Unwise Spending Exposes Europe's Economic Errors
The record of waste will almost certainly be a focus of the meeting. European spending on infrastructure has at times been "over the top and ... not quite necessary," says Raoul Ruparel, head of economic research at London-based think tank Open Europe.
Labor market reforms, training and education, and research and development â¿¿ items that foster long-term growth â¿¿ have often been relegated to second place.
Spending on such projects as roads, bridges and ports "seems like a quick fix in terms of trying to get the employment figures up and (make it) look like there is development going on," Ruparel said, "but it's not a sustainable sort of economic model ... it won't really help in the long term."
Southern Europe, where countries have gone from feast to famine, knows that all too well. Greece and Portugal have needed bailouts that together amount to more than â¿¬300 billion, and Spain and Italy are floundering as economic growth deserts them. That's despite together qualifying for some â¿¬104 billion in EU development aid since 2007 and much more before that.The European crisis, which is choking global growth, was years in the making. From Portugal's now discredited "politics of concrete" to ailing Spain's construction boom and bust, and highway and railroad racketeering in debt-heavy Italy, southern Europe for decades gorged on easy credit and hundreds of billions of euros (dollars) in EU cash taken mostly from the pockets of wealthier northern European taxpayers. The time of plenty has ended, however. With money short because of Europe's debt crisis, and countries such as Germany vexed by what they see as abuses of their generosity by countries around the Mediterranean, EU leaders are determined to change by the end of this year the rules on who gets how much money and for what. A two-day summit in Brussels starting Thursday looks set to bring a confrontation on the issue between opposing camps in the 27-nation bloc: wealthier northern European countries, which want an end to reckless spending, and less well-off countries eager to top their depleted budgets with EU aid.
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