Iceland, Liechtenstein and Norway are partners with the EU through the Agreement on the European Economic Area. This enables the free movement of goods, services, people and capital in the internal market.
The EEA Agreement also includes a common goal of reducing social and economic disparities in Europe. Ever since the agreement entered into force in 1994, Iceland, Liechtenstein and Norway have contributed to social and economic progress in the less wealthy countries of the EU and EEA.
The contributions have been channelled through the Financial Mechanism (1994–1998), the Financial Instrument (1999–2003) and the EEA and Norway Grants (2004-2009 and 2009-2014).
Since 2004, there have been two separate mechanisms: the EEA Grants and the Norway Grants. Norway is the main contributor to both mechanisms (EEA Grants: 95.8% and Norway Grants: 100%).
In the agreements on the Financial Mechanisms 2009-2014, strengthening the bilateral relations between the donor and the beneficiary countries was introduced as an overall objective in addition to reducing social and economic disparities.
When a funding period expires, the donor countries and the EU assess the need for continued support to reduce social and economic disparities within the EEA and negotiate on the financial contributions.
Eligibility of the Grants mirrors criteria set for the EU Cohesion Fund aimed at member states where the Gross National income per inhabitant is less than 90% of the EU average. Countries who have entered the EU before 2004 are however exempt from receiving funding under the Norway Grants.
The Donors and the EU agree both to the total contribution and distribution of funding per beneficiary state.
Within the national allocation, the Donors then negotiate with each beneficiary country and agree which programmes to establish, their objectives and the size of the allocation to each individual programme. The agreements are based on national needs and priorities in the beneficiary states and the scope for cooperation with the donor states.
A National Focal Point is responsible for the overall management of programmes in each beneficiary country. Programme Operators develop and manage the programmes, often in cooperation with a partner from the Donor states, and award funding to projects. Projects are mostly selected following calls for proposals organised by the Programme Operators.
On July 20, 2015, the Norwegian Ministry of Foreign Affairs announced that Norway and the EU have initialled an agreement for a new period of the EEA and Norway Grants. So far, not many details have been disclosed. The funding period has been expanded from five to seven years. Norway Grants (solely funded by Norway) amounts to EUR 179.1 million a year, while the EEA Grants amounts to EUR 221.2 million a year for the 2014-2021 period.
According to a press release from the Norwegian Ministry of Foreign Affairs the funding will be concentrated to promote innovation and growth through research, education and increased mobility in the European labour market. Norway will also expand its cooperation with the beneficiary countries in the area of justice and home affairs. This will include joint efforts to deal with Europe’s migration challenges.
A regional fund amounting to some NOK 850 million will also be established. Through this fund cross-border challenges in Europe will be addressed.
In addition €8 million has been allocated to the Global fund for Decent work and Tripartite dialogue operated by Innovation Norway.
The funding is allocated to 150 programmes under the following priority areas:Environmental protection and Management
Climate Change and Renewable Energy
Carbon Capture and Storage
Research and Scholarships
Green Industry Innovation
Justice and Home Affairs
Human and Social development
Cultural Heritage and Exchange
Decent work and Tripartite Dialogue
Programmes under the EEA and Norway Grants 2009-2014 may run until 2017. More than 80 programmes are implemented in cooperation with public entities from the Donor states. More than 20% of the projects have partners from either Norway, Iceland or Liechtenstein. A full overview of projects are available on the EEA and Norway Grants project portal.
The programmes run until 2017, and so far few reviews and evaluations have been concluded. An independent review of the NGO programmes concluded that the programmes have increased the capacity of civil society in Central and Southern Europe and helped to mobilise citizens to voice their concerns and actively engage with governments. Other preliminary results are available from the Annual Status reports.
EEA Grants: €672 million
Beneficiary states: Bulgaria (from 2007), Cyprus, Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Malta, Poland, Portugal, Romania (from 2007), Slovakia, Slovenia and Spain.
Norway Grants: €567 million
Beneficiary states: Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia.
In addition, Norway allocated €68 million through the Norwegian bilateral cooperation programmes with Bulgaria and Romania when the two states joined the EU in 2007.
Norway – as the largest donor – provided close to 97% of the total funding for all three funding schemes.
The enlargements of the EU and the EEA in 2004 and 2007 required a substantial increase in the contributions towards European cohesion. Most of the new member states were considerably below the EU average level of social and economic development. To illustrate, the 10 states joining the EU in 2004 had 75 million inhabitants, but a joint GDP below the one of Norway and Switzerland combined with merely 12 million inhabitants.In the period 2004–2009, Norway, Iceland and Liechtenstein made available €1.307 billion in support. Country allocations were based on population size and GDP per capita, making Poland the largest beneficiary state, followed by Hungary, Romania and the Czech Republic.
1250 projects, programmes and funds were awarded financial support through the EEA and Norway Grants 2004-2009. The projects were funded under the following areas of support:Environment
health and Childcare
Research and Scholarships
Institutional capacity building and Human resource development
Schengen and the Judiciary
Regional development and cross-border activities
More than 1 in 5 supported projects were partnership projects between entities in the beneficiary states and Iceland, Liechtenstein or Norway. Summaries of all supported projects as well as videos and picture galleries are available in a searchable EEA and Norway Grants project portal.
The End review of the EEA and Norway Grants 2004-2009 concluded: “Surely, the EEA/Norway Grants have contributed to reducing disparities in Europe, although of course on a much smaller scale than the EU funding.” (2012)
Also, the Office of the Auditor General of Norway found “that the projects in the period 2004–2009 largely delivered the planned outputs. There are also examples of outcomes being achieved at the local level.” (2013)
More sector specific evaluations are available on the web page of the Norwegian Ministry of Foreign Affairs.
In the period 1999–2003, Greece, Ireland, Northern Ireland, Portugal and Spain received €119.6 million from the EEA EFTA States – Iceland, Liechtenstein and Norway. Projects were supported within the field of environmental protection, urban renewal, pollution in urban areas, protection of cultural heritage, transport, education and training, and academic research. About 93% of the funding was spent on projects related to environmental protection.
The first programme for economic support covered Greece, Ireland, Northern Ireland, Portugal and Spain. Projects were supported within the fields of environmental protection, education and training, and transport. In addition to €500 million in project support, interest rebates were granted on loans amounting to €1.5 billion in the European Investment Bank (EIB).
When Finland, Sweden and Austria left EFTA for the EU on 1 January 1995, the European Commission took over responsibilities for the contributions of these three countries.