The following is an excerpt from a presentation by Senator Bruce Golding at the Inter-American Forum on Political Parties Second Conference in Vancouver, Canada, December 5-6, 2002.
IT WAS a man called Mark Hanna, the political strategist who masterminded the United States presidential campaign of William McKinley in 1888, who is quoted as saying:
"There are two things that are important in politics. The first is money...and I can't remember what the second one is."
Politics is indeed a marketplace. It involves selling ideas to the consumers in that marketplace who make up the electorate. It involves competition in that marketplace because the market demands that all ideas must not only be allowed but must be encouraged to contend. And, therefore, as in any marketplace there must be rules to prevent market dominance and unfair trading practices.
As is the case in any marketplace, too, promotion and marketing are important elements of doing business. The emergence of new technology, especially in communications, has drastically transformed the methodology for marketing and promotions but it is also very expensive.
How political parties finance their presence and activities in the marketplace, therefore, is not incidental but of fundamental importance to the workings of the marketplace and, hence, the democratic process. It affects not only the quality of the product in terms of the ability to procure the material and services to develop a good product but also the ability to market it effectively.
How then are political parties to secure the financing necessary to operate in that marketplace? They can hardly be expected to borrow money not only because they are unlikely to be able to offer any realisable collateral but their repayment obligations may conflict with their duties as the holders of public trust. And debt financing would place them at the mercy of their creditors an invidious position for any political party to find itself. Should political parties make investments and use the returns to finance their operations? This would inevitably lead to conflicts of interest between what is good for the country and what may be good for their particular investments.
Should party members be expected to fund its operations by way of subscriptions? Party membership necessarily reflects the broader electorate. Especially in developing countries, the electorate is made up predominantly of poor people who are in no position to sustain significant financial contributions to their party.
Furthermore, parties that attract substantial funding from their members tend to be driven by fanaticism where it is the party and not the nation that is paramount and they are likely to become governments of party followers not governments of the people.
This brings us to two important and traditional sources of funding: (a) private contributions; and (b) state funding. Except where restrictively regulated, private contributions are invariably skewed with the bulk of the contributions coming from a minority of contributors.
The danger here lies in the unwritten conditionalities that may be attached to individual contributions and the likelihood of large donors exerting significant self-serving control over party policies and, possibly, governmental decisions.
Even where no conditionalities are attached, parties are hardly able to avoid a sense of obligation to these contributors if for no other reason than to ensure the continuation of such contributions.
Private contributions also open up the possibility of illicit money from drugs, money laundering and other forms of racketeering being used to buy influence or protection. The spectre of similar tactics being employed by the purveyors of terrorism as the war on terrorism escalates cannot now be ruled out.
State funding which currently exists in some developed countries may be difficult for governments in poor countries to take on. Funding political parties and campaigns while being unable to provide proper roads, schools, water supplies and health services is difficult to justify.
It also raises questions of what specific activity ought to be funded, how equitably are the funds disbursed and what requirements are imposed to ensure accountability. There is also the danger that state funding will serve to entrench the position of dominant parties to the disadvantage of other contenders.
Further, if politics is not "sanitised" or conducted on a "best practices" basis state funding will merely serve to entrench bad political practices.
The issue of foreign sources of funding is raised from time to time. The danger here includes the possibility of the real or perceived interference by foreign entities in domestic political activities.
I believe that our consideration of these issues must take into account the realities of the world in which we now live. We are experiencing a new world order defined increasingly by trade and the forces of the market and facilitated by instantaneous communication and connectivity.
That new world order can thrive only in the context of democracy. Thus, globalisation means more than just trade liberalisation. It requires the transnationalisation of democratic values and practices.
While we must recognise the increasing attention that is being paid internationally to domestic political practices, that focus has been largely confined to electoral systems, civil society participation and election monitoring and validation.
That limited approach may have been appropriate for the period in which several countries were making the transition from authoritarian to democratic rule.
Today, however, we need to move beyond the notional criteria for recognising the existence of democracy because these minimum standards do not speak sufficiently to the quality and integrity of democracy or of democracy in action.
Attention must now turn to the internal workings of political parties. As principal players in the political process their internal organisation and dynamics impact significantly on the quality and integrity of democracy. And we must dismiss the notion that internationalising standards for the practice of politics and hence the operations of those who practice that politics represents an unwarranted intrusion into the domestic affairs of sovereign states.
