promoting values instead of pursuing narrow self interest. And from studying the
Norwegian parliamentary debate it is clear that both political “camps” in the
Norwegian party system generally considered an increase in Norwegian
contributions to the CEECs as a moral obligation.
Despite all this, there are reasons to be sceptical to the significance of Norwegian
altruistic values for the Norwegian position in the negotiations. Many of the
Norwegian officials’ comments based on solidarity and values were made after
the negotiations with the EU were over. During the parliamentary treatment of the
outcome, Åslaug Haga (2004), the leader of the Sp, questioned the Norwegian
government’s arguments that the financial contribution was an expression of
solidarity. She pointed to the fact that Poland was to become the largest receiver
of Norwegian bilateral aid and that Poland was not exactly poor in comparison
with other countries receiving aid from Norway. Mr Bjørn Jacobsen (2004 m.t.)
from the SV argued that “the need for contributions is greater in the countries
that do not become part of the EU and therefore is not eligible for EU support in
the same magnitude as the accession countries”xxix
. Furthermore, if both the
Norwegian Prime Minister and Minister of Foreign Affairs felt very strongly
about Norway’s moral obligations, then why did they not accept the EU’s initial
demands of 500 million EUR per year? And why did the negotiations have to
reach a standstill before the Norwegian delegation decided to substantially
increase its offer through a separate Norwegian FM? Also, Norway had provided
375 million EUR to the Baltic states, of which half went to Russia, from 1989 to
2000 (Sverdrup 2004: 7). In comparison with today’s sums this appears to be
marginal. The original offer from the Norwegians in the negotiations in 2004 was
to increase the country’s contributions from 25 million EUR to approximately 38
million EUR per year. Although this represented a 50 per cent increase, it is
questionable that this could be seen as a great manifestation of Norwegian
solidarity.
GRA 1903 Master Thesis 01.12.10
54
3.4.1.5 Norway as a Free Rider
The sense of Norway being a free rider was prevalent in the public debate both
domestically and from the EU and its members. Percy Westerlund (Interview
2008 m.t.) admits that behind the EU’s rational and logical arguments, although
not explicitly expressed “there was perhaps an impression of free riding if these
countries [Norway, Iceland and Liechtenstein] did not contribute more”xxx
.
There were actors in Norway that believed compensation for loss of FTAs with
the CEECs was something that should be brought to the WTO. This was the
message from the leader of the Sp, Mrs Haga, in the Storting’s debate on
Proposition No. 3 to the Storting (2003-2004) (2004). Parliamentarian from the
Ap and Member of the Norwegian Storting’s SCFAD, Mr Haakon Blankenborg,
did not doubt that Norway was in the right when it came to the question of
compensation. However, he was of the opinion that Norway should be
cooperative with regard to the enlargement. One of Mr Blankenborg’s (2002)
main concerns was the impression the EU states would get of Norway if the
country only presented one-sided demands. Mr Blankenborg (2003) presumably
echoed the prevailing conception of the Norwegian WTO right to compensation
for loss of trade in fish. He was very pragmatic and argued that it was the result
that counted and not the principle. Norway did not have the time to clear this up.
This sentiment was shared by Inge Lønning (2003) from Høyre.
The Swedish Minister of Commerce at the time of the negotiations on the period
2004-2009, Mr Leif Pagrotsky, emphasised that it was completely fair that
Norway should contribute substantially to the Eastern enlargement of the EU. Mr
Pagrotsky emphasised this by highlighting the considerable difference between
the Swedish annual contributions to the EU of 2500 million EUR and Norway’s
contributions of 25 million EUR (NTB 2003b). However, Mr Pagrotsky presented
the gross number for Swedish contribution. The net balance for Sweden was about
1500 million EUR in 2008 (Folketinget 2010). The Swedish Prime Minister, Mr
Göran Persson claimed that it was reasonable that Norway, “the richest country in
Europe”, should pay more than it did at the time. He commented that “it would be
very odd if Europe‟s richest country, that wants access to the market, was not to
pay as much as Sweden with our weak economy and Denmark and Finland with
their weak economies”xxxi
(NTB 2003a m.t). However, Mr Jan Petersen, found that
GRA 1903 Master Thesis 01.12.10
55
Mr Göran Persson had presented the costs for Sweden of the enlargement as
around 90 million EUR. Mr Petersen commented that Norway with half the
population of Sweden should be expected to pay half the calculated Swedish
expenses – about 45 million EUR (Eltvik 2003). Mr Gerhard Sabathil argued in a
similar manner as Mr Pagrotsky and Mr Persson. He emphasised that Norway
would become twice as rich as the EU after the enlargement. On the question of
whether Norway should have to pay as much as EU members, he answered that
every member of the common market should contribute equally. He continued by
emphasising that “we now have the chance to make the arrangements fair”xxxii
(Johnsen 2002 m.t). Behind this argument one can assume that he considered the
old arrangements unfair.
It is difficult to interpret Pagrotsky, Persson and Sabathil’s comments in any other
way than implying that Norway had been a free rider. Mr Westerlund argued,
based on the fact that considerably poorer EU countries contributed, that he had
difficulties understanding why the EFTA states should not contributexxxiii
. He also
shared the views of Sabathil that the former arrangements were unreasonablexxxiv
.
Mr. Westerlund stated that “the EU cannot afford to let its wealthiest friends
participate on equal terms in the common market without contributing with a sum
corresponding to their economic strength”xxxv
(Idås 2003 m.t.). Mr Gerhard
Sabathil stated that he was not impressed by prior Norwegian contributions to the
Eastern accession countries. It was noted that it should be considered that since
1990, the EU had provided 25 billion EUR to the 12 accession countries (Johnsen
2002).
Mr Jan Petersen (2002d m.t.), from Høyre stated that he was of the opinion that it
was “important that one is not left with the impression that Norway is a country
that merely seeks benefits[...]Norway is a country that contributes to the common
good”xxxvi
. In the Storting Fridtjof Frank Gundersen from the FrP already in 2000
(m.t.) commented that
“many Europeans are increasingly displeased with the fact that we despite possessing considerable
wealth, refuse to show solidarity and contribute to Europe’s development. We should try to do
something to reverse this image[...]There should be no doubt about our solidarity with the
European states[...]No one should get the impression that we only care about ourselves”xxxvii
.
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One sees that even FrP which has a moderate profile when it comes to foreign aid
is concerned with how the surroundings see Norway.
The EU side has often stressed that the EFTA/EEA states are treated as members
apart from agriculture and fish which the EFTA/EEA states decided to keep out of
the EEA agreement. However, this view has been challenged by representatives
from the EFTA/EEA. Mr Johannsson reminded about the steel conflict in which
the EFTA/EEA states were hurt by a trade war in which they played no part other
than being a non-member of the EU (Hellstrøm 2003). This point was also
emphasised by the Norwegians. In addition, the political debate has also evolved
around the so-called “Salmon case” in which anti-dumping measures were
implemented by the EU against imported salmon from Norway. The dispute
ended up in the WTO. The EU’s anti-dumping measures were ruled to be in
conflict with WTO regulations. After this the EU lifted trade sanctions on
Norwegian salmon. However, this illustrates the uncertainty Norwegian
businesses face through the EEA agreement. This is an element that is pointed to
by Norwegian politicians when the EU side argues that Norway has a privileged
market access and is treated as EU members.
3.4.1.6 Bilateral Relation and Soft Power
It is argued that the separate arrangement was set-up in order to increase the
“visibility” of this contribution (PWC 2008: 16). One wanted to strengthen the
visibility of the EEA agreement and Norway through the arrangements made in
relation to the EU enlargements. This was increasingly important as attention
became harder to achieve in an enlarged EU. The State Secretary of the
Norwegian Ministry of Foreign Affairs, Mr Kim Traavik, argued in early 2002
that the EU Commission had lost much of its institutional memory. This makes
the Commission more rigid and legalistic in its approach to Norway (Hellstrøm
2002a). Mr Jan Petersen from Høyre, (2002a m.t.), made it clear that “the
knowledge about the EEA agreement is something that Norway must fight for
every day”xxxviii
. Norway is very interested in taking part of several EU projects
and programs that it does not have formal rights to participate in. In other words,
Norwegians rely on goodwill from the EU in order to be accepted as a participant
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in initiatives such as EU’s battle groups and R&D programmes. This goodwill is
increasingly difficult to receive in a pre-occupied EU. Thus, one could hold that
the contributions partly were agreed to in order for Norway to be welcomed to
participate in EU programs and generally heighten the country’s attention. The
focus on bilateral relations were emphasised in the MoUs of the period from
2004-2009, but not in the Agreement (2003) or in Protocol 38 A.
One might pose questions of how visible these grants are. It should be noted that
the EFTA/EEA states’ contribution in the period 2004-2009 represents 0.01 to
0.05 per cent of the beneficiary states’ GDP. The corresponding numbers for the
EU support is 2.1 to 4.9 per cent (PWC 2008: 17). Yet it is fair to argue that the
resources are given attention in the beneficiary states through the negotiations of
the MoUs and among the actors that apply for the grants. Also it is elites that
provide Norway with access and arguably they are perhaps the main audience for
the Norwegian contributions. Thus, Norwegian officials can hold that Norway
contributes at comparable scale as the other richer EU countries which might be a
valuable fact in other dealings with the EU. However, the point that Norway
decided to contribute in order to promote Norway’s access and soft power is
weakened by the fact that Norway initially was unwilling to substantially increase
its contributions. Many politicians also raised their eyebrows because of the steep
increase in the EU demands. According to former Norwegian Prime Minister and
Minister of the NMFA, and then leader of the SCFAD, Mr Thorbjørn Jagland, the
negotiated outcome for the period 2004-2009 should make people pen their eyes
(Moe 2004). It is questionable whether to achieve access and soft power was an
intended strategy from the Norwegian government. However, the arrangements
are justified and rationalised on this basis.
3.4.1.7 EU Politics
Since 2003/2004 the negotiations on tariff quotas for fish have become connected
to the negotiations on the financial arrangements. Some countries have common
interest with Norway when it comes to fish. This is true especially for the Baltic
states and Poland. In the negotiations in 2003/2004, it was easy to see that there
were conflicts inside of the EU. Poland was reportedly more than content with the
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negotiated financial arrangements for the period 2004-2009. For instance, the
Polish Chief Negotiator, Mr Truszczynski, stated that Poland was very happy with
the financial contributions from the EFTA/EEA states (Rossavik 2003b). Yet, the
parallel negotiation on fish was a huge disappointment for these countries. Poland
accused the Commission of ignoring the country’s interests which had been
known for quite a while. Reportedly, Poland’s views were supported by the
Baltic states (Anda 2003b). This culminated in a stand still caused by Polish
rejection of the negotiated agreement after one thought that the terms had been
agreed to by the EFTA/EEA states and the EU. The Polish State Secretary of the
Ministry of Foreign Affairs, Mrs Danuta Hübner, remarked that Poland’s rejection
should not come as a surprise. According to her, Poland’s position was well
known for the EU Commission (Anda 2003c). The 15th
of June 2003, the EFTA
group of the EU Council of Ministers convened. Poland met with officials from
Spain and Portugal in the hope that this meeting would “create dynamism”
(Rossavik 2003c).
There was also an element of frustration among the accession states with being
treated as outsiders. This was not acceptable to the Poles who at the same time
used the opportunity to show their new intentions as an EU member. The Director
of the Polish Ministry of Foreign Affairs’ EU department, Mr Pawel Swieboda,
confirmed that there were political reasons for the Polish rejection of the
agreement on the extended EEA. Mr Swieboda stated that Poland had to
demonstrate that it would not let its interests go unnoticed. He commented that
“we [Poland] were not in yet; therefore we were expected to be content with
anything”xxxix
(Rossavik 2003d m.t.). After some time, and marginal technical
changes to the agreement, the negotiations ended.
3.4.3.8 Path Dependence
The EU did not even justify its calls for the continuation of the arrangement for
the period 2004-2009. Rather, it was taken for granted that the EFTA/EEA states
were to contribute. This reminds a lot of the discussion on Norway being a free
rider. However, a great difference is that this explanation is based on article 115
of the EEA agreement and that the establishment of the EEA and Norwegian FMs
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for the period 2004-2009 has its roots in the establishment of the FM 1994-1998
and the continuation of this support in 1999. Further, the EFTA/EEA states
committed themselves “in the light of article 115” to review the need for
continuation of the contribution. This is the first time the EFTA/EEA states
commit themselves to future support. Based on the fact that “no one” expected the
CEECs to not be eligible for further support, this was in essence the same as
stating that one would contribute in the future.
The EFTA/EEA states established a bureaucracy, the Financial Mechanism Office
(FMO), in order to administer the arrangements. This might be an indication that
the FMs were seen as a permanent feature of the EEA agreement. The
establishment of the FMO created new stakeholders and increased the
institutionalisation of the arrangements.
