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SOUTH-EAST FINLAND – RUSSIA CBC

2014–2020

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CONTENTS 1. Introduction

2. Description and analysis of the programme area

2.1 Programme regions 1. Core regions 2. Adjoining regions 3. Major social, economic or cultural centres 4. A map of the programme area

2.2 Population and population density 2.3 Economic structure

1. Main industrial sectors 2. Labour market and income 3. SME’s and entrepreneurship

2.4 Education 2.5 Transport networks and border crossing infrastructure 2.6 Environment 2.7 Energy 2.8 Telecommunications 2.9 Health and social problems

3. Programme’s strategy 3.1. Description of the priorities (and measures) chosen in line with the overall ob-

jectives defined in the CBC strategy 3.2 Justification for the choice of priorities and measures

1. Socioeconomic and environmental situation 2. Environmental sustainability

3.3 Objectively verifiable indicators, related target values and expected results 3.4 Risk analysis 3.5 Cross-cutting issues

1. Tourism 2. Culture

3.6 Coherence with other national and regional strategies + other union financed programmes

3.7 Lessons learned from the previous Programmes 3.8 Information about the consultations and actions taken to involve the participat-

ing countries and regions to the preparation

4. Programme structures and designation of competent authorities 4.1 Joint Monitoring Committee 4.2 Joint Selection Committee 4.3 Managing Authority 4.4 National authorities in participating countries 4.5 Branch Office 4.6 Audit Authority and the members of the group of auditors 4.7 Control contact points in participating countries

5. Programme implementation 5.1 Summary description of management and control systems

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5.2 Timeframe for Programme implementation 5.3 Description of project selection procedures 5.4 Description of types of support (projects selected through direct award, contri-

butions to financial instruments + timetable for call for proposals) 5.5 Description of planned use of TA 5.6 Description of the monitoring and evaluation systems

1. Monitoring and evaluation plan 5.7 The communication strategy 5.8 Information on fulfilment of regulatory requirements laid down in Directive

2001/42/EC of the European Parliament and of the Council 5.9 Indicative financial plan 5.10 Rules on eligibility of expenditure 5.11 Apportionment of liabilities among the participating countries 5.12 Rules of transfer, use and monitoring of co-financing 5.13 Description of IT systems for the reporting and exchange of computerised da-

ta between the Managing Authority and the Commission 5.14 Languages

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1. INTRODUCTION The South-East Finland – Russia CBC Programme 2014–2020 has been drafted jointly by the Finnish and Russian cooperation parties. The preparatory process for the programme was commenced in the summer 2013 with establishment of the Joint Programming Com-mittee (JPC) composed of an equal number of central government and regional level rep-resentatives of both participating countries. The JPC had the overall responsibility for the preparation of the programme. The preparatory work was assisted by a joint regional task force appointed. The Joint Regional Task Force (RTF) has been dealing with the objec-tives and the content of the programme, and it represented regional level from both coun-tries. The representative of the Commission has participated in the meetings of the JPC. The preparatory bodies had several meetings and a common view about the content of the programme and the management issues was found. Public hearings and seminars about the programme were organised in the spring and autumn 2014 in all participating Finnish and Russian regions. In these events the participants and stakeholders were consulted and their needs and ideas were collected. The South-East Finland – Russia CBC programme 2014–2020 will complement the overall EU-Russia relations, focusing on the eligible border regions on both sides of the border. CBC in the European Neighbourhood from 2014 onwards builds on experience with the planning and implementation of CBC in the European Neighbourhood and Partnership In-strument (ENPI) in the period 2007-2013. CBC from 2014 is included in the European Neighbourhood Instrument (ENI) regulation covering the period 2014-2020. The current basis for cooperation is the 1994 Partnership and Co-operation Agreement (PCA). Negotiations on a new, EU-Russia Agreement were launched at the 2008 Khanty-Mansiysk summit. The new agreement should provide a more comprehensive framework for EU-Russia relations, reflecting the growth in cooperation since the early 1990s and in-clude substantive, legally binding commitments in all areas of the partnership, including political dialogue, freedom, security & justice, economic cooperation, research, education & culture, trade, investment and energy. On-going EU-Russia cooperation covers 4 policy areas – referred to as common spaces:

1. economy & environment 2. freedom, security & justice 3. external security 4. research & education, including cultural aspects.

Overall, the EU and Russia cooperate on a number of challenges of bilateral and interna-tional concern, including climate change, drug and human trafficking, organized crime, counter-terrorism, non-proliferation, the Middle East peace process, and Iran. The South-East Finland CBC Programme 2014-2020 has been drawn up for the EU part in a legal framework of the following legal documents:

Commission Implementing Regulation (EU) No 897/2014 of 18 August 2014 lays down specific provisions for the implementation of cross-border cooperation pro-

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grammes financed under Regulation (EU) No 232/2014 of the European Parliament and the Council establishing a European Neighbourhood Instrument

Regulation (EC) No 232/2014 of the European Parliament and of the Council of 11 March 2014 (ENI Regulation)

Council Regulation (EC, Euratom) No 966/2012 on the Financial Regulation appli-cable to the general budget of the European Communities

CBC Strategy/Programming document 2014-2020, with indicative programme 2014-2017

The Strategic Environmental Assessment (SEA) under the Directive 2001/42/EC of the European Parliament and of the Council of 27 June 2001 on the assessment of the effects of certain plans and programmes on the environment (SEA Directive) has been conducted simultaneously with the drafting of the Programme. In accordance with the SEA Directive and the Finland’s Act on the Environmental Impact Assessment of Plans and Programmes of the Authorities (SOVA law, Laki viranomaisten suunnitelmien ja ohjelmien ympäristövai-kutusten arvioinnista, SOVA-laki) a Participation and Assessment plan was prepared by the evaluator and sent out for comments and consultation to the Finnish environmental authorities and the respective Committees of the Leningrad Region and St. Petersburg. A group of experts has carried out an assessment of the environmental impacts of the Pro-gramme in St. Petersburg, a report of which is attached to this document. 2. DESCRIPTION AND ANALYSIS OF THE PROGRAMME AREA 2.1 Programme regions CBC is intended to benefit those regions which directly share a land or maritime border with the EU. The regions eligible to participate in the programmes are those departments or provinces directly sharing the border on both sides. Another essential characteristic is the deep-seated and long-standing historical and cultural links which have been estab-lished over the centuries across the external borders. The border regions often have a long common history. CBC has an important role to play, building on the long-standing shared heritage of contact and cooperation across the border. One lesson learned from the past is the need to focus the vast majority of the effort and funding on populations close to the border to maximise cross-border impact.

1. Core regions The South-East Finland – Russia CBC programme’s core area for the period 2014-2020 includes the regions of Kymenlaakso (FI1C4), South Karelia (FI1C5) and South Savo (FI1D1) in Finland and Leningrad Region and City of Saint Petersburg in Russia. In the programme area, Finland and Russia share approximately 200 km of land and 130 km of sea border. The South-East Finland – Russia CBC programme’s core area covers 117.538.30 km2. The total coverage is 85,900 km2 on the Russian side and 32,000 km2 on the Finnish side.

2. Adjoining regions

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Article 8.2 of the ENI Regulation states: In order to ensure the continuation of existing co-operation schemes and in other justified cases and with a view to contribute to the pro-gramme’s objectives, territorial units adjoining to the core regions may be allowed to par-ticipate in Cross-Border Cooperation. The adjoining regions include Uusimaa (FI181), Päijät-Häme (FI1C3), and North Savo (FI1D2) and the Republic of Karelia. The total coverage of the adjoining regions in Finland is 36 188 km² and in Russian side 180 500 km. These regions are not enlargements of the programme area but regions that are able to develop their activities to Russia via the core programme area, and vice versa. This means that projects initiated by partner(s) from an adjoining region should have partners from the core area both from Finland and Russia. Partners from adjoining region have to bring an expertise of know-how that is unavailable in the core area. Programme funding to partners from adjoining regions is limited to 25 % of the total funding for the programme. The activities support and benefit the development of the core area.

3. Major social, economic or cultural centres Article 8.3 of the ENI Regulation states: In duly justified cases, major social, economic or cultural centres in the Member States or in other Cross-Border Cooperation participating countries that are not adjoining to eligible territorial units may be included on condition that such participation contributes to the objectives laid down in the programming document. City of Turku was included as a major economic and cultural centre due to its long-term relation with the City of St. Petersburg. This means that projects initiated by partner(s) from an adjoining region should have partners from the core area both from Finland and Russia. Partners from adjoining region have to bring an expertise of know-how that is una-vailable in the core area. Programme funding to partners from adjoining regions is limited to 25 % of the total funding for the programme. The activities support and benefit the de-velopment of the core area.

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4. A map of the programme area The eligible programme area is shown on the following map:

Differences between the Finnish and the Russian sides of the programme area (number of population, economic structure, standard of living) make cooperation very challenging. However, the areas also have a lot in common: their geopolitical location, border, sea, his-tory, and extensive know-how, all of which together provide great perspectives and form a fruitful basis for the development of mutual cooperation. Finland is currently one of the most important partners in the external economic cooperation with the Russian Federation, especially with St. Petersburg and the Leningrad Region. 2.2 Population and population density The total population of the programme area is little bit over 7.0 million inhabitants. In terms of population density, there are high differences between the regions, where the City of Saint Petersburg is considerably more populated than other territories. The population density in Saint Petersburg is 3.390,94/km2, in Leningrad Region 20,32/km2, in Ky-menlaakso 32/km2, in South Karelia 18/km2 and in South Savo 8,1/km2. The EU average

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is 116. St. Petersburg is the fourth largest city in Europe after London, Moscow, and Paris. On the Finnish side, the core programme area has approx. 466,000 inhabitants.

Age structure Text or statistics annex coming 2.3 Economic structure

1. Main industrial sectors With their tremendous scientific, industrial, cultural, and educational potential, St. Peters-burg and the Leningrad Region are among the most dynamically developing regions in Russia. Their extremely advantageous economic and geographic locations, together with significant natural resources define the socio-economic development of the regions. On the Russian side, the service sector covers approx. 78 %, the industry 20,5 %, and farming and forestry 1,5 % of the jobs. St. Petersburg is a centre of shipbuilding, electron-ics, defence, energy and machine engineering industries. The main industries in the Len-ingrad region are the fuel, chemical and petrochemical, timber, wood working, pulp and paper, engineering and metal working, and construction material industries. The level of competition in the core industries of St. Petersburg and the Leningrad Region (with minor exceptions, such as some segments of the food processing industry) is still rather low, but the on-going restructuring operations (including reforms in the energy sec-tor and other natural monopolies, and the emergence of new markets, products, and ser-vices) create new market sectors (such as industrial services, engineering, and the manu-facture of specialised equipment), which are highly competitive from the very beginning. At the same time, new market stimuli emerge in the ‘traditional’ sectors of the economy. An-other feature of the current situation is the high level of wear and deterioration of the basic infrastructure and equipment used by enterprises that were established during the Soviet period and have not been able to succeed under the new economic conditions. This, on one hand, creates a high level of delayed demand and, on the other, may result in total loss of competitive advantages of many enterprises. On the Finnish side, the service sector covers approx. 78 %, the industry 16 % and farm-ing and forestry 5 % of the total industrial activities. The programme area on the Finnish side depends on primary production (agriculture and forest industry) more than the rest of Finland on average. Consequently, a major part of the industry in the area consists of wood-processing plants and paper mills, which are some of the largest in Europe. GDB, income and unemployment

1. Population statistics

2013

Deaths 2013

2013 100 017 22 602 398 62 -65Migration

11 700 14 400 1 613 2 205 2 068

12 400 8 800 1 107 1 577 1 214Births

Kymenlaakso South-Savo

Population in the programme

area5 131 900 1 751 000 132 252 180 771 152 518

Year St. Petersburg Leningrad region South Karelia

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2. Labour market and income In 2013 the unemployment rate on the Finnish side of the programme area was approx. 13 %, while on the Russian side, according to the official Russian statistics, the registered unemployment rate was 2,5 %. The social and economic development in the Leningrad Region and St. Petersburg will continue with excess demand over supply of workforce, while the structural and registered unemployment will remain. According to the estimate of the city Committee for Economic Development, Industrial Policy and Trade, the labour demand will increase in the coming years. At first it will concern qualified personnel in the industrial, construction, and transport sectors, but also other fields, including finance, law, information technology, education, and public health, will be affected. Despite the rather high unemployment rate in South-East Finland, the area suffers from a growing shortage of qualified personnel in the social sector and similar. Immigration and commuting across the border could be increased within the programme area. This mobility should be seen as an opportunity to increase welfare, competence, competitiveness, and cultural understand-ing in the programme area.