In that context it is good that the Third Summit of the Americas held in Quebec last year recognised this imperative and issued a mandate. It is good that the OAS has taken up that mandate, adopted the Inter-American Democratic Charter and established the Inter-American Forum on Political Parties. And it is good that we are here at the second meeting of the Forum in furtherance of that mandate, seeking to identify practical steps to give effect to the provisions of the Charter.
If we accept that strengthening democracies is critical to the globalization process and that political parties are integral to the practice of politics, it demands of us a commitment to strengthening political parties at the micro level strengthening their capacity to perform and that must include the means by which they fund their operations.
It must include measures that would ensure fairness and transparency in the use of state funds as well as protecting political parties from sources of financing that would corrupt them.
The majority of countries have no laws or regulations regarding the funding of political parties. Some are reluctant to even recognise political parties as legal entities let alone to intrude on their internal operations. This, however, is changing. Within the last five years a growing number of countries have enacted relevant legislation. Others are undertaking major overhaul of existing legislation.
My own thoughts on the matter have important points of reference:
Political parties can no longer be seen as private entities. They are public institutions that seek to and do, in fact, exert power over the lives and circumstances of the public.
Contributing financially to a political party is a democratic right the right to choose and to support that choice in tangible ways. But, like all other rights, it must not be allowed to be exercised in ways that infringe the rights of others.
Political parties are essential in achieving and maintaining good governance. Hence, state funding for political parties is a legitimate object of public expenditure.
State funding must carry with it strict conditionalities. Political parties in receipt of public funds can no longer see themselves as private organisations whose business is exclusively their own. Their business is, in fact, the public's business and, especially if that business is funded even partially from the public purse, the public is entitled to hold them to account.
I therefore suggest that we consider the following:-
(1) STATUTORY REGISTRATION
There should be a statutory requirement for the registration of political parties with modest criteria including the size of membership, the existence of an established constitution and rules and the holding of periodic, internal, democratic elections.
(2) PRIVATE CONTRIBUTIONS
Two issues arise here. The first is whether there should be prescribed limits on private individual and corporate contributions. In a few countries corporate contributions are actually outlawed. The second issue is whether the source and amount of such contributions should be disclosed and, if so, should they be disclosed publicly or to a statutory authority sworn to confidentiality.
In poorer countries, especially small ones, limits on private contributions or disclosure requirements could drive away contributors and place greater demand on the public purse to pick up the slack. We may need to seek a trade off not imposing limits on private contributions but requiring full disclosure to the statutory body responsible for corruption prevention.
We are all signatories to the Inter-American Convention Against Corruption which requires the existence of such a body. That information would enable it to monitor whether there is any correlation between the donations made to a political party and any discretion exercised by that party in Government or in the legislature.
The issue of tax credits to encourage financial support of political parties within this regulated framework would also need to be considered.
(3) REPORTING REQUIREMENTS
Political parties should be required to publish annually audited financial statements. Details regarding sources and amounts of individual or corporate contributions over a specified level should be reported to the relevant authority.
(4) STATE FUNDING
State funding should be confined to specific purposes that can be easily monitored and verified. Training, research and communications are critical to the work of political parties and are legitimate activities that could be the target of public funding.
These funds should be managed by the recipient party in a segregated account that should be audited by the Auditor General. Allocations to the various political parties should be based on a prescribed formula that is equitable, transparent and not unduly discriminatory against new parties.
(5) MINIMUM SUBSCRIPTION REQUIREMENTS
Political parties should be required to secure membership subscription equivalent to a minimum of, say, 5-10 per cent of their annual budget in order to qualify for state funding.
(6) FOREIGN FUNDING
Foreign funding should be encouraged (and only permitted) for:-
Institution-building that is external to the political parties (e.g. electoral regulating bodies, NGOs and civil society activism).
Political party activities that are conducted on a multi-party basis (e.g. training)
As pre-requisites to adopting this regime governments must ensure that there are in place stringent laws, regulations and codes governing political conduct. The last thing one would wish to see is the use of public funds to entrench bad or corrupt political practices. In addition, the mechanisms must be in place for effective enforcement of these laws and regulations with powerful sanctions for violations.
We are increasingly recognising the need for international conventions to regulate activities that affect our interaction within a globalized world. The Inter-American Convention Against Corruption adopted by the OAS in 1996 is an important example. The Democratic Charter moved our concerns beyond that to focus on the minimum acceptable standards for democracy. It may not be far-fetched for us to consider expanding the Charter, if not establishing a Convention, to define a role for the State in assisting political parties. This conference and the efforts of the Inter-American Forum on Political Parties can make an important contribution in moving us closer to that possibility.
