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The European Audit Court, which oversees EU spending, has repeatedly scolded officials for lax accounting and inadequate oversight covering a spider's web of funds, organizations and acronyms generated by Brussels bureaucracy. "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 euro35 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
euro389 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
euro300 million to improve trash collection and recycling. The recycling target was fixed at 35 percent, but the island achieved only 6 percent. Also,
euro230 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
euro690 million after investigations across the bloc. The biggest amount --
euro525 million -- was recovered from structural funds. In Portugal, which has collected almost euro50 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. With EU aid looking like a free lunch, Portugal neglected to modernize, and the excessive emphasis on infrastructure had a negative impact on its economy. The upshot: Due to low productivity, low education levels and low technology, Portugal languished in the first years of the new century with average annual growth below 1 percent. It has now gone into reverse with its third recession in four years amid a mountain of debt. The windfall produced notorious excesses in the Madeira Islands. But just two years ago, European Commission President Jose Manuel Barroso, a former Portuguese prime minister, touted the region as a model of EU growth. The aid for years delivered spectacular returns, helping lift the standard of living above that in Italy and just lower than in France. Thirty years earlier it was one of the bloc's five poorest regions. The glut of aid invited extravagance as Jardim, Madeira's president, rode a wave of popularity that has made him one of Europe's longest-serving political leaders. Plaques saying he inaugurated ocean swimming pools, libraries and health centers punctuate any trip around this balmy, semitropical island of deep gorges and thick forest. The wisdom of Madeira's lavish, EU-sponsored spending is now in question as it wobbles on the edge of its own fiscal cliff. White elephants include a
euro38 million harbor that sits empty, its entrance full of silt; a business park built on a misty, remote hillside for
euro2.5 million that lies barren; and a euro670,000 oceanside helipad where, locals say, no helicopter has ever landed. Jardim is unapologetic. On the sidelines of the recent inauguration of the 580-meter-(1,900-feet) cliff-top viewing point at Cabo Girao, he continued to preach the benefits of past EU policy and brushed off talk of financial folly. "In small territories different criteria have to be used, which in this case is to continue the (financial) support for the creation of infrastructure because that creates jobs," he said. European leaders, however, want to shift from what they see as unproductive economic policies. The new slogan for the 2014-20 budget period is "smart growth." That will likely translate into stimulus packages for the EU's 23 million small businesses and more skill training
-- a "more targeted investment and better use of funds," Regional Policy Commissioner Hahn said.
[Associated
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