master thesis - the institutionalisation of financial arrangements in the eea agreement

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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.

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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




3.2.1.4 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



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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




3.5.1.4 Solidarity ..................................................................................... 66


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




3.6.1.4 Norway as a Free Rider ............................................................... 76


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

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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

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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.


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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 –


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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.


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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


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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).


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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.


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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.


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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


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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”.


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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


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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


12

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


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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


14

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.


15

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


16

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


17

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.


18

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.


19

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.


20

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


21

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.


22

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.


23

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


24

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).


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.


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


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.


28

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'”.


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.


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


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


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.


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


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


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).


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.


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.


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.


3.3.1.3.1 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


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.


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.


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


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


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.


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


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


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 %


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,


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


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


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.


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.


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.


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


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.


3.4.1.3.1 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


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.


51


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


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.


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.


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


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

.


56

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


57

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


58

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.


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


59

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


60

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


61

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.


62

distribution of payment obligations (Proposition No. 72 to the Storting (2006-

2007) 2007: 15 see footnote 2).


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).


63

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


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


64

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.


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


65

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.


3.5.1.3.1 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.


66

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.


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


67

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.


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.


68

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.


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).


69

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


70

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


71

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 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


72

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.


73

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


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


74

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.


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


75

parallelism of enlargements of the EU and the EEA is so important and that a

dynamic agreement is crucial for Norway28

.


3.6.1.3.1 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.


76


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


77

European state leaders’ lack of flexibility and that the EU is working on stricter

rule adherence with regard to the Euro cooperation.


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


78

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


79

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


80

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.


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


81

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


82

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.


83

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


84

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


85

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.


86

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.


87

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.


88

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


89

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


90

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-


91

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


92

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


93

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


94

“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.


95

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.


96

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


97

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


98

(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.


99

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.


100

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110

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


111

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

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Lith

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Po

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Gre

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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

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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

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Ital

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Lith

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Gre

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Net income/expenditure as % of GDP 2008

http://www.transparency.org/policy_research/surveys_indices/cpi/2010/results


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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.”


114

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.”


115

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.”

master thesis - the institutionalisation of financial arrangements in the eea agreement

Documents

eea financial mechanism

financial instrument

soft power

domestic factors

norwegian financial

norway grants

path dependence

eu politics