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Cleaning up politics

- July 16, 2015

The degree of state regulation of political finance around the world, from less (yellow) to more (red)
The role of money in politics challenges states worldwide, both rich and poor. Its abuse raises problems of graft, corruption and cronyism, which undermine legitimacy and governance. In recent years, financial scandals have erupted all over the world. In Britain, a Conservative Party treasurer offered access to the prime minister for 250,000 pounds. In Germany, corruption hit during the final years of Chancellor Helmut Kohl. In Brazil, high-profile politicians made clandestine payments in exchange for support. In Australia, members of the prime minister’s Liberal party stepped down after soliciting illegal donations. In Chile, recent corruption allegations rocked the political establishment.
Yet money is essential for mobilizing election campaigns, sustaining political party organizations, and communicating with citizens. And countries, such as Sweden, have managed to avoid falling foul of malfeasance and graft.
So how can politics be cleaned up most effectively? New evidence on this issue is available from a comparative report and dataset released by the Money, Politics and Transparency project, produced by Global Integrity (GI), the Sunlight Foundation, and the Electoral Integrity Project (EIP) at Harvard University and the University of Sydney.
Election experts worldwide argue that political finance is one of the key problems faced by political parties and candidates during election campaigns, and ineffective regulations damage electoral integrity worldwide. The report compares how this problem is tackled in emerging economies as diverse as India, Mexico, South Africa and Russia, as well as in established democracies, such as Britain, Japan, Sweden and the United States.
The Money, Politics and Transparency project investigated three crucial questions: How do states around the world attempt to regulate the role of money in politics? What triggers landmark reforms? And, what ‘works’, what fails and why?
The project Web site presents evidence from its Political Finance Indicators, comparing over 50 countries worldwide. A new downloadable report on Checkbook Elections describes detailed case studies of campaign finance reforms in states from all regions of the world.
How do states regulate money in politics?
Policies regulating the role of money in politics include disclosure requirements, contribution limits, spending caps and public subsidies. In most cases, these strategies are combined.
States range across the spectrum from laissez-faire to comprehensive regulation. Transparency rules reflect a minimal role for the state. Contribution and spending limits intervene more directly to provide more equitable party competition and to limit the risks of corruption. Public funding, directly reliant on the state, is the strongest single form of state intervention. A combination of all regulatory policies reflects maximum state regulation.
Data from International IDEA shows that countries such as South Africa, Sweden and India have more laissez-faire policies, while Brazil, Indonesia and Russia are more interventionist. But more legal control is not necessarily better. The results are mixed. For example, Japanese reforms during the early 1990s successfully cut election costs and expanded political competition. But Russia’s tight political finance laws entrenched electoral authoritarianism. And South Africa’s lax political finance laws have entrenched ANC predominance.
The map at the top of this post shows the degree of state regulation of political finance around the world. Countries with more laws on the books are not necessarily closer to achieving a level playing field in party competition, more transparency or less corruption. The reasons become evident if we compare several typical types of reforms.
Transparency requirements are among the most common reforms of the last decade. But disclosure rules are often inconsistently applied. Global Integrity used experts to to construct their Political Finance Indices covering 54 countries worldwide. The results suggest that eight out of 10 countries have statutes requiring parties and/or candidates to submit contribution and expenditure reports. Yet in reality this rarely happens during campaign periods, and the public is unable to access much of the information reported to oversight authorities.
Restrictions on contributions and expenditures are often undermined by loopholes. For example, laws often limit the amount an individual can donate directly to a political party or to a candidate, but not both. Similar loopholes in regard to anonymous and corporate donations are common, and spending limits also fail in many cases. Moreover, few countries regulate election spending by nonprofits, unions, and independent groups, where this is regarded as a private activity in civil society.
Finally, states have adopted public funding and subsidy laws to reduce dependence upon private sector donors and the dwindling band of party members. In practice, however, funds can be unfairly allocated
What ‘works’ and why?
Effective laws depend upon enforcement capabilities, political will, and autonomous oversight agencies. Unfortunately oversight bodies are often hamstrung through a lack of merit-based appointments, independent leadership, technical capacity, and lack of authority. Partisan appointments, insufficient staff and budget, and/or a lack of substantive legal power hinder oversight bodies in countries as diverse as the United States, Romania, Nigeria and Russia.
No single policy can control money in politics. For instance, public funding without spending or contribution limits can lead to a campaign finance arms race. Disclosure requirements without spending caps or equitable public funding may erode public trust in the electoral process. It is more effective to use a balanced mix of regulations fitting each country.
Policies often require trade-offs between values, such as the importance of freedom of expression vs. a level playing field for all parties.
Lax regulation can lead to skyrocketing campaign costs, corruption, cronyism and winner-take-all politics. Yet excessive regulation can lead to loophole seeking and entrenched elites.
More information, including the report Checkbook Elections, detailed case studies and the Political Finance Indicators, is available at www.moneypoliticstransparency.org.