The new arrangement was again based on the old Protocol 38. This can just be a
coincidence. Yet, one can hold that the emphasis from the Norwegian side that the
Financial Instrument 1999-2003 was based on Protocol 31 means that the new
arrangement being based on Protocol 38 is was an important aspect.
It seems that a notion of the Norwegian government was that this type of
contribution was a one-time payment in connection with enlargements of the EU.
Such a view is expressed in Proposition No. 3 to the Storting (2003-2004) (2003:
12 m.t.) in which one can read that one sees the Norwegian contributions to the
FMs as a “direct cost of the EEA enlargement”xl
. This runs contrary to the
experience of the negotiations for the period 1999-2003 in which the number of
recipients actually decreased. The EFTA/EEA states did not decrease their
support to the beneficiary states in the period 1999-2003.
The fact that Greece, Portugal and Spain remained in the EFTA/EEA FM, which
to a great degree can be seen as the specific continuation of the Financial
Instrument, illustrates that this arrangement has become support that the old
beneficiary states see themselves as rightful receivers of. This exemplifies how
expectations can be tied to existing arrangements. If Norway had the wish to
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channel resources away from the old beneficiary states it had to establish a new
mechanism. The exclusion from the Norwegian FM was clearly not seen as a
great problem by the old beneficiary states. One can argue that the reason for this
is that it is a new arrangement which the Mediterranean beneficiary states have
never been a part of and therefore tied no expectations to.
Switzerland first began contributing through an agreed substantial financial
mechanism to poorer regions of the EU in 2007. Until that it did not contribute
and thus adds to the explanatory power of path dependence. No part of the Swiss
support was channeled to Greece, Portugal or Spain when Switzerland started
contributing. Norway contributes to these countries to this day.
3.5 The EEA Financial Mechanism and Norway Grants 2007-2009
Based on Article 128 of the EEA agreement an extension of the agreement was
needed with the pending EU membership of Bulgaria and Romania. Thus, an EU
enlargement meant that the EEA agreement also had to be modified. According to
Mr Olli Rehn in late April 2006, the then EU Commissioner for Enlargement,
stated that the EU’s demands with regard to the accession of Bulgaria and
Romania would not surprise Norwegians. The same logic would be used in the
EEA enlargement of Bulgaria and Romania as in the negotiations of the first
Eastern enlargement. According to centrally placed sources this meant that the
EFTA/EEA states had to contribute yearly with 70 million EUR extra
(Skjævesland 2006a). An official document from the Norwegian EU delegation
showed that the Norwegian negotiators were mandated to increase Norway’s
contributions with maximum 31.25 million EUR per year to Bulgaria and
Romania. Thus, the distance between the Parties was substantial (Ask 2006).
The State Secretary of the Norwegian Ministry of Foreign Affairs, Mrs Liv
Monica Stubholt, reportedly in a meeting the 27th
of October 2006 rejected initial
demands from the EU implying that the EFTA/EEA states were to contribute with
GRA 1903 Master Thesis 01.12.10
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72 million EUR per year to Bulgaria and Romania (Skjævesland 2006b). Mrs
Stubholt confirmed that there was no expectation of reaching an agreement before
the end of 2006. She also stated that a clear Norwegian starting point was that its
contribution should be channelled through a common EFTA/EEA financial
arrangement and not through the EU budget (Vermes 2006).
The negotiations on the conditions of the EEA enlargement of Bulgaria and
Romania lasted from 5th
of July 2006 to 29th
of March 2007. In late January 2007,
the Norwegian Minister of Foreign Affairs, Mr Jonas Gahr Støre, indicated that a
solution to the disagreement between the EFTA/EEA and the EU could be solved
with a more bilateral structure of the Norwegian support (Aftenposten 2007). The
agreements were signed July 2007. It was agreed that Iceland, Liechtenstein and
Norway were to contribute with 72 million EUR through the period lasting from
1st of January 2007 to 30
th of April 2009
26 (Proposition No. 72 to the Storting
(2006-2007) 2007: 31)). The EFTA/EEA was to contribute with 140 million EUR
according to Addendum to Protocol 38 A and the Agreements between Norway
and the beneficiary states (2007a+b). Of this sum, Norway was responsible for
136 out of 140 million EUR. As in the agreement of the 2004-2009 negotiations,
a separate Norwegian channel, Norway Grants, was established. However, this
arrangement was administered by Innovation Norway rather than the FMO.
Norway was to contribute with 68 million EUR through this mechanism. Norway
received some tariff quotas as “compensation” and some technical barriers for
Norwegian tariff quotas were struck down (Proposition No. 72 (2006-2007) 2007:
7). The value of the negotiated tariff quotas was calculated as being about 9
million EUR or 3.6 million EUR annually. This represents about 6.6 per cent of
the value of the Norwegian contribution.
As in the previous financial arrangements the distribution of the share of the
beneficiary states was decided by an EU method used for internal redistribution
(Proposition No. 72 to the Storting (2006-2007) 2007: 15). The EFTA/EEA states
used a method based on GDP instead of GNI when it came to deciding the
26
This represents two years and four months.
GRA 1903 Master Thesis 01.12.10
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distribution of payment obligations (Proposition No. 72 to the Storting (2006-
2007) 2007: 15 see footnote 2).
Beneficiary states and their share (table 6):
Beneficiary States Financial Mechanisms 2007-2009 % of total
Bulgaria €41,500,000 29,64 %
Romania €98,500,000 70,36 %
Total €140,000,000 100,00 %
Million EUR. FMO 2010
The main aim of the EEA FM 2007-2009 was the same as for the EEA FM 2009.
The goal was to “contribute to the reduction of economic and social disparities in
the European Economic Area through the financing of grants to investment and
development projects” (Addendum to Protocol 38 A). The sectors covered by this
mechanism were the same as for the EEA FM 2004-2009. One also established a
new Norwegian bilateral channel for contributions. This was independent of the
existing Norwegian FM. The main aim of the new Norwegian FM was to
promote “social and economic development [in Bulgaria and Romania] through
bilateral cooperation projects between the Parties” (Agreements 2007a+b). The
Norwegian arrangement was meant to offer more flexibility and a greater focus on
partnerships. The sectors covered by this arrangement were:
- “reduction of greenhouse gas emissions, including Joint Implementation projects under
the Kyoto Protocol, and other emissions in air and water,
- energy efficiency and renewable energy,
- facilitating sustainable production, including certification and verification”.
(Agreement Article4 2007a + b)
Furthermore, in Bulgaria’s case a fourth priority sector was “implementation of
Schengen acquis, support of National Schengen Plans as well as strengthening the
judiciary”. For Romania a fourth priority sectors was “health”. Activities eligible
for support were, among other things, innovation, human resource-development,
networking, capacity-building, technology transfer and research and development
(Agreement Article7 2007a + b). Moreover, the Norwegian side emphasised that
the social partners were free to participate in these projects (Proposition No. 72 to
the Storting (2006-2007) 2007: 6).
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The bilateral element of the new arrangement is not reflected in Addendum to
Protocol 38 A. However, it was alluded to in the article 1 in the agreements
between Norway and the Beneficiary states. It was stated in clearer terms in the
MoUs for the EEA Grants of Bulgaria and Romania. In their foreword at page 2 it
is written that:
“WHEREAS the Agreement of 25 July 2007 on the Participation of the Republic of Bulgaria and
Romania in the European Economic Area and the EEA Financial Mechanism will strengthen
relations between the EFTA States and the Beneficiary State to the mutual benefit of their
peoples;”
Additionally, the MoU states some underlying goals that were not mentioned in
the Addendum to Protocol 38 A. This is from page 2 of the foreword in the MoU
for the EEA Grants for Romania:
“WHEREAS the enhanced co-operation between the EFTA States and the Beneficiary State will
contribute to securing a stable, peaceful and prosperous Europe, based on good governance,
democratic institutions, the rule of law, respect for human rights and sustainable development”.
One did not negotiate MoUs for the Norwegian mechanism. Formally, Innovation
Norway is responsible for the administration of the contributions to two countries
in the period 2007-2009. However, the Norwegian Ministry of Foreign Affairs
have the overarching responsibility for the implementation of both the Norwegian
arrangements (Proposition No. 72 to the Storting (2006-2007) (2007: 31)).
Article 9 of Protocol 38 A about the conditional continuation of support also
applied to the arrangements lasting from 2007 to 2009 for Bulgaria and Romania.
The need for further contributions would thus be reviewed after the end of the
arrangement.
3.5.1 EXPLANATION
3.5.1.1 Asymmetry and Power
The asymmetric relationship between the EFTA/EEA and the EU increased with
the EU accession of Bulgaria and Romania. Yet it seems that these negotiations
did not have the same attention of the EU member states as the one leading up to
the FMs 2004-2009. Only contributions to the two accession states were to be
negotiated on. This means that the EFTA/EEA side did not meet the entire EU at
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the negotiation table. Thus, one can perhaps argue that the asymmetry did not play
such an important part in the negotiations. However, one can argue that the
structural asymmetry of power continued to play its part. There are indications
that neither Iceland nor Norway was interested in negotiating further contributions
until 2009. Nevertheless, they had to. Thus, one can argue that the reason for the
negotiation to take place altogether was power asymmetry.
3.5.1.2 Strategy and Tactics
This round actually saw the member states of the EU deciding in early February
2007 that new legislative acts would not be implemented in the EEA until one
agreed on an extended EEA agreement. This did not create immediate concerns
among the Norwegian negotiators. This is a different situation to the previous
round in which vague threats were emphasised in the Proposition No. 3. One
might argue that the parallelism of the EU and the EEA agreements were not as
crucial for the Norwegian as was the parallelism of the former enlargements.
However, it is clear that a long-term freeze of the dynamism of the EEA
agreement would be damaging for Norway.
It was argued from the Norwegian side that one needed to take into account the
absorption capacity of Bulgaria and Romania with regard to the size of the grants
(Proposition No. 72 to the Storting (2006-2007) 2007: 14). At the following page
one can read that “one must take into account the risks that is associated with
project work” in Bulgaria and Romania. In the same proposition it is written that
“even though the administrative apparatus is continuously developing and
strengthening, both countries still have many challenges with regard to good
governance of the public administration”. The Norwegian side therefore deemed
it necessary to have in place “good routines with clear demands for control and
auditing” (Proposition No. 72 to the Storting (2006-2007) 2007: 15). Norwegian
negotiators pointed to the fact that the EU had decreased its planned support to the
two accession countries because of the lack of capacity in the two countries to
absorb the funds. These countries were to receive 28 per cent of the EU’s
Cohesion Fund for the EU’s budget period 2007-2013. However, they ended up
being allocated 12 per cent. As a consequence, Norway called for a corresponding
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reduction in the EU’s demands for contribution from the EFTA/EEA states (Ask
2006a). Norwegian remarks that the EU planned on cutting significant amounts of
support to Bulgaria and Romania did not lead to cuts in the demanded EFTA/EEA
contributions. It appears that the EU has an opinion that the EFTA/EEA states
should follow what the EU says and not what it does.
3.5.1.3 Domestic Factors in Norway
3.5.1.3.1 Political
In 2006/2007, the sitting government was a majority government that consisted of
the three parties Ap, SV and the Sp. The Sp and the SV are the most ardent EU
sceptics in the Norwegian party system. As one saw in the previous negotiation
round, SV and the SP were the only parties in the Storting that were outspokenly
negative to the deal. The Ap is in favour of European integration, despite the EU
issue being a divisive one for the party. It should also be noted that the Ap is by
far the greatest party in the majority coalition. The government in power during
the negotiations in 2006/2007 is the same government that was in power during
the latest negotiations.
Mrs Liv Monica Stubholt had already indicated that this negotiation would be a
testing ground for the new government’s “active European policy”. Mrs Haga, the
leader of the Sp and staunch critic of the negotiated agreement in 2003, became a
member of the majority coalition red/green government of Norway. She warned
that the new government was prepared to stand up against the EU (Mellvang-Berg
2005). Thus, there was some prestige among some politicians to achieve a “better
deal” than the previous government.
The 2nd
of February, the EU decided to freeze the EEA agreement. However, this
was not seen as very dramatic by the Norwegian negotiation team (Skjævesland
and Ask 2007). According to former Secretary of the EEA Joint Committee and
future leader of the Europabevegelsen27, Mr Paal Frisvold, the Norwegian
Government had known about the EU sanction in 14 days and kept it secret for
27
The equivalent of the pro-EU membership organisation in Norway.
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the Norwegian public (Egede-Nissen et al. 2007). This might confirm the sense
that these negotiations take place away from the public eye and therefore imply
little expectations from the Norwegian political scene.
