Dissertation

Research questions : The fact that political parties are founded as private associations raises open debate: why should they rely on public funding and could this affect the nature of their independent role in democratic society? How to apply standards in the financing of political parties in post-communist countries (the case of Albania)?

Methodology

For the purposes of this study, we will mainly rely on empirical analyzes derived from extensive doctrinal research, reports/guidelines of international organizations in terms of political party funding. The empirical analysis will focus on state-owned practices in the field of ​​political party financing: outlining the relevant scope of party financing policies to identify key risks and opportunities. We will also analyze the standards and criteria applied to the financing of political parties and election campaigns in the democracy system. International standards and criteria in this field are part of the common practice of states to respond to their society's needs for democracy as the engine of economic sustainability. The most important part of the research will be to identify the need to further promote financial policy standards regarding the financing scheme of political parties in the case of Albania. Albania has been one of the countries that until the 1990s was under an authoritarian political regime (communist regime) led by a single party (communist party), which is considered a state party. After the '90s, the political system in Albania was changed by establishing democracy and allowing political pluralism. In the political system of liberal democracy, public decision making or institutional choice of the public is about the political electoral process. The election process is about business-political circles because the choice of different parties in government affects public policy (Castles, 1982). Political parties compete in elections to gain access to government and thus control public policy rather than winning a gold medal (Patrick Dunleavy, 1991).

Interest in the issue of political party funding has gained increasing importance in recent decades, both within the community of scholars and among policymakers and politicians as the state takes an increasingly active role in controlling the use of their funds, though this is understandable in the case of countries that began their transition to democracy only a short time ago (Venice Commission 2001). Political parties are basic institutions of any democratic political system, and state funding of parties is one way to support them in fulfilling their essential functions(Biezen, I. 2003) as one of the cornerstones of genuine democracy. In the newer democracies especially in the post-communist states, financial support from the state funds was needed to compensate the newly created parties for the competitive advantages of many of the communist successor parties (Biezen, I. 2003, p.36).

Some modalities or criteria may be adopted for the distribution of public funds such as a proportional model, equal model, or a combination of both. Based on the analysis of international organizations in the field of elections: some countries provide public funds only for electoral campaigns, while others provide public funds for the day-to-day functioning of a political party; where the criteria for parties and candidates to qualify for public funding include thresholds, these should be low enough to allow the emergence of new parties, but high enough to prevent corruption and opportunism (IDEA 2012). Studies show that "where private funds are allowed, provisions have been put in place to regulate inflows and their use by political parties." Some sources of funding may be prohibited from making contributions such as anonymous or foreign donations, donations from government-owned enterprises or companies that have government contracts (public procurement, concessions). International conferences in this field set up argue that "when regulating foreign sources of donations, it is important to balance the protection of national interests with the rights of political parties as private entities" (IDEA 2012).

Regulation and transparency in the financing of political parties

The regulatory framework for public and private funding is always complemented by promoting accountability, transparency, control of corruption, ultimately the level of play, and promoting a healthy and competitive democracy (Regulating political party financing, IDEA 2012).

Regulation and transparency in the financing of political parties can play a pivotal role in the political life of the country that has transitioned from a dominant (one-party) system to a multi-party system. As a general rule, “reform of political finance regimes must be on the agenda in all democratic countries, as greater transparency in political finances and accountability by party leaders are essential to democracy” (CDL (2008)148. Pg.28). Corruption in the area of ​​political party financing and campaign finance is essential for any functioning democracy to develop a party financing regime that is capable of minimizing the threat of corruption and improving freedom of choice in this important area.

The United Nations Convention against Corruption (adapted in 2003), which entered into force in 2005 (entered into force for Albania in 2006), calls on states "to increase transparency in the funding of candidates for elected public office and, when is appropriate, the funding of political parties". Transparency International rating Albania's political financing as "average" score of 5.9 points, according to an analysis using the CRINIS methodology,[footnoteRef:1] focusing on annual funding of political parties and this rating is a reflection of an improved but not good legal infrastructure implementation in practice (Transparency International, Buying influence: Money and Political Parties in Albania, 2012). [1: The research results are categorized into three main evaluation groups: inadequate (0 to 3.3), average (3.4 to 6.7) and good (6.8 to 10). This research is an integral part of the CRINIS project being implemented in five countries of Western Balkans: Albania, Croatia, Kosovo, Macedonia, and Serbia. ]

Political parties play the most important role in democracy, “one of whose aims is to participate in the management of public affairs by presenting candidates in free and democratic elections” (Venice Commission 2001). Political parties function because of the development of competing for policy proposals that offer voice and choice, the election of candidates for elected bodies, the organization of legislative power, the coordination of formation and activities of executive power, recruiting and connecting executives and supporters and conducting election campaigns (Magolowondo, A. International IDEA 2012). Lack of information about how much money is circulating in and around elections; where resources come from and how they are spent makes it harder for the electorate to vote freely (IDEA 2019). It also facilitates corruption and erodes citizens' trust in political institutions (IDEA 2019).