3. SMEs and entrepreneurship The liberalisation of the economy has led to a rapid increase in the number of small and middle-sized enterprises: their number on the Russian side of the programme area is 173. 000 (of which 161.000 in St. Petersburg and 12.000 in the Leningrad Region), and approx. 20.000 on the Finnish side (in 2012 the figure for the whole Finland was 266.290 and about one million for the whole of Russia). The Leningrad Region and St. Petersburg have been especially successful in attracting new production facilities and investments. Howev-er, in most cases this concerns big companies only. Active cooperation between the lead-ing universities and IT-companies has increased the number of innovation centres espe-cially in St. Petersburg. The Leningrad Region is second only to St. Petersburg within the North-West federal district in the number of small enterprises and people employed by them. Despite their rather large number in the Programme area, the SMEs differ in terms of their policies, business culture, and size – most of them being micro-sized enterprises, which means that they are often too small to subcontract with bigger companies. Although a number of SMEs, especially on the Finnish side, have experience in cooperation with Rus-sian companies and expertise in working in the Russian market, their knowledge of cross-border entrepreneurship and business cooperation and the opportunities they offer is still rather vague, especially on the Russian side. Preconditions for business cooperation and expertise in different fields of cross-border cooperation should be maintained and devel-oped further in order to take full advantage of existing opportunities. (Russian legislation defines small-sized companies as businesses employing 30 to 100 people (depending on their branch of economy). The law provides no definition of medium-sized companies but they are usually understood as businesses employing no more than 500 people).

2. Economic structure

Average GDP per capita €

2011

Average monthly income per capita €

2012

Unemployment rate %

2013

South Karelia Kymenlaakso South-Savo

0,7 4,3 13,9 12,8 12,4

Year Unit St. Petersburg Leningrad region

567,30 365,85 3 036,00 3 032,00 2 815,00

8 583,57 6 663,39 30 162,0 35 382,0 25 814,9

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The City of St. Petersburg is a major trade gateway, financial and industrial center of Rus-sia specialising in oil and gas trade, shipbuilding yards, aerospace industry, radio and electronics, software and computers; machine building, heavy machinery and transport, including tanks and other military equipment, mining, instrument manufacture, ferrous and nonferrous metallurgy (production of aluminium alloys), chemicals, pharmaceuticals, medi-cal equipment, publishing and printing, food and catering, wholesale and retail, textile and apparel industries, and many other businesses. The most important competitive advantages of St. Petersburg and the Leningrad Region are their location in close proximity to the European and Russian markets, position as the centre of international trade for other regions in Russia, plentiful natural resources (primari-ly timber), infrastructure that is among the best available in Russia, industrial traditions, low-cost labour force, and advanced level of education and professional training. The in-herent system of R&D and innovation has not so far been a competitiveness factor, but could, if the planned activities are carried out, become an important source of sustainable advantages owing to the existing resources and traditions in the regions. The development of the programme area could be facilitated by dynamic processes that may strengthen the above-mentioned advantages. The innovation system in Russia has weaknesses such as insufficient funding, low effi-ciency in many types of operations, excessive government regulation, low commercialisa-tion of research and development results, as well as underdeveloped bridging institutions and public and private partnerships. There is, however, clear evidence of substantial sci-entific and technical potential, including the vast amount of knowledge and diverse skills accumulated in St. Petersburg, the high concentration of innovation infrastructure in the city, and the willingness to cooperate internationally. The growing number of international investment projects indicates a gradual improvement in the investment climate in the whole of North-West Russia. This region holds substantial prospective for advancing inter-national cooperation in many areas, including science and technology. North-West Russia is the principal focus of Finnish investors receiving about 80 % of all Finnish investments in Russia. The position of the Programme area as a trade venue between Russia and Europe could lead to increased number of investments, more advanced processing of various products locally, and improved services. Investments in ports, terminals, oil pipelines, and mobile telecommunication networks provide proof of this trend. Investments are also promoting the processing of transported goods, which the recent increase in logistics services demonstrates. Another important factor is the complementary character of the economic and industrial structures on the Finnish and the Russian side - the first one need what the other one is well-equipped to offer. Finnish companies need, inter alia, the raw materials of North-West Russia for their own consumption and further processing. Russian companies need new technologies and an access to marketing channels. In the future, it is foreseeable that many activities will be relocated in new locations inside the region. There is a demand in Finland for shifting processing operations to lower cost locations that the two Russian re-gions could well accommodate. A problem for many companies in Russia is the lack of subcontractors. Russian companies have also started to outsource their operations.

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In international comparison, a realistic opportunity for Finnish SMEs would be to settle in St. Petersburg or the Leningrad Region. The reasons are simple: 1) The close proximity and familiarity with each other’s conditions of South-East Finland and the two Russian re-gions allow for the better management of direct investments and keeping of costs at a rea-sonable level. 2) The same clusters are important for both the Finnish and the Russian regions, but their products complement each other, which offer business opportunities. 3) Investments by large Finnish companies are directed to St. Petersburg and the Leningrad Region in particular, and these companies trust the subcontractors they have already found and tried. 4) In addition, the difference in labour costs at the Finnish-Russian border is one of the greatest in the world. It would be profitable for many Finnish companies to subcontract some of their operations, such as manufacture of technical products, to Rus-sia. This would enhance the competitiveness of their products in the world market and in-crease market shares. 2.4 Education St. Petersburg, the Leningrad Region, and South-East Finland have great research, scien-tific, expert, and know-how potential. Higher education organisations in St. Petersburg are clearly differentiated from those in any other city in the North-West Russia. St. Petersburg is the indisputable leader of the region in higher education. 18–20 % of Russian research is concentrated in St. Petersburg. In the Leningrad Region, various cities boast remarkable education and research institutions. Active cooperation between the leading universities and IT-companies has increased the number of modern educational programmes.

per inhabitant - Text or statistics annex coming… St. Petersburg is a major Russian centre of science and education, accumulating more than 10% of its scientific capacity. It hosts more than 320 science and research organiza-tions, including more than 65 research institutions of the Russian Academy of Sciences and other state academies. There are more than 250 state institutions, involved in re-search and development and 10 state research centers. More than 186thousand special-ists work in scientific and higher educational institutions, including 8 thousand Doctors of Sciences and 28 thousand Candidates of Sciences. Heading the list is St. Petersburg State University, founded in 1724 as the University of St. Petersburg. No less renowned and nearly as old are the Academy of Arts (1757), the Institute of Mines (1773), and the Military Medical Academy (1798). There are also 693 public educational institutions, bring-ing together 389 thousand children. A focus for research is the library of the Russian Academy of Sciences (from 1925 to 1991 the Academy of Sciences of the U.S.S.R.), which remained in the city when the academy’s headquarters moved back to Moscow after the Revolution. The research establishments of the Academy of Sciences in the city include the Pulkovo Observatory, along with the Bo-

3. Education and research

2010

Universities and institutions 2014

2014

South Karelia Kymenlaakso South-Savo

% of population with secondary

or higher education

% of

populatio

Year Unit St. Petersburg Leningrad region

89,7 77,8 64 64,9 63,3

Number of educational and

cultural institutions

82 2 6 4 15

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Number of research and

development organizations 325 12 10 4

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tanical, Geological, Forestry, and Zoological institutes, among many others. The city is the principal centre in Russia for Arctic research, notably at the Arctic and Antarctic Research Institute and the Institute for the Study of Permafrost. All university units, higher education institutions, and research centres in South-East Fin-land have wide experience in international cooperation. Lappeenranta University of Tech-nology, LUT, carries out joint research projects in sectors such as energy and environmen-tal technology and business administration. LUT’s Northern Dimension Research Centre, Nordi, coordinates Russia related research at the university. In the adjacent region of Poh-jois-Savo, University of Kuopio has faculties of Pharmacy, Business and Information Technology, Natural and Environmental Sciences, Medicine, Social Sciences and Auxiliary Institutes. There are eight universities of applied sciences (polytechnics) operating on the Finnish side of the programme area (including the adjacent regions), and over 20 universi-ty departments, institutes, and research centres. The main areas of research include bio-energy, environmental technology, maritime, logistics and transport, food chains, transla-tion technology, design, tourism and Russian affairs. Cross-border cooperation between the universities and other educational and R&D institutions within the programme area has already been carried out in several sectors. Measures should be taken to strengthen the existing networks, involve new parties in the activities, create new innovative joint research groups, connect R&D with business life in order to commercialize the innovations and re-sults of R&D. Positive attitudes towards entrepreneurship should also be enhanced through education and networks. Institutions of higher education should activate their cooperation both as an opportunity to secure additional investments (received in the form of grants, scholarships, etc.), and a source of maintaining competitive strength (through knowledge transfer, exchange of spe-cialists, etc.). Lower level contacts can also be found – on the level of departments, labora-tories and groups of specialists. The efficiency of international contacts between schools in the programme area is, on the whole, rather low, which can be attributed to the poor com-mand of foreign languages, different motivations, and insufficient economic independence of schools. The implementation of the previous CBC programmes has lead to the creation of an effective network of Finnish centres of expertise, which is well-prepared to face the IT related problems of the 21st century. These centres continuously develop various inter-national projects, which have great importance for cross-border cooperation. International experience in the fields of education and innovations is a significant potential for the future development of these sectors. 2.5 Transport networks and border crossing infrastructure There are four international border crossing points are located in the programme area be-tween Finland and Russia. In 2013, the total of crossings amounted to 6,8 million (of which over 80% were Russian citizens).

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The infrastructure and new border crossing facilities have been built at the border crossing points and nearby border roads on both sides in recent years. UUTTA: For example Imatra-Svetogorsk, as one the most important border crossing points, was a target of many improvements. New customs and border control buildings, extend to transport areas and adequate equipment has been implemented during ENPI Programme. Also Nuijamaa-Brusnitshnoje, the second busiest border crossing point, was a target of the development action. Onko vielä paikkaansapitävää? The existing infrastructure on both sides of the bor-der is used at their maximum capacity and various administrative problems at the border crossing points are still constraining the flow of goods and people between Finland and Russia. Although some administrative simplification will be introduced on the Russian side by new legislation, the programme could address some of the issues related to the custom procedures and border crossing. In the coming years, attention should be paid to the sim-plification of custom procedures in order to speed up the border crossing formalities in goods traffic at the EU-Russia border e.g., with help of IT systems and EDI technology. There is only one temporary border crossing point left (Parikkala-Syväoro with 10,185 crossings in 2013. Uukuniemi-Ristilahti was closed in 2010) connecting South-East Fin-land to the Republic of Karelia. Parikkala-Syväoro is mainly used for the transportation of timber from Russia. Assistance in developing the Parikkala-Syväoro border crossing point could be considered in the coming years. Traffic from North America, Western Europe, North-West Russia, Moscow, and the Far East passes through South-East Finland. All traffic between Eastern and Southern Finland and most of the international rail transport between Finland and Russia, passenger and goods, go through the programme area. Road traffic between South-East Finland and Russia is also continuously growing.

