Tom Oddgeir Johnsen

BI Norwegian School of Management GRA 5915 Political Economy of Regulation

The EEA and Norwegian Financial Mechanisms Reducing Disparities in Europe?

Exam code and name: GRA 5915 Political Economy of Regulation Hand in date: 06.12.10

Campus: BI Oslo

Program: Master of Science in Political Economy

Summary
This paper is about the EEA and Norwegian Financial Mechanisms (FMs) that have been established in order for the EFTA/EEA to contribute to the prosperity of the poorer areas of the EU. It will be argued that the Norwegian political leadership has been preoccupied with what in this paper is referred to as damage control. The Norwegian government has succeeded in avoiding large scandals and mismanagement of funds. However, this success might have been achieved at the expense of the main objectives of these funds: 1) reduction of social and economic disparities in the EEA, and 2) strengthening of bilateral relations between the donor states and the beneficiary states. The Norwegian government has delegated the responsibility of the funds to the Norwegian Ministry of Foreign Affairs (NMFA). This Ministry has established the Financial Mechanism Office (FMO) in Brussels in Belgium in order to administer the funds. The FMO has experienced some challenges related to the fact that the Norwegian governments primary aim is control and that the NMFA has an overambitious emphasis on the bilateral dimension of the funds. Further there are numerous and the vague signals from the NMFA that are difficult to interpret for the FMO. Since its establishment the FMO has grown from 10 to over 50 staff members. It is generally seen as a professional organisation that has dealt with the administration of the FMs. However, it has challenges derived from its principal-agent (PA) relationship to the NMFA. The modalities for support in the new period from 2009-2014 have changed. It is expected that this change and the trials and errors of the past will remedy some of the weaknesses of the systems. However, the new program method might imply a heightened risk. It will be interesting to observe how a risk adverse Norwegian government will relate to the future change.

Table of Contents
1.0 Introduction ............................................................................................................................. 1 1.1 Structure.............................................................................................................................. 1 2.0 Theory .....................................................................................................................................2 2.1 Knights or Knaves? ............................................................................................................. 2 2.2 Delegation ........................................................................................................................... 2 2.3 Principal-Agent Challenges .................................................................................................3 3.0 Empirics ..................................................................................................................................6 3.1 The EEA and Norwegian Financial Mechanisms 2004-2009 ............................................... 8 3.2 The EEA Financial Mechanism and Norway Grants 2007-2009 .......................................... 9 3.3 The EEA and Norwegian Financial Mechanisms 2009-2014 .............................................10 4.0 Discussion .............................................................................................................................12 4.1 Setting Up a New System The Second Best Solution ......................................................12 4.2 A Focus on Damage Control Rather Than Efficiency ........................................................12 4.3 The Financial Mechanisms - Made From a Different Logic Than They Are Managed .......15 4.4 The Growth of the Financial Mechanism Office ................................................................18 5.0 Conclusion .............................................................................................................................20 6.0 References .............................................................................................................................21 7.0 Appendices ............................................................................................................................24 8.0 Endnotes ................................................................................................................................25

Abbreviations
CEECs = Central and Eastern European Countries CO = Country Officers Difi = Agency for Public Management and eGovernment EEA = European Economic Area EEA FM = European Economic Area Financial Mechanism EFTA = European Free Trade Association EU = European Union FM = Financial Mechanism FMC = European Economic Area Financial Mechanism Committee FMO = Financial Mechanism Office IN = Innovation Norway M.T. = My Translation MoU = Memorandum of Understanding MoUs = Memoranda of Understanding NFP = National Focal Point NMFA = Norwegian Ministry of Foreign Affairs Norwegian FM = Norwegian Financial Mechanism PA = Principal-Agent PO = Program Operators PWC = PriceWaterhouseCoopers

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1.0 Introduction

In relation to the signing of the EEA agreement in 1992 one decided to establish a financial mechanism (FM) which implied that the EFTA/EEA 1 states contributed to the poorer regions of the EU2. The FMs have been established as a result of negotiations between the EFTA/EEA and the EU. Through these negotiations the parties have decided the modalities of support through Protocols setting up the FMs. From the Norwegian side the Ministry of Foreign Affairs (NMFA) is responsible for the arrangement. The NMFA has delegated the assignment to an office called the Financial Mechanism Office (FMO)3. The basis of this paper is the question of how these mechanisms have performed since the Eastern enlargement of the EU in 2004. A special focus of this paper is the FMO which was established in order to take care of the financial arrangements from 2004. The question is whether the agreed objectives are reached and why or why not. This will primarily be done through looking at the relationship as one of a PrincipalAgent (PA) character.

I have translated the quotes and gathered the Norwegian versions in the end notes. The translated quotes are denoted as My Translation (m.t.). It should also be noted that most of the projects are not finished yet. The reviews that will be presented in this paper are affected by this. The focus in this paper will be on Norwegian authorities although the FMs are from the EFTA/EEA states. This can be justified by the fact that about 97 per cent of the funds come from Norway. Furthermore, the three persons in the leading positions of the FMO are Norwegians.

1.1 Structure
The format of this paper means that some factors must be emphasised while other important aspects are ignored. For instance, the author will not devote substantial parts of the paper to the decision establish a separate arrangement in 2007 that was called Norway Grants and run by Innovation Norway (IN).
1 2

Iceland, Liechtenstein and Norway. Technically they supported reductions of disparities in the EEA but in this paper it will be referred to as the EU. See table 1 for an overview of the donor and beneficiary states. 3 The FMO was set-up by the EEA Standing Committee through decision 1/2004/SC on the 5th of February. 1

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Firstly, the theoretical underpinnings of the paper will be presented. Thereafter the different periods will be gone through in the empirics section. The discussion section will present possible interpretations of the performance and debate whether the goals of the FM are reached and why/why not. Finally, a conclusion will be presented.

