How to finance Barents cooperation?

One of the most significant contributions to Barents cooperation in the last two years was an 80-page report “Financing Barents Cooperation”, compiled by a multinational ad hoc Working Group on Financial Mechanism Study and Foreign Ministry officials of the BEAC chair country Finland. Here we take a look at the job done by the Working Group and the findings of the report.

 AHWG 17.6.2015.jpgThe background for the work of the Working Group on Financial Mechanism Study is in the Kirkenes Declaration of summer 2013. On Russian initiative it was proposed “to investigate the possibility of establishing a financial mechanism in the Barents region to support project activities and to facilitate making full use of the region’s investment potential”. In October 2013, the Working Group was established and during its two years of existence it charted different financial instruments as well as needs for investment in the region. The participants of the Working Group included representatives of the BEAC member countries, the International Barents Secretariat, Barents Regional Committee and the EU External Action Service. The chair and secretary of the working group were two officials of Finnish Foreign Ministry, Birgit Autere and Laura Quist.

”In our first meeting in February 2014 we made a working program for the coming one and half a years and decided to meet every two months. The first theme were the international financial institutions, and after that we moved on to regional councils such as the Council of Baltic Sea States, Arctic Council and Nordic Council of Ministers. Next in turn were the EU programs, especially the Cross Border Cooperation programs which are already important in the Barents region. In 2015 we had a hearing of NGOs and also made an Internet survey about how they see the funding situation of the region”, explains Birgit Autere about the schedule of the work.

“The principal method of gathering information was a questionnaire that we sent to the working groups and the regional administrations in Barents region. We also studied the different forms of national and EU funding. The questionnaire was answered with a good percentage, so we were able to get an extensive picture of the current situation”, tells Laura Quist.

Financing sources and gaps

The results of the work show that Barents region offers many interesting investment opportunities, and a lot of financing is potentially available for the benefit of investments in the region. The challenge is to identify and develop bankable projects.

“The problem is not so much the lack of money, as the lack of suitable projects from the point of view of the big donors”, says Birgit Autere.

“An example of this is the EBRD, which has noted that they are not receiving good project proposals. Technical assistance would be necessary for project preparation so that the projects could be eligible for financing.”

One of the findings of the study is that the civil society actors and the regions are not sufficiently well aware of EU financing programmes and other funding sources in the region. It is important to raise awareness on the many opportunities that the existing financing mechanisms have to offer. This is one of the recommendations of the Working Group.

Much of Barents cooperation is small-scale, and it may be difficult to get funding from the major mechanisms for projects with budgets lower than 100 000 euros, as the average budget of e.g. EU programmes is somewhere between 600 000 and 700 000 euros. The financial administration and reporting mechanisms may also be too complicated. The Working Group recommends examining the possibility of adjusting the existing financing programmes in order to improve the availability of funding for small-scale projects, seed money and technical assistance for project preparation and civil society cooperation. Cross-Border Cooperation projects and international funding should also be better interlinked.

The Working Group concluded that there do not seem to be either a common interest or justifiable reasons for establishing a new financial mechanism for the Barents Region.

This was also the opinion expressed in the Joint Communiqué of the Barents Euro-Arctic Council at the Oulu session. The Council now calls on the International Barents Secretariat together with other parties to start implementing the recommendations so that the existing financing instruments could be better used for the benefit of the Barents Region.

Attention also from outside the Barents region

In addition to the information concerning the financing, the work done by the working group also gave experience about using an ad hoc working group in the Barents cooperation. According to Birgit Autere, the results were good.

“Ad hoc working groups are a very good solution, when there is a certain need that requires a specific task to be executed.”

The Working Group included people with various backgrounds. This was both a resource and a challenge for the work. In addition to diversity, the group was also very active to bring forth proposals.

Mainly as a result of the activeness of the Working Group, the final report is quite extensive. It is the largest account of financial cooperation in the Barents region ever made, and can also serve the broader public. Also actors outside the Barents region such as CBSS and many EU officials have expressed their interest. As a result of this, the circulation of the report was more than doubled from the originally planned.

“I hope the report will be attract much attention in Brussels and in the future the EU funding instruments will be adjusted to better meet the needs of the small-scale projects and civil society actors in the Barents region. The participation of EU was very important for the Working Group”, says Birgit Autere.

The report can be found behind the link

Text: Ilkka Tiensuu & Maija Myllylä

BACK

Barents Euro-Arctic Council official website 2016