Jānis Ikstens (Vidzeme, Latvia) / Michael Pinto- Duschinsky (Brunel, UK) / Daniel Smilov (Budapest/ Oxford) / Marcin Walecki (Oxford) in Central Eastern Europe: An Interim Report

Der Beitrag analysiert Gesetze und Regelungen über die Finanzierung von politischen Parteien und Wahlkampagnen in 17 Ländern: Albanien, Weißrussland, Bosnien-Herzegowina, Bulgarien, Kroatien, Tschechien, Estland, Ungarn, Lettland, Litauen, Mazedonien, Moldawien, Polen, Rumänien, Russland, Slowakei und Ukraine. Er bietet einen Überblick über die Kosten der Politik in einigen dieser Länder und stellt Hypothesen auf zu Mustern der Politikfinanzierung in Mittelosteuropa. Ein zentrales Ergebnis ist die Vielfalt der Politikfinanzierung in den untersuchten Ländern, was zumindest teilweise auf die unterschiedlichen historischen, politischen, sozialen und ökonomischen Merkmale der Länder in der Region zurückzuführen ist. Nach der Häufigkeit der angewandten Regelungen und Förderungen in den behandelten Ländern ergibt sich folgende Reihung: freie Sendungen in Radio und/oder TV: 100%; direkte staatliche Unterstützung von Parteien und/oder KandidatInnen: 76%; Ausgabenbeschränkungen (für Parteien und/oder KandidatInnen): 59%; Beschränkungen der Spenden an Parteien und/oder KandidatInnen: 47%. Die geringe Bedeutung von Mitgliedsbeiträgen scheint ein hervorstechendes Merkmal zu sein. In einigen der untersuchten Länder sind reiche “Oligarchen” als politische Finanziers aufgetreten, und einige post-kommunistische Parteien sind nach wie vor stark von Mieteinnahmen aus Gebäuden abhängig, die sie von den früheren kommunistischen Re- gimes geerbt haben.

1. Introduction form of conference papers, which are about to The special issue of the Austrian Journal of be published. Political Science on the subject of political fi- Against such a background, this article is in- nance goes to press at a time of flux in Central evitably an interim report. It consists of three and Eastern Europe (CEE). A number of coun- main sections: the first gives a review of cur- tries in the region recently have enacted new rent laws and regulations; the second traces laws on aspects of election and party funding; some of the realities of party or campaign fund- other countries are in the midst of debates about ing; and the third interprets the legal and em- legal reforms. At the same time, the funding of pirical findings. The first section, which deals politics in the post-Communist countries is rap- with the legal framework, is the most complete. idly emerging as a field of academic research. The second concentrates on the actual patterns The pioneering chapter by Paul G. Lewis on of income and expenditure of political parties ‘Party funding in post-communist east-central and the cost of election campaigns. This sec- Europe’, which appeared as recently as 1998, tion gives findings that are based on a smaller has largely been overtaken by subsequent re- number of countries, since there are still gaps search. Some of this new work has been pub- in empirical research on a number of countries lished and much more of it is currently in the in the region.

ÖZP, 31 (2002) 1 21

02_01_2_ikstens.p65 21 22.12.2007, 17:36 Although the issue of where Eastern Europe The countries of Central and Eastern Europe begins and ends and the related question of what are linked by their geographical proximity and the geographical area should be called have been by the fact that they have all emerged recently discussed many times before, it is relevant and from Communist rule. For these two reasons, it necessary to deal with these questions in a few is understandable that they are generally treated introductory paragraphs. Names of territories – as a group for research and for practical regions as well as countries – are loaded with purposes. Indeed, they may be regarded as a emotional meanings; they express underlying post-colonial group on a par with the (mainly assumptions and legal claims. It is vital, there- African) former possessions of , which fore, to address the question of nomenclature. belong to La Francophonie, or the former Moreover, it is not possible to make sensible British dominions and colonies, which now hypotheses about patterns of political finance belong to the Commonwealth. History has in the countries under review unless their his- strong effects for a considerable time on the le- torical, political, social and economic back- gal and political structures of post-colonial ter- grounds are assessed. ritories.

Table 1: People in Central Eastern Europe

Population GNP 2000 Main Religion Main Language Minorities 2000 (per capita, in (Percentage (in thousands) US-Dollars at of Purchasing population) Price Parity) Albania 3,510 2,804 Muslim (70%) Tosk 5% Belarus 10,350 6,319 Orthodox (80%) Byelorussian 19% Bosnia- Herzegovina 3,922 1,720(1) Muslim (40%) Croatian 56% Bulgaria 7,707 4,809 Orthodox (83%) Bulgarian 17% Croatia 4,334 6,749 Catholic (76%) Croatian 22% Czech Republic 10,264 12,362 Atheist (40%) Czech 19% Estonia 1,423 7,682 Lutheran Estonian 35% Hungary 10,106 10,232 Catholic (67%) Hungarian 10% Latvia 2,385 5,728 Lutheran Lettish 43% Lithuania 3,611 6,436 Catholic Lithuanian 19% Macedonia 2,046 4,254 Orthodox Macedonian 33% Moldova 4,432 1,947 Orthodox (98%) (Romanian)(2) 35% 38,634 7,619 Catholic (95%) Polish 2% Romania 22,364 5,848 Orthodox (70%) Romanian 10% Russia 145,470 6,460 Orthodox Russian 18% Slovakia 5,415 9,699 Catholic (60%) Slovakian 14% Slovenia 1,930 14,293 Catholic (69%) Slovenian 12% Ukraine 48,760 3,194 Orthodox Ukrainian 27% Yugoslavia 10,677 2,300 Orthodox (65%) Serbian 37%

NOTES: (1) Bosnia and Herzegovina: GNP is for 1999–2000. (2) Moldova’s main language Moldovan is virtually identical to Romanian.

SOURCES: CIA World Factbook [http://www.cia.gov/publications/]; Adrian Karatnycky, general editor (2001). Freedom in the World: The Annual Survey of Political Rights and Civil Liberties, 2000–2001. New York: Freedom House, Transparency International [http://www.transparency.org/]; World Bank (2000).

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02_01_2_ikstens.p65 22 22.12.2007, 17:36 Yet, neither the common experience of So- is the further question of determining where viet hegemony nor geography are sufficient to ‘Eastern’ Europe ends and the Asian parts of ensure uniformity within the post-Communist the former Soviet Union begin. For the purposes countries. The boundaries of the region and its of this article, Russia and Ukraine are the most naming are uncertain: the term Mitteleuropa – easterly countries which are included. with its connotations of a zone of German and In broad terms, there is a distinction between Austrian influence – sends shivers down Brit- countries in Central Europe – those relatively ish and French spines. ‘Central Europe’ and close to Western Europe – and the rest. This is ‘Eastern Europe’ are more neutral, descriptive seen in particular in the main measure of pros- words but they do not define where ‘Central’ perity (Gross National Product per capita) and Europe ends and ‘Eastern’ Europe begins. There in the measure of democratic credentials pro-

Table 2: Politics in Central Eastern Europe

President Electoral Freedom Freedom State Illegal directly system House House perception capture political elected index rating index(1) index(2) finance 2000–01 2000–01 (rank (in index(3) order) percent) (in percent) Albania no Mixed 9 partly free n.a. 16 25 Belarus YES Majoritarian 12 not free n.a. n.a. n.a. Bosnia- Herzegovina YES Proportional 9 partly free n.a. n.a. n.a. Bulgaria YES Proportional 5 free 47= 28 42 Croatia YES Proportional 5 free 47= 27 30 Czech Republic no Proportional 3 free 47= 11 6 Estonia no Proportional 3 free 28 10 17 Hungary no Proportional 3 free 31= 7 5 Latvia no Proportional 3 free 59= 30 35 Lithuania YES Mixed 3 free 38= 11 13 Macedonia YES Majoritarian 7 partly free n.a. n.a. n.a. Moldova no Majoritarian 6 partly free 63= 37 42 Poland YES Proportional 3 free 44= 12 10 Romania YES Proportional 4 free 69= 21 27 Russia YES Mixed 10 partly free 79= 32 24 Slovakia YES Proportional 3 free 51= 24 20 Slovenia YES Proportional 3 free 34 7 11 Ukraine YES Mixed 8 partly free 83 32 29 Yugoslavia YES Mixed 8 partly free n.a. n.a. n.a.

NOTES: (1) The ‘Corruption Perception Index’ is produced by Transparency International. Only selected countries are in- cluded. The table shows the rank ordering of specific countries among those covered by TI. The sign ‘ = ’ denotes that the ranking of a country is equal to that of another country. (2) The ‘State Capture Index’ is produced by the World Bank institute: the higher the percentage, the more serious the incidence of ‘state capture’. (3) ‘Illegal political finance’ is one of six dimensions of ‘state capture’. It measures the percentage of firms which considered themselves directly affected by illegal political donations.

SOURCES: see table 1.

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02_01_2_ikstens.p65 23 22.12.2007, 17:36 vided by the Freedom House index. However, try experts on party finance1; (4) reports pre- it is the variety of the countries in the region pared by the Organization for Security and Co- that is the most striking feature. This provides a operation in Europe; (5) reports in the media. warning against the presumption that political Information is for laws in force as of October 1, financing is subject to similar influences 2001. throughout the region. The absence of any obvious regional identity is seen in the lack of a common history of exist- 2. Laws and regulations ence as sovereign states, as well as in the diver- sity of languages and of predominant religions. Before proceeding to examine the actual pat- Of the nineteen countries listed, only five retain terns of political incomes and expenditures, it the territories they held during the Cold War. is necessary to review the laws and rules about No fewer than eleven of them are newly-cre- party and which have emerged ated states or states which regained a sovereignty in the region since the fall of Communism. This of earlier times. Three countries – Russia, Yu- section includes information on Albania, goslavia and the Czech Republic – are the trun- Belarus, Bosnia-Herzegovina, Bulgaria, Croatia, cated remains of states that were stripped of Czech Republic, Estonia, Hungary, Latvia, much of their territory in the 1990s. The differ- Lithuania, Macedonia, Moldova, Poland, Ro- ent countries have contrasting political legacies mania, Russia, Slovakia, and Ukraine. It at- from the Second World War, varying between tempts to lay out the most common patterns of former puppet states of Nazi Germany (such as campaign finance regulations and to identify a Slovakia and Croatia) and countries prominent number of common shortcomings of campaing in their resistance to Hitler. funding in the existing regimes. Information has The uniformity of the population of countries not been gathered from Yugoslavia and Slo- such as Poland and Albania contrasts with the venia. strength of ethnic minorities in a considerable The main kinds of regulations and subsidies number of the states in the region. Ethnic fac- in the countries under review are shown in Table tors may affect politics in general and political 3. financing in particular in some of the countries Ranked by the frequency with which they under review. Moreover, the countries range in occur in the countries covered by the article, the population from under two million (in the case main kinds of regulations and subsidies are: free of Estonia and Slovenia) to 145 million in Rus- radio and/or television broadcasting: 100%; sub- sia. GNP per capita ranges from under USD sidies-in-kind: 94%; public disclosure of party 2,000 per annum in Bosnia and in Moldova to accounts: 88%; complete or partial ban on for- over USD 14,000 per annum in Slovenia. The eign donations: 82%; direct public funding of political systems are rather more uniform though parties and/or candidates: 76%; spending limits there is no shortage of exceptions to the general (on parties and/or candidates): 59%; limits on pattern, which is one of directly elected presi- contributions to parties and/or candidates: 47%; dents and (especially in the countries abutting tax reliefs on political donations: 24%; bans on on Western Europe) of proportional electoral paid political advertising: 18%. systems. In view of this diversity, it should come After the collapse of communist regimes, as no surprise that the picture of political financ- Central and East European countries moved ing that will emerge is also one of considerable quickly to adopt institutional frameworks char- variation. acteristic of advanced democracies. That in- Several kinds of source have been used: (1) cluded the area of campaign finance where no legislation regulating party and campaign fi- prior regulations existed for obvious reasons. nance in the respective countries; (2) informa- However, experience with competitive politics tion provided by representatives of Central Elec- prompted most countries to revise and further tion Commissions; (3) interviews with in-coun- detail their regulatory frameworks of campaign

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02_01_2_ikstens.p65 24 22.12.2007, 17:36 eign Paid Political

‘YES’ under ‘Subsidies-in-kind’ but ‘No’ under

pending For

Limits

SUBSIDIES REGULATIONS

ect Any Tax Any Free Any Any Any Any Ban on Ban on

Public Relief Broadcast Subsidies Public Contri- S Funding in-kind Disclosure bution Limits Donations Advertising

COUNTRY Any Dir

Albania YES NO YES YES NO NO NO PARTLY NO Belarus NO NO YES YES YES NO YES YES NO Bosnia-Her- zegovina YES YES YES YES YES YES YES NO YES Bulgaria YES NO YES YES YES YES YES YES NO Croatia YES NO YES YES NO NO NO NO NO Czech Republic YES YES YES YES YES NO NO YES NO Estonia YES NO YES YES YES NO NO YES NO Hungary YES YES YES YES YES NO YES PARTLY NO Latvia NO NO YES YES YES YES NO YES NO Lithuania YES NO YES YES YES NO YES PARTLY NO Macedonia YES YES YES YES YES YES YES YES NO Moldova NO NO YES YES YES NO NO YES NO Poland YES NO YES YES YES YES YES YES NO Romania YES NO YES YES YES YES NO PARTLY NO Russia YES NO YES YES YES YES YES YES NO Slovakia YES NO YES NO YES NO YES YES YES Ukraine NO NO YES YES YES YES YES YES NO

TOTAL 76% 24% 100% 94% 88% 47% 59% 82% 18%

Table 3: Political Financing in Central Eastern Europe Table

NOTE: In Belarus, funds are given specifically for the publication of leaflets and posters, etc. This tied funding is listed as ‘Any direct public funding’.

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02_01_2_ikstens.p65 25 22.12.2007, 17:36 finance. Therefore, it is appropriate to speak of Lithuania, a single anonymous donation cannot party and campaign finance regimes in the mak- exceed USD 25, but the total of these donations ing. Indeed, a feature of political finance laws is not limited. in the region is the frequency with which they Contribution limits. About half of the region’s have been altered and continue to be changed. countries have introduced limits on contribu- The countries under review have so far de- tions to parties and/or individual candidates in veloped a variety of regulatory regimes of cam- the elections. While they were designed to re- paign finance. Some (such as Croatia) have cho- strict the political influence of large businesses, sen notably liberal regulation and (as in Latvia) preliminary findings indicate that money tends little state interference with campaign funding, to find its way to accounts via while others prefer much more detailed regula- mediations and donations by third parties, or via tions (Poland) or severe restrictions on the role direct payments to third parties for services ren- of non-state donors (Belarus). Poland has re- dered. cently chosen to prohibit corporate donations Spending limits. Nearly two-thirds of post- to parties in an attempt to limit the political in- communist countries have opted for overall fluence of large corporations. Belarus restricts spending limits during campaigns. However, a the entrepreneurial activities of political parties number of experts from particular countries have and virtually bans private donations. pointed out to the authors that these restrictions are often circumvented – either due to loopholes in the legislation or by means of illegal actions, (a) Regulations and bans which are particularly suited for cash-based Foreign donations. As far as restrictions are economies of post-communist countries. It must concerned, one of the most common is a ban, be added that an inflexible limit policy may force either partial or complete, on contributions from parties to engage in illegal activities if – as is foreign sources (foreign citizens, foreign gov- the case in Russia – the law sets unrealistically ernments, international companies and organi- low contribution or spending limits. zations). This is seen as a warrant of national Bans on paid television advertisements. A few sovereignty not to be undermined by external countries (Bosnia-Herzegovina, Czech Repub- forces. Foreign donations are allowed in a few lic, Slovakia) have opted for a ban on paid po- special cases. The role of the international com- litical advertising in an attempt to weaken the munity in the post-war restructuring of Bosnia- very need for large financial resources. The pro- Herzegovina perhaps explains why certain for- posal is being discussed in Latvia as part of a eign contributions are permitted. Lithuania has wider reform plan of party finance but no deci- chosen to involve the Lithuanian diaspora in sion has been reached yet. Opponents of the funding party activities, thereby giving certain advertising ban cite the danger of growing hid- advantage to right-wing, nationalist parties that den paid advertising, which constitutes an of- ruled the country during the adoption of relevant fence. legislation. Anonymous donations. Most post-communist (b) Public subsidies countries have opted to prohibit anonymous donations. However, Poland, Bulgaria, and Public funding. While most countries in the Lithuania have taken the view that reasonable region provide direct state financial subsidies amounts of anonymous donations cannot under- to parties and/or candidates, this is by no means mine the democratic process. The Polish legis- a universal approach. Countries such as Latvia, lation stipulates that anonymous donations are Moldova, and Ukraine refrain from giving di- to be deposited in bank accounts separate from rect state support to political contenders. One the rest of campaign funding. Bulgarian laws possible explanation for this approach is a lack stipulate that anonymous donations must not of state resources at the time of adoption of the exceed 25% of the total party income. In relevant legislation, which led to a lesser in-

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02_01_2_ikstens.p65 26 22.12.2007, 17:36 volvement of the state. Secondly, absence of political parties need not reveal their income and state subsidies may be related to an existence of expenditure accounts are Albania and Belarus. one or two major parties that have access to rich Both countries score low on the Freedom House corporate funding and try to frame political com- index of political freedom. In three more coun- petition in a particular way. Moreover, as shown tries (Bulgaria, Croatia and Macedonia), politi- in the next section, in some of the countries with cal parties must disclose their overall accounts direct public funding (for example, Russia) the but need not identify individual donors. In the amounts given are very small. twelve other countries covered by this article, Income tax relief. Hungary and Estonia pro- both accounts and lists of donors must be re- vide this form of indirect public funding. In vealed. Moreover, Lithuania has gone to the Estonia, tax relief is limited to donations by in- length of making financial records of parties and dividuals up to 5% of their taxable incomes af- individual candidates available to a wider pub- ter deductions; for corporations, tax relief is lic on its internet website. given for political donations up to 3% of their The problem about disclosure does not lie in monthly wage expenditure. the laws themselves but in the lack of enforce- Benefits in-kind. All countries covered by this ment. While local media have shed light on an study offer free air-time on public radio and tele- abundant number of suspicious cases of politi- vision. cal finance, official inquiries or even investiga- tions are rarely pursued. This can be attributed to a lack of independent enforcement agencies (c) Controls and insufficient involvement of civil society. A number of Central and East European coun- Moreover, penal codes of several countries sim- tries have introduced special election accounts, ply lack sanctions for violations of party finance from which a campaign of a party or candidate rules, or sanctions are rather symbolic. In can be financed. While it is difficult to speak of Macedonia alone, election results of a political a clear-cut trend, countries using proportional party that had violated political finance regula- representation to elect their parliaments tend to tions can be declared null and void. refrain from the system of special accounts. Belarus has chosen a very unusual arrange- ment, which, however, is perfectly in line with 3. Patterns of income and expenditure the overall state-oriented tradition in the realm of political finance in this country. According Those researching into political financing in to the Belarussian legislation, a single, state-run CEE are relatively fortunate in being able to election account is opened before every elec- examine party accounts which are published in tion. Donations can be transferred to this ac- a higher proportion of countries in the region count only, and the income is distributed equally than is the case in most others. Nevertheless, among all candidates. Clearly, this system has for reasons amplified below, the official figures, effectively discouraged any donations, drained especially concerning campaign expenditures, contenders from legal financial means and made need to be treated with great caution. They ap- indirect, hidden funding of election campaigns pear severely to underestimate the real levels of a widespread practice. spending. However, even if allowances are made for the unreliable nature of the evidence, the tentative (d) Disclosure and enforcement conclusion that emerges from existing academic research is that in Central Eastern Europe, and Disclosure rules are the norm and exist more particularly in post-Soviet countries, the lack of frequently in CEE countries (and in the former diverse sources of money emerges as the major Soviet Union in general) than in most other parts problem, and not the level of expenditure. More- of the world. The only two countries where over, even if the real levels of income and ex-

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02_01_2_ikstens.p65 27 22.12.2007, 17:36 penditure, as distinct from the declared levels, members to electors would almost certainly have are still uncertain, two things are clear: the rela- been lower than 2.8% since the countries from tive importance of different sources of political which statistics were not obtained generally finance, and the contrast between the funding seem to have weaker party organisations. of communist (or post-communist) parties and Income from membership subscriptions is other parties. particularly low in non-Communist parties. In Political funding in the region is characterised Bulgaria in 1995, the Union of Democratic by: (1) irregular flows of funds and relatively Forces (UDF) reported that party members paid non-diversified financial sources; (2) limited 6.87% of its total income; in 1997, membership income from membership subscriptions; (3) the subscriptions amounted to only 0.078% of the disproportionately large role of plutocratic fund- total (Smilov 1999b). Records of the main ing, which often exceeds direct state subsidies. Czechoslovakian parties in 1991 showed a simi- For most of the CEE countries, state support is larly large differentiation between sources of of lesser importance than would be expected. income in Communist and non-Communist par- Another important aspect of political financ- ties. While subscriptions to the Communist Party ing in CEE countries is the way in which politi- of Bohemia and Moravia accounted for 36.6% cal parties have emerged from the Old Regime (approximately USD 1.32 million) of the total unequally endowed. The extent of the Commu- party income (approximately USD 3.61 million), nist Parties’ hold on some of its economic re- for the Civic Movement, the Czechoslovak sources has a continuing influence in a number Peoples’ Party and the Czechoslovak Socialist of countries. The special circumstances of tran- Party, membership subscriptions accounted re- sition in Poland, Hungary, Bulgaria and Roma- spectively for 0.34%, 15.6% and 5% of the to- nia, for instance, undoubtedly had the effect of tal income (Lewis 1998, 139). protecting Communist Party finance. This was In Estonia, in 2000, membership subscriptions especially the case in Poland. amounted to 1.81% of Pro Patria’s income, 7.15% of the total Centre Party’s income and 3.05% in the case of the Reform Party. The (a) Membership fees and party taxes Moderates stated in their annual financial re- The circumstances of transition from a non- port that the party had not received any mem- democratic regime to a democratic system do bership subscriptions at all (Pentus 2001). Even not entirely account for the failure to develop a in Hungary, the proportion of membership sub- popular financing of politics in CEE countries. scriptions in party budgets is generally very low. There have been similar failures in Western In 1995 the Hungarian Democratic Forum re- countries. But low membership and – resulting ceived the equivalent of USD 79,500, which from this – low income from such membership accounted for 0.96% of the total income. In the is especially pronounced in the CEE. If party case of the Fidesz, the percentage of total in- membership is measured as a percentage of the come accounted for by membership subscrip- electorate, there is a wide range of results both tions (approximately USD 5,738) was only within Western Europe and in the CEE. On av- 0.12% in 1995. Again, the post-communist erage, the CEE scores considerably lower than Hungarian Socialist Party received far more Western Europe. According to recent research from membership subscriptions, than any other by Peter Mair and Ingrid van Biezen (2001, 9), party, yet its income from this source was low: the percentage of electors who were party mem- 3.27% of the total (approximately USD bers in 1999–2000 was 2.8% in the four CEE 160,000) (Lewis 1998, 139). countries for which evidence was available According to Steven Roper (2001), “in the (Czech Republic, Slovakia, Hungary and Po- case of Romania, party member dues have tra- land) compared with 5.5% in 16 countries of ditionally never been collected. Because of the Western Europe. Had figures been obtained from low standard of living and lack of participatory more CEE countries, the proportion of party culture, membership dues have never been an

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02_01_2_ikstens.p65 28 22.12.2007, 17:36 important source of party revenue”. Similarly, of local councillors. The amount depends on the for the Ukrainian political parties the role of party and in the case of councillors differs from membership subscriptions is very limited and 5–10% of their salaries or certain fixed quotas. parties do not encourage their members to make Members of supervisory boards and other mem- direct payment to the organisation. Yet, the So- bers with functional positions are compelled to cialist Party manages to receive money indi- contribute 10% of their salaries. rectly from its members and supporters who subscribe to the party’s newspapers.2 In Poland, (b) Donations from wealthy individuals, the low percentage of the electors who are party corporations and candidates members is especially striking when compared with the years of Solidarity in the 1980’s. Po- The importance of large donations is in in- land had a mass political movement, but when verse proportion to the insignificance of money the euphoria of 1989–1990 disappeared, the from membership subscriptions. In Poland, in political parties which came to take the place of terms of corporate support, institutional dona- Solidarity had a smaller membership base than tions represented less than 40% in the 1991 cam- those in the Czech Republic, Hungary and paign, compared to about 87% of the total party Slovakia. income of the Freedom Union in 1997. More- If they are unable to raise the funds they con- over, in the 1995 Presidential Elections, Lech sider sufficient from voluntary payments from Walesa received one major gift from business- ordinary party members, governing parties and man Aleksander Guzowaty; this constituted al- their candidates in many parts of the world levy most 72% of Walesa’s income and, to date, is ‘taxes’ upon those who derive benefits from the largest official donation in Polish politics. government. In post-communist regimes, two In Latvia, an examination of the Latvian par- classes of donor are the main sources of such ties’ annual reports shows that some 80% of their enforced contributions: (1) government contrac- funding comes from donations. According to tors and (2) officeholders, both public and Ikstens (2001) “large donations (more than USD elected. 5,000) make up 80% of corporate contribution In Estonia, the Moderates demand from all and donations of more than USD 1,000 cover their members in the legislature and from their almost 75% of income from private donations”. ministers a fixed quota equivalent to USD 29 Most of the corporate donations arrive from fi- per month (Pentus 2001). These ‘party taxes’ nancial institutions, companies engaged in trans- are recorded by Moderates as private donations. portation of oil and chemical products and from The MPs of the Estonian Centrist Party are the food industry as third most important con- obliged to pay every month a fixed share of their tributor. During the 1999 campaign in Estonia, salaries. In Romania, all parliamentary factions all parties except the Centre Party, received more oblige their MPs to make similar payments. money from the private companies than from Roper (2001) reports that “the amount may be individuals. According to the parties’ official as much as 20% of an MP’s monthly salary”. reports Pro Patria received 74.55% of its total The Polish case shows the spectacular impor- income from corporate donors, while the Cen- tance that these party taxes have come to as- tre Party received 26.99% of its total income sume. The successful rise of this new form of from private companies. In the case of the Mod- fundraising is the result of recent party erates, corporate donations amounted to 39.1% reorganisation and expansion.3 Parties demand of the total income and for the Reform Party from members who hold an elective or ap- this figure was 47.66%.4 pointed public office a fixed share of their sala- In Russia, in the 1995 Duma Elections, 515 ries. These tolls apply to most of the 560 mem- corporate donors contributed approximately bers of the legislature, hundreds of party mem- USD 6 million to the 30 electoral associations bers with governmental positions, members of (almost 38% of their income). During the elec- supervisory boards and, above all, to thousands tions, institutional donations represented about

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02_01_2_ikstens.p65 29 22.12.2007, 17:36 55% of the total income of ‘Our Home Russia’ real cost of the campaign, the very strong pres- (about USD 1.3 million) and 49% in the case of ence of business involvement is evident. ‘Oli- LDPR (approximately USD 1.1 million). Dur- garchs’ took a direct and active role in support- ing the 1996 Presidential Elections contributions ing political parties and campaign blocks. In the from corporate donors played the most impor- 1998 Parliamentary Elections money officially tant role, representing more than 72% of the received from legal entities accounted for 91.4% candidates’ total income (USD 10.6 million). of the committees’ overall income. General Lebed received 93% of his income from the 94 legal entities (USD 2.65 million), while (c) Public funding donations constituted 90% of Yeltsin’s campaign fund (about USD 2.6 million). These publicly For the new democracies of the CEE direct declared statistics are almost certainly underes- public funding is an almost standard feature; timates. however, the precise pattern of state subvention In Bulgaria, despite the absence of legally varies considerably and the levels of direct pub- disclosed information concerning parties’ in- lic funding in all the CEE countries differ sig- come, the clear picture is that in recent years nificantly. donations and sponsorship have played a major In several countries, the level of public sub- role in financing political parties. In 1995, do- sidy is notably low. In Bulgaria, the state finan- nations accounted for 47.81% of the total Bul- cial support was most significant in the first garian Socialist Party income, compared with years of the transition period: it was gradually the Union of the Democratic Forces which re- scaled down, and in the last general election ceived 82.25% of its income from donations; became largely symbolical. This is partly ex- by 1997 donations constituted 99.9% of UDF’s plained by the financial collapse of the state at total income. that time (spring 1997) (Smilov 1999b). In the In the Ukraine, more than in any other coun- Russian State Duma elections of 1995, the total try, informal political actors – financial groups amount of direct public subsidies distributed and political ‘oligarchs’ – dominate the politi- among electoral blocs was little more than USD cal spectrum. Even though Table 4 presents of- 1 million, which constituted about 6% of their ficially declared campaign spending which total income (approximately USD 16 million). might be irrelevant, as parties often lower the Thus, 43 registered electoral associations re-

Table 4: Official Financial Reports of Major Political Parties and Blocks in Ukrainian 1998 Parliamentary Elections

Name of party or block Total budget Received from Percent of all corporations income Hromada 190,132.00 N/A N/A The Green Party 1,128,487.50 1,127,487.50 99.9% Communist Party 24,934.60 2,491.10 9.9% Labour & Liberal Block 705935.00 705935.00 100% United Social Democrats 529,900.00 529,900.00 100% Party of Regional Renaissance 793,568.90 754,802.90 95% Agrarian Party 125,000.00 101,000.00 80.8% People’s Democratic Party 1,915,936.30 1,915,936.00 100% All-Ukrainian Workers’ Party 56,558.10 56,338.10 99.9% National Front 7,401.00 N/A N/A Socialist & Peasant Block 106,967.00 20,000.00 18.7% The Working Ukraine Block 406,600.00 386,600.00 95%

SOURCE: Central Election Commission, in: Holos Ukrainy, #57 (1807), 26 March 1998.