2.0 Theory
2.1 Knights or Knaves?
In straightforward occupations it is likely that monetary incentives based on easily observable objectives will be efficient (Dixit 2002: 697). However, there is evidence that individuals differ to the extent that they have incentives that are knavish or knightly. In their most extreme forms the former is strictly motivated by self-interest and the latter by altruism (Le Grand 2003). This distinction is often hard to observe at the outset. For instance, someone employed in the Ministry of Environment might want to spend all she is given and demand larger budget simply because she believes that it helps the cause. A different person in the same ministry might want the same things but out of self-interest. For instance, she might increase her career opportunities by pleasing the organisations in the field or she might simply enjoy the increased prestige of her work place.

2.2 Delegation
There are many important functional reasons to delegate (Pollack 1997). In the 1950s the Norwegian government decided that many tasks and functions of administrative nature were to be delegated to agencies. This would enable the government to spend more resources on more strategic issues (Christensen and Lgreid 2007:506). The rationale of an efficient and professional bureaucracy goes back to Max Webers (1930) thoughts on the legalistic rational authority. This captures the political logic of delegation. Either because of perceived increased complexity or other general developments towards more bureaucracy, the politicians might find it optimal to delegate the more technical issues to someone else. One often talks about depoliticised policy areas. Still, Norway has
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traditionally had a quite centralised state system in which the central level has exerted strong political control of the state apparatus (Christensen 2003).

Challenges arise as assignments are delegated. The principal-agent (PA) relationship is found everywhere in society. As members of society have become increasingly specialised, the dependence on such connections have intensified. To use the straightforward definition of the concept of a PA relationship presented by Lupia (2003:33 original italics): an act where one person or group, called a principal, relies on another person or group, called an agent, to act on the principals behalf. Common forms of delegation:

Lupia (2003:34)

Theoretically, the people have delegated power through an election of parties. This creates a parliament which is the mandate for the forming of a government. The government delegate power to cabinet ministers who in turn delegate power to the civil service. In the civil service, the directors delegate power to employees. This is the simplified version of delegation in democracies. The PA-relationships in this paper is: Government Minister of Foreign Affairs. Minister of Foreign Affairs NMFA. NMFA FMO. FMO National Focal Points (NFPs).

2.3 Principal-Agent Challenges

The major discussion on what really motivates human beings will not be introduced in this paper. As far as the author is concerned, this is not a
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dichotomous distinction in which one is either or. The knavish incentive structure is assumed by the public choices approach to individuals behaviour. William Niskanen (1971) is famous for his views on bureaucracy. He shows how bureaucrats can be thought of as seeking to maximise budgets just as market actors are assumed to pursue the maximisation of profit. The market actor does so by selling goods or services in the market place. The bureaucrat does not have incentives to be efficient for the sake of efficiency. According to Niskanen (1971:38) the possible goals for the bureaucrat is salary, perquisites of the office, public reputation, power, patronage, output of the bureau, ease of making changes, and ease of managing the bureau. Further, as the bureaucrats have monopoly on information with regard to cost structures, the principals are vulnerable because of a lack of knowledge. There are many flaws with this approach. For instance, Miller and Moe (1983) have shown how the legislature in Niskanens model is poorly integrated in the sense that its importance and agency is not considered. However, the insights from Niskanen remain. There are reasons to believe that bureaucrats have private interests which condition their behaviour. The principal does not want to create an agent in the image of Niskanen[](it) wants a compliant agent and will do its best to hardwire control mechanisms (Shepsle and Bonchek 1997:362-363). These control mechanisms can take many forms. For instance, the principal can attempt to make sure that the agents incentives are aligned with the principals. This can take various forms. In the market place the profit motive and reputation are the most important incentives a principal can rely on in order to ensure that the agent performs. In public services it is more complicated. The principal can make sure that the contract is as complete as possible in order to minimise the room for shirking from the agent. However, a contract that is too detailed can have the effect that no incentives for innovation exist. A more fundamental problem is that the services rendered by a public agency are often difficult measure. Thus, the agents performance is hard to assess (Blank 2000).

There exists asymmetric information between the NMFA and the FMO. The latter has superior knowledge about the use of resources with regard to evaluation of applications and the other operations necessary for the functioning of the agency. This can create a problem known as adverse selection. This is a situation in which
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the agent has private information about the real costs of its service provision. Thus, there is a possibility that the principal ends up paying too much for the agents services as the principal did not have access to sufficient information (Le Grand 2003: 60).

The principal also faces problems of costly verification. The meaning is quite straightforward and implies that costly auditing and inspection procedures have to be carried through because verification of results is difficult (Le Grand 2003: 60). The many audits and reviews of the EEA and Norwegians FMs illustrates that the NMFA is using this strategy to control the FMO and its services. Simultaneously it implies that the FMO is controlling the NFPs through the same instrument.

There are at least two control systems that can be used by the principals in order to ensure that the agents do not drift away from the delegated assignments. The police patrol approach is based on controls that are announced or not in order to uncover any irregularities. The agents must stay in line with their mission. This is the classic form of control. However, there is a control method that relies on the stakeholders to make the principals aware of any irregularities. This is the firealarm approach. Arguably, this method of control is continual and not seen in the instances in which everyone is pleased with the performance of the agents. It is an efficient and powerful form of control which exists without the principals formal implementation (McCubbins and Schwartz 1984).

It has been established that there are several challenges stemming from delegation. However, it has also been shown that there are many ways in which the principal can monitor the agent. One should not forget the potential benefits from delegation. It creates agencies that have specialised knowledge on a complex policy field. This has clear efficiency enhancing effects compared to a situation in which the principal regulates every detail of operations that it does not have indepth knowledge of. Further, it releases resources that can be used by the principal in areas in which the principal values higher or where it simply is more suited for the job. Underlying this is also questions of democratic legitimacy. This goes back into Eastons (1957) model for politics. His diagram of politics is based
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on the fact that the output is conditioned on input.

The governments in

democracies do not want a civil service that is outside of their control. One important reason for this is that the politicians will in the end be held accountable for its agents performance. Finally, the ultimate principals, the voters, want to make sure that the chain-of-command is not so diluted that politicians cannot be held accountable.