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The main road transport link is the highway E18 that passes to St. Petersburg and Mos-cow via Vaalimaa - Torfjanovka border crossing point. E18 is part of the Nordic triangle railway/road axis within the trans-European transport network and the Corridor IX and compasses the road/rail transport route between Helsinki, St. Petersburg, and Moscow. Road 13 is the main route from the northern and western parts of the Programme Area to the border crossing points in South-East Finland. E18 has been upgraded, and also the remaining section from Hamina to the Russian bor-der will be completed by 2015. There is a need to construct a new lane between the Finn-ish and Russian customs in Vaalimaa - Torfjanovka. During 2007-2012, main road 6 was upgraded between Lappeenranta and Imatra to a four-lane, so-called mixed traffic road. Road 6 from leads from Helsinki to the border crossing points Nuijamaa (Lappeenranta)-Saimensky and Pelkola (Imatra)-Svetogorsk. Transit traffic from Russia reaches Finland by rail, while the fast-growing container traffic and transportation of cars through the Finnish sea ports to Russia from the west is mainly conducted as road transport. Consequently, the busiest border control points are in the programme area. With the growth of the wood processing industry, Kotka and Hamina have become the most important export ports in Finland (see Annex 1, map 3). St. Peters-burg and the Leningrad Region have access to sea routes through the Baltic Sea, through which a large and increasing proportion of Russian foreign trade is forwarded. The role of the two regions as Russia’s main trade gateway will undoubtedly grow in significance also owing to their advantageous location inside Russia. St. Petersburg and the Leningrad Region constitute a node of transport networks with straight-through highways, a railroad and, to a degree, canals that facilitate connections to Moscow, the Murmansk Region, Finland, the Baltic States, and the Southern parts of the Russian Federation. The Port of St. Petersburg has tripled its capacity during the last dec-ade, while several new petroleum and coal ports are being built in the Leningrad Region (Primorsk, Vysotsk, Ust-Luga) with participation of the leading Russian oil companies. St. Petersburg and the Leningrad Region are being developed as an international transport centre of Russia. (see map 2 and 3 in Annex 1). Cooperation between parties that operate in the sea ports within the programme area should be enhanced in order to better take ad-vantage of the existing infrastructure and develop cooperation in the field of transport and logistic services.

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Saint Petersburg is part of the important transport corridor linking Scandinavia to Russia and Eastern Europe. The city is a node of the international European routes E18 towards Helsinki, E20 towards Tallinn, E95 towards Pskov, Kiev and Odessa and E105 towards Petrozavodsk, Murmansk and Kirkenes (north) and towards Moscow and Kharkiv (south). Since December 12, 2010 Karelian Trains, a joint venture between Russian Railways and VR (Finnish Railways), has been running Pendolino operated high-speed services be-tween Saint Petersburg's Finlyandsky and Helsinki's Central railway stations. These ser-vices are branded as 'Allegro' trains. 2.6 The environment The programme area contains vast forests, most of which are managed, large expanses of water, and islands. In addition to timber resources, the area also features stone, ore, and mineral deposits. Four national parks are located on the Finnish side of the programme area. The network of protected areas of the Leningrad Region covers approx. 6 % of its land area; five territories have the status of Ramsar sites. St. Petersburg has two nature reserves and four nature monuments, which occupies 200 hectares – 1.5 % of the city’s area. The most important objective of nature conservation is to preserve the biodiversity and natural heritage and, as far as possible, the unique landscape of the Karelian Isthmus. Increasing transportation and harbour operations are a typical example of the environmen-tal load and risks. The diversified and clean environment also plays an important role in the tourism industry in the region. The largest nature protection areas are shown in Annex 1, map 4. A growth in the number and extent of wild fires, especially in the Leningrad Region close to the border, has been observed during the last years. In most of the cases, they are caused by human activities. Wild fires can damage the environment, resulting in the destruction of fauna and flora and similar. In general, the environmental situation is much better on the Finnish side, and the management and effectiveness of the clean production technologies are much more advanced. One of the most significant environmental problems on the Russian side is the non-treatment of waste waters in St. Petersburg. The northern collector and the water treat-ment facilities that are under construction will improve the situation in St Petersburg. Many towns in the Leningrad Region also have problems with water supply and sewerage sys-tems. They often discharge untreated waste water into the water system in addition to which water leaks into the sewer network making it difficult to organise waste water treat-ment. The growing agricultural industry in the Leningrad Region also causes environmen-tal problems. Another large-scale problem is the air pollution, which concerns the sur-roundings of the main road transport corridors in the programme area and, like most large cities in the world, especially St. Petersburg. Approx. 80 % of the air pollution is caused by road traffic and 20 % by other factors. To decrease the amount of exhaust gasses, the city is building road interchanges, developing traffic management systems, and supporting the development of public transport. In addition to these, industrial companies, which form the basis of the economy in St. Pe-tersburg and the Leningrad Region, produce a great amount of various industrial wastes that needs to be managed. Additionally, according to the authorities of the Leningrad Re-gion, approx. 1.7 million tonnes of solid domestic waste is accumulated every year in the

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region. The data provided by the St. Petersburg Statistics Committee indicates that 500 of the approx. 9 000 enterprises in the region reported annual production of approx. 3.7 mil-lion tons of industrial waste, which often include hazardous substances. Another problem is the lack of modern solid waste treatment and recycling facilities as well as pollution and nutrient flow originating mostly from agriculture into the water system. The programme has supported joint activities of various environmental authorities, organisations, and enter-prises to develop modern environmentally friendly systems for the management, technolo-gies, and recycling of industrial, household and toxic waste in St. Petersburg and the Len-ingrad Region. A lot of expertise and know-how in environmental issues has been trans-ferred from Finland to the Russian partners. Sustainable regional development, exploiting municipal and industrial residues, improvement of waste oil management and developing a modern ecological system for waste management and recycling system – these are few examples of the cooperation targets of the previous Programme. Over the last decade, maritime transport in the Gulf of Finland has changed significantly. Russia is now the second largest oil producer in the world. New oil ports have been opened – Primorsk in the Leningrad Region being now the largest oil transportation port in Russia – and more have been planned on the Russian coast of the Baltic Sea. On the Finnish side in Porvoo there is the largest oil port in Finland and also a large oil refinery. As traffic volumes in the Gulf of Finland continue to rise, the risk of accidents is also in-creasing accordingly. A growing concern has been expressed over accidental oil spills and various negative impacts caused by maritime transport in the Gulf of Finland, which is a sensitive brackish water area with a unique ecosystem. The EU Marine Strategy Directive obliges the Member states to improve the ecological status of the marine environment. In this respect, the previous Programme has enhanced cooperation and exchange of knowledge as well as preparedness in case of disasters at regional and local levels in ac-cordance with the HELCOM recommendations. Finland and Russia have for example en-hanced cooperation regarding risk management to improve maritime safety and produced tools for marine spatial planning and management. Attitudes and values towards the environment can be changed by encouraging participa-tion in the initiation of environmental improvements. The new Programme can also contin-ue providing more opportunities to improve water protection, conserve natural resources for future generations through efficient use of land, less wasteful use of non-renewable natural resources, their substitution by renewable resources wherever possible, and the maintenance of biological diversity. 2.7 Energy The fuel and energy sector is one of the main industries in the Leningrad Region and also provides an important supply for the whole North-West Russia. St. Petersburg is one of the largest consumers of fuel energy resources in Russia, due to its high population and in-dustry. The chemical wood processing industry in South-East Finland is a major producer and consumer of electricity and thermal energy. Industrial enterprises account for approx. 80 % of total power consumption. Approx. 30 % of the electricity generated in the region is hydroelectric. Natural gas and industrial waste both account for approx. 50 % of the indus-trial energy consumption in the region. Finland imports electricity and natural gas from Russia via power lines and pipelines that run trough the Karelian Isthmus to Lappeenranta. The use of renewable energy resources (bio-fuel, low grade wood) for energy production is a topical issue in the cross-border cooperation from economic and ecological points of

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view. The participating regions can participate in ensuring the sustainable development by promoting the development of renewable energy sources and the efficient management of energy on their territories. Experience sharing and practical cooperation, e.g. on energy efficiency and bio-energy can be intensified by the Programme’s support. 2.8 Telecommunications Cellular communication, Internet services, cable television, and telephone connections based on radio access has been under dynamic development on the Russian side of the programme area. These days Internet access is available in the whole Programme area, but there might be a lower level of penetration in the Leningrad Region than in Saint Pe-tersburg and South-East Finland. Russia took over Germany as the market with the highest number of unique visitors online in Europe, says comScore in its September 2011 Internet usage study. The digital statis-tics company counted as many as 50.81 million users aged 15 and older in Russia, com-pared to 50.14 million in Germany, 42.35 in France and 37.2 in the UK. According to TNS Gallup, in January 2011, in Russian cities of 100,000 inhabitants or more, an average of 65% of Russian Internet users twelve years old or older used broad-band Internet connections from home, with 70% in Moscow, 71% in St. Petersburg and 81% in Yekaterinburg. In 2008 the Finnish government made a decision on the national broad band project. Aim of this project is to have 99% of Finnish citizens Valtakunnallisen laajakaistahankkeen ta-voitteena on, että vuoden 2015 loppuun mennessä yli 99 % väestöstä, vakinaiset asunnot sekä yritysten ja julkishallinnon organisaatioiden vakinaiset toimipaikat ovat enintään kah-den kilometrin etäisyydellä nopeudella 100 Mbit/s toimivan yhteyden mahdollistavasta va-lokuitu- tai kaapeliverkosta. Kuluttajat hankkivat tilaajayhteyden omalla kustannuksellaan valitsemaltaan teleyritykseltä. Many large international IT companies have taken interest in Finland. For example Google, an American multinational corporation specializing in Internet-related services and product has established an office in Hamina, Kymenlaakso. Also Russian Yandex has shown interest towards Finland, but the project is on hold at the moment. 2.9 Health and social problems Despite the achievements in the economic development in the programme area, some serious health threats remain or have become even more acute. As stated earlier, the de-mographic development is still negative due to the low birth rate and rising mortality rate in the region. On the Russian side, tuberculosis continues to be a serious challenge – espe-cially in prisons. The number of HIV infections combined with drug abuse is increasing. Hepatitis and sexually transmitted infections (STIs) are also on the increase. Lifestyle re-lated diseases, such as those caused by tobacco and alcohol, are of increasing concern. Furthermore, alcohol and narcotic drugs and other toxic substances are closely linked with social and family problems, risks of social exclusion, and homelessness. Health and social policy challenges are more diversified and difficult than previously. They include the in-creased alcohol consumption, drug abuse, and mental health problems among both chil-dren and adults.

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These problems illustrate the complexity of most health problems and the need for coordi-nated solutions. This is especially evident in case of communicable diseases, substance misuse, and the health of indigenous people. Health problems are often associated with economic problems, family violence, and stigmatisation of the whole family. Children and young people are the first victims in these situations. When planning actions under the Programme, consideration will be given to other international and bilateral initiatives in the health care and social welfare sectors in the programme area. 3. PROGRAMME STRATEGY The programming document 2014-2020 establishes the strategic objectives to be pursued by cross-border cooperation and the thematic objectives of that cooperation. The overall objective is a progress towards an area of shared prosperity and good neighbourliness between EU Member States and their neighbours. Based on evaluation under CBC there are three overarching strategic objectives:

A. Promote economic and social development in regions on both sides of common borders,

B. Address common challenges in environment, public health, safety and security and C. Promotion of better conditions and modalities for ensuring the mobility of persons,

goods and capital.

Each programme must contribute to at least one of the strategic objectives. In order to in-crease the impact and efficiency of programmes, within the framework of objectives set out above, each programme will focus on a maximum of four thematic objectives selected from a list. The promotion of local cross-border “people-to-people” actions will be an important modali-ty to be deployed in support of any of the objectives. This could include support for en-hanced cooperation among local and regional authorities, NGOs and other civil society groups, universities and schools, chambers of commerce etc. The basis of the joint cross-border development strategy of the South-East Finland – Rus-sia CBC Programme is the location of the programme area and the long-established co-operation between its regions. The strategy responds to the developmental needs and op-portunities that are identified. The Programme area is a meeting place or a gateway between the European Union and Russia, between east and west. Even though 80 % of the border crossings between Fin-land and Russia are effected via the border crossing points in South-East Finland the aim of the programme is to increase the importance of the area and become as the most effi-cient, prosperous and interesting hub in Northern Europe and generate growth and well-being in the programme area. The target can be reached with good transport corridors, smooth and modern border crossing points, knowledge based economy, nature and cultural events attempting tourists.

