The New York Times offers an interesting look at the pathologies of European federalism through a case study of southern Italy.
From 2000 to 2011, Italy received more than $60 billion in European Union financing to underwrite a wide array of programs, in areas including agriculture and infrastructure, most of it directed to the south, with little but a half-completed highway to show for it...(Greece received $50 billion, an enormous amount in per capita terms, also to unclear effect.)
The article talks about corruption in parts of Italy, but the problem is also politics.
But the problem goes well beyond corruption and cuts to the heart of the political systems of most of Southern Europe, in which politicians have traditionally offered citizens state-financed work in exchange for votes...
Over the years, as many as 6,000 workers have been employed by hundreds of subcontractors. (No one from the large construction companies from the Italian center or north has been convicted of any crimes.) The south is a land of unfinished works because finished works don’t pay,” said Aldo Varano, a journalist and author of several books on Calabria...
The European Union neither puts conditions on the spending nor monitors the projects. The incentives are not good. It is hard to imagine that the incentives would be much better if Brussels tried to monitor the spending.
Things might improve if the money for the projects were raised and spent locally. There might be less buying of votes with other people's money (i.e. people who cannot vote). Still we ought to consider the possibility that such schemes cannot foster economic development in these regions. The best choice might be to do nothing and let emigration improve outcomes for the people in these areas.
In any case, when you hear about the radical spending reductions in southern Europe, remember the Italian highway to nowhere.