3.0 Empirics

There have been established several financial arrangements. We can distinguish between five programs/periods: 1) 2) 3) 4) 5) The Financial Mechanism 1994-1998 The Financial Instrument 1999-2003 The EEA and the Norwegian Financial Mechanisms 2004-2009 The EEA Financial Mechanism and Norway Grants 2007-2009 The EEA and the Norwegian Financial Mechanisms 2009-2014

The magnitude and timeline of the different arrangements:

45678

, , , , Million EUR

4 5

EFTA is the EFTA/EEA states. According to Report No. 1 to the Storting (2005-2006), Norway was reimbursed 8 million EUR as projects were not finalised. 6 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). 7 A separate Norwegian Financial mechanism for the periods 2004-2009 and 2009-2014. A separate Norway Grants for the period 2007-2009. 8 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. 6

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One sees that the sums have increased dramatically.

In 1994, Norway was

committed to pay approximately 22.5 million EUR annually. In the period 20092014, the yearly support is about 349 million EUR. The greatest increase occurred in relation to the first Eastern enlargement of the EU. Bulgaria and Romania received support at the same level in the period 2007-2009. With the increase in 2004 (about 1000 per cent) it is easy to overlook the substantial increase agreed to in the period 2009-2014. From contributing yearly about 285 million EUR, Norway would in the period 2009-2014 contribute yearly with about 349 million EUR. This represents a yearly increase of 64 million EUR or 22 per cent.

The crude application process looks like this: The National Focal Point (NFP) calls for proposals the project promoter sends an application the first evaluation is made by the NFP. If accepted, the NFP sends it to FMO if accepted, the FMO sends the application for final approval in the FMC or the NMFA (depending on which arrangement). Simultaneously, the FMO sends the application to the EU Commission which makes sure that the project is not in conflict with Community objectives. If the project is approved in all the stages it will be disbursed grants.

In the negotiations leading to the EEA and Norwegian FMs in 2004-2009 it was decided that the arrangement was to have a two tiered institutional design. One was to be an EEA mechanism and the other was to be a separate Norwegian mechanism. It is the FMO that administers the EEA and the Norwegian FMs. Furthermore, it is responsible for the administration of the two prior arrangements. The FMO is formally part of the EFTA Secretariat. The Financial Mechanism Committee (FMC) was established9. The primary responsibility of the FMC is deciding on which projects will be supported by the EEA FM. Each EFTA/EEA member country has one vote each. The decision rule is unanimity (1/2004/SC Art. 1(4+5)). The FMC has the primary responsibility of the EEA FM. The NMFA has the ultimate responsibility for the Norwegian FM (1/2004/SC Art. 1(4+5)).

The Financial Mechanism Committee (FMC) for the period 2004-2009 was established by the EEA Standing Committee through decision 4/2004/SC on the 3rd of June 2004. 7

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A NFP is established in each of the beneficiary states. They are responsible for the administration of the arrangements in their respective countries. This includes the processes from the first evaluation of the applications to supervision of the projects that are accepted. Another important function of the NFP is to be the contact point in the beneficiary states for EFTA/EEA authorities, the auditors and the FMO (FMC 2010a:4; NMFA 2010a:4). The NFPs are described as the FMOs counterparts in the beneficiary states (FMO 2008:7). The FMO has established Country Officers (COs) responsible for each beneficiary state 10 in order to coordinate the efforts in the different countries. These also serve as the contact point for the NFPs in their communications with the FMO (2008:6).

The responsible organisation for auditing of the EEA FM is the EFTA Board of Auditors. The Office of the Auditor General in Norway is responsible for the audition of the Norwegian FM (FMC 2010b:9; NMFA 2010b:9).

The focus of a large share of the FMs has been individual projects. These types of applications must be for 250.000 EUR or more (FMC 2010:11; NMFA 2010:11). This is to be changed in the new period. This is something that will be discussed later.

3.1 The EEA and Norwegian Financial Mechanisms 2004-2009

The main aim of the EEA FM is to reduce economic and social disparities in the European Economic Area (Protocol 38A Article 1). The Norwegian FM shares the main aim of the EEA FM in the sense that it is established in order to reduce disparities. Additionally, it 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 rules for the financing levels were similar to former arrangements. The EEA and the Norwegian FMs could not fund more that 60 per cent of a projects costs. However, the corresponding limit for projects financed by central, regional or
10

All COs are responsible for a group of countries apart from the CO responsible for Hungary (FMO 2010). 8

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local government budget allocations is 85 per cent of project costs (Agreement Art. 4 2003; Protocol 38A Art. 4(1)).

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 (2003). The bilateral element is emphasised in the Memoranda of Understanding (MoUs) and Recommendation No. 103 (2003-2004) (2004:4). For instance, at page 2 in the Memorandum of Understanding (MoU) (both on the EEA and Norwegian mechanisms) of Poland, it is written that:
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) (2004:4 m.t.) one can read that Norwegian contributions must also promote Norwegian interests in the EU and strengthen our connections with the new member statesi. In addition to the bilateral element, the MoU have described cross-cutting aims that are not mentioned in Protocol 38A or the Agreement (2003). At page 2 from both of Polands MoUs it is written that:
a stable, peaceful and prosperous Europe, based on good governance, democratic institutions, the rule of law, respect for human rights and sustainable development.

3.2 The EEA Financial Mechanism and Norway Grants 2007-2009

The main aim and the sectors covered of the EEA FM 2007-2009 were the same as for the EEA FM 2004-2009 (Addendum to Protocol 38A). One also established a separate Norwegian channel for contributions. This was independent of the existing Norwegian FM. It was called Norway Grants and aimed to promote social and economic development [in Bulgaria and Romania] through bilateral cooperation projects between the Parties (Agreements 2007a+b). The Norwegian Grants were meant to offer flexibility and greater focus on partnerships. One did not negotiate MoUs for the Norwegian mechanism. It was IN that administered the Norway Grants (Proposition No. 72 to the Storting (2006-2007) (2007:31)).