3.5.1.3.2 Collective Action
The trade between the accession countries and the EFTA/EEA side had not been
substantial. Thus, there were no calls from the EU to create tariff quotas for
agricultural products. Neither were there genuine calls for compensation of lost
FTAs with the accession countries. However, a link had been established between
market access for seafood on the one hand and the financial arrangements on the
other. In this regard, one can argue that compensation for lost free trade became
an important issue also in the negotiations on the period 2007-2009. Norway
wanted permanent tariff quotas but the EU negotiators did not accommodate this
wish. Norway received some tariff quotas as compensation and some technical
barriers for Norwegian tariff quotas were struck down (Proposition No. 72 (2006-
2007) 2007: 7). The estimated value of the quotas was 9 million EUR or 3.6
million per year. The value of the compensatory quotas for fish was one per cent
smaller than what was achieved in the previous negotiation. However, the
Norwegian authorities were generally pleased with the outcome. Norway both
received larger tariff quotas and importantly got rid of some technical barriers
(Proposition No. 72 (2006-2007) 2007: 18). The status quo was preserved with
some additional costs to the tax payer.
3.5.1.4 Solidarity
There are reasons to believe that solidarity did not play a considerable part in the
decision of the EFTA/EEA to increase their contributions through including
Bulgaria and Romania in the financial arrangements. The accession countries
were poorer than those that had joined in the former round and therefore were
more deserving of support from a normative point of view. However, signals from
Iceland and Norway were not forthcoming to the demands from the EU. Mr Jonas
Gahr Støre from the Ap stated that there was no legal obligation on the
EFTA/EEA states to increase their contributions. Mr Gahr Støre was of the
opinion that the EU had no basis in their demands for more contributions. The
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Icelandic Minister of Foreign Affairs, Mrs Valgerður Sverrissón, stated that there
was no reason to establish new mechanisms as the existing EFTA/EEA financial
arrangements were not to be renegotiated until 2009 (Christensen 2006). Contrary
to the past round, there had been no clear expression that Norway would assist
these countries through EFTA/EEA contributions. If one believes that this support
is provided out of solidarity this is perhaps particularly surprising, given that
Bulgaria and Romania are clearly among the poorer of the latest EU member
states. If the rationale for providing more contributions had been solidarity, the
EFTA/EEA side would not be so hesitant to provide support to these countries.
3.5.1.5 Bilateral Relation and Soft Power
The Norway Grants 2007-2009 (the Norwegian arrangement that was set-up) was
seen as a great way for Norwegian actors to get involved in Bulgaria and
Romania. All approved projects of the Norway Grants 2007-2009 had to have a
Norwegian partner. The priority sectors were also channelled to areas in which
Norwegian actors had competencies. (Proposition No. 72 to the Storting (2006-
2007) 2007: 14). In this sense, it was the arrangement that had the most
Norwegian and bilateral component yet. This was also a development that was
welcomed by the SCFAD (see Recommendation No. 257 to the Storting) and the
Storting (2007). The priorities and design of the Norwegian arrangement for the
period was much more in line with Norwegian interests than the existing EEA and
Norwegian FMs. In this regard, one can argue that the Norwegian government
managed to obtain a better agreement than the previous government. However,
one should keep in mind the short time horizon of the deal. It would only be in
place for two years and four months. This might have tempted the EU to a greater
degree than before to let Norway take care of the arrangement. For instance, the
projects supported by the Norway Grants 2007-2009 did not have to be screened
by the Commission, which is normal practice for the other arrangements. This is
an indication that the EU was lenient with regard to demands toward the set-up of
the arrangements. It is also worth remembering that half the money would be
channelled to the existing EEA FM. However, one observed that Norway was
very hesitant with regard to increasing their contribution. It seems that arguments
about bilateral relations or soft power to a large extent were used only in order to
rationalise or legitimise the contribution after the fact.
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3.5.1.6 EU Politics
It appears that the negotiation for the period 2007-2009 was straightforward to
with regard to EU politics. An important principle for the Commission, Bulgaria
and Romania in the negotiations on the period 2007-2009 was non-discrimination
compared to the ten new EU and EEA members when it came to the contributions
(Proposition No. 72 to the Storting (2006-2007) 2007: 13). Seemingly, there was
no zero-sum game apart from between Bulgaria and Romania. The short time-
horizon of the agreement also made the negotiation parts more pragmatic in this
round. As explained in the section about EU strategy and tactics, the EU went to
the drastic step of freezing the EEA agreement. However, this did not have
anything to do with internal politics in the EU.
3.5.1.7 Path Dependence
Norwegian authorities argued that one was committed at the end of the current
period “to review the need for continued aid in order to reduce economic and
social disparities within the EEA”xli
. This indicates that the financial arrangements
are regarded as a long-term measure. At the same time all signatories agreed “that
the different financial mechanisms that have been negotiated shall not create
precedence for the time after they end on the 30th
of April 2009”xlii
(Proposition
No. 72 to the Storting (2006-2007) 2007: 15 m.t.). This can either mean that the
Norwegian government genuinely believed that there was a possibility that the
arrangements were to end after April 2009. More likely, the reason that one felt
the need to specify this was that one knew that the precedence in reality had been
established and confirmed with the agreement in 2007.
The Commission initially presented calculations showing that the EFTA/EEA
countries ought to contribute 165.9 million EUR in the period 2007-2009. This
calculation was merely a technical operation in which the Commission based their
numbers on the previous arrangements for the period 2004-2009. Norway did not
agree that this was proper as these were technically a new set of negotiation of the
adjustments to an extended EEA agreement. (Proposition No. 72 to the Storting
(2006-2007) 2007: 14).
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Liechtenstein (2007) officially made clear the principle that EFTA/EEA states
should receive a reduction of contributions in the case that not all countries
qualify for contributions the next period. Liechtenstein (2007) declared that:
“at the review foreseen in Article 9 of Protocol 38a any possibly agreed further financial
arrangement will take into account the already achieved reductions of economic and social
disparities so as to reduce contributions by the three EFTA States proportionately, if one or more
of the current Beneficiary States does not further qualify for funding under such an arrangement”.
Norway or Iceland did not put forward such a statement. This can mean that the
quietly acquiesced or that they were concerned with potential consequences. The
Liectensteinian statement about the application of objective rules can be
interpreted as confirming the view that this arrangement was seen as a permanent
feature of the EEA agreement.
3.6 The EEA and Norwegian Financial Mechanisms (2009-2014)
In late March 2008, a spokesperson for the EU Commission, Mrs Christiane
Hohman, revealed that a negotiation mandate was being prepared for a negotiation
on another period with financial arrangements. No precise figures were being
presented. However, it was expected that the contribution demanded by the EU
would represent a considerable increase. According to centrally placed source, the
demand from the EU would be around a 50 per cent increase in the next period
(Mellvang-Berg 2008a). A spokesperson in the NMFA, Mr Bjørn Johansen,
commented that Norway’s position was that there was no legal obligation for
Norway to continue its support (Ask 2008).
The EU Commission’s Chief Negotiator and former EU ambassador to Norway,
Mr Alan Seatter, called for EFTA/EEA solidarity when the negotiations started
the 26th
of September 2008. He remarked that the challenges of many of the new
member states had increased, therefore an increase of the contributions was called
for. The Norwegian Chief Negotiator, Mrs Oda Sletnes, argued that the EU had
presented no good arguments that would warrant calls for an increase in the
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contributions. Mrs Sletnes also strongly hinted that Norway would demand that
Spain would not be included in future arrangement (Mellvang-Berg 2008c). She
signalled that the Norwegian view was that no increases in the contributions
should occur (Eltvik 2008b).
The negotiations on the new mechanisms started in September 2008. The outcome
of the negotiations was revealed right before Christmas 2009. The negotiations
were formally ended on the 18th
of December 2009, but the final agreement was
not signed until the 28th
of July 2010. The new agreement implies that the
EFTA/EEA states shall make available 1788.5 million EUR in the period 1st of
May 2009 – the 30th
of April 2014 (Proposition 160 (2009-2010) 2010: 1). As in
the previous arrangements one is to channel the funds through two separate
mechanisms. The EFTA/EEA countries will provide 988.5 million EUR toward
the EEA FM 2009-2014. Norway will make available 800 million EUR through
the separate Norwegian FM. Norway is responsible for 97 per cent for the total
expenditure. This represents about 1740 million EUR which means that Norway is
committed to contribute about 349 million EUR annually. This represented an
increase of the Norwegian contributions of 22 per cent compared to the period
2004-2009 (including the contributions to Bulgaria and Romania). Mrs Sletnes
commented that 10 per cent represented inflation adjustment, so the real increase
was only 12 per cent (Mellvang-Berg 2009e). In addition, Norway received tariff
quotas for fish which the NMFCA (2010) value at about 130 million EUR, or
about 26 million EUR per year. This represents approximately 7.5 per cent of the
total contribution from Norway.
The financial crisis served as a context for the negotiations. At the EFTA/EEA
side it was agreed that Iceland would not have to face increases in their
contribution compared to the last two years. This meant that Iceland were at most
responsible for annual contributions of 6.795 million EUR (Proposition 160 S
(2009-2010) 2010: 4). Apart from this the distribution of expenditures is decided
by the states’ GDP. The internal distribution key for the contributions is decided
by the EU (Proposition 160 S (2009-2010) 2010: 4). An important example is
Spain which does not anymore qualify for support by the EU’s own calculations.
However, a transitional arrangement is in place in the EU for the budget period
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2007-2013. This has meant that transitional arrangements have been established
also in the EFTA/EEA support. This implies that Spain will be given 45.85
million EUR in the period 1st of May 2009 – 31
st of December 2013 (Proposition
160 S (2009-2010) 2010: 4).
Beneficiary states and their share (table 7):
Beneficiary States Financial Mechanisms 2009-2014 % of total
Poland €578,100,000 32,32 %
Romania €305,950,000 17,11 %
Hungary €153,300,000 8,57 %
Czech Rep €131,800,000 7,37 %
Bulgaria €126,600,000 7,08 %
Lithuania €84,000,000 4,70 %
Slovakia €80,750,000 4,51 %
Latvia €72,950,000 4,08 %
Greece €63,400,000 3,55 %
Portugal €57,950,000 3,24 %
Estonia €48,600,000 2,72 %
Spain €45,850,000 2,56 %
Slovenia €26,900,000 1,50 %
Cyprus €7,850,000 0,44 %
Malta €4,500,000 0,25 %
Total €1788,500,000 100 %
Million EUR. Proposition 160 S (2009-2010) 2010: 5)
The main aim as described in Protocol 38 B Article 1 is still “to contribute to the
reduction of economic and social disparities in the European Economic Area”.
Moreover, the new Protocol’s article 1 has a bilateral element as well. One can
read that the agreement is intended to contribute to “the strengthening of their [the
EFTA/EEA states] relations with the Beneficiary States” (Protocol 38 B Article
1). The Article 1 of the Norwegian Agreement is similar. However, it is
emphasised that the agreement lasts for five years. The aim mentioned in article 1
is that Norway “undertakes to contribute for a five year period to the reduction of
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economic and social disparities in the European Economic Area, and to the
strengthening of its relations with the Beneficiary States”. One can observe how
the bilateral emphasis has gone from the MoUs of the different beneficiary states
to becoming one of the main emphases of the arrangements.
The priority sectors of the EEA FM are:
- Environmental protection and management
- Climate change and renewable energy
- Civil society
- Human and social development
- Protecting cultural heritage
Support will also be provided to academic research granted that it is targeted
toward any of the abovementioned sectors. A new feature of the support is that the
priority of some of the priority sectors is quantified. It is made clear that the two
environmental priority sectors together are indicatively allocated 30 per cent of
the grants. Further, the civil society sector is indicatively allocated 10 per cent of
the EEA Grants (Protocol 38 B Article 3).
The priorities of the Norwegian FM are:
- Carbon Capture and Storage
- Green Industry Innovation
- Research and Scholarship
- Human and Social Development
- Justice and Home Affairs
- Promotion of Decent Work and Tripartite Dialogue
The support of the priority sector called “Carbon Capture and Storage” is
targeted to amount to 20 per cent of the Norwegian FM. In addition, the
Norwegian FM will set up funds for the “Promotion of Decent Work and
Tripartite Dialogue” which one per cent of the arrangement’s allocation to the
beneficiary states will be distributed (Agreement Article 3 2009). This fund will
likely be managed by Innovation Norway.
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It was written in Protocol 38 B Article 9 that:
“at the end of the five-year period and without prejudice to the rights and obligations under the
agreement, the Contracting Parties will in the light of Article 115 of the agreement review the need
to address economic and social disparities within the European Economic Area”.
This is exactly the wording of Article 9 of Protocol 38 A which was set-up for the
period 2004 to 2009.
3.6.1 EXPLANATION
3.6.1.1 Asymmetry and Power
The EU now consisted of 27 member states. 15 of these had a direct stake in these
negotiations. The beneficiary states consisted of over 170 million people. Further,
the most difficult negotiation partner of the EFTA/EEA side, Iceland, did not take
part in the negotiations. The Icelandic stance was that the country wanted to
continue its contribution to the financial arrangement but not at a higher level than
in the previous periods. Thus, the contribution of Iceland was frozen at a
maximum of 33.975 million EUR for the next five years or 6.975 million EUR per
year (Proposition 160 S (2009-2010) 2010: 4). This means that Norway and
Liechtenstein, totalling about 4.9 million people was up against an EU that was
100 times the size of the EFTA/EEA. The beneficiary states consisted of
populations 35 times the size of the EFTA/EEA states. The asymmetry was
obvious and arguably greater than before.
