This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Unwise Spending Exposes Europe's Economic Errors

"Put simply, the Court found too many cases of EU money not hitting the target or being used sub-optimally," Vitor Caldeira, President of the European Court of Auditors, said this month, when presenting the body's report on 2011 spending.

Across southern Europe examples of questionable spending decisions are easy to find.

EU funds stoked Spain's overheated construction sector, helping to inflate a real estate bubble that burst with devastating effect in 2008.

Almost a third of the roughly ⿬35 billion of structural funds that went to Spain over the 2007-2013 period was channeled to infrastructure projects ⿿ ignoring perilous over-investment by the country's regional governments that now are appealing for financial rescues. Despite the billions poured into the Spanish economy, the country is in the grip of a double-dip recession with a 25 percent unemployment rate.

A three-year investigation by European and Italian authorities into EU-funded road-building programs in Sicily, meanwhile, unearthed illegal sub-contracting, a lack of proper oversight and conflicts of interest, among other shortcomings. Italy had to repay ⿬389 million.

Italy's southern Mafia heartland also yielded some of the more scandalous cases of abuse. According to an inventory compiled by the Open Europe think-tank, one program in Sicily involved around ⿬300 million to improve trash collection and recycling. The recycling target was fixed at 35 percent, but the island achieved only 6 percent. Also, ⿬230 million was used to improve Sicily's railway network, but only eight kilometers (five miles) of track was repaired.

The EU's anti-fraud agency, OLAF, says last year it recouped about ⿬690 million after investigations across the bloc. The biggest amount ⿿ ⿬525 million ⿿ was recovered from structural funds.

In Portugal, which has collected almost ⿬50 billion from the EU over the past two decades, an infrastructure construction spree became so notorious it got its own moniker ⿿ "a politica do betao" (the politics of concrete) ⿿ as politicians plundered the aid programs for vote-winning projects. In 1989, Portugal had just 210 kilometers (130 miles) of highways; 20 years later, it had 2,860 kilometers (1,777). That's a lot of highway in a country about 550 kilometers (240 miles) long and less than 200 kilometers (125 miles) wide.

4 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs