Buying influence: Money and elections in the Balkans

Corruption scandals involving the financing of political parties and election campaigns are daily news in the countries of the Balkans. Therefore it is not surprising that citizens in Croatia, Macedonia (FYR) and Serbia view political parties as the most corrupt of 12 public institutions assessed by Transparency International’s Global Corruption Barometer 2013, set to be published 9 July. The result is a lack of public trust in the political system, posing a threat to democracy in a region where the influence of powerful tycoons has dominated politics for more than two decades.

Increased transparency and better public knowledge about the flow of money in politics, makes it easier to detect and expose corrupt practices. Transparency in political party financing can also help citizens to make informed voting decisions and therefore bolster democratic processes. All this has made political party financing a strong focus for anti-corruption reforms in the Balkans, which have largely been driven by the EU accession process.

A new Transparency International report launched today entitled ‘Buying Influence: Money and Elections in the Balkans’ assessed transparency in election campaign financing in 2011-2012 in Croatia, Kosovo, Macedonia (FYR) and Serbia, and non-electoral political party financing in Albania in 2012. Despite considerable improvements in the area of party financing in the Balkans, the report found significant gaps in both election campaign financing laws and the way they are implemented.

Do political parties honestly declare their funding and where it comes from?

Although information on political parties’ donors is largely made available, financial reports submitted by the parties do not enjoy much trust in terms of accuracy. In Croatia, independent experts estimate that reports from political parties on where the money for their election campaigns comes from only account for up to 50 to 60 per cent of the actual revenue in their campaign budgets.

In Serbia, reporting on campaign financing following the most recent elections in May 2012 was considered more reliable than for previous elections. This is largely attributed to the significant increase in public funding of election campaigns, reducing the incentive for parties to hide sources of income. But despite this improvement, the ultimate source of funding for almost half of reported expenditure during the last election is still unknown. Questions remain open about how funds that circumvent official reports are channelled to the parties, and under what conditions the transactions take place.

Are political parties sanctioned for flouting the rules?

Parties will comply with the laws on declaring finances if they know that the cost for breaking the rules is high. However, the findings of the report show that this has not been the case so far. Even when relatively robust sanctioning mechanisms are in place, implementation is almost non-existent across the board. In Serbia and Macedonia (FYR) no political party has ever been sanctioned for violating the rules on political campaign financing, and in Albania, the suspension of public subsidies has never been invoked. Even where sanctions are imposed, the scale is often negligible. In Kosovo, for example, despite numerous recorded violations of political financing regulations, the total value of fines issued in 2011 amounted to an average of only 451 euros per party sanctioned.

How strong is oversight on political parties?

By law, all of the state oversight agencies in charge of supervising the financing of political parties have relatively far reaching powers, but in practice these agencies cannot effectively hold political parties to account because of a lack of resources (Croatia, Serbia) or a lack of independence from political parties (Albania, Kosovo, Macedonia (FYR)). In Kosovo, the Chairman of the Central Election Commission is appointed directly by the President of the Republic, compromising the independence of the institution. In Macedonia (FYR) the law grants authority to the State Commission for Prevention of Corruption and the State Auditor’s Office to initiate independent investigations on the financing of parties and candidates, but despite this mandate, the effectiveness of these agencies remains limited.

In Croatia, Macedonia (FYR) and Serbia, non-governmental organisations play an active role in monitoring political party and campaign financing. They carry out activities such as media monitoring, reviewing political parties’ financial reports and proposing political financing reforms. Oversight exercised by civil society should rightly complement supervision by state bodies, but all too often it is filling a gap. In Croatia, non-governmental organisations that oversee campaign financing are deemed considerably more effective than the State Electoral Commission in holding political parties to account.

What can be done?

As the report shows, transparency laws are an important starting point for reducing corruption. However, strong enforcement of these rules and ongoing public monitoring of election campaign spending is vital for tackling corruption effectively. In addition, the following measures need to be taken:

• To better inform the public about the funding sources of politicians on the ballot, it is important to disclose information on election campaign funding before election day. Croatia and Macedonia (FYR) require financial reporting of income and expenditure during the electoral period (as opposed to after), allowing citizens to cast an informed vote when they go to the polls. This should be a legal requirement across the board.
• To ensure the independence of state oversight agencies, members should be drawn from across the political spectrum and their appointment should be approved by all the major political parties contesting an election.
• In Macedonia (FYR) it is a legal requirement that the media publish a unified price list for political advertising at the outset of an election campaign. To strengthen rules on equal access to the media, this practice should be adopted by other countries.

National reports

• Albania
• Croatia: English | Hravatski
• Kosovo: English | Shqipe | Cрпски
• Macedonia (FYR): English | Македонска
• Serbia: English | Cрпски