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3.1 Description of the priorities (and measures) chosen in line with the overall objec-tives defined in the CBC strategy The South-East Finland – Russia CBC 2014-2020 Programme has chosen four themes:

1. Business and SME development (Strategic objective A)

2. Support to education, research, technological development and innovation (Strate-gic objective A)

3. Environmental protection, and climate change mitigation and adaptation (Strategic

objective B)

4. Promotion of border management and border security (Strategic objective C) 3.2 Justification for the choice of priorities and measures The selection of themes is based on the region’s characteristics and the identified needs and challenges that may potentially be solved via cross-border co-operation. The themes have been translated into the Programme priorities:

Lively, active and competitive economy (Priority 1), Measures within this Priority:

SME and business development, incl. labour market development

trade and investment promotion

culture and tourism industry

rural development

transport and logistics

research and education

innovations and technology

energy cooperation Objective of promoting sustainable economic development in the programme area include:

supporting the most potential business cooperation activities in order to yield con-crete and sustainable results from the cooperation, e.g. subcontracting, production cooperation, joining forces in the marketing of products and services, transfer of technologies and innovations, etc.;

supporting the foundation of science parks (industrial / business / technological) and innovation centres through the creation of preconditions for further large-scale in-vestments in production and, where appropriate, trough small-scale infrastructure projects;

creating mechanisms for simplification of international trade, e.g. developing envi-ronmentally sound transportation and logistic services and networks, cargo termi-

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nals, logistic centres; increasing the speed and transparency of the goods flow; ac-tions in real-time mode; and improving maritime transportation system where ap-propriate through small scale infrastructure projects;

promoting energy cooperation, e.g. encouraging R&D, use of new solutions and training in renewable energy sources and energy efficiency, use of bio-fuels, and transfer of (energy saving, environmentally sound, and best available) technologies and know-how, and sustainable management practices;

developing mutual integration between Russian and Finnish industrial enterprises and the integration of Russian companies into European business community with jointly chosen prior branches;

promoting mutual brand of the region on the internal and external markets to pro-mote the attractiveness of the region in terms of investment;

creating automatic computer-based system for processing data concerning goods flows (transporting companies and terminals);

promoting R&D, education, and training in business areas of mutual interest;

supporting the use of new ICT by businesses and innovation activities at high schools, R&D institutions, industrial enterprises, and similar;

developing intensive and environmentally sound tourist industry and increasing tourist attractiveness of the region by improving the quality of services and coopera-tion of tourist infrastructure companies, developing new products, promoting eco-tourism etc.;

promoting entrepreneurship and business start-up in jointly chosen prior branches, e.g. in knowledge based and innovation driven sectors, and the exchange on re-gional business support structures that aim to assist SMEs.

Innovative, skilled and well-educated area (Priority 2),

Measures within this Priority:

Text….

Objective of promoting education as well as R&D in the programme area include:

Text….

Attractive, well-being environment and region (Priority 3) and Measures within this Priority:

Text….

Objective of promoting environmental awareness in the programme area include:

promoting rational use and research in the field of natural resources and the imple-mentation of sustainable systems of waste and water management (prevention, re-cycling, and recovery of waste), reduction of emissions, and pollution;

promoting nature protection and conservation of the marine environment, and pre-serving biodiversity, including the establishment of special ecological zones;

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promoting research, planning, and education in the fields of the environment, re-source efficiency, eco-efficiency, environmental audit schemes, and sustainable de-velopment;

supporting public awareness of environmental safety, energy and eco-efficiency, and sustainable development;

improving municipal systems of waste management, incl. the development of a network of companies specialising in waste management and processing;

developing cooperation between industrial enterprises, SMEs, and R&D institutions in using environmentally safe and eco-efficient technologies;

promoting the use of renewable energy sources (bio-fuel, landfill gas, hydro energy, etc.) and the substitution of non-renewable resources with renewable ones

promoting cross-border cooperation aiming at reducing the environmental load and risks related to increasing traffic, eutrophication, hazardous substances, and oil spills.

Well-connected region (Priority 4).

Measures within this Priority:

Text…

Objective of promoting mobility? in the programme area include:

improving small-scale infrastructure projects at border crossing points and their vi-cinity where appropriate;

improving equipment at border crossing points as necessary;

promoting training and networking between border authorities;

promoting cooperation of customs and control authorities assuring efficient and se-cure controls and smooth border crossings;

launching joint rescue actions such as accident risk management and emergency preparedness and training of rescue personnel, exchange of know-how and infor-mation, and improving the maritime search equipment as necessary.

Tehdäänkö oma kohtansa? The choice of theme “business and SME development” aims to develop and promote the knowledge based innovative economy, to support the creation of new companies and to enable small and medium-sized enterprises’ (SMEs) entrance to the international markets.

1. Socioeconomic and environmental situation Both sides have many strengths and opportunities when it comes to socioeconomic de-velopment, but during recent years the weak economic development around the world has also affected the Programme area. St. Petersburg is a region of Russia with an above-average level of economic develop-ment. Comparative competitive advantages of St. Petersburg are a large domestic mar-ket, active position in foreign markets, transport infrastructure, the development of edu-cation, information and communication, innovation and technology, the large tourist re-sources and good residential provision. St. Petersburg takes a position above the aver-age according to the indicators: the quality of life, the quality and

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efficiency of infrastructure and the level of innovation. But in terms of doing business (as well as Russia as a whole) St. Petersburg is positioned at the bottom of the list, and even among Russian cities St. Petersburg is lagging behind. The shortage of labour, (clearly felt from the beginning of 2000s), has become in St. Petersburg a serious limit of economic growth. The shortage of labour resources is defined by serious imbalance in the labour market - the inconsistency between qualitative and quantitative parameters of the labour supply and labour demand. There occurred a serious weakening of links between the labour market and vocational training. The most acute shortages are in in-dustry, construction, transport, trade, housing and utilities, and in some social sectors. Labour shortages are covered in St. Petersburg by immigration of workers from other regions of Russia, first of all, from a nearby Leningrad region, as well as from foreign countries. On the other hand St.-Petersburg saved considerable industrial potential thanks to leadership in production on a number of branches – energomashinery, ship-building, instruments production with the high value added. Enormous industrial enter-prises survived through the transitional period of 25 years (1989–2013). The Leningrad region has a population of 1.75 million people, of which 65.2% are urban dwellers and 34.8% live in rural areas. The region borders on Finland and Estonia and has administrative borders with five other constituent regions of the Russian Federation: the Novgorod, Pskov and Vologda regions, the Republic of Karelia and the City of St. Petersburg. Leningrad region is becoming one of the most important automotive indus-try centres in Russia and there are more than 20 producers of the automotive compo-nents. The development of the industrial cluster for automotive assembly and compo-nents production is among the priority areas of economic development outlined in the strategy of socio-economic development of Leningrad region. There are also some ob-jective advantages in the region: the availability of Russian and European sales markets and highly developed transport and logistics infrastructure. All these advantages allow businesses to operate successfully in Leningrad region as well as to increase the de-gree of localization of the automakers. Moreover, the Leningrad Region is rich in various natural resources. The region has major reserves of: bauxite, clay, phosphorite, shale, granite, limestone, sand and peat. New types of feedstock have been discovered in the region, including magnetite ore of tin-silver and uranium mineralisation, ornamental stones, natural gas and bitumen. The region is also among the leaders in north-western Russia in timber cutting, processing and export. These factors support the Leningrad Region's development as a highly in-dustrialised region where all types of production and transportation are represented. South East Finland lives strongly from industry. The renewing and building competitive-ness of the forest industry is very important to the area. Structural changes have taken thousands of jobs during past years, but also new ones have emerged in trade and ser-vice sector. Also tourism industry is growing in high speed. While Kymenlaakso and South Karelia are known as a home for large forest industry factories, South Savo is a home for many, mainly small and medium size entrepreneurships. As a border region, the neighbor Russia has a large influence to our business and industry. Due to resent economic development and decline in the ruble exchange rate trade and service sectors and of course travelling have lost jobs in the area. According to the statistics of 2011 the GDP of Kymenlaakso and South Savo are bit lower than the average in whole Finland. On the other hand South Karelia is ….

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Aging of the population St. Petersburg ranks as one of Russia’s most polluted cities. Results of the first inde-pendent environmental ratings of Russian cities conducted in 2014 revealed St. Peters-burg – Russia’s window on Europe – to be in 85th place among cities studied in this no-toriously polluted country, making it one of the more polluted cities on the planet. St. Pe-tersburg fell to the bottom of the group because of its high levels of air pollution and its poor abilities to maintain fragile ecosystems. As mentioned before, big issue in St. Petersburg is the non-treatment of waste waters. Many towns in Leningrad region also have problems with water supply and sewerage systems. 2. Environmental sustainability

Text…

Especially South Karelia is profiling as a pioneer renewable energy and green solutions.

3.3 Objectively verifiable indicators, related target values and expected results All programmes must have chosen some of the common indicators introduced by Com-mission, this requirement is with consistent with approaches in ETC and IP. Actions not measurable by output indicators in the common list will require programme specific output indicators to be developed. All indicators assumes implicitly that all actions undertaken by the programme do have specific cross border value-added character or dimension, even if this is not explicitly re-flected in the wording and/or definition of a particular individual indicator. 3.4 Risk analysis 3.5 Cross-cutting issues Alla olevien yhdistäminen? Tourism In all participating regions, the authorities have acknowledged the importance of tourism for the development of the regional economy. With 13 %, Russia was (before Sweden and Germany) the largest country of origin of foreign tourists visiting Finland in 2006. Due to its location, South-East Finland benefits from transit travel from Russia to other parts of Fin-land and other countries. In 2005, one third of Russian tourists visited Lappeenranta dur-ing their trip, with Kotka and Hamina also ranking among the most visited destinations. A large proportion of the visits are one day shopping trips. Russian tourists visiting South Savo usually come for a vacation. Therefore, Russian tourists might be more important for

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the local retail and entertainment industry in Kymenlaakso and South Karelia, and for the hotel and accommodation businesses in South Savo. The most important development in tourism business in St. Petersburg and the Leningrad region in the past decade has been the commercialisation of tourism services. Domestic tourism has been developing rapidly. Although tourism represents only a small proportion of the economy of the two Russian regions as a whole, it can become one of the genera-tors of growth for the regional economies. The level of incoming tourism has in the two Russian regions and St. Petersburg in particular been growing during the past years. Saint Petersburg has significant historical and cultural heritage and is thus considered a highly attractive tourist destination. Saint Petersburg is inscribed on the UNESCO World Heritage list as an area with 36 historical architectural complexes and around 4000 out-standing individual monuments of architecture, history and culture. The city has 221 mu-seums, 2000 libraries, more than 80 theatres, 100 concert organizations, 45 galleries and exhibition halls, 62 cinemas and around 80 other cultural establishments. Every year the city hosts around 100 festivals and various competitions of art and culture, including more than 50 international ones. Culture St. Petersburg is known as the cultural centre of Russia, featuring the State Hermitage Museum, the State Russian Museum, and Marinsky Theatre, to mention but a few. The cultural supply is also rich in South-East Finland: the most significant and traditional annu-al cultural festival being the Savonlinna Opera Festival. In addition to these, the area fea-tures various museums, arts exhibitions, historical castles, and many smaller cultural points of interest in various cities and municipalities on both sides of the border, of which only the old city of Vyborg with its rich traditions will be mentioned here. The Finnish and Russian cultural institutions and organisations have existing cooperation connections. The cultural supply is the backbone of the tourism industry in the entire programme area. Finland and Russia as well as the programme area including the adjacent regions share a long history. During the second half of the 19th and in the beginning of the 20th centuries, a lot of cultural contacts existed between the countries involving people from both sides. Our shared history is much more about further enhancing the successful cooperation and mutual benefits that derive from our cultural cooperation and influence on each other. In-novative ways to make this cultural heritage more visible and accessible provides the ba-sis for further exploitation of cultural resources for educational purposes, research, and tourism. 3.6 Coherence with other national and regional strategies + other union financed programmes Baltic Sea Strategy The EU Strategy for the Baltic Sea Region is the first comprehensive EU strategy to target a macro-region. The eight EU countries that make up the Baltic Sea Region (Sweden, Denmark, Estonia, Finland, Germany, Latvia, Lithuania and Poland) face several common challenges which are reflected in the jointly-agreed Action Plan for the Strategy. It includes a number of priority areas to save the sea, connect the region and increase prosperity. The Strategy helps to mobilise all relevant EU funding and policies and coordinate the ac-

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tions of the European Union, EU countries, regions, pan-Baltic organisations, financing institutions and non-governmental bodies to promote a more balanced development of the Baltic Sea Region. So far has achieved improved cooperation between regions and other partners and a greater involvement of Russian partners in areas like environmental protec-tion, water quality and innovation. Strategy of social and economic development of the North-West Federal District of Russia The strategy embraces all spheres of life in the district. The geographic location of the North-West Russia predetermines its active participation in securing economic links of Russia with the European Union. Being an internal instrument of the Russian Federation, the Strategy has an impact on the participation of Russian regions also in Russia- EU cross-border cooperation (CBC) programmes. According to the action plan of the strategy there are four main objectives:

I. Create conditions for effective economic development II. Remove transport, energy, information, telecommunication and other infrastructure

restrictions III. Social development IV. Solve environmental problems

Arctic Strategy Finland’s new Strategy for the Arctic Region defines a number of objectives for Finland’s Arctic policy. The strategy addresses local residents, education, research, the economy, infrastructure, the environment, stability and international cooperation in the Arctic. Underlying the review of Finland’s Strategy for the Arctic Region is the increased signifi-cance of the region and a growing perception of the whole of Finland as an Arctic country. Finland possesses diversified Arctic expertise and it is very much in its interests to be in-volved in the development of the region. The new strategy is a reflection of the drive to pursue these ambitions. The new strategy addresses a wide range of issues. It examines the possibilities for bol-stering Finland’s position regarding the Arctic region; the creation of new business oppor-tunities; the Arctic environment and the region’s security and stability; international coop-eration; and Arctic expertise in the widest sense of the term. Inherent in the perspectives created by the new strategy are the four pillars of policy out-lined by the Government: an Arctic country, Arctic expertise, Sustainable development and environmental considerations and International cooperation. Together, these elements define Finland’s role in the Arctic region. It is Finland’s objective to promote growth and actions to enhance competitiveness in the region with due regard to the local environment. Northern Dimension The Northern Dimension is a joint policy between EU, Russia, Norway and Iceland. The Northern Dimension Policy was initiated in 1999 and renewed in 2006. The policy aims at providing a framework to:

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promote dialogue and concrete cooperation

strengthen stability, well-being and intensified economic cooperation

promote economic integration, competitiveness and sustainable development in Northern Europe.

The policy covers a broad geographic area, from the European Arctic and Sub-Arctic to the southern shores of the Baltic Sea, countries in the vicinity and from North-West Russia in the east, to Iceland and Greenland in the west. The renewed Northern Dimension policy was launched at the Helsinki Summit in Novem-ber 2006, which adopted a Northern Dimension Political Declaration and Northern Dimen-sion Policy Framework Document. The renewed policy introduces a link between the Northern Dimension and the EU-Russia common spaces. Practical cooperation takes place within the Northern Dimension Partnerships. To facilitate Northern Dimension project implementation, four Partnerships have been established to deal with the following themat-ic issues:

environment (NDEP)

public health and social well-being (NDPHS)

transport and logistics (NDPTL)

culture (NDPC). The Northern Dimension framework is an important part of the overall Baltic Sea Region cooperation and as a platform for developing cross-border cooperation with non EU Mem-ber States, first and foremost Russia, complementing the EU Strategy for the Baltic Sea Region. It would provide a platform for concrete practical results, real programmes and visible improvement of regional prosperity. Karelia CBC Programme and Kolarctic CBC Programme Close cooperation with Karelia CBC and Kolarctic CBC programmes is essential while preparation of the programmes, as well as during the programme implementation phase. The same Commission Implementing Regulation (CBC IR) applies to all ENI CBC pro-grammes. Accordingly, the MA of the Kolarctic CBC, Karelia CBC and South-East Finland – Russia CBC programmes are located in Regional Councils in Finland, which promotes synergies in harmonization of administrational procedures and the programmes will devel-op and use a common management and monitoring system. Karelia ENI CBC Programme area covers regions of Kainuu, North Karelia and Oulu in Finland and the Republic of Karelia in Russia. The key objective of the programme is to… (To be completed) The area covered by the Kolarctic CBC Programme comprises Lapland in Finland, Norrbotten in Sweden, Finnmark, Troms and Nordland in Norway and Murmansk Oblast, Archangelsk Oblast and Nenets Autonomous District in Russia. Adjoining regions in Kolarctic CBC Programme are Northern Ostrobothnia in Finland, Väs-terbotten in Sweden and Republic of Karelia and Republic of Komi in Russia.

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City of Saint Petersburg in Russia is selected as a major economic centre, which is includ-ed in the Programme. Regional strategies The actions financed by the South-East Finland – Russia CBC Programme should be co-herent also with existing regional and local development plans and that the related CBC grants complement the resources allocated by the concerned regional and local public au-thorities. tekstiä 3.7 Lessons learned from the previous Programmes “Vanhalla” puolella Experience from previous CBC Programmes –kappale, siirretäänkö jotain osia? The best possible results both from projects and programmes can be achieved when they are jointly designed for mutual benefit on both sides of the border and their results are achievable and sustainable only through joint action. The European Regional Development Fund has funded CBC in the programme’s border regions (core area) since 1996 under the South-East Finland INTERREG II A programme 1996-1999. The most significant objectives of the programme was to improve border crossing points and the conditions for later large-scale projects, increase economic and commercial profitability, and promote job creation and the competitiveness of the services and operations of companies in the programme area. The participation of Russia, particularly the city of St. Petersburg and the Leningrad Re-gion, in the CBC has been funded under the Tacis programme since 1996. In the period from 1996 to 2003, under the Tacis CBC Small Project Facility a total of 134 projects were funded in Russia, the share of St. Petersburg was 34 and the share of the Leningrad Re-gion 27 projects. The South-East Finland – Russia INTERREG III A programme, covering the period of 2000-2004, focused on developing border crossing points and transport links, maintaining and improving the state of the environment, supporting expertise and the conditions for cooperation and welfare, and increasing the number of SMEs and improving their opera-tional preconditions. Between 2004 and 2006, a new approach was adopted with the introduction of Neigh-bourhood Programmes. The previous INTERREG programme became South-East Finland – Russia Neighbourhood Programme 2004-2006. The main change was that EU financing was also provided for the Russian partners through Tacis CBC. A single application and project selection procedure existed for joint projects, but formally two financing decisions were made concerning EU financing: one on the INTERREG funds by the Finnish manag-ing authority for the Programme and the other on Tacis CBC funds by the EU delegation in Russia. The content of the Programme was revised in the spring 2004, together with the

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Russian authorities and Commission representatives, to better comply with common priori-ties. The regional government and the Ministry of Economic Development and Trade of Russia were actively involved in the preparation of the Programme. The South-East Finland – Russia ENPI CBC 2007-2013 Programme allowed for funding of joint projects across the border from one financial source and with one administrative pro-cedure. The management of the programme was based on equality and partnership be-tween the participating countries. Besides development projects a remarkable amount was allocated to large scale investment projects related directly to border crossing. A number of lessons learned from the CBC cooperation in recent years have been taken into account in the preparation of the CBC Programme. Successful cooperation and work-ing for mutual benefit can be built on in the Programme by capitalising prior experience, best practices, and achievements. The partners have become accustomed to working to-gether in tasks such as the joint project management, selection and decision making pro-cesses. Moreover, a project evaluation system has been created involving a large number of experts from both sides of the border. A large number of both Finnish and Russian part-ners have become more familiar with the new way of working on the programme man-agement as well as the project implementation levels. Both the South-East Finland – Russia Neighbourhood Programme 2004-2006 and the ENPI CBC 2007-2014 have made a contribution to the developing and deepening of col-laboration between participating adjacent regions. A large number of discussions and joint projects involving stakeholders on both sides of the border have emphasised that coopera-tion in the programme area can be intensified and optimised further through systematic cross-border cooperation. When CBC has already been active several years, also an in-creased involvement and support from the national level have been evident. 3.8 Information about the consultations and actions taken to involve the participat-ing countries and regions to the preparation 4. PROGRAMME STRUCTURES AND DESIGNATION OF COMPETENT AUTHORITIES 4.1 Joint Monitoring Committee (JMC) The Joint Monitoring Committee shall monitor and follow the programme implementation and progress towards its priorities using the objectively verifiable indicators and related target values and may issue recommendations to the Managing Authority regarding the programme implementation and evaluation. The Joint Monitoring Committee shall be set up within three months after the Joint Opera-tional Programme has been adopted by the European Commission. The Committee shall consist of two (2) central government representatives and maximum of four (4) regional level representatives from both participating countries. The representa-tives shall be appointed on a functional basis and not on a personal basis. The European Commission shall be involved in the work of the Joint Monitoring Committee as an observ-er. The JMC may appoint other observers when necessary.

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The Joint Monitoring Committee shall draw up and adopt its rules of procedure by unanimi-ty. The first meeting of the Joint Monitoring Committee shall be convened by the Joint Managing Authority. The Joint Monitoring Committee shall meet at least once a year. It may also take decisions through a written procedure. According to Article 24 of the Implementing Regulation (EU) No 897/2014 the Joint Moni-toring Committee shall in particular:

(a) approve the Managing Authority's work programme and financial plan, including planned use of technical assistance;

(b) monitor the implementation by the Managing Authority of the work programme and financial plan;

(c) approve the criteria for selecting projects to be financed by the programme; (d) be responsible for the evaluation and selection procedure applicable to projects to

be financed by the programme; (e) approve any proposal to revise the programme; (f) examine all reports submitted by the Managing Authority and, if necessary, take

appropriate measures; (g) examine any contentious cases brought to its attention by the Managing Authority. (h) examine and approve the annual report; (i) examine and approve the annual monitoring and evaluation plan; (j) examine and approve the annual information and communication plans.

The travel and accommodation expenses of the members and invited experts of the Joint Monitoring Committee can be covered from the Programme’s Technical Assistance budg-et. The procedures will be defined in the Committee’s Rules of Procedure. 4.2 Joint Selection Committee (JSC) The declaration of intention of the Joint Programming Committee was that the Joint Moni-toring Committee sets up a project selection committee (Joint Selection Committee) and nominates the representatives. The Committee shall consist of four (4) regional level rep-resentatives from both participating countries. The representatives shall be appointed on a functional basis and not on a personal basis. The JMC may appoint central level repre-sentatives and observers when necessary. The project selection and the final decision of projects to be funded shall be delegated to the Joint Selection Committee according to the selection procedure approved by the JMC. 4.3 Managing Authority (JMA) The participating countries have appointed Regional Council of South Karelia to act as a Managing Authority for the Programme. Regional Council of South Karelia Kauppakatu 40 D 53100 Lappeenranta Finland www.ekliitto.fi

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Managing Authority shall be officially designated by Finland. The designation shall be based on a report and an opinion of an independent audit body that assesses the compli-ance of the management and control systems with the designation criteria laid down in ENI CBC Implementing rules. The independent audit body shall be the Audit Authority (or an-other public or private law body with the necessary audit capacity, which is functionally independent of the Managing Authority). It shall carry out its work in accordance with inter-nationally accepted audit standards. The Managing Authority shall be responsible for managing the programme in accordance with the principle of sound financial management and for ensuring that decisions of the Joint Monitoring Committee comply with applicable law and provisions. According to Article 26 (EU 897/2014) as regards the programme management, the Man-aging Authority shall:

(a) support the work of the Joint Monitoring Committee and provide it with the infor-mation it requires to carry out its tasks, in particular data relating to the progress of the programme in achieving its expected results and targets;

(b) draw up and, after approval by the Joint Monitoring Committee, submit the annual report and the final report to the Commission;

(c) share information with intermediate bodies, the Joint Technical Secretariat, the Au-dit Authority and beneficiaries that is relevant to the execution of their tasks or pro-ject implementation;

(d) establish and maintain a computerised system to record and store data on each project necessary for monitoring, evaluation, financial management, control and au-dit, including data on individual participants in projects, where applicable. In par-ticular, it shall record and store technical and financial reports for each project. The system shall provide all data required for drawing up payment requests and annual accounts, including records of amounts recoverable, amounts recovered and amounts reduced following cancellation of all or part of the contribution for a project or programme;

(e) carry out where relevant environmental impact assessment studies at programme level;

(f) implement the information and communication plans; (g) implement the monitoring and evaluation plans.