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Regarding financing levels, it was agreed that the rules of the agreements in the period 2004-2009 applied. However, there was a new element in which contributions to non-governmental organisations and social partners may be up to 90 per cent of project costs (Addendum Art. 1(4) to Protocol 38A; Agreements (2007)).

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 FM of Bulgaria and Romania. In their foreword at page 2 it is written that:
Participation[...]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 38A. These cross-cutting aims are exactly the same as in the previous arrangements (MoU Romania 2007).

3.3 The EEA and Norwegian Financial Mechanisms 2009-2014

The main aim as described in Protocol 38B Article 1 is still to contribute to the reduction of economic and social disparities in the European Economic Area. Moreover, the new Protocols article 1 has a bilateral element. 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 38B Article 1). Article 1 of the Norwegian Agreement (2009) is similar. 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. It was written in Protocol 38B 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.

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This is exactly the wording of Article 9 of Protocol 38A which was set-up for the period 2004-2009. For the EEA FM the maximum financing level is 85 per cent of a programs total cost. In special cases the support can represent 100 per cent of the costs (Protocol 38B Art. 3(1)). The exception includes NGOs and individual scholarships ii (Proposition 160 S (2009-2010) 2010:4 m.t.). The Norwegian FM (Agreement Art. 3 2009) has identical regulations.

The regulations for the new mechanisms are more detailed and specific than the previous arrangements. The publications Regulation on the implementation of the European Economic Area (EEA) Financial Mechanism/Norwegian Financial Mechanism 2009-2014 (FMC 2010b; NMFA 2010b) are 59 pages long each compared to the 29 pages of the publications Rules and Procedure for the Implementation of the EEA Financial Mechanism/Norwegian Financial Mechanism 2004-2009 (FMC 2010a; NMFA 2010a). Some of the reason might be the more diverse number of priority areas in the new mechanisms.

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 is 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 iii (Proposition 160 S (2009-2010) 2010:3 m.t.). By interpreting the EU Commission it appears that the program method of the EEA and Norwegian FMs coordinates these arrangements with the EUs 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). So the FMs in period from 2009 to 2014 will be run by the program method instead of mainly project method. This means that the FMO in the new period no longer will assess each single project. The FMO will evaluate and recommend the Program Operators (POs) in the beneficiary states. In turn, these POs will take care of the evaluations
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of the different project. In previous periods it has been the FMO that has evaluated each project.

4.0 Discussion
Based on the agreements one can declare that the arrangements are made in order to: 1) reduce social and economic disparities, and 2) strengthen bilateral ties.

4.1 Setting Up a New System The Second Best Solution

It has been reported that the beneficiary states have at times been frustrated by the fact that a new bureaucracy was established with the EFTA/EEA support (PWC 2008:35). If the only aim of the EFTA/EEA states was to maximise the efficiency of the support they could have distributed their resources to existing offices that take care of the similar EU funds. The direct set-up costs of the FMO are relatively large. Additionally, there are costs that are less visible. For instance, it took a while before the FMO was up and running. The time lags and implementation costs must have been substantial. Another example is that the creation of a new system means that the complexity for the applicants increases. A new system means that there are different applications with different logics to fill out. This can create costs for organisations and individuals that have to learn the formal requirements stemming from the EEA and Norwegians FMs in addition of those of the EU.

It is plausible that the bilateral relations which the Norwegian government seeks would be accomplished just as efficiently through channelling money directly to the EU offices. It is the elite that decide on Norwegian membership in different types of cooperation programs. One can assume that Norwegian contributions had been noticed among the EU politicians regardless of the fact that one put in place separate mechanisms. Still, the reality is that one has set-up the FMO and FMs separate from the corresponding EU programs. This is a political outcome.

4.2 A Focus on Damage Control Rather Than Efficiency

The NMFA wants to minimise the risk of a political backlash caused by scandals of corruption or mismanagement. The Norwegian Minister of Foreign Affairs, Mr
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Gahr Stre (2008) stated that his general attitude was that Norway should be thorough and aware instead of the opposite with regard to the evaluation of projects before the disbursementiv and that he believed that this also was the former governments approach. The person that led the evaluation that PWC (2008) conducted on the Norwegian contributions, Mr Strand, says that Norwegian authorities are too strict. Mr Strand argues that it is a paradox that one is more inclined to strongly control the payments to the Central and Eastern European states (CEECs) than payments to developing countries (Eltvik 2008). The NFP of Poland argues that most serious drawback of the arrangement is the overregulation of the grant system (Scanteam 2008:26). It appears that the Norwegian political leadership does not dare to establish a system that aims to maximise the effect and minimise the inefficiencies of these arrangements.

According to the mid-term review of the EEA and Norwegian FMs (2004-2009) the average time passed before an application is fully treated is one year (PWC 2008:38). However, this process can last for as long as two years (PWC 2008:20). The PWC (2008:32) maintains that:
as far as effectiveness of program implementation is concerned, this [delay in the application process] must be considered as one of the failures of the EEA/NFM mechanism and it should be mitigated in any successive mechanism.

It is indicated that the effect of this focus on control is an indirect loss of 10 to 30 per cent of the value of the FMs. This is because of the delays which make projects vulnerable to inflation, currency fluctuations and price rises (especially in the Polish construction industry) (PWC 2008:38). For an applicant with limited resources this is devastating and the PWC (ibid.) reports that some withdraw their applications. Another feature of the mechanism is that one is disbursed after the expenditures occur. Thus, it is difficult for smaller actors without the proper capacity to benefit from the arrangements. Still, it is reported that the NGO Fund which seeks to support actors of a smaller scale has been successful (PITIJA 2010b). Further, Deputy Director General in the NMFA, Mrs Schulerud, argues that the EEA and Norwegian FMs have taken George Soros position in many of the beneficiary states (Bondevik 2010). One of the reasons that Mrs Schulerud can claim this is that the arrangements, despite not being geared towards the smaller actors, supports projects that are often too small for the EU grants. Nevertheless,
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an effect of the emphasis on control is that the aim of reducing disparities suffers. This weakens the opportunities for smaller actors to benefit from the arrangement. One can assume, as many of the CEECs are centralised countries, that the smaller actors in the periphery might feel excluded. The regions of outside of the capital areas are many times the ones most in need of funding. This is an important weakness. However, it will be taken steps towards remedying this in the future period through a greater focus on smaller actors.

