Models for the European Neighbourhood Policy: The European Economic Area and the Northern Dimension

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This paper, written by Marius Vahl and
published by the Centre for European Policy
, focuses on two particular EU policies
towards non-EU members in Northern Europe: the Northern Dimension
(ND) initiative and the European Economic Area (EEA), which are
analysed in light of two broader themes: first, how the EU
organises its policy towards its neighbours more generally and,
secondly, the enlargement process and how the EU has attempted to
develop alternatives to EU membership.


The suggestion that EU policies towards Northern Europe could
serve as a potential model for the EU’s relations with its other
neighbours has emerged in recent years, both in the Convention on
the Future of the EU in 2002-03 and in some of the proposals for
the EU’s new ‘European Neighbourhood Policy’ (ENP). This paper
focuses on two particular EU policies towards non-EU members in
Northern Europe: the Northern Dimension (ND) initiative and the
European Economic Area (EEA). These two policies are analysed in
light of two broader themes: first, how the EU organises its policy
towards its neighbours more generally and, secondly, the
enlargement process and how the EU has attempted to developed
alternatives to EU membership. 

The Northern Dimension represents a regional approach to the
EU’s neighbours, and stands in contrast to a bilateral approach
whereby the EU relates to its neighbours on a country-by-country
basis. A number of arguments can be raised for and against a
regional versus a bilateral approach. These will be analysed in
light of the experiences of the Northern Dimension, as well as EU
policies towards other regions in its immediate

The Agreement on the European Economic Area between the EU and
the three EFTA states (Iceland, Liechtenstein and Norway) is the
most comprehensive agreement between the EU and any third country
short of full EU membership. The EEA has recently been discussed as
a possible long-term model the EU should aim for in its relations
with other neighbouring countries. The prospects of this, and how
this is linked to past and possible future EU enlargements, will be
analysed by comparing the proposals for a European Neighbourhood
Policy with the realities of the EEA. 

1 The Northern Dimension Model(s) 

In order to analyse the Northern Dimension initiative as a
potential model for EU policy towards other neighbouring regions
and states, it is necessary first to have a clear idea of what the
Northern Dimension is. Diverging views on the ultimate scope and
purpose of the initiative have been voiced since its gestation in
the late 1990s. In view of these conceptual differences it is more
correct to speak, not of one Northern Dimension model, but of
several partially overlapping models. 

In the speech that put the Northern Dimension on the EU’s agenda
in 1997, Finland’s Prime Minister, Paavo Lipponen, claimed that the
“ultimate goal of an EU policy [for the Northern Dimension] is
peace and stability, with prosperity and security shared by all
nations [in the region]” (Lipponen, 1997). Such ambitious
objectives were supported in a number of academic studies that
called for a radical re-organisation of the EU’s relations with
neighbouring countries. A ‘Europe of regions’ in a structure of
‘Olympic circles’ would complement or even transform the current
dominant approach of hub-and-spoke diplomacy in a structure of
‘concentric circles’, with the EU at the core, accession candidates
occupying the ‘inner circles’ and non-candidates relegated to the
outer circles (Emerson, 1999; Joenniemi, 1999). Such a regional
approach, it was argued, could counteract the trend towards the
creation of new dividing lines in Europe and create stronger
incentives for the countries in the ‘outer circles’ to converge on
European norms and values.

While stating the need for a “comprehensive strategy, an
institutional framework and adequate financing arrangements”,
Lipponen (1997) pointed out that cooperation in Northern Europe was
“already organised well enough to make major new institutional
arrangements unnecessary” and that therefore no new financing was
required. Some observers noted early on in the process of
establishing the Northern Dimension that a certain “scaling down”
of the initiative had occurred (Joenniemi, 1999). This was evident
in the official documents from the EU on the Northern Dimension,
one of which stated that “the Commission considers that neither new
permanent structures nor new budget lines should be considered”
(European Commission, 1999). According to the first Action Plan for
the Northern Dimension (2000-2003), adopted by the Feira European
Council in June 2000, the “aim [of the Northern Dimension] is to
provide added value through reinforced co-ordination and
complementarity in the EU and Member States’ programmes and
enhanced collaboration between the countries in Northern

There were thus two clearly distinct Northern Dimension models
proposed in the early phases of the initiative. Meanwhile, it
appears that the ambitions concerning the Northern Dimension
initiative have been lowered and that the discrepancy between these
(perhaps) overly ambitious aims and the resources the EU has been
willing to put into the initiative has been reduced. 