A document written by Mrs Oda Sletnes, in relation to the 15th
anniversary for the
establishment of the EEA agreement, pointed out that Norway had few allies in
these negotiations. In previous negotiations one might have gotten the impression
that the question was somewhat a divisive issue between the EU members that are
net contributors and those that are net beneficiaries of the EU budget. However,
Mrs Oda Sletnes wrote that the Nordic countries and the UK do not particularly
mind that the EEA membership include some costs. This is because the states do
not want the EEA agreements seem like an attractive alternative to EU
membership. Based on a “different reasoning”, France and Italy are especially
inclined to support tough demands on Norway (Sletnes 2009). One sees that at
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least 20 EU member states (the ones mentioned by Mrs Oda Sletnes and the
beneficiary states) want Norway to contribute at a substantial level.
One sees that the asymmetry has become greater and Norway is faced with a
situation in which support within the EU for their decision is hard to maintain.
However, it does not appear that asymmetric relations increases our understanding
much with regard to the direct causes for the result in 2009/2010 and the future
round. It had already been decided that the arrangements were to continue. Still,
one should be aware of the structural condition of the relationship between the
EFTA/EEA and the EU.
3.6.1.2 Strategy and Tactics
The financial crisis represents the context of these negotiations. Mr Jonas Gahr
Støre from the Ap was the Norwegian Minister of Foreign Affairs in this
negotiation as well. He stated that “the financial crisis has not weakened the focus
on how much Norway, which is rich, can contribute with”xliii
(Gahr Støre 2010a).
The initial reaction of the leader of the KrF, Mr Dagfinn Høybråten, was that the
EU demand of 50 per cent would be “extortion without an objective
foundation”xliv
(Aalborg and Vermes 2008 m.t.). Mr Gahr Støre called the EU
demands “indecent and exorbitant”xlv
. He continued by stating that “the sky
cannot be the limit every time financial arrangements from the EFTA/EEA states
are negotiated”xlvi
(NTB 2009a). However, this round was the shortest one with
regard to time. This can shed light on the fact that there was little real conflict
between the negotiation parties.
In the latest negotiations there were no time limits to hold. If anything, it was the
EU that spent more time than one could expect. Mr Jonas Gahr Støre (2009b)
expressed some concern about the situation despite promises from the
Commission that there was nothing to worry about. One of the reasons that this is
important is based on certainty and continuity. This is also the reason that a
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parallelism of enlargements of the EU and the EEA is so important and that a
dynamic agreement is crucial for Norway28
.
3.6.1.3 Domestic Factors in Norway
3.6.1.3.1 Political
The same coalition government was in place for the most recent negotiations as
those in 2007. One will not find the Sp and the SV arguing against the negotiated
outcome that they participated in reaching. The silent reception of the agreements
might mean at least three things. Either, the Sp and the SV have begun to accept
the financial arrangements or the parties’ loyalty to the coalition government they
are part of is more important to them than signalling dissatisfaction with the
Norwegian relationship to the EU. It might also indicate that that the government
was holding back as it was vulnerable to further disagreements29
. Perhaps the Ap
has signalled to the Sp and the SV that public disagreement within the government
coalition is deemed too costly. The matter of fact is that the political system in
Norway is in favour of the EEA agreement as a status quo. Therefore, objections
from the Sp and the SV are only symbolic.
The Norwegian delegations to the negotiations have been criticised for being too
secretive. Among other things, it has created some irritation that the Norwegian
government did not reveal the substance of the agreement which was accepted in
December 2009. It was revealed first in June 2010. Furthermore, Norwegian
actors have kept silent in negotiations when it comes to explicit issues.
It appears that the understanding for the considerable problems in Europe is
prevalent among the Norwegian political parties. The challenges for Europe
served as an important context for most arguments in the yearly debate in the
Storting following the MFA’s biannual address to the Storting on important EU
and EEA matters (Storting 2010).
28
This alludes to Bobbitt’s (2002: 229) arguments that the rationale for the present “market state”
is to maximise its subjects' possibilities rather than utility /welfare as before. 29
There have been some already for instance on environmental issues and the fact that the SV
formally is against the NATO.
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3.6.1.3.2 Collective Action
One can interpret the results that Norway is ready to use money in order to
directly promote export interests and indirectly defend the Norwegian agricultural
sector. The vital interest is the EEA agreement in which the Norwegian
business/industry interests are maintained through their access to the European
market. There were reasons in the past negotiations that Norway should receive
compensatory market access in return for the loss of FTAs with the CEECs. This
was also provided when Austria, Finland and Sweden joined the EU. In the latest
round there were no objective reasons that Norway should get a compensation for
loss of FTAs as there was no enlargement and no further loss of trade through
FTAs. However, the Norwegian government made clear that it was “vital to make
use of the negotiations in order to improve the fishery sector‟s access to the EU
market”xlvii
. It was also stated that a satisfactory agreement on the market access
of seafood was necessary in order for Norway to continue its financial support to
EU members (Proposition 160 S (2009-2010) 2010: 3 m.t.). The negotiation on
market access for seafood did have as central a position as in the negotiations
leading up to the 2004-2009 agreements. The existing tariff quotas were
continued. In addition, Norway received increased tariff quotas on frozen, peeled
shrimps and herring (Proposition 160 S (2009-2010) 2010: 5). However, the EU
did not accommodate Norwegian proposals for extending the number of included
products in the tariff quotas. Furthermore, the Commission rejected Norwegian
proposals for more permanence of the tariff quotas. Still, the Commission insisted
on keeping a connection between the periodisation of the fish negotiation and the
financial negotiations (Proposition 160 S (2009-2010) 2010: 6).
3.6.1.4 Norway as a Free Rider
Mr Gahr Støre (2008a) revealed that the support is thin for the Norwegian view
that a non-member should not contribute on the level of EU members. The fact
that Norway was not hit the hardest by the current Financial Crisis means that
even less sympathy exists for the Norwegian stance that it is not legally
committed to contribute. Further, Norway becomes more integrated to the EU as
time passes. The tolerance for a country that is seen as cherry-picking European
integration programs is low in today’s EU. This has a lot to do with other
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European state leaders’ lack of flexibility and that the EU is working on stricter
rule adherence with regard to the Euro cooperation.
3.6.1.5 Bilateral Relation and Soft Power
Norway has ambition of using the funds in order to strengthen the country’s
“general reputation and profiling in the beneficiary states”xlviii
(Proposition 160 S
(2009-2010) 2010: 3 m.t.). Mr Gahr Støre (2010b m.t.) sees the FMs for the new
period as an “historic opportunity”xlix
for Norway. In the same vein, Mr Gahr
Støre (2009a m.t.) argued that the greatest challenge for Norway is to “draw out
political capital on the investment”l in the form of the FMs. The bilateral profile
of this support has increased. In the agreement on the FMs for the period 2009-
2014 it has been agreed that bilateral relations is a goal of the funding on equal
footing to the reduction of disparities.
Mr Roar Flåthen, the leader of Norway’s largest labour union, the LO, was quoted
saying that he wanted more social dialogue and less “insulation of public
buildings in Poland”li (Mellvang-Berg 2008b m.t.). This was adhered to by the
Norwegian negotiators. The idea of a fund for tripartite cooperation and decent
work was launched at a negotiation meeting the 30th
of January 2009 (Nilsen
2009). Mrs Oda Sletnes commented that Norway was willing to increase its
contribution. However, this was dependent on other elements in the negotiations
(Mellvang-Berg 2009a). On the 29th
of May 2009, Mrs Oda Sletnes could reveal
that Norway had increased its proposed contributions and channelled this increase
to climate and environmental measures (Mellvang-Berg 2009c).
Still, there are limits to how much Norwegian priorities can diverge from the
priorities of the beneficiary states. For instance, the proposal of focusing
Norwegian support on Carbon Capture and Storage (CCS) was well received by
the Commission. However, the reception was mixed in the beneficiary states
(Gahr Støre 2009a). According to Bellona, many member states were not content
with having to earmark contribution to CCS (NTB 2009b). Yet 20 per cent of the
Norwegian FM 2009-2014 is channelled to projects which involve CSS. One can
argue that 20 per cent is modest sum but it represents a lot as it is 20 per cent of
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800 million EUR. Arguably Norway has been effective in steering the support to
its own priority areas. Green industry, decent work and the fight against gender-
based violence is includes as priority sectors. It is clear that Norwegian
negotiators have considerable influence on what the EFTA/EEA support is
channelled toward. According to Mrs Ingrid Schulerud in the NMFA, Norway
“received 100 per cent acceptance for the sectors in which the money is to be
used”lii
. She continued by arguing that Norway has taken George Soros place in
many countries (Bondevik 2010).
An important recommendation from the mid-term review of the FMs 2004-2009
made by PWC (2008) was that one should direct resources through a program
method rather than supporting individual projects. This recommendation was an
important element of the new mechanisms. The Norwegian authorities argue that
this change was made in order to “strengthen the focus on strategic interests”liii
(Proposition 160 S (2009-2010) 2010: 3 m.t.). By interpreting the Commission it
appears that the programme method of the EEA and Norway Grants coordinates
these arrangements with the EU’s own structural funds. The Commission (2010:
3) writes that “the key element is that the funds will be spent using the same
“program method as used in the EU structural funds”. The fact that one co-opts
the EU method is interesting by itself. However, it is not mentioned as anything
else than a way of Norway to better achieve its goals in Proposition 160 S (2009-
2010).
The period 2009-2014 is the first period of the financial arrangements’ in which
strengthening of bilateral relation have become a main aim at equal footing to the
reduction of disparities. This development is in line with political signals in
Norway. It might be that this element of the new arrangement is result of the fact
that one now sees the support as an integral part of EFTA/EEA relations to the EU
and therefore to a greater degree try to influence the funds’ direction rather than
their size. However, the fact that the new program method for disbursement
implies more autonomy for actors in the beneficiary states might mean that the
bilateral contact between the authorities in the two sets of countries do not
increase as intended. On the other hand, there was much frustration with the slow
processes of the past EEA and Norwegian FMs (Nordrum 2006). Increasing the
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effectiveness of the funds might mean greater goodwill. Nevertheless, it seems
that the inbuilt slowness of the application and the disbursement is an intended
feature by Norwegian authorities. One should take into account that many of the
beneficiary states reportedly have large challenges with regard to corruption (see
Appendix 6). Mr Gahr Støre (2008b) stated his general attitude was that Norway
should be “thorough and aware instead of the opposite with regard to the
evaluation of projects before the disbursement”liv
and the he believed that this was
the former government’s approach as well. The new program method means that
Norway will have less control of the arrangements than before. Thus it is difficult
to believe the argument that one from the Norwegian side wanted a program
method in order to increase the effectiveness of the new arrangement. This would
constitute a new approach from the Norwegian side which it will be interesting to
see evaluated in the coming years.
The EEA and Norwegian FMs 2009-2014 intend for the first time to cover the
administration costs of the beneficiary states. This can have at least two effects.
The governments in the beneficiary states might be more positive and appreciative
toward the mechanisms as they put no extra burden on their administrative
capacity. Contrarily, it might be that the governments of the beneficiary states lose
a sense of ownership to the funds and that they therefore will not contribute to
strengthening bilateral relations. There is a tension between the possible outcomes
and which effects will be stronger is too early to predict.
3.6.1.6 EU Politics
There are indications that the negotiations in 2009/2010 were complicated on the
EU side. The negotiations between EFTA/EEA and the EU had been finalised
already in December 2009. Norway and the other EFTA/EEA states had to wait to
July 2010 before the EU achieved an internal consensus on the distribution of the
funds. Without this agreement among the EU states, this agreement could not be
signed.
The element of future internal EU distribution has spilled over to the negotiations
on the EFTA/EEA arrangements. The internal distribution of the EFTA/EEA
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contributions is something to be decided upon by the EU members. Mr Gahr Støre
(2008a) mentioned that the Norwegians have views on the distribution of support.
However, he did not think that the Norwegian view was going to be emphasised.
Mrs Brinkmann in the EU’s negotiation team commented that the EFTA/EEA
states had to accept the EU’s distribution key. Mrs Oda Sletnes remarked that she
saw no connection “between these negotiations and the EU‟s internal decisions
on the distribution of EU funds”lv (Mellvang-Berg 2009c m.t.). Mr Jonas Gahr
Støre (2009b m.t.) told the Storting’s EEA Committee that “vehement conflicts
between the countries as this is seen in connection to their distribution of benefits
in other EU channelled programs”lvi
. Already at a meeting in the Storting’s EEA
Committee at the 21st of October 2009, Mr Gahr Støre (2009b m.t.) expressed
concern of the fact that the EU countries had yet to agree to the negotiated
outcome. He said that “the fact that it has lasted until now is not good”lvii
. The
negotiated outcome was not agreed upon by the EU until the end of July 2010.