The NMFA appears to both exert strong control on the FMO and demand that the FMO closely monitors the authorities in the beneficiary states. The FMO is consistently reviewed and audited either directly or indirectly. For instance, from 2006 until today Difi (2009), Scanteam (2008) and PWC (2008) have carried out external evaluations of the FMs and FMO. Furthermore, evaluations are made for specific policy areas that the FMO provides support for. These evaluations have been about the support to greenhouses gasses (COWI 2010), biodiversity (PITIJA 2010a), judicial issues (Integration 2010), cultural heritage in the Czech Republic (CrossCzech and Nordic Consulting Group 2009), NGO support (PITIJA 2010b) and energy saving and renewable energy projects in Poland (Scanteam and Proeko 2009). The many reviews can be seen as a method for control. This can be seen as the police patrol approach to controlling the agent (McCubbins and Schwartz 1984). This is a way for the Norwegian government to control the NMFA and the NMFA to control the FMO. However, it is also a way for the FMO to control the NFPs. Before the new NGO Guidelines were made, the FMO established a forum for consultation on the internet. Among the themes one could discuss was the management of the funds (FMO 2010). Further, the FMO has in place easily available details on warning about corruption or mismanagement. This can be interpreted as a fire control approach to control of agents (McCubbins and Schwartz 1984). These are ways for the FMO to control its agents.

There are indications that the FMO is in place primarily in order to ensure control of the sums. This view can be confirmed through looking at the background of Mrs Lundin Andresen which became the Director for the FMO. She has a professional background related to risk management which is in line with her job in the FMO. She came from grant management work in the World Bank with a
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focus on risk evaluation (Wiedswang 2004b). Further, it is noted that Mrs Eva Joly had been hired as a consultant in order to prevent large scandals (Wiedswang 2004a). According to Shepsle and Bonchek (1997:366) the most important exante political weapon of the principal is the appointment process. It seems that the NMFA has focused on risk aversion with regard to the staffing of the leadership of FMO. This makes sense if one takes into account the corruption challenges of the beneficiary states (see appendix 1).

It is understandable that the political leadership in Norway is cautious. This kind of support is vulnerable to criticism as the beneficiary states are perceived as middle-income countries 11 . Thus, one of the largest news papers in Norway, Verdens Gang, can publish stories about Norwegian money going to renovation of old castles in the Baltic states in order to use these as schools. At the same time it is reported that public Norwegian schools face underinvestment (Haugan and Brugrand 2008). The EEA beneficiary states receive support in areas which are not part of what is seen as traditional aid. In Vrt Land 12 one could read that Norwegian money go towards renovating churches in EU countries all the while numbers of Norwegian churches were not fully renovated (Hoel 2007).

The objectives of the arrangements have been efficiency with regard to reduction of disparities and strengthening of bilateral relations. It seems that the Norwegian government is more concerned with damage control than the actual objectives of the FMs. Increasing the 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.

4.3 The Financial Mechanisms - Made From a Different Logic Than They Are Managed
The modalities of the FMs take shape as a consequence of international negotiations. This means that relevant, effective and efficient support for new
11

Gullestad (2004) shows the Norwegian foreign aids close historical affinity to the Norwegian Bible belt. This means that the strongest supporters of this type of aid tend to see it as legitimate to exclusively support poor countries in Africa in which Norwegian missionaries are established. See Appendix 2 for overview of the largest recipient countries of Norwegian bilateral aid. 12 A Norwegian news paper with a Christian profile. 15

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member states was important but de facto secondary and has only gained in importance later (PWC 2008:17). Additionally, the priority sectors are

constructed in an unclear manner. The lack of clarity in the priorities undermines the efficiency of the FMs regarding reductions of disparities. It can also be a way for the Norway to make sure that many domestic actors are eligible for support (PWC 2008:17). Thus, the logic of the establishment of the arrangements is different from the logic of their management. The former is to pursue Norwegian interests. The latter is to reduce disparities in the EU and to strengthen bilateral relations.

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 formal goal of the arrangements in 2004 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 has become 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.

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 Gross Domestic Product (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.

On the one hand, the NMFA wanted the bilateral dimension to be higher and to have a more significant profile in the arrangements from 2004 to 2009. On the other, the widespread perception within the FMO is that this is an unrealistic
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ambition (Difi 2009:12). The FMO echoes a perception among some Norwegian ambassadors that there are limitations to the influence that can be achieved through these arrangements. One of the reasons is the fact that there is no requirement for support that one has a partner in Norway (Scanteam 2008:50). Further, it is difficult to ensure partnerships with Norwegian actors through positive discrimination because of the public procurement regime of the EEA agreement (Difi 2009: 12). It seems that there have been tensions between the NMFA and the FMO about what is possible regarding the bilateral dimension of this support. There can be different reasons for this. One is simply based on information and the fact that the FMO is better informed. A different reason is that the NMFA is run by the logic of national interests and is looking for a way to promote national interests. The FMO might have a different rationale. This might point to a general problem when foreign ministries establish professional bureaucracies. Organisations differ and it is unlikely that independent bureaus, and especially multi-national ones as the FMO, have equal interests to the foreign ministry. Perhaps it is a bit nave to establish a professional office in Brussels and expect it to be a day-to-day secretariat and remain so?

There is an emphasis that these funds are not only made available because of solidarity but also with Norwegian business interests in mind (Petersen 2004). However, it is problematic for the Norwegian government to sell the arrangements as a great way for Norwegian actors to get involved if the experiences do not match the expectations. The permanent tension is that this support is primarily made available for actors in the beneficiary states. Apart from the temporary Norway Grants in 2007-2009, there has been no obligation for beneficiaries to seek partnerships in Norway. Further, the number of partnerships in the current period (2004-2009) (about twenty per cent) hides the fact that most of these relationships existed already (Scanteam 2008). The bilateral relationships were hardly strengthened apart from the fact that existing bonds were continued. Further, it might be that the existing interest for bilateral relationships among Norwegian actors is too small. Many Norwegian embassies in the beneficiary states express that Norwegian institutions show little interest when the embassies arrange seminars about the funds (Scanteam 2008:49f).

