Funding of Political Parties and Election Campaigns

458 Pages·2015·7.465 MB·English

by  International IDEA

Funding of Political Parties
and Election Campaigns
A Handbook on Political Finance

Funding of Political Parties
and Election Campaigns
A Handbook on Political Finance
Editors:
Elin Falguera
Samuel Jones
Magnus Ohman
Contributors:
Julie Ballington
Elin Falguera
Muriel Kahane
Juan Fernando Londoño
Karl-Heinz Nassmacher
Magnus Ohman
Daniela R. Piccio
Fredrik Sjöberg
Daniel Smilov
Andreas Ufen
Daniel Zovatto
Political Parties, Participation and Representation
© International Institute for Democracy and Electoral Assistance 2014
International IDEA
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E-mail: [email protected], website: www.idea.int
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Graphic design by: Turbo Design, Ramallah
Cover illustration: © Ellen Isaacs
Printed in Sweden
ISBN: 978-91-87729-24-9
Foreword
Over the course of my career, I have witnessed the negative impact of money
on politics and governance. Th ere is increasing evidence that corruption
and unregulated donations are exercising undue infl uence on politics and
undermining the integrity of elections. In some countries, money from
organized crime has infi ltrated politics to gain control over elected offi cials
and public institutions. Th ese threats to democratic politics help explain why
large numbers of people around the world are losing faith in politicians and
democratic processes. For example, recent research shows that more than
two-thirds of Americans trust government less because of the infl uence of
big donors.1
Th e need to regulate uncontrolled, undisclosed and opaque political fi nance
was identifi ed by the Global Commission on Elections, Democracy and
Security2 as a major challenge to the integrity of elections in emerging
and mature democracies alike. Th e Global Commission argued that
poorly regulated political fi nance can diminish political equality, provide
opportunities for organized crime to purchase political infl uence, and
undermine public confi dence in elections. Indeed, a failure to regulate
political fi nance threatens to hollow out democracy and rob it of its unique
strengths.
Citizens all over the world want political parties and governments to represent
their views and be responsive to their needs. However, all too often parties
are disproportionately representative of the interests of the donors who have
largely fi nanced them. If large corporations and rich individuals are able to
buy greater infl uence through large campaign donations, then citizens can lose
faith in, or be marginalized from, the political process. Th is is compounded
by a lack of citizen participation in political parties, which further adds to
people’s alienation from politics.
Although the funding of electoral campaigns and political parties has an
important role in the functioning of democracy, unregulated money in
politics means that the political playing fi eld is not level. Th e explosive growth
in campaign expenditures fuels the perception that wealth buys political
1 Brennan Center for Justice Research referred to in the report of the Global Commission on
Democracy, Elections and Security (2012, p. 34).
2 Th e Global Commission on Elections, Democracy and Security was established as a joint initiative
of the Kofi Annan Foundation and the International Institute for Democracy and Electoral
Assistance (International IDEA). Th e Commission’s 2012 report, Deepening Democracy: A Strategy
for Improving the Integrity of Elections Worldwide, can be downloaded at http://www.global-
commission.org/report
III
infl uence and threatens political equality. Th e abuse of state resources by
the ruling party to put itself in an advantageous position also remains a
problem in many countries. Th is lack of a level playing fi eld prohibits the
equal participation and representation of all citizens in democratic political
processes.
Recent years have seen a growing penetration of transnational organized
crime and illicit funds into politics. In Latin America, West Africa and
in many other parts of the world, opaque electoral fi nance and lack of
transparency and oversight are providing opportunities for organized crime
to gain infl uence over elected offi cials by fi nancing their campaigns. Th is not
only undermines democracy, good governance and the rule of law, but also
has negative consequences for economic development and the alleviation of
poverty.
Th ere is clearly an urgent need to better control political fi nance. Governments
should regulate political donations and expenditures eff ectively. Th is will
require full transparency and disclosure of donations, with penalties for non-
compliance. Eff ective monitoring and enforcement of regulations are also
crucial.
Th is new publication from International IDEA on political fi nance around
the world is a timely and much-needed contribution to the fi eld of democracy
support. It builds on International IDEA’s previous work and provides
a better understanding of the current state of political fi nance regulation.