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02_01_2_ikstens.p65 30 22.12.2007, 17:36 ceived only some USD 23,255 each.5 During million from the state budget. In the parliamen- the 1996 presidential elections, each of the 11 tary elections of 1998, a substantial subsidy registered candidates received approximately amounting to USD 5.5 million went to the victo- USD 60,000 of direct subsidies, which ac- rious Social Democrats. counted for only 4.46% of their declared in- Estonian political parties rely heavily on state comes.6 In the Duma elections of 1999, direct financial assistance to fund their routine activi- state subsidies to all political parties rose to USD ties. In 2000 public funding accounted for 4.6 million. Every candidate received direct state 67.95% of Pro Patria’s regular income 87.75% subsidies amounting to the hardly grand total of that of the Centre Party. For the Moderates, of USD 38.91; this accounted for 0.06% of their the figure was 92.83%, and for the Reform Party total spending allowance. During the 2000 presi- 82.51%. However, election campaigns are less dential elections, money was allocated to all dependent on state subsidies. During the 1999 registered presidential candidates. Each of the election campaign, public funding accounted for 11 candidates running for president received an only 7.47% of the total Pro Patria campaign in- insignificant sum from the federal budget.7 come, 12.90% for the Centre Party, 23.07% for In Poland, the first step towards state subsidy the Moderates and 15.07% for the Reform Party. of political financing was made with the Elec- The state funding of political parties is an toral Law of 1993, which introduced state re- important factor in the operation of Hungarian imbursement of electioneering expenses. Thus, democracy. As early as 1990, state funding ac- the committee received approximately the counted for 93% of the Independent Small- equivalent of USD 7,650 for each deputy elected holders’ Party budget, 88% of the Christian to the two chambers. After the 1997 General Democratic People’s Party budget and 24% in Election, the treasury allocated to the particular the case of the Hungarian Socialist Party. Well- election committees the total of USD 4.1 mil- documented records for 1995 confirm signifi- lion. The two main parties, the Solidarity Elec- cant state dependence in the cases of six parlia- tion Action (AWS) and the Democratic Left mentary parties. Parties received from 18% Alliance (SLD), received about 79.3% of this, (Fidesz) to 90% (Alliance of Free Democrats) amounting to USD 7,350 for each elected of their total income in the form of state subsi- deputy. Thus, the AWS, with its 201 MPs and dies. 51 Senators, received USD 1.85 million and the Indirect state subsidies have contributed sig- SLD with 164 MPs and 28 Senators received nificantly to party financing in the CEE coun- about USD 1.4 million. All the other four par- tries. There are many various kinds of indirect ties had to divide proportionately the sum of subsidies but two are of particular importance: USD 0.8 million. Public subsidies accounted for free broadcasting and subsidies for parliamen- only 4.75% of the total declared income of the tary groups. An important source of money for Polish Peasant Party (PSL) in 1997, and 4.44% CEE parties consists in specific grants paid to in 1998. In 1998 public financing accounted for parliamentary caucuses and individual parlia- 11.63% of the Freedom Union’s (UW) total in- mentarians (excluding salaries) (Lewis 1998, come. The Labour Union, not represented in the 145ff.). The demarcation of different kinds of current parliament, recorded public funding as public funding is a controversial matter; how- the main source of income.8 As a result of the ever, these funds should be classified as a source recent political finance reforms of 2001, public of indirect subsidies for political parties from financing in Poland was increased. It is esti- the state’s budget. Generally, grants for party mated that these new subsidies might cost the representation in Parliament are a perfect state budget around USD 14.5 million in 2002. supplement to the party’s central and local of- The role of state refunds for campaign expen- fices and can also be used for campaign activi- diture is clearly evident in the Czech Republic. ties.9 Undoubtedly, most of the CEE political After the 1996 general elections the successful parties would not be able to operate efficiently ODS of Vaclav Klaus received about USD 6 without access to these parliamentary re-

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02_01_2_ikstens.p65 31 22.12.2007, 17:36 sources.10 For countries with low direct subsi- dies to political parties these indirect subsidies play an important role for non-parliamentary activities. 1.373 1.121

(d) The cost of politics An examination of the revenue and expendi- Kwasniewski Pawlak 0.544 ture items from the parties’ published annual reports shows that there was a significant in- crease in election expenditure between 1991 and 2000. In particular, expenditure on the mass media burgeoned. Yet, official statistics need to 0.581 Walesa 0.192 Kuronbe 0.529 treated with considerable scepticism. In some CEE countries, the artificially low level of the legal limits on permitted campaign spending makes the reporting of political party expendi- ture irrelevant. Walesa The way in which the reported statistics have reflected changes in spending limits is demon- strated by the financial accounts of Russian par- ties and electoral blocs. During the 1993 elec- tion campaign, national blocs spent USD 3.7 0.154 Tyminski 0.351 million; two years later national blocs reported spending USD 15 million on campaigning. In 1995, spending limits were imposed allowing individual candidates to spend no more than

Kuchma approximately USD 100,000 and electoral blocs no more than USD 2.4 million. The officially reported figures on campaign spending naturally slumped in line with the new regulations. In the 1999 elections to the Russian Duma, individual

0.451 Vitrenko 0.125candidates Cimoszewicz were allowed to spend only USD 65,000 and electoral blocs USD 1.6 million. Not surprisingly the press has reported that, unoffi- cially, national blocs spend considerably more than these totals, which of course they were

Putin unable to declare without laying themselves open to prosecution for exceeding the legal lim- its. In fact, according to the campaign fundraiser for the SPS (Union of Right Forces), the party spent over USD 25,000 million on the Duma (million USD) (million USD) (million USD) (million USD) (million USD) 2.42 elections.11 Dr Leonid Gozman, who was re- sponsible for the party’s electioneering strategy, Annual reports for 1990, 1995, 1996, 1999 and 2000. Tabulated by Marcin Walecki. Annual reports for 1990, 1995, 1996, 1999 and 2000. Tabulated reportedly spent no less than USD 200,000 on campaign research alone.12 In the Russian 2000 presidential elections, Russia* ElectionsPresidential 1996*Candidate Elections Presidential SpendingLebed Elections Presidential Candidate Spending 2.83 Elections Presidential Candidate 2000** Spending Elections Presidential Zyuganov Candidate 0.869 Spending Candidate Ukraine** Moroz 1999*** Spending 0.214 Mazowiecki Poland**** 0.597 1990 1995 Zhirinovsky 2.72Yavlinsky 2.72 Titow Yavlinsky 0.866 0.840 Tkachenko 0.195 Yeltsin each candidate could spend a mere USD * Official spending limit – USD 2,850,000 ** Official spending limit – USD 920,000 spending limit – USD 2,850,000 ** Official * Official spending limit – USD 385,000 **** N/A *** Official SOURCES:

Table 5: Financing a Presidential Election Campaign: Major candidates’ Spending in Poland, Russia and Ukraine 5: Financing a Presidential Table 920,000 in the first round of elections, and a