The political finance should be neutralized through a variety of instruments: public support to help equalize the resources of the major political actors (the German model of political finance) and the introduction of expenditure and contribution limitations designed to decrease the influence of wealthy political donors (the UK model, after the reforms of 2000, relies on expenditure limits with the same aim). Some jurisdictions do not limit electoral expenses (the US model) as the contrary would be considered an unconstitutional restriction of the fundamental right of the freedom of speech (Amendment I of the Constitution law) as an extension of the right to elect. In the case of Switzerland, there is no federal law on party finances, which means that there are no restrictions on the funding of party initiatives, nor are there any regulations governing the use of funds raised by political parties.

Since the late 19th century, countries have created rules concerning the role of money in politics. Today, political parties should be regarded as ‘public utilities’ or as private organizations under some sort of public supervision. For parties to gain the confidence and support of voters, they must be transparent and accountable about their finances. Unless parties meet the citizens' demands for clean politics, voters will constantly question their integrity and become apathetic and disillusioned with the democratic process, which will require the creation of comprehensive acts regulating political finance.

The abuse of public resources by the ruling party to put itself in a favorable position remains a problem in many countries: this lack of public accountability in a playing field prohibits equal participation and representation of all citizens in democratic political processes (International IDEA 2014). The abuse of public resources can lead to a mono party system. In many countries, the abuse of public resources is not sufficiently regulated; these technical gaps leave the electoral system vulnerable to manipulation by those in power (IFES 2017).

State resources that may be abused by public officials for electoral advantage include: institutional resources - the use of official vehicles during campaigns; office staff working for the campaign; state-owned media is a prime example of public resource abuse in many countries (Ohman, M. 2013); control of state bureaucracy and security apparatus to mobilize votes among civil servants (Uberti, L & Jackson, D. 2018). B) coercive resources - include the use of security and law enforcement agencies to enforce the law abusively, including withdrawal of opposition campaign permits or unexpected tax inspections of rival parties (Jenkins, M. 2017). C) Private sector relationship - private sector integrity may be compromised as the government pressures donor companies in exchange for continuing to do business with the state, which could lead to policy capture (OECD 2017) as access to public procurement, by excluding corporations that support the adversary at the same time private companies subject to government contracts may also be forced to donate to the ruling party or prevented from supporting the opposition parties (OECD 2016).

International standards recommend that governments ensure equal access to public buildings; abstain from non-essential appointments in public bodies during election campaigns; prohibit civil servants from engaging in electoral campaigns in their official capacity; establish a functionally independent and properly sourced state body responsible for auditing the use of political party administrative resources; and require political parties to report on the origin and purpose of campaign finance transactions, stipulating that the permissible use of administrative resources should be treated as a campaign finance contribution and reported accordingly (Venice Commission & OSCE / OIDHR 2016).

The Venice Commission and Organization for Security and Cooperation in Europe’s Office for Democratic Institutional and Human Rights (OSCE/ODIHR) adapted “Guidelines for Preventing and Responding to the Misuse of Administrative Resources during the Electoral Process (2016)”. According to the Guidelines on Political Party Regulation, "the regulation of political party funding is essential to guarantee parties independence from undue influence created by donors and to ensure the opportunity for all parties to compete in accordance with the principle of equal opportunity and to provide for transparency in political finance”[footnoteRef:2]. OSCE commitments under the Copenhagen Document include the obligations on the separation of the State and the party (paragraph 5.4). [2: Guidelines on Political Party Regulation, approved by the Venice Commission in the 84th Plenary Session, Venice, 15-16th October 2010.]

To ensure equality of opportunity for the various political forces, the costs of the election campaign will be limited to a ceiling appropriate to the situation in the country and fixed in proportion to the number of voters concerned; the state must participate in campaign spending through funding equal to a certain percentage of the ceiling above or in proportion to the number of votes received; this contribution can, however, be rejected for parties that do not reach a certain threshold of votes(Venice Commission 2001).

According to comparative estimates, countries' performance in dealing with the misuse of state resources has been assessed, both in law and in practice (Venice Commission 2012). Albania has legislation that does not distinguish between state material and human resources (such as in Georgia, Turkey, Ukraine, Russian Federation) and legislation referring to temporary circumstances where public servants cannot campaign during working hours or only during working days (such as in Armenia, Kyrgyzstan, Ukraine). In Albania, there is no legislation that prohibits any interference by public servants in favor of a candidate[footnoteRef:3] . One form of political participation is the financing of political parties through private contributions (Venice Commission 2010). In this case, the legislation should strive to strike a balance between promoting moderate private contributions and limiting very large contributions. It is a fact that corruption and unregulated donations are exerting undue influence on politics by undermining the integrity of political parties and democratic processes. This explains why so many people around the world are losing faith in parties and electoral processes. The growing perception of corruption in political life misleads the public image of parties and politicians. The way parties and candidates access their funding greatly affects how the political system works and how democratic processes are conducted. The Global Commission on Elections, Democracy, and Security argued that “poorly regulated political finance can diminish political equality, provide opportunities for organized crime to purchase political influence, and undermine public confidence in democratic processes”. [3: such are the legal provisions in Greece, Ireland, the Kyrgyz Republic, Portugal and Spain.]