It also off ers recommendations on reforms for a range of stakeholders and
provides concrete suggestions for future research. Th rough sharing global
practices in the fi eld of political fi nance, this handbook is an important step
in safeguarding the integrity of elections and of democratic politics.
Kofi A. Annan
Chair, Global Commission on
Elections, Democracy and Security
IV
Preface
Democracy is a system in which the government is controlled by the people,
and in which people are considered equals in the exercise of that control.
However, unequal access to political fi nance contributes to an uneven
political playing fi eld. Th e rapid growth of campaign expenditure in many
countries has exacerbated this problem. Th e huge amounts of money involved
in some election campaigns makes it impossible for those without access to
large private funds to compete on the same level as those who are well funded.
Th ere is no doubt that political parties need access to funds in order to play their
part in the political process. At the same time, the role of money in politics is
arguably the biggest threat to democracy worldwide today. Th is threat is clear
across all continents—from huge corporate campaign donations in the United
States and drug money seeping into politics in Latin America, to corruption
scandals throughout Asia and Europe. Evidence shows that large portions of
the electorate around the world are left with the perception that their politicians
are more concerned about money than about representing citizens’ interests.
Recognizing the many challenges of money in politics and the gap in
comparative knowledge, International IDEA has been focusing on the topic
for over a decade and has worked on a broad range of activities, including
stimulating national debates on legal reforms, building institutional capacity
and producing global comparative knowledge. Th is handbook builds on
the 2003 International IDEA handbook Funding of Political Parties and
Election Campaigns and is unique in its global scope. By off ering an overview
of political fi nance around the world, its aim is to advance the debate and
stimulate action to improve the role of money in politics.
Th ere are a myriad of problems related to money in politics: fi nancial scandals, the
abuse of public funds, drug cartels’ supply of illicit money to parties, and private
corporations funnelling vast sums to party fi gures in order to garner favours.
Women candidates in particular suff er disproportionately from lack of
access to campaign fi nance. In many countries, unfair allocation of public
funds distorts the playing fi eld in favour of ruling parties. Th is abuse of state
resources is particularly problematic in former Soviet countries and Africa.
It is common for money in politics to operate behind closed doors and involve
shadowy practices. Th e exact amounts and origins of donations to political
parties or candidates are often unknown. Th is creates a system that is open to
abuse by big business or organized crime, which contributes money in return
for infl uence. Donations seen as an investment by corporate interests have
been reported from virtually all regions, not least the older democracies of
V
North America and Europe. Th e penetration of illicit funds into politics poses
a particular danger to democracy and its institutions on all continents. Th is
is especially so along the Latin American drug-traffi cking corridor stretching
from the Andean region to Mexico, where drugs money has infi ltrated
political life and elections.
In all regions of the world there is a deeply worrying trend of money in politics
drowning out the voices of ordinary citizens. For a democracy to be healthy,
it must revolve, fi rst and foremost, around the citizen. And for a democracy
to be sustainable, it requires transparent, accountable and inclusive political
parties that can channel the demands of the people and truly represent them.
Attempts to tackle these challenges through political fi nance laws and
regulations are often undermined by a lack of political will or capacity, as
well as poorly designed and enforced measures.
Th is handbook addresses these and other problems of money in politics by
analysing political fi nance regulations around the world and providing guidance
for reform. Th e chapters are divided by region; each assesses the current state of
regulations and challenges and off ers a series of recommendations to tackle the
identifi ed shortcomings. Th is geographical approach has the benefi t of revealing
regional trends and patterns, and off ers insights into what has (and has not)
worked in diff erent contexts. An additional chapter focuses on gender, refl ecting
the reality that women remain grossly under-represented in politics around
the world, while the increasing infl uence of money in politics perpetuates this
inequality. While context is a crucial component of any discussion on political
fi nance, some general recommendations and messages are identifi ed.
An important basis for this work has been International IDEA’s Database on
Political Finance3 which received a major revision and update in 2012. We hope
that this database, which has become the leading and most exhaustive source on
political fi nance regulation worldwide, will, together with this handbook, provide
tools that will be useful to those actors and stakeholders in a position to undertake
reforms that will address the numerous challenges of money in politics.
