1 Introduction

Ever since the establishment of the European Economic Area (EEA) in 1994, Norway has provided funds for reducing economic and social disparities in the EEA. Since 1994, the funding provided to the less prosperous countries in the EU through various grant mechanisms has amounted to EUR 3 272.5 million, EUR 1 788.5 million of which is being made available for the period 2009–14. After the EU enlargement of 2004 the scheme was divided in two: the Norway Grants, which are entirely funded by Norway, and the EEA Grants, to which Iceland and Liechtenstein also contribute.

The grant scheme came about as a result of Norway’s participation in the internal market in the areas covered by the EEA Agreement. The grants were negotiated in parallel with the negotiations on improved market access for seafood, which is an area where the EEA Agreement does not provide for full market access.

The objective of the EEA and Norway Grants is to reduce social and economic disparities in the EEA, and they are intended to put the beneficiary states in a better position to make use of the internal market. This is in the interests of both Norway and the beneficiary states. Innovation and business development, research and education are crucial to long-term growth and sustainable development in Europe, and these are key areas for support under the Grants. Europe 2020, the EU's new growth strategy, has five target areas: employment, R&D, climate change/energy, education and poverty/social exclusion, and puts more weight than previously on social inclusion.

The financial crisis has affected Europe in many different ways. It is having widespread consequences for individuals and societies in the form of growing unemployment, reduced welfare and tough restructuring processes. The new austerity measures are primarily affecting vulnerable groups such as young people, minorities and those who already have few resources. Public welfare cuts are increasing social disparities and social marginalisation. This in turn is weakening public confidence in democratic institutions and creating a breeding ground for xenophobia and extreme nationalism. On the other hand, the financial crisis has also resulted in some necessary changes being made. The EEA and Norway Grants are one of the ways in which Norway contributes. The scheme is a clear expression of solidarity, strengthening as it does fundamental European values such as democracy, tolerance and the rule of law. For example, support is being given to civil society, research, and the environment, crucial areas that are under pressure in the current crisis.

The scheme is also intended to strengthen relations between Norway and the beneficiary states, as explicitly stated in the agreement with the EU on the EEA and Norway Grants 2009–14. In this way the Grants have also become an instrument of Norwegian foreign policy. Steps will be taken to facilitate participation, where relevant, by NGOs, companies, research institutions, public agencies and others.

Most of the projects under the EEA and Norway Grants 2004–09 have now been completed. The final evaluation showed that they have been successful, and have helped to reduce social and economic disparities in the EEA. They have provided support in areas where little EU funding has been available, such as civil society, judicial reform and cultural heritage. They have also made funding available for small projects targeted at very specific groups and areas. They have thus been a useful supplement to the EU funding available for developing social structures in the beneficiary states. However, since the Grants are small compared with EU internal transfers and the beneficiary states’ own budgets, it is not always possible to document specifically how they have contributed to development in these countries. The Norwegian partners that have participated in many of the projects have made a positive contribution to the results.

The figure shows the total Norwegian contribution in the periods 2004–09 and 2009–14 respectively. The increase from 2004–09 to 2009–14 corresponds to 22 % of the annual funding since Bulgaria and Romania joined the EU in 2007.

The experience gained in 2004–09 led to important changes being made for the period 2009–14. Rather than funding individual projects, the Grants now fund large-scale programmes consisting of several individual projects in which Norwegian partners can participate. The new programme model facilitates performance management, but it can also entail uncertainties about implementation capacity in some countries and sectors, and particular attention will be paid to risk management. However, so far few irregularities have been registered.

The general objectives of the EEA and Norway Grants influence the selection of programme areas in the individual country. The focus for the period 2009–14 is on areas that are crucial for development in the beneficiary states and where there is also interest in and a potential for cooperation with Norwegian partners. Importance has been attached to balancing these considerations in the negotiations with individual countries.

With its annual contribution of EUR 357.7 million for the period 2009–14, Norway is an important partner for the less prosperous EU countries. Developments in these countries are of interest to Norway, because they influence the European agenda and because our ties with them are becoming increasingly close. The Government’s intention is that the Grants will be used to support positive developments in the beneficiary states and to strengthen their ties with Norway.

The purpose of this white paper is to present the results that were achieved in the period 2004–09, and to give an account of the objectives for the period 2009–14. The performance management system, including risk management, is also described.