Funding of political parties and elections: Getting the system right The way that parties and candidates access their funding greatly affects how the political system functions and how democratic politics is conducted. Money is necessary for a democracy to function well and it helps strengthen the core components of democracy, establish sustainable party organisations and provide the opportunity to compete on (more) equal terms. Yet it also poses serious challenges and threats to the political process. Findings from Transparency International’s 2013 Global Barometer report reveal that political parties are perceived to be the most corrupt institution of those surveyed, ahead, for example, of the police, public ocials, parliament and the judiciary (TI, 2013).1 Regional surveys such as the Latino- and Afrobarometers reveal a similarly bleak picture, with low levels of trust in political parties.2 Such distrust can be explained in part by the exposure of financial misconduct of parties and politicians in a wide range of countries. The challenge for policy-makers and politicians is to strike the right balance: limiting the negative effects of money while encouraging democratic consolidation through pluralistic political competition. In this effort, it is important to view both the use and control of money in politics as the means to an end rather than an end in itself. Levers of change In general terms, political finance refers to all money in the political process – legal and illegal. In this article we focus on financing of ongoing political party activities and electoral campaigns, particularly campaigns by candidates and political parties but also by third parties. What is the best way to regulate political finance? Political traditions and culture vary between countries, and it should not be assumed that what is considered the ideal solution in one country would even be acceptable in another. To put it differently, since there is no form of democratic governance that is preferred everywhere, there is no ultimate method of regulation. Reform does not always have to involve the legal system. In many cases, the most relevant reforms may involve ways to strengthen the capacity, independence and/or political support of the enforcing institution so that it can better implement existing legal provisions. Any reform-minded person must start by considering how they would like democratic politics to be organised, what political system should exist and what form of democratic process is desired. Too often, political finance regulations are the result of reactive measures to crisis situations and so reform discussions start Commonwealth Governance 12 Handbook 2014/15 with whether a particular regulation should be used, rather than a more holistic consideration of broader issues such as the role of political parties and election candidates, and that of the state in controlling these actors. Second, the specific context of each country must be taken into account. Regulations are not created in a vacuum but in real-world situations. Two aspects are included here under the notion of context. The first is the political system as a whole. This includes structural and institutional factors that must be taken into account, as they often have a significant impact on the suitability and effectiveness of different political finance regulations – examples of important structures are the electoral system and presidentialism versus parliamentarism.3 The other aspect is the particular set of challenges faced by each country relating to money in politics. Regional trends: Public funding Since the early 1990s there has been a movement towards increasing levels of regulation (but not necessarily increased enforcement) in most of the regions examined. This development has gone hand in hand with increased levels of overall democratisation and legislation4 to shape and regulate new democratic systems.5 All of the (180) countries surveyed have some rules in place, and more and more countries are creating single Political Finance Acts.6 Although all African countries have regulations on how money is allowed to flow in and out of politics, these formal regulations play a very limited role in how politics function. This also relates to public funding, which is used in more than two-thirds of African countries but which almost universally has no more than a symbolic meaning. African electoral campaigns are largely funded through candidates rather than political parties, although there are some exceptions, and are frequently influenced by clientelistic networks. In many Asian countries there has been a commercialisation of politics that has strengthened ties between the political sector and business interests. Public funding for political parties is less widespread in Asia overall than in other regions. There are a number of countries in South Asia, such as Afghanistan, Nepal and Pakistan, which do not provide public funding at all. These countries’ rationale for choosing not to do so requires further analysis. The most generous public financing schemes in Asia are found in the north-east. A combination of public and private funding is preferable as recommended, for example, by the Council of Europe.7 However, Elin Falguera and Magnus Ohman Adapted from International IDEA, 2014. Funding of Political Parties and Election Campaigns: A Handbook on Political Finance. International Institute for Democracy and Electoral Assistance. International IDEA publications are independent of specific national or political interests. Views expressed in this article are those of the authors and do not necessarily represent the views of International IDEA, its board or its council members.
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