As regards the selection and management of projects, the Managing Authority shall:

(a) draw up and launch the approved selection procedures; (b) manage the project selection procedures; (c) provide the lead beneficiary with a document setting out the conditions for support

for each project including the financing plan and execution deadlines; (d) sign contracts with lead beneficiaries; (e) manage projects.

As regards the technical assistance, the Managing Authority shall:

(a) manage the contract award procedures; (b) sign contracts with contractors; (c) manage contracts.

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As regards the financial management and control of the programme, the Managing Author-ity shall:

(a) verify that services, supplies or works have been performed, delivered and/or in-stalled and whether expenditure declared by the beneficiaries has been paid by them and that this complies with applicable law, programme rules and conditions for support of the projects;

(b) ensure that beneficiaries involved in project implementation maintain either a sepa-rate accounting system or a suitable accounting code for all transactions relating to a project;

(c) put in place effective and proportionate anti-fraud measures taking into account the risks identified;

(d) set up procedures to ensure that all documents regarding expenditure and audits required to ensure a suitable audit trail are held in accordance with the require-ments;

(e) draw up the management declaration and annual summary; (f) draw up and submit payment requests to the Commission; (g) draw up the annual accounts; (h) take account of the results of all audits carried out by or under the responsibility of

the Audit Authority when drawing up and submitting payment requests; (i) maintain computerised accounting records for expenditure declared to the Commis-

sion and for payments made to beneficiaries; (j) keep an account of amounts recoverable and of amounts reduced following cancel-

lation of all or part of the grant. Verifications shall include the following procedures:

(a) administrative verifications for each payment request by beneficiaries; (b) on-the-spot project verifications.

The frequency and coverage of the on-the-spot verifications shall be proportionate to the amount of the grant to a project and the level of risk identified by these verifications and audits by the Audit Authority for the management and control systems as a whole. On-the-spot project verifications are carried out on a sample basis. 4.4 National Authorities in participating countries National Authorities shall support the Managing Authority in the management of the Pro-gramme in accordance of sound financial management. National Authorities shall be responsible for the set up and effective functioning of man-agement and control systems at national level. National Authorities shall ensure the overall coordination of the institutions involved at na-tional level in the programme implementation, including, inter alia, the institutions acting as control contact points and as member of the group of auditors.

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National Authority shall also represent the country in the Joint Monitoring Committee. Participating Countries have nominated the following organisations to act as National Au-thorities in South-East Finland - Russia CBC Programme: Russia: Ministry for Regional Development; Russian Federation Finland: Ministry for Employment and the Economy 4.5 Branch office The participating countries have jointly decided to set up a branch office for the Pro-gramme to St. Petersburg. Branch office shall assist the managing authority in fulfilling its management tasks on the Russian side. It shall assist the Managing authority in the pro-ject selection procedures and in the follow-up and monitoring of on-going projects. Branch office shall also work with communication and information in line with the Pro-gramme’s communication strategy and annual communication plans. A task involving exercise of public authority or the use of discretionary powers of judge-ment cannot be entrusted. 4.6 Audit authority and the members of the group of auditors The participating countries have appointed control function of the Ministry of Finance (Fin-land) to act as the Audit Authority in South-East Finland - Russia CBC Programme. The Audit Authority shall ensure that audits are carried out on the management and con-trol systems, on an appropriate sample of projects and on the annual accounts of the pro-gramme. The Audit Authority shall be assisted by a group of auditors comprising a repre-sentative of each participating country in the programme. Audit Authority shall ensure that the audit work complies with internationally accepted au-diting standards. 4.7 Control Contact points in participating countries Participating countries have nominated the following organisations to act as control contact points. Control contact points shall support the Joint Managing Authority to fulfill its project level control and verification tasks. Finland: Russia: Control systems have been described in chapter 5.1. 5. PROGRAMME IMPLEMENTATION 5.1 Summary description of management and control systems The South-East Finland – Russia CBC Programme shall be implemented in shared man-agement with a Member State. General principles of the management and control systems are defined in Article 30 of Commission implementing regulation (EU) No 897/2014. Gen-

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eral principles of management and control systems are functionality of each body involved in management and control, including division of functions within each body, their internal organisation in compliance within the principle of separation of functions between and within such bodies. Management and control systems shall include procedures for ensur-ing correctness and regularity of expenditure declared, electronic data systems for ac-counting, storage, monitoring and reporting. Functionality of the management and control systems, including arrangements for auditing and adequate audit trail, shall be ensured by the Managing Authority. Procedures for prevention, detection and correction of irregularities, including fraud and the recovery of amounts unduly paid, together with any interest shall be included in the management and control systems. Furthermore, management and control systems shall include contract award procedures for technical assistance and project selection proce-dures, as well as the role of national authorities and responsibilities of the participating countries in accordance with Article 31. The Managing Authority shall ensure that the management and control systems for the programme are set up in accordance with the provisions of this Regulation and that these systems function effectively, efficiency and economically. The Audit Authority shall ensure that audits are carried out on the management and control systems, on an appropriate sample of projects and on the annual accounts of the programme. Each participating coun-try shall appoint National Authority, Control Contact Point, a representative to the Group of Auditors and representatives to the Joint Monitoring Committee. In accordance with Article 27 (EU) No 897/2014 the participating countries may decide to set up a Joint Technical Secretariat and it shall be described in the programme in accordance with Article 4. Responsible authorities and bodies for the programme management and control are: - Joint Monitoring Committee (JMC) - Managing Authority (MA) - Branch office (BO) - Audit Authority (AA) with group of auditors (GA) - National Authorities in each participating country (NA) - Control contact points in each participating country (CCP) A full description of the Management and Control systems shall be prepared taken into notice the requirements laid down in the Commission Implementation Regulation (EC) No 897/2014 of 18 August 2014 and submitted to the European Commission within two months after approval of the Programme document (JOP). (Annex xx, Flowchart on Man-agement and Control system and project selection bodies, approved by participating coun-tries) from the Implementing Rules. 5.2 Timeframe of the Programme implementation 5.3 Description of project selections procedures 5.4 Description of types of support (projects selected through direct award, contri-butions to financial instruments + timetable for call for proposals) 5.5 Description of planned use of TA

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A total of 10% of the European Union’s total contribution to the Programme may be allo-cated to Technical Assistance (TA). In order to ensure sufficient resources, the TA is also co-financed by the participating countries. The amounts of TA co-financing are shown in the Indicative Financial Table on page xx (3.3) of this document. The technical assistance level should reflect the real needs of the programme, in particular taking into account factors such as total budget of the programme, size of the geographical area covered by a programme and number of participating countries. Technical Assistance shall be used to finance activities that are necessary for the effective and smooth implementation and management of the Programme. This concerns the prep-aration, management, monitoring, evaluation, information, communication, networking, complaint resolution, control and audit activities related to the implementation of the Pro-gramme and activities to reinforce the administrative capacity for implementing the pro-gramme. Technical assistance should be used for the needs of both programme structures and beneficiaries. 5.6 Description of the monitoring and evaluation systems Through Monitoring and Evaluation the programme results at all levels (impact, outcome, output and input) can be measured to provide the basis for accountability and decision-making. Content of Monitoring and Evaluation Plan

1. indicator definitions and measurement - a table presenting all indicators, for each indicator the following information should

be provided a. indicator definition b. baseline values (dates and source of data) c. targets set, frequency of measurement d. data collection method e. frequency of data collection

2. Routine data collection - description of existing systems in place / plans to develop systems to collect data

for measuring impact / outcome indicators and programmatic indicators (mapping of relevant data flows)

a. routine data b. data collection and reporting tools c. reporting frequency d. information and report flow and feedback mechnisms

3. Data management - how data and reports are managed - infrastructure and facilities available 4. Programme review, evaluation and surveys

a. schedules and description for conducting reviews, evaluations and surveys

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An electronic system used for management of the programme and individual projects is developed as tailored web-based service for the CBC programmes implemented on the Finnish-Russian border. All programmes use the same system but have a separate data-base. The administrative users acting as the first level support for the other user groups are named from the MAs of each programme. The system and database are secured and the use of functions requires registration. The main functions provided by the system include publication and management of call for proposals, management of project selection and data collection for the programme report-ing. At project level the MA uses the system for operational as well as for financial follow up. Payments to the applicants are made with separate electronic accounting system. The information within these two systems is matched regularly. An indicative monitoring and evaluation plan Through Monitoring and Evaluation

1. Monitoring and evaluation plan 5.7 The communication strategy 5.8 Information on fulfilment of regulatory requirements laid down in Directive 2001/42/EC of the European Parliament and of the Council 5.9 Indicative financial plan 5.10 Rules on eligibility of expenditure The programme partners define the precise beneficiaries of the actions under the pro-gramme, within the definition of eligible local and regional key actors. Priority should be given to eligible actors based within the geographical eligibility of the programme and im-portant for the realisation of the objectives of the programme. According to the ENI Implementing Rules Article 48 grants shall not exceed an overall ceil-ing expressed as a percentage and an absolute value which is to be established on the basis of estimated eligible costs. Grants shall not exceed the eligible costs. Eligible costs are costs actually incurred by the beneficiary which meet all of the following criteria:

(a) they are incurred during the implementation period of the project. In particular: i) costs relating to services and works shall relate to delivery and installation of

items during the implementation period. Signature of a contract, placing of an order, or entering into any commitment for expenditure within the implementa-tion period for future delivery of services, works or supplies after expiry of the implementation period do not meet this requirement; cash transfers between the

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lead beneficiary and the other beneficiaries may not be considered as costs in-curred;

ii) costs incurred should be paid before the submission of the final reports. They may be paid afterwards, provided they are listed in the final report together with the estimated date of payment;

iii) an exception is made for costs relating to final reports, including expenditure verification, audit and final evaluation of the project, which may be incurred after the implementation period of the project;

iv) procedures to award contracts, as referred to in Article 52 and following, may have been initiated and contracts may be concluded by the beneficiary (ies) be-fore the start of the implementation period of the project, provided the provisions of Article 52 and following have been respected;

(b) they are indicated in the project's estimated overall budget; (c) they are necessary for the project implementation; (d) they are identifiable and verifiable, in particular being recorded in the accounting

records of the beneficiary and determined according to the accounting standards and the usual cost accounting practices applicable to the beneficiary;

(e) they comply with the requirements of applicable tax and social legislation; (f) they are reasonable, justified, and comply with the requirements of sound financial

management, in particular regarding economy and efficiency; (g) they are supported by invoices or documents of equivalent probative value;

A grant may be awarded retroactively in the following cases:

(a) where the applicant can demonstrate the need to start the project before the con-tract is signed. Costs eligible for financing shall however not have been incurred prior to the date of the submission of the grant application; or

(b) for costs related to studies and documentation for projects including an infrastruc-ture component.

No grant may be awarded retroactively for projects already completed. To allow the preparation of strong partnerships, costs incurred before submission of the grant application by projects to which a grant has been awarded are eligible provided that, the following conditions are also met:

(a) they are incurred after the publication of the call for proposals; (b) they are limited to travel and subsistence costs of staff employed by the beneficiar-

ies, provided they exceed neither the costs normally paid by the beneficiary accord-ing to its rules and regulations nor the rates published by the Commission at the time of the publication of the call for proposals;

(c) they do not exceed a maximum amount fixed at programme level. 5. Subject to paragraphs 1 and 2, the following direct costs of the beneficiary shall be eli-gible:

(a) the costs of staff assigned to the project under the following cumulative conditions: - they relate to the costs of activities which the beneficiary would not carry out if the project was not undertaken - they must not exceed those normally borne by the beneficiary unless it is demonstrated that this is essential to carry out the project - they relate to actual gross salaries including social security charges and other remuneration-related costs;

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(b) travel and subsistence costs of staff and other persons taking part in the project, provided they exceed neither the costs normally paid by the beneficiary according to its rules and regulations nor the rates published by the Commission at the time of such project;

(c) purchase or rental costs for equipment (new or used) and supplies specifically for the purpose of the project, provided they correspond to market prices;

(d) the cost of consumables specifically purchased for the project; (e) costs entailed by contracts awarded by the beneficiaries for the purposes of the pro-

ject; (f) costs deriving directly from requirements imposed by this Regulation and the project

(such as information and visibility operations, evaluations, external audits, transla-tions) including financial service costs (such as the cost of bank transfers and finan-cial guarantees).