Reportedly, Hungary and Poland was in a less beneficial position with regard to
the internal distribution key than in 2004. This was the main reason that the
member states took considerable time with accepting the agreement. This
disagreement should be seen as positioning in the context of the long-term EU
Budget from 2014 (Mellvang-Berg 2009d). The EU’s budget negotiations for
2014 and later are something that every member state of the EU is apprehensive
about.
3.6.1.7 Path Dependence
There were conditional indications that the EFTA/EEA support would continue in
both the agreements with regard to the first Eastern enlargement and the
enlargement of the EU of Bulgaria and Romania. Mr Gahr Støre (2007) stated that
he would be surprised if there were no calls for future contributions after April
2009. Mr Per Olaf Lundteigen from the Sp stated that the Norwegians should
“pay, smile and try to look happy”lviii
the day Norway would be faced with
increased demands from EU with regard to the financial arrangements (Eltvik
2008a). Thus, there are clear indications that one expected increased demands
from the EU side. One did not come across anyone who expected the
arrangements to end when the 2004-2009 period was done. However, there seems
to be an understanding in the Norwegian side that increases are related to
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enlargements. Mrs Oda Sletnes argued that “we [Norway] are of the opinion that
the Commission‟s initial demands are unreasonable[...]contrary to the last
negotiation round, there is currently no enlargement of the EEA”lix
(Hegtun 2009
m.t.). This points to the fact that Norwegian expectation was that the level of
contributions would remain the same apart for some technical adjustments.
Nevertheless, it appears that Norwegian authorities at least expected a
continuation of financial arrangements.
A partial explanation for the increase of sums in the period 2009-2014 was
adjustment to inflation. This indicated that the financial arrangements have
become an institutionalised part of the EEA agreement. It resonates well with
Spanish arguments that this part of the EEA agreement has to be dynamic if one
wants to take part in increasing numbers of EU led programs. Furthermore, when
the EEA agreement was signed, the EU (or EC as it was called), were providing
support for the poorer regions of the common market through their Structural and
Cohesion funds. In retrospect, it seems natural that this would be an objective of
the EEA agreement as well. Article 115 seems to imply that this was an aim from
the beginning.
It was central for the Norwegian government that the size of the grants had to be
based on “an assessment of what constitutes a reasonable Norwegian
contribution”lx
. It is noted that the EU increases its support of the 12 new member
states (Proposition 160 S (2009-2010) 2010: 2). The increase in the Norwegian
contributions mirrored this. This is consistent with statements from 1999 that
Norway would follow the EU’s policy with regard to reduction of disparities.
Further, it was emphasised from the Norwegian side that new resources “should
be channelled to the states that are most in need”lxi
(Proposition 160 S (2009-
2010) 2010: 3 m.t.).
The EEA and Norwegian FMs 2004-2009 are seen as a success. This means that
there are no good arguments for ending the contributions. One tried to bring the
EU demand downwards in the negotiations on the period 2007-2009 by pointing
to the lacking absorption capacity of Bulgaria and Romania. And in the EU there
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was some worry about this as one could observe that the EU countries limited the
size of their support to Bulgaria and Romania. Nevertheless, the reviews of the
sums administered by the FMO in the period 2004-2009 indicated that there were
some problems but the absorption capacity was not one of them. In certain areas,
such as health in Poland, the national focal point, received application for over
twenty times the value of the available resources (PWC 2008: 28). Of course one
can hold that this has many reasons. For instance, many of the project applications
were faulty and did not qualify. It might also be that the priorities have not been
described concretely enough. However, there are hints that the EU has used the
size of the local demand as an argument in the negotiations with the EFTA/EEA.
It is not mentioned in the Proposition No. 160 to the Storting (2010-2011) but the
program method is an adaption of the EU method for providing support. The EU
Commission (2010) emphasises that it is pleased that the EFTA/EEA
contributions take form of a program rather method rather than a project approach.
This adds to the sense that the financial arrangements have become an
institutional element of the relationship between the EFTA/EEA and the EU. The
change of approach of the financial arrangements might indicate that an
Europeanization of the support has occurred.
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3.7 The Long-Term Perspective
3.7.1 Asymmetry and Power
One should describe the asymmetric relations between the EFTA/EEA and the
EU. This serves as a structural context of the negotiations. If one believes that
international relations are led by law-like determinism then one can explain the
negotiation results by only looking at the asymmetric relations. One might argue
that there is a certain equilibrium that was established with the start-up of the
FMs. In this scenario, the “Great Narrative” is that the equilibrium was
established with the set-up of the FM 1994-1998. With the adjustment through the
Swiss rejection of the EEA agreement, the EU did not receive less contribution
from the EFTA/EEA as one perhaps would have formally expected. In 1999, the
contributions did not end but did not increase either. The reason for this was that
the EU did not call for the contributions to increase. A new equilibrium was
established in relation to the enlargement of the EU with ten new member states in
2004. The enlargement meant that the asymmetric relationship had increased and
therefore the contributions were increased as well. The same pattern is observed
with the EU enlargement of Bulgaria and Romania. The deal agreed to in 2009
implied an increase of the contributions from the EFTA/EEA states to the EU for
the period 2009-2014. This agreement involved some calls from the EU for more
contributions from the EFTA/EEA side. The current level of contributions
represents the new equilibrium based on the power relations of the two parties.
If one looks at two snapshots from 1994 and 2010 it would not be complicated
based on explanations of asymmetry to argue convincingly about the existence of
the financial arrangements and their increase. The asymmetry of the EFTA/EEA
and the EU is clear to see. From the inception of the EEA agreement until today
the relationship has gone from being 1: 10 to 1: 100. The contribution has
increased about 1500 per cent from 1994 until today. However, there are too
many puzzles to such an explanation.
Perhaps the main challenge for this explanation is the result in 1998/1999. Why
did not the contributions increase? Why were the negotiations in 2006/2007 so
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lengthy and why did the EU have to freeze the EEA agreement in 2007 if merely
asymmetric relations were at play? If it was true that only power asymmetry was
at play then one would expect that this negotiation would be shorter than the
previous one. A possible explanation is the EFTA/EEA states only met Bulgaria,
Romania and the Commission in the negotiations. However, then the question
becomes why these countries received as much as they would receive in the more
asymmetric previous round of negotiation. A small puzzle internally in the
EFTA/EEA for the asymmetry thesis is that Iceland has always contributed with
less than its size would imply in these negotiations. In this regard, Iceland also
received more tariff quotas for fish than Norway.
There are convincing reasons to believe that the asymmetry of power conditioned
the negotiations. There are less indications that power asymmetry can explain the
outcome of the negotiations. The explanation based on a law-like view on the
level of contributions is not satisfying. It does not tell us why the equilibrium is at
the level it is.
3.7.2 Strategy and Tactics
One can interpret the negotiations line with a perspective in which the EU or
actors within it have used explicit or implicit threats in order for the EFTA/EEA
side to give in to their demands. Explicit threats were made in relation to the
adjustment of the EEA agreement in 1993 and the calls for the continuation of the
financial arrangement in 1998/1999. The Norwegian government felt that the
future of the EEA agreement was at stake in 2003. The EU froze the EEA
agreement in 2007. At the same time one notices how Norwegian government
actors tend to signal before the negotiation rounds that Norway is ready to
increase its contributions. This has annoyed Finns, Icelanders, Swedes, Swiss and
likely some Norwegians in the past. Mr. Blankenborg even commented that
Norway should have been more generous in 1998/1999 in order to prevent the EU
arguing that Norway had been providing marginally in the past.
The view that these arrangements come in place because of power play from the
EU is plausible. However, the last negotiation round did not prove to be
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controversial at all. It seems that no explicit or implicit threats were furthered by
the EU. Nor was any sanction against the EFTA/EEA states carried out. If one
looks at Appendix 1 one finds that the latest round of negotiations were the
shortes of all the rounds. It can mean that the EU has got its point across and that
it therefore does not need to sanction or threaten the EFTA/EEA states.
Nevertheless, one should have met more resistance from the political scene in the
EFTA/EEA states if this was the case. Further, a puzzle is that the same
governement was in place as in 2007 which was a lengthy and at times conflictual
negotiation. The narrative based on strategy and tactics is convincing but it has
some explanatory weaknesses. It is difficult to apply the theoretical approach in
the latest negotiation round as it is nearly impossible to falsify. It seems rather that
there was no substantial resistance from the EFTA/EEA side in the latest
negotiation. The countries of the EFTA/EEA had already accepted a conditional
commitment to continue the support in 2004 and 2007 with Protocol 38 B (9).
That this acceptance was motivated by EU threats is possible.
3.7.3 Domestic Factors in Norway
3.7.3.1 Political
Roger de Rabutin (1618-1693) once wrote that “we must like what we have when
we don't have what we like”. To some extent this phrase sums up the sentiments
among Norwegian political parties. It is important to keep in mind that the EEA
agreement is a cross cutting compromise in Norwegian politics. The side that is
against Norwegian EU membership remains relatively quiet as Norway stays
formally outside the EU and has exceptions in the EEA agreement for fish and
agriculture. The side in favour of Norwegian EU membership stays silent as
Norway is as integrated as it can be as a non-member. Several commentators see
the increased contributions as a way for Norwegian politicians to “pay for
silence”. This is also why the Sp and the SV in Norway accepted the continuation
of the EEA agreement in 2004 and has not come up with an alternative to it in all
the years of the problematic EEA agreement’s existence despite the fact that the
parties are committed based on their party programs to end the EEA agreement.
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In fact, there is an article in the EEA agreement that seeks to remedy any conflicts
of interpretation. Article 111 describes how disputes like this can be settled.
However, no politicians from either side have argued in favour of this path. There
can be many reasons for this. One is simply ignorance, however this is very
unlikely. Especially since the main discussion of the permanence of the
arrangement was only years after the signing of the EEA agreement. Another
reason is that neither side wanted to settle the dispute as none could be sure about
the outcome. Further, it would not be a good idea for any side to test article 111
on this issue as it would look bad. Norway does not want to be seen as a free rider
or a greedy nation. Furthermore, Norway is heavily dependent on goodwill in the
EU in order to take part in European cooperation, for instance when it comes to
research, Schengen and security policy. On the other hand, such a dispute would
damage the legitimacy of the EU and especially its soft power. If the EU was to
“win”, a scenario in which the EU legally “forces” a neighbour to contribute
would almost be unthinkable. If it lost, the EFTA/EEA states could not expect to
take part EU programmes in the future. There are many reasons that this scenario
is unthinkable and some parallels can be drawn to article 126 and the question of
what the EEA agreement means by the word “territory”. The result is that neither
side clears it up but Norway harmonises the EEA rules and the rules on its oil
platforms on its continental shelf.
A term that is used several times in this thesis is that the negotiations have been
kept “under the radar”. The “EU question” in Norway is conflictual and a highly
divisive issue that is intimately coupled with the Norwegian fault line between the
centre and the periphery. Every government that has been in power during the
negotiations has been divided on the question of EU membership. There has been
an informal “suicide clause” in the different governments’ programs. Mr
Bondevik, who has been Prime Minister during two of the negotiations, has
commented that the EU question is political dynamite which will disintegrate any
thinkable Norwegian governmentlxii
(NTB 2007 m.t.). The politicisation of the
negotiations threatens with opening up for the more conflictual issue of
Norwegian EU membership. Further, one can argue that the EU debate in Norway
and the demand for objective facts is limited. This means that it is uncomplicated
to depoliticise the negotiations on the financial arrangements.
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There seems to be a Norwegian consensus that one can use financial arrangements
to keep controversial issues off the table in its meetings with the EU. With the
Swiss No to the EEA in 1992 it was provided more money in order not to again
open up a debate about the EEA which would create challenges to the Norwegian
party system. In 1998/1999 one continued to pay in order not to compromise the
EEA agreement and the ability to take part in European cooperation. In 2004 it
was about not compromising the future of the EEA agreement and to keep the
“EU question” off the table as the coalition government would disintegrate if the
issue emerged. The same can be said about the negotiations in 2007 and 2009. A
new issue was brought up in the negotiations leading up to the FMs 2004-2009,
2007-2009 and 2009-2014. Without increased financial contributions, the EU
would demand a liberalisation of the regime for foreign investments in the
Norwegian fishing fleet. This is a controversial issue in Norwegian politics
stretching back to when the EEA agreement was negotiated on. It is part of the
Norwegian objective to keep control of its natural resources. With regard to
another controversial issue, Norway managed to limit calls for quotas on
agricultural products from the EU to Norway. Most parties are split on their views
on Norwegian EU membership. However, in general the Norwegian party system
has stabilised around the EEA agreement as a solution to the “EU question”.
Apart from debates about the Eastern enlargement in 2004 there has been little
debate in the Storting with regard to the financial arrangements from the
EFTA/EEA to the EU/EEA. In recent rounds it seems that the agreements were
ratified more as a formality than a contentious agreement with the most important
organisation in Norway’s foreign policy. From their political treatment, it seems
that these contributions have gained political acceptance. They have been
institutionalised. In past negotiations one argued against the legality and fairness
of the EU’s demands. However, now it is more about the arrangements’ objectives
and to what aims they are directed.