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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 towards 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.

4.4 The Growth of the Financial Mechanism Office

Using Niskanens, or just public choice, logic one can posit that the leader of the FMO primarily wants to maximise the organisations budget rather than its output. Thus, one can assume that the leadership of the FMO welcomes the new formal emphasis on bilateral relations. It is still seen as unrealistic for Norway to directly influence anyone with the FMs. At the same time, the intensification of the bilateral emphasis of the arrangements means that new positions have to be established. This in turn means that larger budgets are justified and that the prestige of the FMO is heightened through its increased profile as an organisation that promotes bilateral relations. Still, it can be that the FMO does not particularly enjoy the new objectives. Putting more emphasis on bilateral relations might mean that the FMO to a greater extent performs assignments that the NMFA has experience from. This might decrease the existing information asymmetry. Therefore it can increase the NMFAs control of the FMO and make sure that it increasingly is led by the principals logic.

An observation is that the FMO has grown considerably in size since its establishment. According to the Difi (2009:7), the FMO started out with 10 employees. At the time of the Difi evaluation in 2009 the number of staff members was 33 which were down from 42 earlier the same year (Difi 2009:7). The number today in early December 2010 is 51 staff members. This is an extraordinary growth.

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The increase from 10 to 51 staff members can have many objective reasons. First, if the objective of the Norwegian authorities was mere cost control then they could have delegated the resources to the respective EU offices. However, this is not a plausible action. Secondly, it might be that there simply is need for the current number of staff. The FMO administers considerable sums and according to an interviewed FMO employee everybody does everything in the organization (Difi 2009:7). Through trial and error one has discovered not only what areas need more attention but also how great the need for further employees is.

Eight per cent of the FMs will go towards administration in the new period. This shall cover administrative costs in the beneficiary states as well as for the donor states. It is uncertain what amount will go to the FMO and what will go towards bureaucracies in the beneficiary states. In the period 2004-2009 one set aside 4 per cent to the EEA FM and 5 per cent to the Norwegian FM towards covering administrative costs. The corresponding number for IN is 7 per cent (NMFA 2007). This means that the FMO is less expensive than the IN. The Swiss take 5 per cent in administration costs (Integration Office 2007). This means that the FMO has more or less the same level of expenditure as the Swiss.

The indication is that the running costs of the FMO are moderate. Nevertheless, there are reasons to question the drastic increase in the staffing of the FMO. This corresponds neatly to public choice theorys predictions. However, one should take into account that it might have taken a while for the real demand on the FMO was evident. Some adjustments to this reality should be expected.

There are tensions between the NMFA and the FMO as the former sees the FMO primarily as a day-to-day secretariat serving the donors, without any formal status, while the FMO tends to see itself more as a body with a relatively independent position (Difi 2009:12). Thus, there is a potential conflict of interests in play. Mrs Lundin Andresen (2004) writes that one of the most important objectives for the FMO is to provide information and guidance with regard to partnerships. It seems that this confirms the views of the NMFA. However, years have passed and experiences have been made since Mrs Lundin
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Andresen made this statement. It seems that the FMO has matured as time has passed.

5.0 Conclusion
It must be declared that the FMO is not a runaway agency. In fact, the many reviews point to its general good performance in managing the FMs. At the same time there are some challenges associated with its work. Some of these are derived from the different expectations between the NMFA and the FMO especially with regard to the bilateral ambitions of the former. Other challenges stem from the Norwegian governments emphasis on control rather than efficiency regarding the administration of these funds. There is also a general challenge with numerous and diffuse goals and objectives which makes performance assessments demanding.

The new program method will cause novel challenges. The move towards a program method creates autonomy for the POs. Will this increase the risk of corruption and mismanagement? The change can be understood as increased delegation from the FMO to the POs. What, if any, PA challenges will arise because of this delegation? The program method is used by the EU in order to manage the same type of funds. This will undoubtedly help the user through streamlining arrangements and increase the efficiency of the FMs. However, how can one be sure about the efficient use of these resources through the EU method? Just recently, the BBC aired a podcast called Europe's Missing Millions (File on 4 2010). This program set focus on some of the grave corruption problems with support provided in order to reduce disparities in the EU. The emphasis at the end is that the world faces a financial crisis and that these funds, if spent effectively, can contribute to reducing the hardships in the poorest areas of Europe. In the end, this is what it is all about. One wants to make sure that the EEA and Norwegian FMs make a real difference and that the grants are spent on projects that have a real effect on European communities. The local people themselves know best what is most needed. However, local autonomy and flexibility increases the risk for corruption and mismanagement. Until now the trade off has tilted too much in the direction on controlling risk. This has hampered the effect of the FMs.
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6.0 References
Addendum to Protocol 38 Agreement, 2003. Agreement between the Kingdom of Norway and the European Community on a Norwegian Financial Mechanism for the period 2004-2009. Agreement, 2007a. Agreement in the form of an Exchange of Letters between the European Community and the Kingdom of Norway concerning a Cooperation Programme for Economic Growth and Sustainable Development in Bulgaria. Agreement, 2007b. Agreement in the form of an Exchange of Letters between the European Community and the Kingdom of Norway concerning a Cooperation Programme for Economic Growth and Sustainable Development in Romania. Agreement 2009. Agreement between the Kingdom of Norway and the European Union on a Norwegian Financial Mechanism for the period 2009-2014. Appendix 4 to Protocol 31. Blank, R.M., 2000. When can public policy makers rely on private markets? The effective provision of social services. Economic Journal, Vol. 110 (462), pp. 34-49. Bondevik, Andreas, 2010. ES-midlene skal brukes p klima. Nationen 10.09.10. Christensen, T., 2003. Narratives of Norwegian Governance: Elaborating the Strong State Tradition. Public Administration. Vol. 81 (1), pp. 163190. Christensen, T. Lgreid, P., 2007. Regulatory AgenciesThe Challenges of Balancing Agency Autonomy and Political Control. Governance. Vol. 20 (3), pp. 499520. Commission, 2010. COM(2010)234 final 2010/0129 (NLE) Proposal for a Coucil Decision. COWI, 2010. EEA and Norway Grants - Review of Support to Greenhouse Gas Reductions. http://www.eeagrants.org/asset/1704/1/1704_1.pdf Accessed 04.12.10. CrossCzech Nordic Consulting Group, 2009. Review of Cultural Heritage Support to the CzechRepublic.http://www.eeagrants.org/asset/1134/1/CZ+Cultural+heritage+report+final+0 1.04.09.pdf.pdf Accessed 04.12.10. Difi (Agency for Public Management and eGovernment), 2009. Organizing the Financial Mechanism Office A review of options. Difi Report 2009: 10. Oslo: Difi. Dixit, A., 2002. Incentives and Organizations in the Public Sector: An Interpretative Review. Journal of Human Resources.Vol.37 (4), pp. 696-727. Easton, D., 1957. An Approach to the Analysis of Political Systems. World Politics Vol. 9 (3), pp. 383-400. EEA Agreement EEA Standing Committee, 2004. Decision 1/2004/SC. EEA Standing Committee, 2004. Decision 4/2004/SC. EFTA (European Free Trade Association), 2002. Activities and Financial Contributions under the EEA Agreement. EFTA Bulletin Vol. 2. Eltvik, Anders, 2008. Norsk EU-sttte somles bort. Nationen 19.09.10. File on 4, 2010. Europes missing millions. BBC 30.11.10. 21