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02_01_2_ikstens.p65 32 22.12.2007, 17:36 further USD 0.3 million in the second round. In vote and to political representation in Eastern the case of Putin’s campaign, the total declared Europe have been institutionalised. Who are the sum of contributions to his electoral fund was actual beneficiaries of the competitive elections about USD 1,030,000, part of which was re- which have been established in the region? Is turned to the contributors. Putin had intimated the political process open to a plurality of inter- that he had no intention of running an intensive ests? Are there systematically excluded minori- and costly election campaign. During the presi- ties? dential campaign of 2000 four of the candidates Few of these questions can be answered mean- made serious accusations against Grigorij ingfully without a careful study of the practices Yavlinskij to the effect that his extensive news- of party funding and campaign finance which paper and television coverage exceeded the ar- have been developed in Eastern Europe. With- tificially low limit for the first round of USD out such an examination, one cannot be sure that 0.9 million. the rights to vote and to political participation In general, Russian, Polish and Ukrainian have a different fate than the fate of the quickly examples show that spending limits have proven forgotten constitutional social commitments. in practice to be a fiction having been introduced From this perspective, the first troubling ten- at an unrealistically low level. Limits not only dency in the region is that little attention is be- have failed to curb a political finance ‘arms ing paid to the issue of party funding and cam- race’, but their failure also has undermined con- paign finance as a constitutional matter affect- fidence in the whole system of political finance ing the very fundamentals of the democratic regulations. The rules have made it hard to as- order. A clear demonstration of this is the fact sess the true levels of expenditure. that the CEE’s constitutional courts, although being very active in other areas, have, with a very few exceptions,13 avoided the ‘political’ 4. Trends, hypotheses and tentative questions of party and campaign finance. Leg- evaluations islatures have enjoyed broad policy discretion in the adoption of rules on political finance, with More than a decade ago Eastern Europe no serious input or oversight either by civil so- started its transition to democracy with the adop- ciety or a judicial body. Not surprisingly, this tion of constitutions, which introduced the rights situation has led to the production of legislation to vote freely and to form political parties. The which contains many provisions: pluralistic and competitive political process was (a) aiming mainly to express a certain ideology; not the only value enshrined in the transition (b) attempting to establish the dominance of the constitutions, for instance, various social rights pro-governmental parties, and oppress the – the rights to work, to healthcare assistance, opposition; maternity and retirement benefits, and to free (c) creating loopholes and lack of transparency education – found their place in many of the as far as this maximises the advantages of the East European basic laws. Typically, the ‘fram- major parties or political actors. ers’ across the region were not occupied with The ideology expressed by the predominant the question of the cost of the rights they were majority of the party and campaign finance laws entrenching. One of the consequences of their in the region contains a bias towards egalitari- negligence was that many of the constitutional anism and regulation. Thus, the review of such social commitments remained meaningless dec- laws in the second section of this article has larations. In terms of party funding and cam- found that all of the countries covered provide paign finance, the constitutions were virtually free air-time during campaigns, and most have silent, and left the regulation of this issue to the schemes of public funding and require some national legislatures. public disclosure of political funds. Contribu- Now, a decade later, the time is ripe for a re- tion limits and spending limits are common, examination of the ways in which the right to though by no means universal (see also Ikstens

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02_01_2_ikstens.p65 33 22.12.2007, 17:36 et al. 2001). All these measures and techniques Thus, generally, two major types of models have are traditionally employed to equalise the emerged in the region: one with significant pub- chances of different contestants in the political lic funding, and one with predominantly private process in financial terms, and to reduce the funding coming mainly from corporate sources, impact of personal and corporate wealth on poli- or wealthy individual donors. It should be noted, tics. A forthcoming study (Pinto-Duschinsky et however, that both of these models exhibit sus- al. 2002) has demonstrated that, in comparative tained legislative efforts to equalise the chances terms, the Eastern and Central European coun- of political contestants in financial terms: the tries have introduced more regulation in the area countries without public funding, as a rule, fea- of public disclosure than Western Europe and ture various contribution and expenditure re- the Americas. strictions, free air-time on electronic media, and Finally, the American style libertarian argu- some forms of in-kind support for the parties. ment of ‘money is speech’ has been entirely Formally, only Latvia, Moldova and Ukraine absent from the Eastern European political do not envisage forms of public funding. Yet, scene; radical libertarian principles of legitima- countries such as Bulgaria and Russia provide tion have not been used in the area of party fund- only nominal financial support for parties and ing and campaign finance, despite the promi- candidates, covering a tiny fraction of their ex- nence of neo-liberalism in parts of the region. penditure. In other countries, such as Albania, The demonstrable ideological bias in favour public funding has been introduced very re- of egalitarianism and regulation probably has a cently, and any conclusions about the actual historical explanation: the combined effect of characteristics of the model will be premature. the communist legacy and the influence of po- And there is the case of Belarus, where public litical and legal ideas from Germany, Austria, funding of candidates in elections is fully within and France. Yet, if one looks beneath the com- the discretion of the president of the country. mon ideological surface of the developing mod- Whether public funding in this case is an ele- els, one would find different patterns of fund- ment of democratic government or an instru- ing of politics. ment to suppress and control the opposition is As shown in the previous section, Eastern an open question. European countries have failed to develop a di- Is there a correlation between the establish- versified system of funding sources. In most ment of a particular party funding model and CEE countries, money for politics comes prin- other features of the political regimes in the CEE cipally from corporations or large individual countries? All of the ‘central case’ countries contributors. Small donations are as a rule not without public funding – Bulgaria, Latvia, encouraged in the CEE by forms of matching Moldova, Russia, Ukraine – happen to be coun- grants (which make state subsidies dependent tries with a high ‘state capture’ index according upon parallel, private fundraising), or by tar- to the 2000 study of the World Bank14 (World geted tax relief/credit on small political dona- Bank 2000). Especially telling seems the aver- tions. Despite the low levels of income from age share of the respondent firms in these five membership subscriptions, there are no legisla- countries directly affected by ‘illegal donations’ tive efforts to encourage the parties to extend to political parties – 34.4% – when the average their membership base – state subsidies are as a for all transition countries is 20%. Similarly on rule tied only to electoral performance and par- average, countries without public funding have liamentary representation. a much higher index of ‘buying of legislative Against this background, public funding of votes’.15 parties and candidates (either in the form of re- These data suggest that the lack of public imbursement of electoral expenditures, or in funding is correlated with the opportunity for annual subventions) has been the only effort to corporations and wealthy individuals to ‘cap- diversify the sources of political money, and ture’ the policy-making capacity of the transi- decrease the plutocratic influence in politics. tion states. This problem has recently been over-

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02_01_2_ikstens.p65 34 22.12.2007, 17:36 exposed as a problem of ‘corruption’. Funda- tively weak and fragmented Duma, which would mentally, however, it is a problem of the au- be easier to control. Until 2001, there was no tonomy of the democratic institutions, and a special law on the political parties. The new law defect of democratic representation. Put some- adopted under President Putin does change the what differently, this is a process of degrada- situation to an extent, but it is too early to judge tion of democracy and its transformation into how it is going to be applied in practice.16 In oligarchic forms of government. It is by no short, the lack of significant public funding and means coincidental that the political landscape other institutional advantages served the strate- of Russia and Ukraine is inhabited by ‘clans’, gic goal of starving the opposition of resources. ‘oligarchs’, and other non-democratic centres The pro-presidential parties themselves were not of power. that disadvantaged, because they, as a rule, en- The hypothesis about the correlation between joyed the support of various oligarchs, eager to the lack of public funding and state capture is gain access to presidential and governmental not fully supported by the data, however. Coun- favours. tries with significant public funding, such as A similar logic could be observed in the case Slovakia and Croatia, also have developed forms of Bulgaria – the ruling parties in the country of state capture. The ‘capturing’ of the state in gradually scaled down public funding, because these cases seems to have been a product of op- they realised that by being in power they were pressive majorities around Meciar and Tudjman, in a much more favourable position in terms of who had managed to frustrate the opposition and fund raising than the opposition. Thus, a grow- occupy the key economic positions in the coun- ing funding gap between the government and tries. Having this in mind, it is obvious that pub- the opposition has appeared, which could be lic funding cannot be seen as a remedy against observed both in the case of the Socialist gov- state capture on its own. But it could be argued ernment of Jan Videnov and the right-wing gov- that the existence of significant state funding ernment of Ivan Kostov (Smilov 1999b). will reduce the likelihood of state-capture, by The abuse of governmental positions for party increasing the autonomy of democratically building purposes is an understudied topic in elected politicians vis-à-vis business interests. Eastern Europe. The abundance of evidence and Of course, it could be argued that public fund- allegations of such abuses in Russian elections, ing has disadvantages of its own and that it is but also in other countries in the region, sug- an unsatisfactory solution – even if it may be gest that the dynamics of party funding could seen as a necessary one – to the fundamental hardly be understood properly without a more problem of lack of popular participation in po- careful study of this problem. An encouraging litical life. fact is that, despite the pro-governmental bias In certain cases, the choice of a model with- leading to a growing gap in the funding of the out significant public funding has been dictated governmental and opposition parties, electoral by the desire of the governing parties or politi- ‘surprises’ do happen in Central Eastern Europe cians to preserve their competitive advantages. on a regular basis. Instructive is the case of The clearest example of such a development has Bulgaria, where the financial might of the So- been the Russian evolution of party funding and cialist Party in 1997, and the UDF in 2001 did campaign finance. After the dissolution of par- not save them from bitter electoral defeats. liament in 1993, President Yeltsin saw the es- Meciar’s party in Slovakia and Tudjman’s sup- tablishment of the political parties as a major porters in Croatia lost key elections despite their threat to his rule: therefore, both the electoral long stays in power and their opportunity to system and the rules on party funding were de- accumulate huge resources. In some extreme signed to encourage individual candidates and cases, like the last parliamentary elections in ad hoc electoral alliances (Smilov 1999b). The Poland and Romania, the ruling parties could ‘established’ parties had no major institutional not enter the legislature at all. What is more, advantages, since the President preferred a rela- new major parties do appear all around the re-

