According to the results of the 16th Summit Ukraine-EU in Brussels, Ukraine agreed to fully implement OSCE/ODIHR recommendations regarding the improvement of electoral legislation, to take measures and timely adopt the required legislation, to consider the need to adopt the Election Code and introduce precise regulations securing balanced access to the media for all candidates.
In February 2013, the Cabinet of Ministers of Ukraine had approved the Action Plan for Ukraine's integration with the EU in 2013. To improvement this Plan, the Ministry of Justice of Ukraine prepared the draft Law on Making Amendments to Some Laws of Ukraine on Improvement of Electoral Legislation in June 2013.
On July 22, 2013 the Minister of Justice of Ukraine has signed the Order on the Conduction of Roundtables for the Improvement of Electoral Legislation of Ukraine.
According to it, in November 2013, the discussion of recommendations of the Council of Europe's Group of States against Corruption (GRECO), the European Commission for Democracy through Law (Venice Commission), and the OSCE/ODIHR shall be held, regarding financing of the political parties and election campaigns, as well as the possibility of their implementation in the national legislation.
Civic organizations have the following opinion on the issues, announced for the discussion.
The problem of financing of the political parties and election campaigns is comparatively "young". It was raised in international documents yet in 2001, and worked out in detail in 2006-2010. European approaches to this problem are being specified and elaborated.
Financing of the political parties and election campaigns shall be reformed in correspondence to all recommendations of the Venice Commission and OSCE/ODIHR regarding the political financing system. They are the following:
- limitation of private contributions;
- balanced private and public financing;
- limited use of state financing;
- fair requirements for receiving public financing;
- limited expenses on election campaigning;
- requirements securing transparency of party financing and authenticity of their financial reporting;
- independent regulatory mechanisms and appropriate sanctions for violations of the law.
We are convinced that selective implementation of recommendations in Ukraine will lead to abuses committed by state authorities.
The Ministry of Justice, together with parliamentary factions, VRU committees, civic associations, and experts should work out and agree on a set of measures, aimed to introduce a political financing system, conforming to international standards.
The first step shall be renovation of the state financing for political parties.
State (public) financing for political parties
The Venice Commission and OSCE/ODIHR are convinced that the state financing for political parties must:
- be a potential measure for combating corruption
- support the important role of political parties in society
- decrease the exceeding dependence on private donors
- make all the parties able to compete in accordance with the principle of equal opportunities
- strengthen political pluralism
- assist to proper functioning of democratic institutions
Therefore, we think that the state financing for parties should be introduced again, on the basis of the Law of Ukraine on Making Amendments to Some Laws of Ukraine in Connection to Introduction of the State Financing for Political Parties in Ukraine as of 11/27/2003.
Principles of the state financing of parties:
1. Direct state financing of political parties shall be provided in two forms:
a) as a yearly state financing for the statutory activities of parties;
b) as a reimbursement of expenses on participation in Parliamentary elections from the State Budget;
4. In case a party acquires the right to receive the yearly state financing for statutory activities, it shall open a separate account, on which funds are going to be transferred from the State Budget of Ukraine, and from which they will be taken to carry on activities, determined by the Law. Funding from any other sources shall not be transferred to this separate account, where financing for statutory activities is being transferred from the State Budget of Ukraine.
5. Funds for statutory activities of a party, transferred from the State Budget of Ukraine, shall be used only for activities, determined by the Law. Parties shall not spend these funds for political advertising, renumeration of employees, purchase of vehicles or equipment etc.;
6. In case a party or its local office hasn't spent the allocated funds on activities determined by the Law, these funds shall be returned to the State Budget of Ukraine. Funds, allocated for expenses on statutory activities may not be used for electoral campaigning.
The other legislation should be improved only after the state financing is introduced.
During implementation of international standards in the national legislation of Ukraine, we should focus on problems, which appeared in our country. In addition to the state financing for parties, urgent issues which must be solved first, are the following:
- Inconsistency of different legislative acts pertaining to financing of parties and electoral campaigns;
- Excessive expenditures during electoral campaigns in Ukraine;
- Considerable shadow financing of parties and electoral campaigns.