GRA 5915 Pol.Econ of Regulation Financial Mechanism Office, 2008. Standard Operating Procedures. 08.02.08. Financial Mechanism Office, 2010. Home Page. http://www.eeagrants.org/ FMC, (EEA Financial Mechanism Committee), 2010a. Rules and Procedures for the Implementation of the EEA Financial Mechanism 2004-2009. FMC, (EEA Financial Mechanism Committee), 2010b. Regulation on the implementation of the European Economic Area (EEA) Financial Mechanism 2009-2014. Gahr Stre, Jonas, 2008. Meeting in the EEA Committee. 04.11.08. Gullestad, M., 2004. Nrhet til Afrika avstand til Paris og Brussel. ISF Paper 2004: 9. Haugan, Bjrn - Brugrand, Odd Helge, 2008. Norske millioner til baltiske skole-slott VG 09.09.08. Hoel, Per Anders, 2007. Pusser opp EU-kirker. Vrt Land 07.11.07. Integration, 2010. Evaluation of Norway Grants support to the implementation of the Schengen acquis and to strengthening of the judiciary in the new EU and EEA member states. http://www.eeagrants.org/asset/1600/1/1600_1.pdf Accessed 04.12.10. Integration Office, 2007. Annex to Memorandum of Understanding (Swiss Enlargement Contribution). http://www.europa.admin.ch/dokumentation/00438/00464/00766/index.html?lang=en&downlo ad=NHzLpZeg7t,lnp6I0NTU042l2Z6ln1ad1IZn4Z2qZpnO2Yuq2Z6gpJCDdIR5gmym162epY bg2c_JjKbNoKSn6A-- Accessed 05.12.10. Le Grand, J., 2003. Motivation, Agency, and Public Policy. Of Knights and Knaves, Pawns and Queens. Oxford: Oxford University Press. Lundin Andresen, S., 2004. Ml og midler for finansieringsordningene. Kommunal Rapport 26.10.04. Lupia, A., 2003. Delegation and its perils. In T. Bergman, pp. 33-54. In Mller, W.S. Strm, K. (eds), Delegation and accountability in West European parliamentary democracies. Oxford: Oxford University Press McCubbins, M. - Schwartz. T., 1984. Congressional oversight overlooked: Police patrols versus fire alarms. American Journal of Political Science. Vol. 28, pp. 16579. MoU (Memorandum of Understanding) EEA/EFTA-Poland, 2007. On the Implementation of the EEA Financial Mechanism 2004-2009. 18.12.07. MoU (Memorandum of Understanding) Norway-Poland, 2007. On the Implementation of the Norwegian Financial Mechanism 2004-2009. 18.12.07. MoU (Memorandum of Understanding EEA/EFTA-Romania), 2007. On the Implementation of the EEA Financial Mechanism 2004-2009. 25.10.07. Miller, G Moe, T., 1983. Bureaucrats, Legislators, and the Size of Government. American Political Science Review. Vol. 77 (2), pp. 297-322. Niskanen, W., 1971. Bureaucracy and Representative Government. Chicago, IL: Aldine Press. NMFA (Norwegian Ministry of Foreign Affairs), 2007. Statbudsjettet 2007 Oppdragsbrev til Innovasjon Norge. 02.11.07. NMFA (Norwegian Ministry of Foreign Affairs), 2010a. Rules and Procedures for the Implementation of the Norwegian Financial Mechanism 2004-2009. 22