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3.7.3.2 Collective Action
One sees from the latest round that there is a clear willingness for the Norwegian
government to pay for increased market access for the fishing industry in Norway
regardless of rights of compensation for lost FTAs. However, one can also
interpret this as the EU throwing Norway a fish bone to use Rossavik’s words.
This can be used by Norwegian politicians to argue that one “pays for market
access”. This can provide some insight to the fact that the Norwegian government
do not mention the financial value of these quotas in their description of the
arrangement s and the negotiations on these. The only thing that is stated is that
the tariff quotas are at an acceptable level. In reality the value of these tariff
quotas on fish represent less than eight per cent of the value of the Norwegian
financial contribution. In this light, the argument that one is genuinely paying for
market access appears weak. Another explanation is that Norway is given tariff
quotas because industries in some member states want fish in order to process it.
One of the reasons that Poland blocked an agreement in 2004 was that Polish (and
Baltic) officials were of the opinion that not enough quotas were provided in order
to supply the Polish (and Baltic) processing industries. Further, the Polish wanted
some assurances that substantial amounts of the Norwegian fish were directed to
Poland for processing. This was a potential problem for Poland because the tariff
quotas were not country specific. The tariff quotas are valid in the entire EU area.
One should contextualise the values of the quotas. If one follow Melchior’s
(2007) calculations, one finds that existing tariffs for seafood after the value of the
tariff quotas are considered are valued at about 25 million EUR. This means that
the numerical tariff barriers for Norwegian seafood are limited. One must
remember that what appears a little value in the big picture is considerable for
small sectors. There is considerable value in the tariff quotas for fish. According
to NMFCA (2010), the negotiated quotas for 2004-2009 were estimated to have a
value of approximately 18.1 million EUR annually. For the EU enlargement of
Bulgaria and Romania, the estimated value was about 3.6 million EUR per year.
The negotiated tariff quotas for fish for the period 2009-2014 are estimated to
have a value of about 25.8 million EUR per year. The increase of the value of
tariff quotas from 2004-2009 to 2009-2014 was 4.1 million EUR. This was about
a 19 per cent increase. The value of the quotas is not far from the increase in the
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annual financial contributions of 22 per cent. The value of the Norwegian fish
quotas represents about 7.5 per cent of the total Norwegian contribution.
No connections have been made between improved market access for EU
agricultural products in return for improved market access for Norwegian seafood.
This observation holds true regardless of the ideology of the Norwegian
governments. The connection is something that the FrP has proposed at several
occasions. However, the solution of pitting industries against one another has not
been an attractive option for Norwegian politics. The Norwegian tradition is to
protect agricultural interests. Nevertheless, there appears to be some movement in
current Norwegian politics. The SCFAD wrote it was of the opinion that “in
future negotiation rounds”lxiii
, the Norwegian side should make use of all relevant
measures in order to achieve better market access for fish. This includes providing
market access in Norway for agricultural products from the EU. In the Storting’s
treatment of Proposition 160 S (2009-2010) and Recommendation No. 22 S
(2010-2011), Mrs Eva Kristin Hansen (2010) from the Ap, made clear that the
parties in government did not support any such connection between agricultural
products and fish. A mistake had been made in the document that made up the
Recommendation No. 22 S (2010-2011). As no further corrections were made,
one can perhaps assume that the other parties in the Committee supported such a
future connection. These parties were the KrF, Høyre and the FrP. The latter
party has argued in favour of this at least since 2000 (See Hagen (2000) and
Høglund (2004, 2008)). Disregarding this connection is understandable if an
objective of the ruling government is to protect the Norwegian agriculture. This
means that the status quo is preserved. The Norwegian farmer is protected, the
fishermen have more tariff quotas for fish, the businesses and industry keeps their
access to the European market.
3.7.4 Solidarity
There are reasons to argue that solidarity Norwegian identity as an altruistic
country might partly explain the developments. The evidence is that Norway
appears to be forthcoming in these negotiations. In 1993, the Finns reacted
because of Norwegian willingness to accede to EU demands that the remaining
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EFTA/EEA states should take on the Swiss commitment despite the Swiss’ No to
the EU and the EEA (Haugli 1993). In the negotiations leading to the Financial
Instrument 1999-2003, the Icelanders were less ready than the Norwegians to
contribute to a new financial arrangement (Bjellaanes 1998d). This indicated that
the Icelandic were more open than Norwegians in their hostility to the Spanish
claims. In the negotiations leading up to the FMs for 2004-2009 had the same
features. It was reported that Iceland was annoyed by Norwegian indications of an
increase in the EFTA/EEA contributions (Hellstrøm 2002b). It was rumoured that
the result of the negotiations on the period 2004-2009 annoyed the Swiss who
were next in line with regard to contributions toward the new EU members. Mr
Gahr Støre (2007a) said that he would surprised if not demands for further
contribution after April 30th
2009. This can also be interpreted as readiness to
continue the contributions after 2009.
One sees that solidarity has only been a central issue in the negotiation round for
the period 2004 to 2009. However, as stated in the “Theory” chapter: where does
one draw the line? Would it be evidence of solidarity if Norway made available
1000 million EUR per year instead of 350 million EUR per year. Solidarity should
not be understood as dichotomous to rationality. At least one can establish that
Norwegian solidarity has never been the main aim of the contributions to the
poorer EU member states. At the same time, Norway is known for being an
altruistic actor in foreign aid. Yet there are reason to believe that the support to the
EU is different because these countries are middle income and the non-
governmental organisations that administer much of Norwegian traditional aid has
never been involved in the areas in which EFTA/EEA support goes to. In other
words, it seems that solidarity has never been the primary logic of this
contribution. The negotiations and the behaviour of Norway in these negotiations
have primarily been about something else than solidarity. However, one should
treat solidarity as a contextual element.
3.7.5 Norway as a Free Rider
One can hold that European integration has created a vast amount of public good
for Norway. A public good is characterised by being non-excludable and non-
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rivalrous. In that regard, one can argue that membership of the EU for the
EFTA/EEA states does not really matter as peace and stability, among other
things, are non-excludable. In this light one can see the contribution as a way for
the European Union to make EFTA/EEA to some extent internalise the positive
externalities they enjoy. There is a normative element in the fact that countries on
the outside of the EU system receive the benefits of the cooperation inside the
Union.
The EU negotiators can point to the Cecchini report showing that the finalisation
of the single market would add two per cent to the countries’ annual GDP. Not
even EU members contribute at this level but it might serve as a concrete
reminder for the EFTA/EEA countries that they have benefited not only
intangibly from European integration. With further liberalisations, for instance the
Service Directive, the EFTA/EEA states will profit even more and provide EU
demands with a strong justification. There is proof that actors to a great extent
have used this type of argument against Norway before. It seems that this was
especially prevalent in the negotiations in 2003/2004. There is no plausible
reason that they will quit to tell Norway again how much it benefits from
European integration and therefore that it should internalise more of the positive
externalities.
Many of the areas in which EFTA/EEA states take part are club goods. A club
good is characterised by the trait that it is excludable but non-rivalrous. Norway
takes part in cooperation programs of this kind and thus contributes with a
contingent based on clear and objective calculations. One can imagine the
financial arrangement as a more general contingent for European cooperation.
No state can readily afford to be “shamed”. A loss of reputation and goodwill can
have dire consequences both for a state’s economy (through a loss of investments
and tourism) and its credibility (Matlary 2002). The process leading up to the
Financial Instrument 1999-2003 shows that it is problematic for a country to be
seen as a free rider. It is complicated to argue that one only wants to cooperate in
areas that are seen as beneficial and not bear any costs (Arnesen et al. 2001). It is
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possible to understand the perceived double standards of Norway cherry picking
the areas in which it wanted to take part. The reduction of social and economic
disparities in the EU was one of the areas in which Norway did not want or saw
itself as legally committed to take part of. At the same time membership in the
Schengen agreement and the research cooperation through the Fifth Framework
was pursued by the Norwegian government. In 2003 not only did EU actors claim
that an increase would be just and fair, it was also emphasised that the former
arrangement was unfair. Percy Westerlund commented that “the EU cannot any
longer afford to let its richest friends take part in the common market with
contributions that are not corresponding with their economic strength”lxiv
(NTB
2003c m.t.). This indicates that Norwegian actors see solidarity going hand in
hand with strengthening bilateral relations and soft power
In each negotiation the view that Norway in some way has to contribute has been
part of the rhetoric both on the domestic arena in Norway and in the EU. This
serves as a shadow of the future. Some see the EU’s demands on the EFTA/EEA
states as power play and “extortion”. Still it is simple to understand the logic of
the EU’s arguments. To put it in Mr Westerlund’s words, “one cannot eat one‟s
cake and have it too”lxv
(Nielsen 2003a m.t). This argument was especially strong
with regard to the Eastern enlargement of the EEA and the EU. Norway has not
become less integrated to the EU nor has the need in the EU decreased since 2004.
Therefore, it makes sense to see this as a contingent for the general European
cooperation just as is paid with regard to specific EU programs that outsiders want
to take part of. This arrangement is very convincing. Nevertheless, there are some
puzzles to such a view.
If the EU was so concerned with no country being a free rider then a puzzle in this
regard is the smaller demands to Switzerland compared to Norway. Why did not
Switzerland contribute to the EU until 2007? Why do the Swiss pay almost half
per capita toward reducing disparities than the Norwegians? Further, one can
argue that Switzerland is more closely integrated to Greece, Portugal and Spain.
In that regard, it appears peculiar that Switzerland did not contribute to these
regions of the EU in the period 1994-2007. Why were no financial obligations to
Greece, Ireland, Portugal and Spain imposed on Switzerland? The case of
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Switzerland indicates that there are more issues involved than making external
actors pay their “fair share”.
3.7.6 Bilateral Relation and Soft Power
There has always been an idea of adding to the EFTA/EEA’s profile in the
beneficiary states through the financial arrangements. Ever since the first
arrangement from 1994 to 1998, the projects funded have received a brass plaque
from the donor countries. This is very symbolic and a sign that goodwill and
strengthening of the bilateral relationships between the donor countries and the
beneficiary states is. Yet it is questionable whether one has had any plans on the
use of political capital created by the financial arrangement either in the period
1994-1998 or 1999-2003. It must also be noted that the arrangement first
established in relation to the EEA agreement was seen a temporary by the
contributors.
One sees that the emphasis on strengthening the bilateral relations is something
that has formally become more important over the years. The Storting began to
stress this element in 2004 when it was made clear that the sums involved would
increase drastically. Still, the only official goal of the arrangements was to reduce
disparities. One clearly sees Norwegian intentions with the establishment of
Norway Grants in 2007. For the period 2009-2014, the strengthening of bilateral
relations became a main aim of the arrangements together with the reduction of
disparities. At the same time there are signs that the arrangements have become
more user-controlled in the new period. Still, it appears that the sectors to which
the funds are channelled have become a focus area for the Norwegian government
to influence. This might indicate that the goal of Norwegian negotiators in 2009
was to influence the areas in which Norwegian support was channelled instead of
caring too much about the size of the sums. One should look at Norwegian
idealistic aspirations in a wider context. In the political debate it was often
emphasised that Norwegian foreign policy could be both idealistic and a result of
rational considerations at the same time. Mr Petersen (2004 m.t.), has argued that
acting idealistic ultimately is a good way for Norway to pursue its national
interests. He claimed that Norwegian foreign policy is designed in order to
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“secure direct and indirect interests, but also in order to honour our political and
moral commitments. The former does not exclude the latter”lxvi
. There is a clear
tension between the aim of reducing social and economic disparities on the one
hand and strengthening bilateral relation on the other.
3.7.7 EU Politics
Some scholars have indicated that the states in the EU tend to be more “well-
behaved” with time in foreign affairs (Smith 2004). For instance, Tonra (2003:
740) writes that the members states of the EU tend to “internalize the views of
their colleagues in order to see that their own positions are at least
complementary in the common and shared endeavour of CFSP”. There are
indications that there is more conflict on the contribution of the money than
before.
One sees that the EU’s own budgetary quarrels spill over into the EFTA/EEA
negotiations with the EU. The reason for this is that the distribution of the
EFTA/EEA funds is decided on by the EU. This EU distribution key is the same
as for the EU’s Cohesion and Structural funds. However, the financial
arrangements from the EFTA/EEA states is not synchronised with the EU
budgetary time frames. This means there is some uncertainty surrounding the
distribution of these funds. The effect is also that an agreement has to be made
between the EFTA/EEA states and the EU but also internally in the EU. As more
states have become members and are eligible for support the process on the EU
side have become more complicated. For instance, the Baltic states and the Iberian
states have different interests with regard to tariff quotas for fish. The Iberian
states would like to limit the size of the quotas while the opposite is true for the
Baltic states. This difference of interests indicated that there is more conflict
internally in the EU with regard to the distribution of the EFTA/EEA contribution
after the EU enlargement. However, there are limitations to how far Norway can
go in exploiting these disagreements. As one saw, it did not go down well to link
the negotiations in 1998/1999 to the future accession of the CEECs. Further, the
concern for the shadow of the future and a good working relation to the EU
prevents Norway from taking advantage of splits inside the EU.