6. Pursuant to Article 4 a programme may establish additional eligibility rules for the pro-gramme as a whole. Non-eligible costs The following costs relating to the implementation of the project shall not be considered eligible:

(a) debts and debt service charges (interest); (b) provisions for losses or liabilities; (c) costs declared by the beneficiary and already financed by the Union budget; (d) purchases of land or buildings for an amount exceeding 10% of the eligible expendi-

ture of the project concerned; (e) exchange-rate losses; (f) duties, taxes and charges, including VAT, except where non-recoverable under the

relevant national tax legislation, unless otherwise provided in appropriate provisions negotiated with CBC partner countries;

(g) loans to third parties; (h) fines, financial penalties and expenses of litigation; (i) contributions in kind.

A programme may declare other categories of costs as ineligible. Lump sums, unit costs and flat-rate financing The total amount of financing on the basis of lump sums, unit costs and flat rate financing may not exceed EUR 60 000 per beneficiary and per project, unless the programme estab-lishes otherwise according to Article 4, but not exceeding EUR 100 000. The use of lump sums, unit-costs and flat-rate financing shall at least be supported by the following: (a) justification concerning the appropriateness of such forms of financing with regard to

the nature of the projects as well as to the risks of irregularities and fraud and costs of control;

(b) identification of the costs or categories of costs covered by lump sums, unit costs or flat-rate financing, which shall exclude ineligible costs referred to in Article 49.

(c) description of the methods for determining lump sums, unit costs or flat-rate financing, and of the conditions for reasonably ensuring that the no-profit rule and co-financing

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are complied with and that double financing is avoided. These methods shall be based on:

i) statistical data or similar objective means; or ii) a beneficiary-by-beneficiary approach, by reference to certified or auditable his-

torical data of the beneficiary or to its usual cost accounting practices.

Once the amounts have been assessed and approved by the Managing Authority, they will not be challenged by ex-post controls. Indirect costs Indirect costs may be calculated on a flat-rate of up to 7 % of eligible direct costs, exclud-ing costs incurred in relation to the provision of infrastructure, provided that the rate is cal-culated on the basis of a fair, equitable and verifiable calculation method. As indirect costs for a project shall be considered those eligible costs which may not be identified as specific costs directly linked to the implementation of the project and may not be booked to it directly according to the conditions of eligibility as defined in Article 48. They may not include ineligible costs as referred to in Article 49 or costs already declared under another cost item or heading of the budget of the project. 5.11 The apportionment of liabilities among the participating countries 5.12 Rules of transfer, use and monitoring of co-financing National co-financing Participating countries have centralised national financing systems. The organisations al-locating the national financing depend on which system is used. Annual national co-financing to the Programme comes from the State budgets to the financing organisations and it will be allocated to the projects according to national and EU legislation and the de-cisions of the JMC. Modalities concerning the national co-financing shall be regulated in separate agreements, which will be concluded between xxxxxxxxxxxxxxxxxx. National co-financing shall also be used to co-finance the Programme’s technical assistance. Financial flows of the National co-financing Finnish national co-financing is allocated annually from the state budget, and allocated and transferred to the Joint Managing Authority (JMA). Application for Finnish national co-financing is made using the same application form as for ENI financing and the financing decision is included in the Grant Contract. The role of the JMA as a body responsible for the use of national co-financing in the South-East Finland - Russia CBC Programme will be defined in the national legislation on the management of ENI CBC Programmes in Finland. The payment procedures for the Finnish co-financing follow the same procedures as in ENI financing. Payments are mainly based on expenses already paid. Russian co-funding to be described later.

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EU Financing The EU funding for the South-East Finland - Russia CBC Programme comes from the Eu-ropean Neighbourhood Instrument. The EU funds allocated to the Programme from the ENI may be used on either side of the EU external border for the benefit of the eligible re-gions. The Implementing Rules apply to the funds within the whole Programme area. The indicative allocation of Community funding in the ENI CBC Strategy Paper 2014-2020 to the South-East Finland - Russia CBC Programme is € 36 146 782 million for the years 2014-2020 and an additional ERDF allocations for the years 2018-2020 is € 9 355 180 which are available subject to the mid-term review of CBC and availability of matching ENI funds. Total financing is 45 501 962 €. 5.13 Description of IT systems for the reporting and exchange of computerised data between the Managing Authority and the Commission 5.14 Languages As working language each programme shall use one or more of the Union’s official lan-guages. Interpretation and translation costs for all languages selected by the programme shall be covered by either the technical assistance budget at programme level or the budget of each individual project at project level. The official language used by the Programme is English. The English language will be used in all official documentations and correspondence in order to facilitate the manage-ment of the Programme and shorten the completion periods. All Programme and meeting documents will be prepared and presented in English. The meetings of the JMC and the JSC will be conducted in English or Finnish/Russian. At the request of a member of the JMC or the JSC, interpretation between English/Finnish and Russian will be secured for individual Committee meetings. Such a request can be made to the JMA no later than 14 days before the meeting in question. The project Lead Partners will submit all documents concerning their project in English. However, calls for proposals will be published in English, Finnish, and Russian. All costs related to interpretation in meetings and translation of documents into English according to this paragraph will be covered by the TA budget excluding project applications and their annexes.

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4 COHERENCE WITH OTHER PROGRAMMES AND EXISTING STRATEGIES 4.1 Experience from previous CBC Programmes The European Regional Development Fund has funded CBC in the concerned border re-gions since 1996 (Finland became a member of the EU in 1995) under the South-East Fin-land INTERREG II A programme 1996-1999. The most significant objectives of the pro-gramme was to improve border crossing points and the conditions for later large-scale pro-jects, increase economic and commercial profitability, and promote job creation and the competitiveness of the services and operations of companies in the programme area. The participation of Russia, particularly the city of St. Petersburg and the Leningrad Re-gion, in the CBC has been funded under the Tacis programme since 1996. In the period from 1996 to 2003, the total funding for Russian projects under the Tacis CBC Small Pro-ject Facility amounted to approx. 25 million euros. Of a total of 134 projects in Russia, the share of St. Petersburg was 34 and the share of the Leningrad Region 27 projects. The South-East Finland – Russia INTERREG III A programme, covering the period of 2000-2004, focused on developing border crossing points and transport links, maintaining and improving the state of the environment, supporting expertise and the conditions for cooperation and welfare, and increasing the number of SMEs and improving their opera-tional preconditions. Between 2004 and 2006, a new approach was adopted with the introduction of Neigh-bourhood Programmes. The previous INTERREG programme became South-East Finland – Russia Neighbourhood Programme 2004-2006. The main change was that EU financing was also provided for the Russian partners through Tacis CBC. A single application and project selection procedure existed for joint projects, but formally two financing decisions were made concerning EU financing: one on the INTERREG funds by the Finnish managing authority for the Programme and the other on Tacis CBC funds by the EU delegation in Russia. The content of the Programme was revised in the spring 2004, together with the Russian authorities and Commission repre-sentatives, to better comply with common priorities. The regional government and the Min-istry of Economic Development and Trade of Russia were actively involved in the prepara-tion of the Programme. A number of lessons learned from the CBC cooperation in recent years have been taken into account in the preparation of the ENPI CBC Programme. Successful cooperation and working for mutual benefit can be built on in the Programme by capitalising prior experi-ence, best practices, and achievements. Despite the fact that under the previous Neigh-bourhood Programme the combination of different sources of funding (INTERREG and Tacis) caused some inconvenience, the partners have become accustomed to working together in tasks such as the joint project selection and decision making processes. More-over, a project evaluation system has been created also on the Russian side involving a large number of experts from the sectorial Committees of the St. Petersburg city Admin-istration and the Leningrad Region Administration, who have also been trained for project assessment work. A large number of both Finnish and Russian partners have become more familiar with the new way of working on the programme management as well as the project implementation levels.

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The South-East Finland – Russia Neighbourhood Programme 2004-2006 has made a con-tribution to the developing and deepening of collaboration between participating adjacent regions. A large number of discussions and joint projects involving stakeholders on both sides of the border has emphasised that cooperation in the programme area can be inten-sified and optimised further through systematic cross-border cooperation. 4.2 Coherence with other programmes and strategies EU-Russia Strategic Partnership Cross-border cooperation is an integral component of the EU-Russia Strategic Partner-ship, which is based on the Partnership and Cooperation Agreement (PCA). Preparations have started for negotiations on a new framework agreement that is to replace the PCA. The June 2008 EU-Russia summit marked the launch of negotiations on a New Agree-ment to replace the current PCA. The current work for developing the EU-Russia relations is set out in the road maps of Common Space: The Common Economic Space (CES), the Common Space of Freedom, Security and Justice, the Common Space of External Security, and the Common Space on Research and Development, Education and Culture. In the Road Map, CES refers to the deepening and diversification of interregional cooperation through the involvement of local and regional key operators as well as of the civil society. The further deepening of cooper-ation is achieved by taking the following measures: - increasing the importance of regional development and cross-border coopera-tion through active support to cross-border initiatives and programmes; - encouraging the involvement of local and regional key operators such as the various authorities and civil society, in all aspects of cross-border cooperation; - deepening cooperation and facilitating investments in the areas of cross-border infrastructure and other border issues; - promoting the establishment and strengthening of economic and people-to-people links between Russia and EU regions. EU’s Russia Country Strategy Paper 2007-2013 The main interests of the EU in Russia lie in fostering the political and economic stability of the Federation; maintaining a stable supply of energy; furthering cooperation in the fields of justice and home affairs, the environment and nuclear safety in order to combat ´soft´ security threats; and increasing cooperation with Russia in the Southern Caucasus and the Western CIS countries to increase the geopolitical stability of the CIS region, including the resolution of frozen conflicts. Northern Dimension Policy The Northern Dimension (ND) is a dialogue and cooperation tool involving the European Union, Russia, Norway, and Iceland. The Northern Dimension Policy Framework increas-ingly focuses on North-West Russia and its specific challenges and opportunities for the whole Northern Dimension region. In this context, it is a regional expression of the EU - Russia Common Spaces with full participation of Iceland and Norway in matters relevant to the region. The Northern Dimension will support sub-national and governmental cross-border and trans-border cooperation as one of the instruments for promoting regional development. The priority sectors for dialogue and cooperation under the Northern Dimension are eco-

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nomic cooperation; freedom, security and justice; external security; research, education and culture; the environment, nuclear safety and natural resources; and social welfare and health care. Northern Dimension activities are implemented by various actors and financed from different sources, including the existing and future European Union financing instru-ments and programmes, national budgets, international regional organisations, interna-tional financial institutions, regional and local public organisations, and other public bodies. The most important and concrete achievement of the Northern Dimension is the Environ-mental Partnership. The Northern Dimension is currently striving to find its place in the entirety of EU-Russia relations. In particular, the idea is to develop new partnerships alongside with the two ex-isting (on environment and public health). Two sectors were identified for these partner-ships – transport and energy. Work in the energy sector involves the further development and integration of energy markets, the strengthening of EU-Russia dialogue on energy, the development of energy resources in an environmentally friendly way, and the promotion of energy efficiency and saving. The Political Declaration on the Northern Dimension Policy invites also to examine opportunities for enhanced cooperation in the field of energy effi-ciency and renewable energy resources. An example of this sort of cooperation could in-volve launch of small and medium-sized energy efficiency projects. The views and perspectives underlined in the concept of the Northern Dimension have been taken into account in the ENPI CBC Strategy 2007 - 2013. This is particularly rele-vant for the priority themes of the Northern Dimension, which are in some correlation with the general objectives of the ENPI CBC Strategy and specific ENPI CBC Programmes. The Programme has been drawn up with consideration of the aims of the Northern Dimen-sion. The Programme will seek to ensure synergies with the new ND policy where appro-priate and that actions financed by the Programme complement the ND framework for co-operation. The geopolitical position of the Programme area as a gateway to Russia and from Russia to the EU enables the achieving of the Northern Dimension objectives, includ-ing the development of traffic in the border area and border crossing points, transport and logistic systems, environmental protection, and energy production. The involvement of lo-cal and regional authorities in cross-border cooperation is given prominence in the context of the ND. Regional strategic programmes in Finland The Regional Development programme for each of the participating Finnish regions out-lines regional development targets, key projects and measures, and a financing plan for the programme for the coming years. These are based on the development needs and potential of the region. In the preparation of the regional strategic programmes, the regions have taken into account the national regional development targets set by the Government and the regional development strategies adopted by different administrative sectors. The regional strategic programme is designed to act as an umbrella programme coordinating regional development work. In both, the Strategic Regional Plans and the Regional Devel-opment Programmes, the most essential objectives and measures for the development of the Regions are presented as four Objectives: 1) People, welfare and services 2) Expertise, innovations, and technology 3) Entrepreneurship, production, and working and labour policies

