EUOBSERVER / BRUSSELS - Norway, Iceland and Liechtenstein on Wednesday (28 July) agreed to donate €1.79 billion to the EU's poorer southern and eastern members in the coming five years for green projects, labour rights, research and human resources, a top-up of 22 percent compared to the previous period.
The funding scheme is part of the "European Economic Area" agreement which ties the three countries to the EU, allowing them to participate in the internal market without actual membership of the bloc.
Norway provides 97 percent of the funding, amounting to €347 million a year, and has expressed its satisfaction that the original demand put forward by the EU - over €2 billion - was scaled down.
"The negotiations have been long and challenging. The demand originally put forward by the EU has been reduced to a sum that is acceptable, and we have agreed on how our contribution is to be targeted in order to ensure good results for both Norway and the EU," Norway's foreign minister Jonas Gahr Store said in a statement.
Initial disagreements over fish quotas for Norway, which are also part of the agreement, dragged the talks on until December 2009, when Oslo agreed to the terms of the deal. Since then, EU member states on the receiving end - all eastern European countries plus Greece, Spain and Portugal - have been quarrelling over who gets what.
This means that although the funding period is supposed to cover the years 2009-2014, money will not actually start flowing until 2011, pending bilateral agreements which still have to be signed with each recipient country.
Poland will continue to be the biggest recipient of the scheme, with €580 million, followed by Romania, for whom €306 million have been earmarked.
The bulk of the money will be allocated to environment protection programmes, renewable energy and the development of "carbon capture and storage" technology aimed at reducing CO2 emissions.
"We are entering into a critical phase in the global climate efforts, and we are pleased to have reached agreement with the EU on giving priority to climate change in the EEA cooperation with new member states," Mr Store said.
A novelty of the renewed agreement is the set-up of a fund worth €8 million targeting the promotion of "decent work" and tripartite dialogue with labour unions, employers and government officials, in line with the "Nordic model" of social democracy that Oslo is proud of.
Meanwhile, Iceland, who just started accession negotiations with the EU, gave reassurances it would not abandon its financial commitments even if it were to become a member before 2014 when the scheme is again up for renewal.
Switzerland, also a non-EU member integrated in the internal market and the border-free zone of the EU, has a parallel funding scheme for the new member states. Brussels is now looking at ways to integrate Bern into the EEA agreement - to which Swiss voters said no in a referendum in 1992.