1. 1 The Europeanization of Party Financing in Georgia Dr.Natalia Timuş Maastricht University

2. 2 Outline Introduction Why bother? What? How? Empirical findings Policy recommendations Conclusion

3. 3 Money and Politics Blessingcurse? Blessing or curse? Example: Public funding + political pluralism - asymmetric electoral competition + objective treatment - political corruption of political parties (public office abuse)

4. 4 Why bother? -Illicit party financing – increased salience during the integration of post-communist democracies into the Council of Europe (CoE) and the EU -No adequate mechanisms of party financing =>  ‘buying’ political influence  democratic instability

5. 5 Why Bother? -The degree of Europeanization of Georgian legislation on party financing – ignored aspect BUT - important for assessing democratic and pro- European reforms & fulfillment of international commitments

6. 6 What? Research Question: What is the degree of compliance of Georgian legislation on party financing with the European standards set by CoE?

7. 7 How? - Focus on Venice Commission of CoE The European Commission for Democracy through Law - Georgian legislative framework: laws on political parties and electoral campaign financing - Time-period: 1990s – 2010 - Qualitative Methodology: Process-tracing Content and discourse analysis

8. 8 Theoretical framework Broader research project: Europeanization of party legislation (since 2008) Bridging International Relations and Comparative Politics Beyond the ‘EU-ization perspective’, ‘broader Europeanization’ process Conditionality literature –Clarity of requirements –Size of rewards and sanctions Party politics literature: –Party strategic behavior vs. principled oriented behavior

9. 9 Hypotheses H1. Clarity matters: The lower the degree of clarity of European requirements on party financing, the higher the degree of discretion of domestic political parties in legislative compliance H2. “Carrots and sticks” (Incentives and sanctions) matter: The lower the incentives and sanctions from the side of the Venice Commission, the lower the degree of legislative compliance

10. 10 European standards on party financing Key VC documents: 1.Guidelines and Report on the Financing of Political Parties (2001) 2.Opinion on the Prohibition of Financial Contributions to Political Parties from Foreign Sources (2006) Critical assessment: -Broad principles, ambiguity -lack of guidelines regarding their practical implementation -Lack of incentives and sanctions – ‘soft laws’

11. 11 European standards on party financing Public fundingPrivate financingElectoral campaign financing For each parliamentary party * could extend to extra- parliamentary parties interdiction of donations from foreign states and companies * Foreign donations can be accepted if they do not inhibit the effective democratic development fixed limit for party financing objective criteria for distribution of funding possibility of donations from the nationals residing abroad distribution formula (proportional to the number of electoral votes) transparency

12. 12 Transparency International principles on effective enforcement of party financing (2009) respect of the rule of law clear, realistic and accessible rules (updated) effective & independent internal auditing regulating agencies must be independent and have to be supervised, in their turn, by an independent entity the regulating authority must have adequate powers to monitor and supervise party financing, but it also must be subjected to legal responsibility.

13. 13 Pre-revolutionary periodPost-revolutionary periodLatest VC recommendations Georgian provisions Public fundingArt.30 of Organic Law (1997): - parties and blocs >5% votes * in 2000 – abandoned, subsidies for individual candidates Amendments 2006: - parties and blocs with 4% (national) and 3% (local) 2008: - increased subsidies for opposition parties - fixed regressive distribution - Foundation for Development and Reform (FDR) - stability of law - avoid textual contradiction &synchronization of different laws/amendments - clarification of the legal statute of FDR, financing mechanisms, relations with other institutions, etc. - greater transparency Private fundingArt.25-28 of Organic Law (1997): - max. quota private donations - no max. quota for membership fee - prohibition of foreign donations - no interdiction of anonymous donations Amendments 2006, 2007: - register all the donations - identification of donors - bank transfer - limit on individual donations - interdiction of anonymous donations - stability of law - greater transparency Campaign funding Election Code of Georgia (2001) - interdiction of foreign donations - sanctions in case of violations - private audit company for electoral funds Amendments 2007: - monitoring group of electoral finances - no monitoring mechanisms - no clarity on responsibilities & obligations of monitoring group 2008 & 2009: - special clause on prohibiting ‘buying votes’ - stability of law - no abuse of public office for campaigning - disclosure of campaign funds before, during, and after elections - concern with disproportionate and potentially troublesome sanctions - a clear definition of responsibilities and obligations of the monitoring group

14. 14 The evaluation of the implementation of VC requirements -Overall - considerable progress in complying with the European standards on the financing of political parties -More reforms in post-revolutionary period -party financing: one of the few cases of constructive dialogue & agreement between opposition and governing parties (2006, 2008) -the majority of reforms: since 2006 (EU-Georgia AP) => the merit of EU leverage on compliance to European standards

15. 15 Policy recommendations –Clarity of requirements on party financing: avoiding abuse of public office detailed clarification of sanctioning procedures limits for financial contributions from parties to their own electoral fund and for membership fees –Effective enforcement & efficient monitoring process (TI) Foundation for Development and Reform institution with the authority of financial regulation (e.g. CEC) –Guaranteeing transparency and public accountability: Ad-hoc group on financial monitoring of campaign regular procedure of disclosure and reporting of income sources of electoral contestants public access to party financial declarations

16. 16 Conclusion Clarity, incentives and sanctions matter: –VC has high potential for triggering legislative compliance, but its mechanisms are of permissive nature, lacking some feasible sanctions & rewards –EU’s leverage indirectly increases the legislative compliance to VC standards Georgian case – confirms the need to examine the ‘broader Europeanization’ process and move outside the usual suspects More research on the following questions: –cooperation of European institutions and their common democratic leverage –domestic political and context specific factors determining the legislative compliance to European standards

17. Thank you! Questions