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4) Infrastructure The Regional Development programmes contain several principles and measures that deepen and strengthen the cooperation with St. Petersburg and the Leningrad Region. They are related to active immigration policy, strengthening of educational networks, re-search and innovation activities, and promotion of business cooperation and its compre-hensiveness. All these objectives are supported by facilitating the entrance of businesses in the Russian market, in other words, improving both physical and functional prerequisites for cooperation. The ENPI programme takes into account the national targets, special na-tional programmes implemented in the region, programmes co-financed by the European Union (EU) and the strategies and development work of various authorities. Regional Competitiveness and Employment Objectives (Southern and Eastern Finland) The Regional Competitiveness and Employment programmes involving the participating Finnish regions have been prepared in the context of the Lisbon economic reform agenda for jobs and growth and its focus is on building the knowledge-based economy, promoting business competitiveness, and increasing employment. When implementing the ENPI pro-gramme, attention will be paid to the avoidance of overlaps between the programme and other Structural Funds based assistance, notably the Competitiveness and Employment objective programmes. Russia’s Priority National Projects The primary goals of Russia’s economic policy are: implementation of the priority national and state investment projects; creating special economic zones, facilitating the develop-ment of innovative and high-tech industries; and facilitating the development of the small business sector. Russia has created new mechanisms to reach the basic goal of the state policy, i.e., the substantial improvement of the quality of life of its citizens. Concrete steps towards the implementation of the tasks include priority national projects in areas such as health care, education, housing, and agriculture. Firstly, these areas determine the peo-ple's quality of life and the society's welfare. Secondly, solutions to these problems will ultimately have a direct effect on the country's demographics and, most importantly, create the necessary preliminary conditions for the development of its human capital. The high-priority national projects have, without exaggeration, become an important phe-nomenon of life in the Russian Federation. In 2006, not only federal, regional, and local institutions but also a significant proportion of society was involved in their implementation. The development of education, healthcare, agriculture, and construction will lead to break-throughs in other sectors. Implementation of national projects requires long-term planning and budgeting, which is extremely important for steady economic development. More im-portantly, the strategy of effective investment in people, in raising the quality of life, is logi-cally developed in the budget-planning process. The introduction of modern technology is another important aspect of the implementation of national projects. All Russian schools have been equipped with broadband Internet ac-cess in the last two years, creating new opportunities even in the most isolated regions. Internet connections in village schools are useful also for the local medical and agricultural specialists and will help to attract investments. New technology requires better manage-ment, which has become evident in many regions. Certain coherence can be seen be-tween the general objectives of the ENPI Programme and the aims of the Russia's Priority

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National Projects, which have been approved by the Government of Russia and imple-mented since 2005. For the part of the national projects in the Russian regions, this is evi-dent in areas such as housing, agriculture, health care, and education. Development Programmes of St. Petersburg and the Leningrad Region The Socio-Economic Development Programme of St. Petersburg, ratified by the City Gov-ernment, and the current Socio-Economic Development Programme of the Leningrad Re-gion, which will be valid until 2008, (and the next Development Programme for the period 2008-2010, which is under preparation in the Government of the LR) aim at a substantial improvement in citizens' welfare and quality of life and the creation of preconditions for the socio-economic development of the regions. The objectives of the two Development Pro-grammes corresponding to the priorities of the South-East Finland - Russia ENPI CBC Programme are listed below with some examples of feasible actions: - Promoting economic growth; improving the preconditions for entrepreneur-ship; attracting investments and strengthening investment policy; developing industrial po-tential; developing international relations. - Promoting innovations; supporting innovative enterprises; training staff; pro-moting systems of public support to innovations and scientific activities. - Developing tourism: improving the attractiveness of the regions to tourists and the preconditions for entrepreneurship in tourism. - Strengthening the position of the regions as a transit zone: developing the sea ports, increasing the volume of logistic companies and systems. - Improving the environs of cities and the protection of natural and man-made environments: protecting inheritance; developing infrastructure; reducing emissions and improving waste management; ensuring the safety of the inhabitants; promoting housing reform; developing loans on real-estate. - Creating a positive climate for entrepreneurship: developing public-private co-operation; promoting the transparency and predictability of decision-making processes; promoting state support to SME development; ensuring the safety of business. - Strengthening family institution, maternity benefit, and child support: realising social codex; improving health care; developing medical and social support and social cen-tres for mothers and children; propagating traditional family values; diminishing extensive poverty by e.g. helping the disabled to find work and thus integrate with society. - Improving opportunities to reach a higher standard of living: developing labour market and continuing education; creating working places especially for the young. Other ENPI CBC programmes and INTERREG programmes The programme is linked as far as possible with the INTERREG and ENPI CBC pro-grammes implemented in the neighbouring regions: - Euregio Karelia ENPI CBC programme - Southern Finland – Estonia sub-programme (SFE) under the Central Baltic programme (European Territorial Cooperation) - Estonia/Latvia – Russia ENPI CBC programme - Baltic Sea Region Programme 2007-2013. In the implementation of the programmes, attempts are made to identify new ways of co-operation and practices to complement the existing ones. The connections between the

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Baltic Sea Region programme and the South-East Finland – Russia ENPI programme may be connected with the administrative cooperation and e.g. the development of transport services and activities related to marine environment protection and marine safety within the area covered by these programmes. A regular exchange of information will be organ-ised between the administrative bodies of the programmes. Neighbouring area cooperation between Finland and Russia Finnish-Russian neighbouring area cooperation focuses on the North-West Russia, espe-cially the City of St. Petersburg: the Leningrad Region. The Republic of Karelia and the Murmansk Region. The cooperation is regulated by the intergovernmental agreement signed between Finland and Russia in 1992. Finnish government funding has been allo-cated to projects covering especially the following sectors: environment, agriculture and forestry, social welfare and health care, economic development, judiciary, transport and communications, nuclear and radiation safety, civil society, education and training. Coordination between the South-East Finland - Russia ENPI CBC Programme and the Finnish neighbouring area cooperation is essential to avoid overlapping. These two in-struments have also a good opportunity to complement each other and thus create wider development entities with clear impacts. Consequently, regular change of information be-tween the programmes’ administrative bodies shall be continued. The EU’s Sustainable Development Strategy Sustainable development became a fundamental objective of the EU in 1997, when it was included in the Treaty of Amsterdam as an overarching objective. Subsequently, at the Gothenburg Summit in June 2001, the first EU Sustainable Development Strategy (SDS) was launched. Whereas the Lisbon strategy focuses on employment, economic reform, and social cohesion, the SDS adds an environmental dimension and establishes a new approach to policy-making. In June 2006, the European Council adopted a renewed SDS. From an environmental perspective, the SDS outlines priorities in four key areas of climate change, transport, public health, and natural resources. The EU’s Sixth Environmental Action Programme The Sixth Community Environmental Action Programme 2002-2012 (EAP6)1 addresses the key environmental objectives and priorities based on an assessment of the state of the environment and the prevailing trends including emerging issues that require a lead from the Community. It promotes the integration of environmental concerns in all EU policies and contributes to the achievement of sustainable development throughout the Communi-ty. Its four priorities are climate change, nature and biodiversity, environmental health and quality of life, and natural resources and waste management. The European Commission developed, in accordance with the requirements of the above EAP6, also seven thematic strategies to fulfil the objectives of the EAP6. Based on the four priorities, these Thematic Strategies work with themes rather than specific pollutants of economic activities. They take a more long-term perspective in setting clear environmental objectives to be reached by approx. 2020, thereby providing a stable policy framework. Finally, they focus on identi-fying the most appropriate instruments to deliver the European policy goals in the least burdensome and most cost effective way possible. These strategies often overlap and synergies with other policies of other sectors are vital.

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Other strategies In the context of further development of a wider economic cross-border cooperation strat-egy between South-East Finland and St. Petersburg and the Leningrad Region, joint priori-ties were established by joint working groups involving experts from various regional and municipal organisations and administrations as well as institutions and NGOs from both sides of the border. The activities suggested by the strategic planning work have been im-plemented during the period of 2004-2006 under two projects co-financed by the South-East Finland – Russia Neighbourhood Programme. The five priorities jointly agreed by the Finnish-Russian work groups are as follows: devel-opment of entrepreneurship and business cooperation; support and development of inno-vations; development of tourism industry; development of transportation and logistic net-works; environmental protection; and development of ecological technologies. This means that a large number of mutually interesting fields of economic cooperation and innovations has been identified. The chosen priorities have a strong linkage to the four core objectives identified for the ENPI CBC Programmes 2007-2013. By processing the priorities, a num-ber of concrete project ideas have been created. The results of the strategic planning work have been taken into consideration in the preparation of the content of the Programme. Conclusions and Recommendations By virtue of its regional character, involving actors in the border regions within the Pro-gramme area, the South-East Finland – Russia ENPI CBC Programme is complementary to the activities to be carried forward under the respective national, regional and interre-gional development programmes, strategies and policies described above. Coherence be-tween the Programme and these initiatives, especially with the underlying policy objectives of the EU-Russia Strategic Partnership has been assured in the programming phase and will be ensured during the whole period of implementation of the Programme. In addition, the Programme will seek to encourage synergy linkages to, e.g. the Northern Dimension Policy and the Neighbouring area cooperation between Finland and Russia. As in the previous programming period, the Programme will have some geographical over-lap with some other CBC programmes such as the Baltic Sea Region Programme. There are, however, considerable differences between the objectives and priorities of the BSR Programme. On the other hand, there are also shared programme elements (e.g. support for innovations, promotion of transport, maritime safety, etc.) which, however, are com-plementary and give the potential for synergies. The Karelia ENPI CBC and the Esto-nia/Latvia – Russia ENPI CBC Programmes will also have some geographical as well as “strategic” overlap with the South-East Finland – Russia Programme. However, each of them has been prepared and will be implemented in a distinctive, regional context. By en-suring a close coordination and information change between the administrative bodies of these programmes possible overlaps can be avoided and rather synergies and comple-mentary benefits can be achieved between the programmes. In order to promote high effects of the cross-border activities from possible synergies and coherence with projects and programmes funded under other EU policies as well as to avoid duplication, information on activity funding in the recent past may be exchanged as required between Directorate Generals before launching calls for proposals. The Commis-sion's line Directorate Generals should be consulted on the proposals submitted within the call for proposals. For that purpose, AIDCO will request each DG to nominate one or more contact points.

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List of used abbreviations (in alphabetical order)

AIDCO EuropeAid Cooperation Office

BSR Baltic Sea Region

CBC Cross Border Cooperation

CES Common Economic Space

EC European Council

ENI European Neighborhood Instrument

ENPI European Neighborhood and Partnership Instrument

ERDF European Regional Development Fund

EU European Union

GDP Gross Domestic Product

HELCOM Baltic Sea Environment Protection Commission

ICT Information and Communication Technology

IFAC International Federation of Accounts

JAMDT Joint Administration and Management Drafting Team

JCDT Joint Content Drafting Team

JMA Managing Authority

JMC Joint Monitoring Committee

JOP Joint Operational Programme

JPC Joint Programming Committee

JSC Joint Selection Committee

JTF Joint Task Force

LUT Lappeenranta University of Technology

ND Northern Dimension

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NDEP Northern Dimension Environmental Partnership

NDPHS Northern Dimension Partnership in Public Health and Social well-being

NDPTL Northern Dimension Partnership in Transport and Logistics

NDPC Northern Dimension Partnership in Culture

NGO Non-Governmental Organisation

PCA Partnership and Cooperation Agreement

PRAG Practical Guide to Contract procedures for EC external actions

PTA Programmes Technical Assistance budget

R&D Research and Development

RTF Joint Regional Task Force

SEA Strategic Enviromental Assessment

SFE Southern Finland – Estonia sub-programme

SME Small and Medium-sized Enterprises