1.1 The Northern Dimension in

The Northern Dimension initiative could be assessed in terms of
how it has dealt with the main contentious issues in the region. It
is notable that many of these have been beyond the competencies of
the EU as such, and that to the extent that they have been
confronted, this has occurred without the direct involvement of the
EU. Issues on this list include hard security matters such as the
withdrawal of Russian forces from the Baltic States, NATO
enlargement, first to Poland and then to the Baltic States, and the
possible extension of the CFE Treaty (Conventional Armed Forces in
Europe) in the region. On other issues, where the EU could have
become involved, for example concerning the situation of the
Russian-speaking minorities in Estonia and Latvia, these have been
deferred to other international institutions, in this case to the
Organisation for Security and Cooperation in Europe (OSCE) and its
commissioner for minorities. This was in part due to the allocation
of the Northern Dimension portfolio to the external relations
department in the European Commission, which further limited the
possibility of a more comprehensive regional multilateral approach
by excluding questions relating to enlargement and the enlargement
candidates. While the Northern Dimension contributed to putting the
special challenges of Kaliningrad on the agenda, it did not provide
sufficient impetus to find an early solution to the problem. This
led to the ‘crisis’ of 2002, until then arguably the most serious
crisis in the history of EU-Russia relations. While the regional
approach has made inroads in Northern Europe, it is hard not to
agree that the European Union is indeed a “reluctant regionaliser”
(Haukkala, 2001). 

In spite of this, the Northern Dimension arguably provided
‘added-value’ beyond the ‘minimalist model’ and the limited aims of
many, if not most, EU member states (Selliaas, 2002; Bonvincini et
al., 2000). In political terms, the Northern Dimension has been
appreciated by the EU’s partners for its inclusive approach, with
extensive consultations on priorities creating a sense of “joint
ownership” (European Commission, 2004). 

In operational terms, the main result of the Northern Dimension
initiative is the Northern Dimension Environmental Partnership and
its activities in Kaliningrad and St. Petersburg, financed in part
by the Commission and the European Investment Bank. The creation of
an additional programme can be criticised as going against the aim
of improving coherence between the various initiatives in the
region. There has also been criticism that the EU has not made use
of existing institutions such as the Council of Baltic Sea States
(CBSS) and the Barents-Euro Arctic Council (Catellani, 2001).
Despite the insistence that no new financing would be made
available, considerable funds (€110 million) were promised to the
Northern Dimension Environmental Partnership in July 2002.
Furthermore, the commitment to annual high-level conferences and
the Second Action Plan for the period 2003-2006 ensure that the
Northern Dimension has become a going concern. 

The relative success of the Northern Dimension initiative may be
attributed to the fortuitous sequencing of EU presidencies, rather
than reflecting a principled change in the EU’s approach towards
its ‘near abroad’. The three Nordic EU member states – Finland,
Sweden and Denmark – held the EU Presidency in autumn 1999, spring
2001 and autumn 2002, respectively. Their active support for the
initiative ensured that the Northern Dimension became a fixture on
the EU agenda. Indeed, it has been claimed that the principal
lesson of the Northern Dimension initiative is the way Finland
managed to ‘customise’ the Union and use its EU membership and its
Presidency to promote stronger EU policies in areas of national
interest (Ojanen, 1999). The Northern Dimension has been seen as an
example of how an EU member state could use its membership and the
presidency to promote its national interest, by turning a policy
question of national importance into an EU project. This ‘lesson’
was an important reason for the Polish proposals for an ‘Eastern
Dimension’ during 2002 (Cimoszewicz, 2002). 

The 2004 EU enlargement transformed the rationale on which the
Northern Dimension is based, as most of the questions of coherence
and coordination of policies and programmes will be greatly
reduced. Whereas the task until 2004 was to coordinate economic
assistance programmes targeting member states, candidates and
non-candidates, this is now limited to coordination between EU
internal assistance and aid to Russia. This is unlikely to change
much in practice, as the key issues confronted so far in the
Northern Dimension have been essentially bilateral EU-Russian
affairs. From 2004 onwards, the Northern Dimension became
essentially a regional element of EU-Russia bilateral

EU enlargement does not, however, spell the end of the utility
of the regional approach in Northern Europe. Some of the key
outstanding issues on the Northern Dimension initiative’s agenda,
such as energy and environmental security, involve third parties,
notably Norway, but also Iceland, the US and Canada. This is
reflected in the growing use of the term the “Arctic Window” in
official texts on the Northern Dimension. These indicate that the
regional approach of the Northern Dimension could remain relevant
also after 2004, although this utility seems in part to depend on
widening the scope of, and participation in, the Northern Dimension


To read the full text of the article, visit the Centre for European Policy Studies website.

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