The EU Goes Mediterranean

According to this article from Reuters, there different members of the European Union are squabbling over a proposal to create a 'Mediterranean Union' to expand and augment the goals of the European Union. Sarkozy could not be more ahead of his time by proposing this. For those who don't know more about this issue, information can be found here and here. It appears the most common reason for criticism is that the current EU members and the EU Commission are afraid of funding and resources being diverted from EU goals, such as setting up a Mediterranean Investment Bank. This argument has some valid points, after all there is only so much time, money, and political will to go around. The argument for the Mediterranean Union has noble goals as well, such as spreading human rights, development aid, and democracy to Mediterranean Nations. Another problem with the proposal is that many of the prospective nations are ruled by authoritarian governments that the EU doesn't want to blindly give funds without any oversight. This is also a valid concern but it must be dealt with because the nations with these types of governments are the most in need of civil freedoms. Similar issues arose in the 1950's and 60's when the EU was beginning form and the solution was to keep the process slow and focus on areas of agreement and mutual benefit such as the European Coal and Steel Community. I think this lesson would be well applied in this situation. Encouraging a few coastal Muslim countries to embrace freer trade agreements could lead to them adopting more secular laws and human rights as well as helping Europe and Middle East/North Africa to diversify their economies and generate employment.
Do you think this plan could work? How would you approach the situation?