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02_01_2_ikstens.p65 35 22.12.2007, 17:36 gion, and in some extravagant cases they even principles, which the majority of Eastern Euro- manage to win parliamentary elections – King pean party funding models create, lead the pub- Simeon II’s movement in Bulgaria is an inter- lic to be bitterly disappointed in cases of irregu- esting, although probably aberrant example. larities and to quick conclusions that the ‘sys- This evidence speaks against attributing too tem is rotten as whole’. Perception of wide- much influence to the mechanisms and abuses spread corruption is possibly a combined prod- of party funding rules on the political process uct both of facts and extremely high expecta- in the countries of Central Eastern Europe. These tions. If these perceptions lead to an improve- countries are not so ‘captured’ after all, and the ment of democracy in Eastern Europe, they democratic process has not been entirely stifled should be welcome. However, in countries by the interests of a few oligarchs. More trou- where there is a danger that a fledging democ- bling from that perspective, seem to be Russia racy itself may be disregarded as a ‘corrupt form and Ukraine, where radical political changes of government’ perceptions should be treated concerning the centre of power – the presiden- seriously, as they can become self-fulfilling tial institution – are much more problematic. But prophesies. this is of course due to the constitutional struc- ture of these states. In any event, the impact of political finance models and practices on this issue would be extremely difficult to measure. If the political finance model matters in a par- REFERENCES ticular area, however, it is definitely the area of perception of the legitimacy of the governmen- 1 Two of the authors, Dr Ikstens and Dr Smilov, have completed doctoral theses relating to the subject of tal structures. Let us consider the fact reported this article. Marcin Walecki has largely completed by the World Bank state capture study that 42% the research for a third doctoral thesis. Interviews of the firms in Bulgaria report themselves as were carried out by the above authors mainly in Bul- directly affected by ‘illegal political donations’. garia, Latvia, Poland, Russia and Ukraine. Dr Pinto- Duschinsky has been an advisor to governmental At the time the BEEPS study was done, which bodies or to local non-governmental organisations is the basis of the World Bank report, there were on issues of political finance in the former Czecho- no contribution limits in Bulgaria and no re- slovakia, Latvia, Russia, Poland, and Ukraine. quirements for disclosure of the name and the 2 Interview with the Chairman of the Socialist Party, Alexander Moroz, Kiev, October 2000. amount of the donations. In what sense, then, 3 As a result of the 1998 administrative reform, politi- were the donations illegal? A plausible hypoth- cal parties considerably increased the number of their esis is that most of the respondents had differ- councillors. See Szczerbiak (1999). ent ideas about the illegality of the donations, 4 Official reports for the 1999 election campaign. See Pentus (2001). but they converged in their common overall 5 Source: Central Electoral Commission, 1996, Vybory perception of the political system in the coun- 95: Electoralnaya Statistika Moscow: CEC. try as corrupt. Thus, despite the effort of the 6 Source: Central Electoral Commission. World Bank experts to base their study on more 7 Source: ITAR-TASS news agency, Moscow, 29 Feb- ruary 2000. tangible, proxy measures of corruption, prob- 8 As it is often the case, the facts may differ from those ably a significant part of the responses they got contained in the balance sheets. For the UP annual reflected general perceptions of the ‘corruption report see p. 6. of the system as a whole’. This is all the more 9 In Poland, the SLD acknowledged in the National probable, having in mind the poor public knowl- Election Committee Communiqué of February 18, 1992 that it received PLZ 10 million from its own edge of the technical intricacies of the rules and parliamentary caucus in 1991. This kind of practice, principles of party funding and campaign fi- though essentially illegal, is still taking place in a nance. more indirect way. This observation suggests a bold hypothesis: 10 Political parties with parliamentary representation receive money through their MPs’ and Senators’ of- the egalitarian expectations for a well-regulated fices for running their local offices, as well as the system of political finance reflecting just social necessary equipment for operating these offices, and

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02_01_2_ikstens.p65 36 22.12.2007, 17:36 a certain number of postage-free envelopes for par- Moraru, Adrian (coord.) (2000). Political Parties’ Fund- liamentary correspondence. ing, Pro Democracy Association, Bucharest 11 Interview with the leader of SPS, Moscow, Septem- [www.apd.ro]. ber 2000. Pinto-Duschinsky, Michael/Karl-Heinz Nassmacher/ 12 Interview with Dr Leonid Gozman, West Sussex, Daniel Zovatto et al. (eds.): Funding of Parties and November 2000. Election Campaigns: Handbook, Stockholm (forth- 13 The most notable exception was the constitutional coming). controversy in the Czech Republic concerning Smilov, Daniel (1999a). Legal Regulation of Political amendments to the law on political parties providing Finance: Bulgaria and Russia Compared with De- for an increase of state subsidy for big parties. See veloped Western Democracies, Ph. D. thesis, Cen- the decision of the Czech Constitutional Court from tral European University, Budapest. February 27, 2001. Another exception was a 2001 Smilov, Daniel (1999b). Structural corruption of party- decision of the Macedonian Constitutional Court, funding models: governmental favouritism in Bul- which declared unconstitutional the ownership of garia and Russia, Paper presented at the Princeton companies by political parties. University-Central European University Joint Con- 14 The average index of these five countries is 31.8, ference on Corruption, Budapest, 30 October – 6 while the average for all transition countries in the November 1999. study is 21. For the purposes of comparison, low state Walecki, Marcin (2001a). Political finance in Central capture countries like Slovenia and Hungary stand Eastern Europe, in: Karl-Heinz Nassmacher (ed.): at 7. Foundations for Democracy: Approaches to Com- 15 The share of firms directly affected by the buying of parative Political Finance, Baden-Baden, legislative votes in the five countries without public Walecki, Marcin (2002). Money and politics in Central funding is 38, while the average for all transition Eastern Europe, in: Michael Pinto-Duschinsky/Karl- countries is 24. Heinz Nassmacher/Daniel Zovatto et al. (eds.): Fund- 16 For instance, it is not yet clear how the new scheme ing of Parties and Election Campaigns: Handbook, of state funding (envisaged by the 2000 Party Law) Stockholm (forthcoming). will actually operate in practice. World Bank (2000). Anti-corruption in Transition: A Contribution to the Policy Debate, Washington D. C. [http://www.worldbank.org/wbi/governance/pdf/ contribution.pdf]. BIBLIOGRAPHY