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3.7.8 Path Dependence
It has been hinted to the fact that one can make much realist sense of the
development of the financial arrangement of the EEA agreement from its signing
until today if one merely sees snapshots of the two periods. At the signing of the
EEA agreement, the EFTA/EEA states consisted of seven countries and 38
million people and the EU consisted of 12 countries representing about 350
million people. Today the EFTA/EEA consists of three countries consisting of
five million people while the EU consists of 27 countries and 500 million people.
However, if one looks at the entire period instead of snapshots of it there are some
puzzles that imply that a relist or strictly rational explanation is insufficient for
understanding the persistence and development of financial arrangements from
the EFTA/EEA to poorer regions in the EEA. The path dependence perspective is
more aimed at looking at the phenomenon as a moving picture.
Despite Norwegian authorities not stating it the financial support to poorer areas
of the EEA has become intimately interlinked with the EEA agreement. Clearly,
neither the Norwegians nor the other original EFTA/EEA signatories of the EEA
agreement expected the FM 1994-1998 to become permanent or to continue.
Evidently, in hindsight it is difficult to imagine that when the parties established
article 115 of the EEA agreement one did not at the EFTA/EEA side understand
that reduction of disparities in the EEA would be a long-term feature of it. The
arrangement agreed to for the period 1999-2003 did not refer to article 115
thought it literally shared the same goal. Not until the agreement in 2004 did the
connection between the FMs and the EEA agreement’s article 115 become
explicit. It is difficult not to interpret this as an institutionalisation of the FMs the
EEA agreement. Mr. Blankenborg (2004) from the Ap, argued that no matter how
one saw it, Norway had to contribute as the EEA agreement states that one of its
purposes is to reduce economic and social disparities. There was no question of
the continuation of these contributions. The EU side did never try to convince the
EFTA/EEA side of the continuation of support. It was taken for granted. From the
Norwegian side one only called for a “reasonable” increase.
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Also the distribution of both contribution and benefits has not been a discussion
point in the negotiations. The EFTA/EEA side has from day one understood that
the EU’s internal distribution key has not been anything for the EFTA/EEA
countries to meddle with. On the EFTA/EEA side it has been the GDP or GNI that
has been used. The exception is the Norwegian mechanisms which of course are
fully funded by Norway. An interesting aspect is that the arrangement of a
separate Norwegian FM was kept. The separate Norwegian FM applied to the two
latest negotiations and it does not seem that alternatives to a two-tiered solution
were discussed in the negotiations.
In each negotiation round, the EFTA/EEA and the EU have presented calculations
of what they see as a reasonable contribution. However, the objective calculation
on each side has always been far from one another (Gahr Støre 2008a). There has
been some frustration in the EU about a lack of explicit numerical figures from
the EFTA/EEA side in the negotiations. There has been some annoyance with the
blue sky bargaining from the EU side. However, the Norwegian government has
accepted the principle that it is to contribute. Thus, the distance has been great but
there has always been an understanding that the EFTA/EEA side must contribute
to the reduction of disparities in the EEA.
The contribution increased substantially in 2009-2014. However, according to
Mrs. Sletnes, 10 per cent of this rise was because of inflation adjustment
(Mellvang-Berg 2009e). This was also part of the explanation for the “untouched”
level of support in 1998/1999. The routine of inflation adjustment of the
contribution is a strong indicator that this is something that has become an integral
part of the EEA agreement.
It appears that prior actions by Norway create expectations about the future
actions. Rossavik (2008) points to the fact that Mr Jonas Gahr Støre, in his
biannual address to the Storting on important EU and EEA matters implicitly
stated that Norway was ready to continue its contributions to the poorer regions of
the EU. This was more or less the same message that had come from Mr Kjell
Magne Bondevik, in the wake of the negotiations in 2003. It should be added that
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the willingness to contribute to the CEECs was already officially signalled in the
negotiations in 1998-1999. The statements from Norway create expectations. In
2007 one saw that Bulgaria and Romania expected an equal treatment to the other
accession countries with regard to EFTA/EEA support. The outcome of the
negotiations was in line with this demand.
The Swiss do not contribute to Greece, Portugal and Spain. This adds to the
explanatory power of a more path dependent perspective. Norway faces tough
demands from these countries because they “were used to” receiving the support.
Switzerland did not face the same demands because the Swiss had not entered the
role as donor state for the Mediterranean states. However, Switzerland has more
bargaining chips in its encounters with the EU. Further, their ratification
requirement of a referendum of financial arrangements mean that power
asymmetry and imbalances in bargaining strength is watered down. This can help
explain that they contribute about half per capita to their financial arrangements
compared to Norway. Norway has contributed for 13 years longer than
Switzerland and Norwegian contributions are to a greater extent taken for granted
than the Swiss contributions. One can only speculate on how the round in
1998/1999 would have been if Switzerland had become part of the EFTA/EEA. It
is plausible that it would continue and the level of contributions would remain the
same for the EFTA/EEA side today. However, it is also plausible that the
arrangement would have ended in 1998 and that the support to Greece, Portugal
and Spain would have ended. It might also be that the EU’s internal distribution of
EFTA/EEA support would have been different. This is counterfactual and
therefore not something one can know for certain. Nevertheless, it is very
plausible that the outcome would be different.
Norwegian politicians are prepared to continue their support also after 2014. A
telling comment is that the SCFAD in its Recommendation No. 22 S (2010-2011)
(2010) referred to “future negotiation rounds”. This can be interpreted as a
confirmation from the parties in the Storting that the financial arrangements are
seen as a lasting arrangement, if not permanent. Importantly, the Norwegian
Government emphasises that it was not legally obliged to “continue the financial
arrangements after their expiration the 30th
of April 2009” (Proposition 160 S
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(2009-2010) 2010: 2). At the same time the opinion of the Norwegian
Government is that Norway should contribute to economic and social cohesion in
the EEA as it furthers fundamental Norwegian interests (Proposition 160 S (2009-
2010) 2010: 2).
4.0 Conclusion
This thesis aimed at explaining the emergence, continuation and development of
the financial arrangement channelling money from the EFTA/EEA states to
poorer EU states. Obviously, the EU has become larger and poorer from 1992 to
2010. At the same time as the EFTA/EEA has become smaller and relatively
richer. The recent developments in Iceland, which might end up as the 28th
EU
member in the near future, show that the picture is perhaps more nuanced. The
general attention given to Norway by the EU has become marginal since the
relationships became clear with the EEA agreement and the second rejection of
Norwegian EU membership through the referendum in 1994. Fears of further
marginalisation have been expressed by the Norwegian Minister of Foreign
Affairs, Mr Gahr Støre, with regard to the development of the European External
Action Service (EEAS). These development condition the relationship between
Norway and the European Union.
It does not seem that normative considerations have much explanatory power. It
should instead be looked at in the context of the power asymmetry of the parties.
Thus, it becomes a way in which the EFTA/EEA states can stay relevant for the
EU. It seems that the fear of appearing as a free rider is greater than the possibility
of appearing as a country which does not show solidarity with its neighbours. One
should also remember that Norway has international credentials for having a
foreign policy inspired by altruism. It is one of the largest contributors to the UN
considering its size.
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Each negotiation round and their outcomes have been described and analysed. The
different negotiations happened at different times with different contextual
factors. These factors are too many to mention but a plausible narrative is that the
establishment of the Financial Mechanisms in 1992 with the signing of the EEA
agreement was seen by EFTA and EU negotiators as an insignificant decision.
The demand for continuation of financial arrangements was perhaps seen by the
Norwegian government as principally wrong but a small price to pay in order to
be able to take part EU projects and preventing political conflicts. One ought to
take into account that this was shortly after a very divisive domestic debate on
Norwegian EU membership. It is possible that one in Norway underestimated the
magnitude of the Eastern enlargement in 2004. It might be that the Norwegian
government understood after some consideration that it had to take part in the
challenge of reuniting Europe and that the modest sums previously provided were
not enough. The principle of reducing poverty was already de facto accepted in
1999 through the continuation of the financial arrangement. It was arguably de
jure accepted in 2004 through the introduction of Article 9 of Protocol 38 A which
called for a review of the need for continued support at the end of the agreement.
This is where one is now. Many factors have played their part in the process until
today. One should remember the contextual factors of fundamental asymmetric
relations between the EFTA/EEA and the EU. However, the evidence indicates
that asymmetric relations did not play a significant role in the negotiations in
1998/1999. This was a vital negotiation round for the explanation based on path
dependence. What appears to be clear is that Norway and the other EFTA/EEA
states have accepted that the FMs have become a “permanent temporary feature”
of the EEA agreement. This indicates that the financial arrangements have
become an institutionalised part of the EEA agreement.
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5.0 References
Aalborg Strøyer, Berit - Vermes, Thomas, 2008. “KrF mener EU stiller grådige krav”. Nationen
22.04.08.
Addendum to Protocol 38
Aftenposten 2000. “Norsk milliard-eksport står på spill”. Aftenposten 25.10.00.
Aftenposten, 2007. “Drøftet EØS-bidrag med Romania”. Aftenposten 29.01.07.
Agreement, 2003. Agreement between the Kingdom of Norway and the European Community on
a Norwegian Financial Mechanism for the period 2004-2009.
Agreement, 2007a. Agreement in the form of an Exchange of Letters between the European
Community and the Kingdom of Norway concerning a Cooperation Programme for Economic
Growth and Sustainable Development in Bulgaria.
Agreement, 2007b. Agreement in the form of an Exchange of Letters between the European
Community and the Kingdom of Norway concerning a Cooperation Programme for Economic
Growth and Sustainable Development in Romania.
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The Economist, 2010. Snubbed. The Economist 14.10.10.
Thoresen, Jan, 1998. “Nærmere løsning på EØS-krisen”. Aftenposten 16.12.98.
Thucydides, 1972. The Peloponnesian War, trans. Warner, R. London: Penguin Books.
Thune, Henrik – Larsen, Torgeir, 2000. “Utenrikspolitikk uten software”, in Dale, Geir (ed).
Grenser for alt : kritiske perspektiver på norsk utenrikspolitikk. Oslo: Spartacus.
Tonra, Ben, 2003. ”Constructing the CFSP: The Utility of a Cognitive Approach.” Journal of
Common Market Studies, Vol. 41: 4, pp. 731-756
Traavik, Kim, 2003. “EU and EEA enlargement – the Norwegian view”, speech made at a seminar
on Norway and Poland in Oslo 16.06.03,
Transparency International, 2010. “Corruption Perception Index 2010 Results”. Accessed
25.11.10.
Tsebelis, George, 1995. “Decision making in political systems: Veto players in presidentialism,
parliamentarism, multicameralism and multipartyism”. British Journal of Political Science.
Vol. 25: 3, pp. 289-325.
Tvedt, Knut Are, 2009. “EU-striden”. Det Store Norske Leksikon.
Vallernes, Finn Martin, 2008. Meeting in the Storting 29.01.04.
Vermes, Thomas, 2006a. “Ingen EØS-avtale før nyttår”. Nationen 21.12.06.
Vogt, Helen, 1993. “35 millioner i ekstra EØS-regning”. NTB 25.02.93.
Vollebæk, Knut, 1999. Meeting in the EEA Committee, 23.03.99.
Westerlund, Percy, 2008. Interview at the office of the EU Commission’s delegation to Norway
and Iceland 10.04.2008. Oslo.
Yin, Robert K., 2003. Case study research : design and methods. 3rd edition. Thousand Oaks:
Sage Publications.