Yves Leterme
Secretary General, International IDEA
3 See http://www.idea.int/political-fi nance
VI
Acknowledgements
Th e production of this handbook would not have been possible without the
kind support, contributions and expertise of a number of individuals.
First, we would like gratefully to acknowledge the contributions of the authors:
Julie Ballington, Elin Falguera, Muriel Kahane, Juan Fernando Londoño,
Karl-Heinz Nassmacher, Magnus Ohman, Daniela Piccio, Fredrik Sjöberg,
Daniel Smilov, Andreas Ufen and Daniel Zovatto. We also thank Elin
Falguera, Samuel Jones and Magnus Ohman for their overall coordination
and editing of the handbook.
Our sincere thanks to UN Women for contributing the valuable chapter on
‘Women in Politics: Financing for Gender Equality’.
We would also like to thank the following people, who have generously
given their time, ideas and insights during the development of this book:
Adhy Aman, Raul Avila, Elin Bjarnegård, Andrew Bradley, Catalina Uribe
Burcher, Elaine Byrnes, Andrew Ellis, Judith February, Alfonso Ferufi no,
Harold Jansen, Barbara Jouan, Norm Kelly, Lisa Klein, Michael Koss, Laura
Sanz Levia, Paul Lewis, Susan Markham, Percy Medina, Graeme Orr, Rafael
Roncagliolo, Delia Ferreira Rubio, Kristen Sample, Victor Shale, Pilar Tello,
Wondwosen Teshome, Dirk Tromsa, Alejandro Urízar, Sandra C. Urquiza,
Jorge Valladares, Sam van der Staak, Vasil Vashchanka and Lotta Westerberg.
Th anks also go to International IDEA colleagues Millad Matin, Andrea
Milla and Nadia Handal Zander. We would also like to express our gratitude
to Kelley Friel and Eve Johansson for their highly professional editing of
this book. Finally, we would like to extend our thanks and appreciation to
International IDEA’s Member States.
VII
Contents
Foreword ....................................................................................................................................... III
Preface .......................................................................................................................................... V
Acknowledgements .................................................................................................................... VII
Acronyms and abbreviations .................................................................................................... XVI
Chapter 1: Introduction to Political Finance ........................................................................ 1
Why is political fi nance important? ............................................................................. 1
Political fi nance regulations ......................................................................................... 3
Enforcement ..................................................................................................................... 4
Internal party fi nance behaviour .................................................................................. 4
About the handbook ........................................................................................................ 6
Introduction to the regional chapters ................................................................... 8
References ........................................................................................................................ 9
Notes .................................................................................................................................. 9
Chapter 2: Getting the Political Finance System Right ...................................................... 12
Introduction ...................................................................................................................... 13
The best way to reform political fi nance regulations .............................................. 13
Political goals ............................................................................................................. 16
Context ......................................................................................................................... 18
Ways of regulating political fi nance ............................................................................ 21
Donation bans and limits .......................................................................................... 21
Public funding ............................................................................................................. 22
Spending bans and limits ......................................................................................... 26
Financial reporting ..................................................................................................... 28
Enforcing political fi nance regulations ....................................................................... 30
References ........................................................................................................................ 33
Notes .................................................................................................................................. 33
Regional Studies of Political Finance:
Regulatory Frameworks and Political Realities ................................................................. 38
Chapter 3: Africa ......................................................................................................................... 39
Introduction to problems in African political fi nance .............................................. 39
Access to funds for all relevant actors ................................................................. 39
Abuse of state resources ......................................................................................... 40
Clientelism ................................................................................................................... 40
Vote buying .................................................................................................................. 40
Illicit funding ................................................................................................................ 40
Dependency on foreign funds .................................................................................. 41
The cash nature of African economies ................................................................. 41
An overview of political fi nance regulations in Africa ............................................ 41
Sources of income for political parties and candidates ......................................... 42
Contribution bans ....................................................................................................... 42
Contribution limits ..................................................................................................... 43
Sources of private income ....................................................................................... 44
Public funding ............................................................................................................. 49
Abuse of state resources ......................................................................................... 54
VIII