Inconsistency of different legislative acts pertaining to financing of parties and electoral campaigns
In the first recommendation of GRECO's First Evaluation Report on Ukraine: Transparency of Party Funding 1E (P2), the organization emphasizes that it's necessary to harmonize different electoral laws and legislation on political parties pertaining to financing of election campaigns on different elections.
We think that different electoral laws may be harmonized only through the adoption of the Election Code, which draft was approved by the Venice Commission.
We remind that codification was recommended in Reports of OSCE/ODIHR Missions on the results of elections in 2002, 2006, 2007, and 2010, in a number of Opinions of the Venice Commission, starting from 2006, and in the resolution of the Council of Europe as of 2007.
Excessive expenditures during electoral campaigns in Ukraine
According to international and national experts, election campaigns are too expensive in Ukraine. In result, parties and candidates are too dependent on representatives of big business. Therefore, we think that campaign expenses of parties and candidates should be decreased.
In paragraph 20 of Recommendations in the Final Report on the 28 October 2012 Parliamentary elections in Ukraine, OSCE/ODIHR proposed to introduce moderate limitations on campaign expenditures.
In fact, campaign expenses are limited in many European countries. However, the conditions of such limitations are quite different. In particular:
"Reasonable limitations on campaign expenditures might be justified where this is necessary to ensure that the free choice of voters is not undermined or the democratic process distorted by the disproportionate expenditure on behalf of any candidate or political party." Guidelines on Political Party Regulation by OSCE/ODIHR and the Venice Commission, Adopted by the Venice Commission at its 84th Plenary Session (Venice, 15-16 October 2010).
In Ukraine, excessive campaign expenditures may be explained by the absence of any limitations on the use of advertising materials during election campaigning.
The electoral legislation of Ukraine effective in 1994-1997 limited the total amount of electoral funds of candidates. This very legislation caused shadow financing of elections in Ukraine. Besides that, pro-governmental candidates never suffered from sanctions aimed at deterring excessive financing.
To our opinion, the best way of making election campaigning in Ukraine cheaper, and, therefore, making candidates less dependent on representatives of big business, is, on the one side, prohibition or limitation on political advertising in the media and on outdoor advertising, and, on the other side, indirect financial support to parties, which are subjects of the election process. Besides free airtime and printing space, such indirect financial support may include post office discounts on dissemination of campaigning materials, free facilities for meetings with the voters, etc.
Considerable shadow financing of parties and electoral campaigns
In fact, Ukrainian legislation becomes a reason why parties attract shadow financing now only during the election period, but also in the period between elections. It happens because parties have limited possibilities to legally attract funds for their activities. In particular, in Article 15(2) of the Party of Ukraine on Political Parties, parties cannot be financed by organizations, enterprises, or establishments, which shares belong to the state or communal property or owned by non-residents. In fact, the biggest part of Ukrainian business has such characteristics.
We think, that this problem can be solved by allowing party financing for enterprises, establishments, or organizations which have less than 20-30 percent of shares belonging to non-residents.
Another problem is non-transparent private financing of parties. On the legislative level, transparent party financing may be achieved through mandatory publication of annual reports including the list of all donations, besides member fees. All donations larger than the certain amount determined by the law shall be reported and published.
In Recommendations, GRECO emphasized that it's important to secure that transparency requirements of the legislation are not avoided by applying indirect donations to election funds through "individual funds" of parties and candidates, or donations which are not included into electoral funds. We think that this problem may be solved by introducing regulations on:
- limitation of "individual funds" which may be transferred to the electoral fund of a party;
- limitation of "individual funds" which may be used by a candidate on campaigning. It may be the certain percentage of the amount, announced by a candidate in tax declaration.
Therefore, we think that the first steps to introducing a party financing system in Ukraine, conforming to international standards, should be the following:
- State financing for parties should be introduced again, on the basis of the Law of Ukraine on Making Amendments to Some Laws of Ukraine in Connection to Introduction of the State Financing for Political Parties in Ukraine as of 11/27/2003.
- limitation of "individual funds" which may be used by a candidate on election campaigning.
- Prohibition or limitation on political advertising in the media and on outdoor advertising.
- Mandatory publication of annual reports including the list of all donations, besides member fees.
- All donations larger than the certain amount determined by the law shall be reported and published.