The studies (in 180 countries) shows the use of at least some form of regulation of the role of money in politics, such as prohibitions on donations from certain sources, spending limits and public funding provisions (IDEA 2016). Formal rules alone cannot have a significant impact, thus the dedicated work of many stakeholders is required to manage the role of money in politics. The increase of political finance regulations is linked to the problem in many countries to 'Enforcing political finance regulations'. The institutions most often tasked with enforcement are the country's electoral administration body, government ministries, specific audit institutions or other bodies. And the full power of these bodies is always regulated by legislation.

There are three main regulatory areas in the political funding regulation that could be improved: parties-citizens’ relationship; transparency and control; and sanctions. I will limit ourselves to suggest some “good practices” observed in some European countries in issues related to the abovementioned regulatory areas.

Nowadays, financial control of the activity of electoral subjects (political parties) and candidates are becoming one of the most integral debates of the electoral process. The International IDEA Political Finance Database offers information on five types of contribution bans: foreign interests, trade unions, corporations, anonymous donors and government contractors (or corporations in partial public ownership) may be legally banned from contributing to parties or candidates.

Regulation and transparency in the financing of political parties in Albania

According to the Law “On Political Parties in Albania”, donations are prohibited when the conditions mentioned below apply to a juridical person, or any of its shareholders (article 23): a) has profited from public funds, public contracts or concessions during the last two years for an amount of money exceeding 10,000,000 Leke (approx. 71,950 EUR); b) bases its activity in the field of media; c) has been a partner on projects benefiting from public funds; d) has monetary obligations toward the State Budget or any public institution. This ban is not applied when the shareholder possesses these shares as a result of a public tender. At the same time, the law (article 21) prohibits political parties to profit from financial and material donations from foreign governments, public or private entities. The law ‘On Political Parties” states that every year the state budget is assigned a fund that serves as a public financial subsidy for the annual activity of political parties. According to article 22 of the law "On Political Parties", the parliamentary parties are provided by the state with a building for their central and local headquarters. This access is available also for those political parties, whose average votes in the three last parliamentary elections has been more than 1 % nationwide.

According to the provisions of the Albanian legislation, the rules on the allocation of public funds from the state budget are as follows: a) 70 % is allocated according to the number of MPs in the recent parliamentary elections. Every parliamentary party profits from a financial subsidy in accordance with the number of MP seats won as per the electoral system predicted in the Electoral Code; b) 20 % is allocated equally to the parliamentary parties; c) 10 % is allocated in accordance with the percentage of votes won by political parties who participated in the recent parliamentary elections and who won more than 1% of the votes nationwide. Any part left unallocated from the final 10 % is added to the first 70 % and is re-allocated to parliamentary parties (article 19 of Albania law “On Political Parties”).

Practices under the regulation of political party financing regime give us some examples: if we want to reduce the disparity between public and private funds, it is recommended to apply a "matching financing system" - which should aim to increase the transparency of internal parties, promoting membership participation and internal democracy, building the skills of their staff, promoting youth and women (as a German model); If we want to eliminate political support through private funds, it is recommended to implement a "fully public fund system" - which should be implemented by strengthening the regulation of political party financing, strengthening the powers of financial oversight bodies with regard to public transparency.

Contribution restrictions can be tools to minimize the possibility of corruption or political influence, and such restrictions may be determined by monetary amounts (quantitative restrictions) or by their type (qualitative restrictions). Quantitative restrictions are defined in monetary terms (as individuals or legal entities may donate). Qualitative restrictions are determined by the type of transaction (contributions, for example foreign donations or anonymous donations, state enterprises or companies’ donations). All these monetary policies regarding the financing of political parties must be formulated within a legal framework. There is a wide variety of funding legislation for political parties and election campaigns throughout the OSCE region, ranging from those relying mainly on private funds to those based largely on public funds, but most systems are a mixture of both.

Regardless of the approach of applying for political party funding - the formula for greater public control of money in politics requires a comprehensive system of political financing based on three main pillars: (1) full disclosure, (2) an independent enforcement agency, and (3) reasonable public funding. Studies have argued that if the parties are entitled to state funding, the legal provisions regarding the transparency, control and enforcement of party financing must be specified in law (Biezen, I. 2003).

The institutionalization of political party finances should be achieved by ensuring that the funds (public or private) are sufficient to fulfill their public mission, while also ensuring that funds do not undermine the democratic process contextualized with social reality.