GRA 5915 Pol.Econ of Regulation NMFA (Norwegian Ministry of Foreign Affairs), 2010b. Regulation on the implementation of the Norwegian Financial Mechanism 2009-2014. NMFA (Norwegian Ministry of Foreign Affairs), 2010c. Sprsml og svar om FN generelt. http://www.regjeringen.no/nb/dep/ud/tema/fn/fn_svar.html?id=613826#14 Accessed 04.12.10. NMFA (Norwegian Ministry of Foreign Affairs), 2010d. Proposition 1 S (2010-2011). Petersen, Jan, 2004. Foreign Policy Address to the Storting. 27.01.04. PITIJA, 2010a. Review of the EEA and Norway Grants Biodiversity Support. Ljubljana: PITIJA. PITIJA, 2010b. Evaluation of EEA and Norway Grants NGO Funds. Ljubljana: PITIJA. Pollack, M., 1997. Delegation, Agency, and Agenda-Setting in the European Community. International Organization, Vol. 51, pp. 99134. Proposition No. 3 to the Storting (2003-2004), 2003. Om samtykke til ratifikasjon av avtale om Den tsjekkiske republikks, Republikken Estlands, Republikken Kypros, Republikken Latvias, Republikken Litauens, Republikken Ungarns, Republikken Maltas, Republikken Polens, Republikken Slovenias og Den slovakiske republikks deltakelse i Det europeiske konomiske samarbeidsomrde (ES) og tilliggende avtaler. 10.10.03. Proposition No. 72 to the Storting (2006-2007), 2007. Om samtykke til ratifikasjon av avtale om Republikken Bulgarias og Romanias deltakelse i Det europeiske konomiske samarbeidsomrde (ES) med tilliggende avtaler, samt inngelse av avtale om midlertidig anvendelse. 25.05.07. Proposition 160 S (2009-2010), 2010. Samtykke til ratifikasjon av avtale mellom ES/EFTAstatene og EU om en ES-finansieringsordning 2009-2014, avtale med EU om en norsk finansieringsordning 2009-2014 og tilleggprotokoll til frihandelsavtalen mellom Norge og Det europeiske konomiske fellesskap om handel med fisk, alle av 28. juli 2010. 03.09.10. Protocol 38 Protocol 38 A on the EEA Financial Mechanism Protocol 38 B on the EEA Financial Mechanism PWC (PriceWaterhouseCoopers), 2008. Mid-term Evaluation of the EEA Grants, Evaluation Report 3/2008. Oslo: Norad. Recommendation No. 103 to the Storting (2003-2004), 2004. Innstilling fra utenrikskomiteen om samtykke til ratifikasjon av avtale om Den tsjekkiske republikks, Republikken Estlands, Republikken Kypros", Republikken Latvias, Republikken Litauens, Republikken Ungarns, Republikken Maltas, Republikken Polens, Republikken Slovenias og Den slovakiske republikks deltakelse i Det europeiske konomiske samarbeidsomrde (ES) med tilliggende avtaler. 14.01.04 Recommendation No. 257 to the Storting (2006-2007), 2007. Innstilling fra utenrikskomiteen om samtykke til ratifikasjon av avtale om Republikken Bulgarias og Romanias deltakelse i Det europeiske konomiske samarbeidsomrde (ES) med tilliggende avtaler, samt inngelse av avtale om midlertidig anvendelse. 06.06.07. Recommendation No. 22 S to the Storting (2010-2011), 2010. Innstilling fra utenriks- og forsvarskomiteen om samtykke til ratifikasjon av avtale mellom ES/EFTA-statene og EU om en ES-finansieringsordning 20092014, avtale med EU om en norsk finansieringsordning 20092014 og tilleggsprotokoll til frihandelsavtalen mellom Norge og Det europeiske konomiske fellesskap om handel med fisk, alle av 28. juli 2010. 20.10.10. Report No. 27 to the Storting (2001-2002), 2002. Om ES-samarbeidet 1994-2001. 26.04.02. 23

GRA 5915 Pol.Econ of Regulation Report No. 1 to the Storting (2005-2006), 2005. Nasjonalbudsjettet 2006. 07.10.05. Shepsle, K. Bonchek, M., 1997. Analyzing politics. New York: WW Norton. Scanteam, 2008. Norwegian Bilateral Relations in the Implementation of the EEA Financial Mechanisms Final Report. Oslo: Scanteam. Scanteam Proeko, 2009. EEA and Norway Grants: Review of Energy Savings and Renewable Energy Projects in Poland. Oslo: Scanteam Proeko. Transparency International, 2010. Corruption Perception Index 2010 Results. http://www.transparency.org/policy_research/surveys_indices/cpi/2010/results Accessed 04.12.10. Weber, Max. 1930.The Protestant Ethic and the Spirit of Capitalism. London: Allen and Unwin. Wiedswang, Kjetil, 2004a. Fordeler st-milliarder. Dagens Nringsliv 15.01.04. Wiedswang, Kjetil. 2004b. Deler ut milliarder. Dagens Nringsliv 30.08.04.

7.0 Appendices
Appendix 1. CPI score from the 2010 report on corruption from Transparency International (2010) Country Rank 8 10 11 14 26 27 28 30 32 37 41 46 50 53 57 57 68 73 78 Name Switzerland Norway Iceland Ireland Estonia Slovenia Cyprus Spain Portugal Malta Poland Lithuania Hungary Czech Republic Latvia Slovakia Romania Bulgaria Greece Corruption Perception Index (score) 8.7 8.6 8.5 8.0 6.5 6.4 6.3 6.1 6.0 5.6 5.3 5.0 4.7 4.6 4.3 4.3 3.7 3.6 3.5

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Appendix 2

Beneficiary States Poland Tanzania Afghanistan Palestinian Authority Sudan Mozambique Romania Uganda Malawi Zambia Pakistan Nepal Hungary Sri Lanka Czech Republic Bulgaria Financial Mechanisms Bilateral aid 2009 UN 2009 World Bank Group 2009

Annual Financial Mechanisms 2009-2014/Bilateral aid 2009 115,620,000 91,367,125 90,980,250 78,593,625 72,272,125 63,102,625 61,190,000 52,835,000 49,933,375 49,202,375 36,549,125 35,558,375 30,660,000 27,672,625 26,360,000 25,320,000 357,700,000 573,328,250 900,000,000 184,000,000 Proposition 1 S (2010-2011) (NMFA 2010d) and NMFA (2010c)

8.0 Endnotes
i

norske bidrag m ogs bidra til fremme norske interesser i EU og styrke vre forbindelser med de nye medlemslandene. ii frivillige organisasjoner og stipender til enkeltpersoner. iii sikrer sterkere fokus p strategiske interesser. iv min generelle holdning har vrt jeg tror det ogs var den forrige regjeringens holdning at vi heller har vrt grundige og varsomme enn det motsatte nr det gjelder vurderinger av prosjekter fr det kommer til utbetaling.

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