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GRA 1903 Master Thesis 01.12.10
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6.0 Appendices
Contains 7 appendices:
1) Protocols of the EEA Financial Mechanism (FM)
2) Duration of the negotiations
3) EUR per Capita
4) Net Balance
5) Net income/expenditure as % of GDP 2008
6) CPI Score from the 2010 report on corruption from Transparency International
Appendix 1. Protocols of the EEA Financial Mechanism (FM)
Appendix 2. Duration of the negotiations
1994-1998 1999-2003 2004-2009 2007-2009 2009-2014
Protocols of the
EEA FM
Protocol 38 Protocol 31 Protocol 38 A Addendum to
Protocol 38 A
Protocol 38 B
Started Ended Duration
1999-2003 6th
of October 1998 20th
of April 2000 1 ½ year
2004-2009 9th
of January 2003 6th
of June 2003 ½ year
2007-2009 5th
of July 2006 29th
of March 2007 ¾ year
2009-2014 September 2009 18th
of December 2009 ⅓ year
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Appendix 3. EUR per Capita (Marcu 2009; Folketinget 2010)
Appendix 4. Net Balance (Folketinget 2010)
-200,00 -150,00 -100,00
-50,00 0,00
50,00 100,00 150,00 200,00 250,00 300,00 350,00 400,00 450,00 500,00 550,00 600,00
Net
her
lan
ds
Swed
en
Ger
man
y
Den
mar
k
Ital
ia
Bel
giu
m
Fin
lan
d
Fran
ce
No
rway
Luxe
mb
ou
rg
Au
stri
a
Liec
hte
nst
ein
Swit
zerl
and
Icel
and
Cyp
rus
Gre
at B
rita
in
Slo
ven
ia
Spai
n
Mal
ta
Ro
man
ia
Bu
lgar
ia
Hu
nga
ry
Cze
ch R
epu
blic
Po
lan
d
Slo
vaki
a
Esto
nia
Irel
and
Latv
ia
Lith
uan
ia
Po
rtu
gal
Gre
ece
EUR Per Capita 2008
-9000,00 -8500,00 -8000,00 -7500,00 -7000,00 -6500,00 -6000,00 -5500,00 -5000,00 -4500,00 -4000,00 -3500,00 -3000,00 -2500,00 -2000,00 -1500,00 -1000,00
-500,00 0,00
500,00 1000,00 1500,00 2000,00 2500,00 3000,00 3500,00 4000,00 4500,00 5000,00 5500,00 6000,00 6500,00
Ger
man
y
Ital
y
Fran
ce
Net
her
lan
ds
Swed
en
Gre
at B
rita
in
Bel
giu
m
Den
mar
k
Au
stri
a
Fin
lan
d
No
rway
Swit
zerl
and
Luxe
mb
ou
rg
Cyp
rus
Icel
and
Liec
hte
nst
ein
Mal
ta
Slo
ven
ia
Esto
nia
Latv
ia
Irel
and
Bu
lgar
ia
Slo
vaki
a
Lith
uan
ia
Hu
nga
ry
Cze
ch R
epu
blic
Ro
man
ia
Po
rtu
gal
Spai
n
Po
lan
d
Gre
ece
Net Balance 2008
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Appendix 5. Net income/expenditure as % of GDP 2008 (Eurostat 2010; Folketinget 2010)
Appendix 6. CPI score from the 2010 report on corruption from Transparency International (2010)
Country Rank Name Corruption Perception Index
(score)
8 Switzerland 8.7
10 Norway 8.6
11 Iceland 8.5
14 Ireland 8.0
26 Estonia 6.5
27 Slovenia 6.4
28 Cyprus 6.3
30 Spain 6.1
32 Portugal 6.0
37 Malta 5.6
41 Poland 5.3
46 Lithuania 5.0
50 Hungary 4.7
53 Czech Republic 4.6
57 Latvia 4.3
57 Slovakia 4.3
68 Romania 3.7
73 Bulgaria 3.6
78 Greece 3.5
http://www.transparency.org/policy_research/surveys_indices/cpi/2010/results
-0,50 -0,40 -0,30 -0,20 -0,10 0,00 0,10 0,20 0,30 0,40 0,50 0,60 0,70 0,80 0,90 1,00 1,10 1,20 1,30 1,40 1,50 1,60 1,70 1,80 1,90 2,00 2,10 2,20 2,30 2,40 2,50 2,60 2,70
Net
her
lan
ds
Swed
en
Ger
man
y
Ital
y
Den
mar
k
Bel
giu
m
Fran
ce
Fin
lan
d
Au
stri
a
Cyp
rus
No
rway
Icel
and
Luxe
mb
ou
rg
Swit
zerl
and
Gre
at B
rita
in
Liec
hte
nst
ein
Spai
n
Slo
ven
ia
Irel
and
Mal
ta
Cze
ch R
epu
blic
Hu
nga
ry
Slo
vaki
a
Ro
man
ia
Po
lan
d
Esto
nia
Po
rtu
gal
Latv
ia
Bu
lgar
ia
Lith
uan
ia
Gre
ece
Net income/expenditure as % of GDP 2008
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7.0 End Notes
i “Nasjonal internasjonalisme.”
ii “Norsk bistand har i høyere grad enn for mange andre land vært preget av ideelle motiver.”
iii The Norwegian expression is “humanitær stormakt”.
iv “Dette har noe med Wergeland og Bjørnson å gjøre – med historie og tradisjon – og ønsket om
å leve opp til den anseelse som Fridtjof Nansen skaffet Norge gjennom sin innsats for flyktninger
etter den første verdenskrig.” v Norge er “en rik nasjon som deler sine ressurser med andre gjennom humanitær aktivitet og
fredsarbeid.” vi Norge er “en nasjon som ikke gjør nok for utvikling og fred.”
vii “Kravene om at vi skal betale for at Sveits ikke vil være med i EØS, er urimelige og ulogiske.”
viii “andre EU-land støtter kravet fra sine egne medlemmer.”
ix “Agenda 2000 utgjør en enorm oppgave for det tyske formannskapet, og vi ønsker å se EFTA-
bidragene i lys av dette”. x “Våre penger skal ikke gå til landene i øst. De er jo ikke medlem av EU ennå.”
xi “Låne- og tilskuddsordningen ble aldri oppfattet som en varig ordning[…]Det var ingen tvil om
dette. Vi hadde til og med en arbeidsgruppe som arbeidet med saken. Dens innstilling var klar. Jeg
kan ikke forstå at det kan oppfattes på noen annen måte.” xii
“Umiddelbart stiller jeg meg undrende. Et slik krav må sies å være i strid med EØS-avtalen,
men vi vil naturligvis se på saken og studere på hvilken måte kravet er kommet opp.” xiii
“Men det er en grense for hvor langt vi kan gå i å støtte Norge, et land utenfor Unionen.” xiv
“Vil man gå til krig for et beløp på 200 millioner kroner i året, så vær så god. For oss er det
snakk om et viktig prinsipp som er nedfelt både i EUs unionstraktat og i EØS-avtalen. Pengene er
av mindre betydning.” xv
“Vi er enige om at dette er en ny ordning, og ikke en fortsettelse av protokoll 38 i EØS-avtalen.” xvi
“Vi følger EUs egen utjevningspolitikk.” xvii
“norske bidrag må også bidra til å fremme norske interesser i EU og styrke våre forbindelser
med de nye medlemslandene.” xviii
“i lys av økonomiske og sosiale forskjeller innenfor EØS.” xix
“- Vi må bare innse at dette blir krevende. Et EU med ti nye medlemsland vil i antall
innbyggere være 100 ganger større enn EØS-landene til sammen.” xx
“EU-siden ville reise spørsmål om videreføring av EØS-avtalen.” xxi
“EØS-avtalens framtidige være eller ikke være var den reelle situasjonen vi sto overfor i
forhandlingene.” xxii
“Det er idag ikke noe reelt alternativ til EØS-avtalen for å ivareta våre interesser vis-à-vis
EU.” xxiii
“for å opprettholde et enhetlig indre marked er det svært viktig at de to avtalene trer i kraft på
samme tidspunkt.” xxiv
“gjennomgangen [av utvidelsesavtalen til EU] måtte utføres på meget kort tid, fra de relevante
tekstene fra EU-utvidelsen ble gjort tilgjengelige for EFTA-siden ved årsskiftet [2002], og fram til
forhandlingene om EØS-utvidelsen ble avsluttet [juni 2003].” xxv
“basert på en absurd regnemetode som gir absurde tall.” xxvi
”Kvifor gjekk forhandlingane dårleg? Ein viktig grunn til eit så uheldig
forhandlingsresultat er at Regjeringa har gjeve dei norske forhandlarane ein usedvanleg
svak forhandlingsposisjon.” xxvii
“alle produkter vi [Norge]ba om.” xxviii
“Mitt ønske er å gjøre utenrikspolitikken enda mer verdibasert. Den skal utvikles til et stadig
sterkere redskap for å fremme overordnede mål som fred og frihet, forsoning, demokrati og
menneskerettigheter, fattigdomsbekjempelse og økologisk bærekraft.” xxix
behovet for slik hjelp langt større i dei europeiske landa som ikkje blir medlemmer av EU, og
som derfor heller ikkje får EU-støtte i det omfanget som dei nye medlemsstatane vil få. xxx
“Under detta låg det kanske et resonemang att om man inte bidrar mer så blir det en slags
freerider. Det går inte att komma från.”
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xxxi
“Det er ytterst merkelig om Europas rikeste land, som vil ha tilgang til markedet, ikke skal
betale like mye som Sverige med vår dårlige økonomi og Danmark og Finland med deres dårlige
økonomi.” xxxii
“Nå har vi mulighet til å gjøre dette [finansieringsordningene] rettferdig.” xxxiii
“Om betydeligt fattigare EU-länder bidrar så var det svårt att förstå varför inte de här
länderna skulle bidra.” xxxiv
“Jag tyckte alltså att den tidigare situationen var orimlig.” xxxv
“EU har ikke lenger råd til å la sin rikeste venner delta på like vilkår i det indre marked med et
bidrag som ikke er i samsvar med deres økonomiske styrke.” xxxvi
“Jeg tror det er viktig at man ikke sitter igjen med inntrykket av at Norge er et land som bare
skal ha fordeler, men at det også er spørsmål om å bidra[…]Norge er et land som også bidrar til
det felles beste.” xxxvii
“På den annen side er det mange i Europa i dag som ser med økende uvilje på at vi sitter på
vår store pengebinge og våre olje- og gassreserver, men nekter å ta solidarisk del i utviklingen og
oppbyggingen av et Europa. Denne ulempen bør vi gjøre noe for å kompensere[...]Vår solidaritet
med de Europeiske stater og USA bør ikke trekkes i tvil[…]Man bør ikke få det inntrykk at vi til de
grader er oss selv nok. ” xxxviii
“Så bevisstheten om EØS-avtalen er noe Norge må kjempe om hver eneste dag, for å sørge
for at den er på plass.” xxxix
“Vi var ennå ikke med og skulle liksom være glade for det vi fikk.” xl “som en direkte kostnad av EØS-utvidelsen.”
xli “vurdere behovet for fortsatt bistand for å utjevne økonomiske og sosiale forskjeller innenfor
EØS.” xlii
“enige om at de forskjellige finansielle bidragsordingene som er avtalt i forbindelse med
utvidelsen, ikke skal utgjøre noen presedens for tiden etter at de utløper 30. april 2009.” xliii
“Finanskrise som rammet flere av mottakerlandene, og som jo ikke akkurat minsket fokuset på
at rike Norge kunne bidra.” xliv
“-hvis det er realiteter i dette, er dette utpressingen uten saklig grunnlag fra EUs side.” xlv
“uanstendige og ublu.” xlvi
“Det kan ikke være slik at himmelen er målet hver gang vi skal forhandle om
finansieringsordningene i EØS.” xlvii
“viktig å bruke forhandlingene til å sikre fiskerinæringen bedre markedsadgang i EU.” xlviii
”Norges generelle omdømme og profilering i mottakerstatene vil bli styrket gjennom at Norge
bidrar til statenes sosiale og økonomiske utvikling innen viktige områder.” xlix
“Historisk mulighet.” l “Hente ut politisk kapital av investeringen.”
li “isolering av offentlige bygninger i Polen.”
lii “- Vi fikk 100 prosent gjennomslag for områdene vi ønsket å bruke penger på.”
liii “sikrer sterkere fokus på strategiske interesser.”
liv ”Min generelle holdning har vært – jeg tror det også var den forrige regjeringens holdning – at
vi heller har vært grundige og varsomme enn det motsatte når det gjelder vurderinger av
prosjekter før det kommer til utbetaling.” lv “mellom disse forhandlingene og EUs interne vedtak om fordeling av EU-midler.”
lvi “det er ennå ikke enighet innad i EU om fordelingen av pengene[…]det er en ganske heftig
kamp mellom landene, fordi det ses i sammenheng med deres øvrige fordeling på rene EU-
programmer.” lvii
“Det at det har vart helt til nå, er ikke bra.” lviii
“betale, smile og prøve å være glade” lix
“vi mener at Kommisjonens opprinnelige krav er urimelige og minner også om at det denne
gang, i motsetning til forrige forhandlingsrunde, ikke skjer en utvidelse av EØS med flere
medlemsland.” lx “på en vurdering av hva som er et rimelig norsk bidrag.”
lxi “skal gå til de statene som trenger det mest.”
lxii “- EU-saken sprenger enhver tenkelig regjeringskonstellasjon. Det vil bli en regjeringsendring
hvis den saken blir tatt opp.” lxiii
“I fremtige forhandlingsunder.” lxiv
“Hittil har det norske bidraget vært svært begrenset. EU har ikke lenger råd til å la sine rikeste
venner delta på like vilkår i det indre marked med et bidrag som ikke er i samsvar med deres
økonomiske styrke.” lxv
“man kan inte äta kakor och samtidig ha dom kvar.”
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lxvi
“Norsk utenrikspolitikk utformes altså både for å kunne ivareta direkte og indirekte nasjonale
interesser, og ikke minst våre politiske og moralske fellesforpliktelser. Det ene utelukker ikke det
andre.”