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Are Political Finance Regulations Helping to Combat Party Corruption in Europe and Latin America?

By Fernando Casal Bértoa

As has been repeatedly stated, money is the main fuel of politics. Without it political parties cannot function, elections cannot take place, and democracy – at least as we know it – cannot exist. It is for this reason, but not the only one, that most political systems in the world guarantee (at least some) political parties access to state resources either to finance their electoral campaigns or to keep their political organizations running, or both.

However, as happens with any other fuel, money in general and party funding in particular can become extremely explosive. Indeed, because money and political power tend to be positively correlated, parties can be tempted to misuse those state resources and/or fall into illegal financing. For that reason, from the second half of the 1950s onwards, most world democracies started to introduce a set of regulations trying to control the way in which political parties were to be financed. As a result, and with very few exceptions (e.g. Switzerland, Ukraine, Bolivia, Venezuela, etc.), most democratic countries in both Europe and Latin America currently contain a piece of legislation – be it a specific Party Finance Law or various sections/dispositions in the Party Law, the Electoral Code or even the Constitution – regulating party finance one way or another.

The main idea is that by guaranteeing political parties access to public subsidies as well as by regulating and controlling both their income and expenditure: (1) party competition will become more balanced, (2) parties will free themselves from private interests, (3) party corruption will decrease (if not disappear), and (4) party legitimacy in the public eye will grow. However, is it really the case? In particular, have those political finance regulations contribute to the disapearance, or at least reduction, of illegal funding and other corrupted practices? And even more specifically, have perceptions of corruption of political parties declined with the introduction of public funding and (increasingly stricter) party funding regulations?

In principle, and following common agreement among scholars, national legislators and/or supra-national policy advisors, the level of corruption of political parties in a given country should be lower the more (intensively) their financial activities are regulated by the state (figure 1). The reasoning behind such statement is that the abuse of public office and/or resources by political parties (e.g. bribery, vote purchasing, etc.) will be more frequent in those countries where party income and/or expenditure is weakly (or not at all) regulated, parties are not financially accountable or remain unpunished despite flagrant legal violations. On the contrary, in those countries where party funding is tightly regulated, the financial activities of parties remain strictly controlled and substantive sanctions are provided in case such activities deviate from the path marked by the law, parties will have less incentives to abuse state resources or fall into illegal financing.

f1 f2

However, a first look at the linkage between political finance and party corruption reveals a totally different relationship (figure 2). Thus, while parties are perceived to be very corrupt in countries where their financial activities are highly regulated (e.g. Southern European democracies, most of Latin America, etc.), citizens of Scandinavia or more consociational democracies (e.g. The Netherlands, Switzerland, etc.), where party funding regulation is very limited or almost inexistent, tend to have a better perception of their political forces. All in all, this seems to suggest that rules on party funding may not only have not reached their intended goal in most cases, but also have even motivated the opposite behaviour in many occassions.

In an article making use of a new political finance dataset comparing 37 European and Latin American democracies the author and his colleagues at Leiden University found that, in clear contrast to what had been expected, political finance regulation has not helped to reduce the perceived level of corruption among political parties. In particular, and contrary to conventional wisdom, perceptions of party corruption continue to be high despite the introduction of (1) substantial restrictions to private funding, (2) a tighter system of financial control, and (3) a stricter sanctions framework. Moreover, and what is perhaps more interesting, the injection of generous amounts of public cash for political parties does not seem to have solved the problem of corruption. Thus, parties which are financially dependent on the State are not perceived to be less corrupt than those relying mostly on private sources (e.g. membership fees, donations, etc.). In this context, further research by the author in both Portugal and Poland found that originally private funded parties do not renounce to this type of funding despite being guaranteed an important share in the distribution of public taxes. In other words, and in the field of political finance, old (party) habits also die hard.

In sum, neither public funding nor party funding regulation has brought the panacea they had promised: namely, a reduction in the level of party corruption. In fact, and contrary to what both politicians and academics have told us,  parties continue to eat the carrot offered by the state (i.e. subsidies), but the effects of an increasing application of the public stick are yet to be seen. This research should at least constitute a warning against those voices promising the earth – i.e. the end of party corruption – in exchange of more regulation or a substantial contribution from our taxes.

Fernando Casal Bértoa is a Nottingham Research Fellow in the School of Politics and International Relations at the University of Nottingham

Image credit: Wikipedia Commons


Published inBritish PoliticsCorruptionEuropean Politics

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