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Bertrand, E. D. de Speville (2000). Summary of Mem- BULGARIA ber and Observer States’ replies to Political Party Kanev, Dobrin (2001). Campaign finance in Bulgaria, and Candidate Funding Questionnaire, Council of Paper presented at the workshop on party funding Europe, Directorate General of Legal Affairs (DGI), and campaign finance in Central and Eastern Europe, Multidisciplinary Group on Corruption (GMC), Open Society Institute/COLPI, Budapest, 2–3 No- Working Group on the Funding of Political Parties vember 2001. (GMCF), 21 February 2000, Strasbourg. [Council of Europe document number: PF/DAJ/GMC/docs99/ CROATIA GMC99 23E rev],

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02_01_2_ikstens.p65 37 22.12.2007, 17:36 of National Elections in Selected Foreign Countries, Walecki, Marcin (ed.) (2000b). Finansowanie polityki: Library of Congress, Law Library, LL 97–3, 97–1552, wybory, pieniadze, partie polityczne, Instytut Spraw May, Washington D. C. Publicznych: Warsaw. Ondrej, Cisar/Tomas Petr (2001). Party funding in the Walecki, Marcin (2001b). Poland, Paper presented at the Czech Republic: recent developments, Paper pre- workshop on party funding and campaign finance in sented at the workshop on party funding and cam- Central and Eastern Europe, Open Society Institute/ paign finance in Central and Eastern Europe, Open COLPI, Budapest, 2–3 November 2001. Society Institute/COLPI, Budapest, 2–3 November 2001. ROMANIA Reed, Quentin (1997). Political corruption, privatisation, Roper, Steven D. (2001). Campaign finance in South and control in the Czech Republic: a case study of East Europe: the case of Romania, Paper presented problems in multiple transition, Ph. D. thesis, Uni- at the workshop on party funding and campaign fi- versity of Oxford. nance in Central and Eastern Europe, Open Society Reed, Quentin (1999). Corruption in Czech privatisation: Institute/COLPI, Budapest, 2–3 November 2001. dangers and policy implications of neoliberal privatisation, Paper presented at the Princeton Uni- RUSSIA versity-Central European University Joint Confer- Avtonomov, Alexei (2000). Political funding in Russia, ence on Corruption, Budapest, 30 October – 6 No- Study prepared for the Political Finance Project of vember 1999. International IDEA. Simicek, V. (ed.) (1998). Financovani politickych stran Gel’man, Vladimir (1998). The iceberg of Russian po- v. CR, International Political Science Institute, Law litical finance, in: Peter Burnell/Alan Ware (eds.): Faculty, Masaryk University, Brno. Funding democratization, Manchester. Koliushin, E. I. (1998). Prawo i Finansirowanie Wybo- ESTONIA row: Nauczno-prakticzeskoje Posobie, Moscow. Pentus, Keit (2001). Party funding in Estonia, Paper pre- Nadeau, Christian (ed.) (2000). Parliamentary and Presi- sented at the workshop on party funding and cam- dential Elections in Russia, 1999–2000: Technical paign finance in Central and Eastern Europe, Open Assessment, International Foundation for Election Society Institute/COLPI, Budapest, 2–3 November Systems: Moscow. 2001. Postnikov, Alexander (1995). Finansirowanie Wyborow: Zakonodatel’noye Regulinovaniye, Moscow. LATVIA Roudik, Peter (1997). Russia, in: Ruth Levush (coord.): Ikstens, Jānis (2000). Party finance in Latvia, Paper pre- Report for Congress: Campaign Financing of Na- sented at an international conference “Party Finance tional Elections in Selected Foreign Countries, Li- and Corruption”, Riga, 24–26 November 2000. brary of Congress, Law Library, LL 97–3, 97–1552, Ikstens, Jānis (2001). Latvia, Paper presented at the May, Washington D. C. workshop on party funding and campaign finance in Sakwa, Richard (1998). Left or Right ? The CPRF and Central and Eastern Europe, Open Society Institute/ the problem of democratic consolidation in Russia, COLPI, Budapest, 2–3 November 2001. in: John Loewenhardt (ed.): Party Politics in Post- Communist Russia, London, 128–158. LITHUANIA Treisman, Daniel (1998). Dollars and democratization: Vyriausioji rinkimu komisija (2000). Seimo rinkimai the role and power of money in Russia’s transitional 2000, Vilnius: Vyriausioji rinkimu komisija. elections, in: Comparative Politics, 31 (1), 1–21.

POLAND UKRAINE Szczerbiak, Aleks (1999). The Impact of the October Pidluska, Inna (2000). Ukraine: trends in development 1998 local elections on the emerging Polish party of political parties and party financing in an emer- system, in: Journal of Communist Studies and Tran- gent democracy, Study prepared for the Political Fi- sition Politics, 15 (3), 80–100. nance Project of International IDEA. Szczerbiak, Aleks (2000). Party structure and Protsyk, Oleg (2001). Party funding in Ukraine, Paper organisation in post-communist Poland, Paper pre- presented at the workshop on party funding and cam- sented at the Political Studies Association annual paign finance in Central and Eastern Europe, Open conference, London, 10–13 April 2000. Society Institute/COLPI, Budapest, 2–3 November Walecki, Marcin (2000a). Finansowanie polityki a 2001. korupcja polityczna, in: Jeremy Pope (ed.): Walecki, Marcin (2001c). Ukraine, Paper presented at Rzetelnosc zycia publicznego: podrecznik procedur the workshop on party funding and campaign finance antykorupcyjnych, Transparency International: in Central and Eastern Europe, Open Society Insti- Warszawa. tute/COLPI Budapest, 2–3 November 2001.

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02_01_2_ikstens.p65 38 22.12.2007, 17:36 AUTHORS been active in the campaigning for the rights of victims of the Nazi Holocaust.

Jānis IKSTENS, born in 1970, Assistant Professor in Address: Brunel University, 92 Hamilton Rd., Oxford, Political Science at the Vidzeme University College in OX2 2QA, UK; e-mail: [email protected]. Latvia. He has held fellowships granted by the Fulbright Foundation (at Columbia University, New York) and by the Soros Foundation, Latvia. Main research interests: Daniel SMILOV, born in 1970, Senior Consultant of political parties and party systems in the Baltic coun- the Constitutional and Legal Policy Institute, Budapest, tries. Co-author of a study for the United States Agency and Visiting Professor at the Central European Univer- for International Development on political financing in sity, Budapest. He is DPhil candidate at Jesus College, the 18 member countries of the Association of Central University of Oxford. Research interests: constitutional and Eastern European Electoral Administrators (2000). law and adjudication, party funding and campaign fi- nance, and corruption. Address: Department of Political Science, Vidzeme University College, Cesu iela 4, Valmiera, LV–4200, Address: Jesus College, Oxford, OX1 3DW, UK; e- Latvia; e-mail: [email protected]. mail: [email protected].

Marcin WALECKI, born in 1974, PhD candidate at Michael PINTO-DUSCHINSKY, born in 1943, Se- St. Antony’s College, University of Oxford, Senior Pro- nior Research Fellow in Politics at Brunel University, gram Officer at the National Democratic Institute Wash- UK. He chairs the International Political Science ington DC, USA. Research interests: political parties and Association’s Research Committee on Political Finance political finance in post-communist countries. and Political Corruption. In 1992–98 he was founder governor of the Westminster Foundation for Democracy. Address: e-mail: [email protected]. He specialises in research on political financing and has ac.uk.

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