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Electoral Insight – International Electoral Co-operation

Electoral Insight – March 2006

Political Financing and International Electoral Co-operation

Steven Griner*
Coordinator, Organization of American States Inter-American Forum on Political Parties

The Organization of American States (OAS) and the International Institute for Democracy and Electoral Assistance completed an unprecedented comparative analysis of political party and campaign financing in the 34 member states of the OAS. The relationship between money and politics affects all countries, big and small, rich and poor. The observations and results of the three-volume study are intended to assist political reformers in the hemisphere and suggest solutions to international organizations supporting their efforts. This study was made possible through generous contributions from the government of the United States and the Canadian International Development Agency. Elections Canada provided financial and substantive support, co-hosting a workshop for U.S. and Canadian electoral officials, academics and politicians, as well as drafting an important concept paper on enforcement mechanisms.

Do elections cost too much?

The leaders of the Western Hemisphere posed that question in 2001, when they approved the Inter-American Democratic Charter and expressed their concern for "the problems associated with the high costs of election campaigns." Four months previously, at the Third Summit of the Americas in Québec, the presidents and prime ministers of the same countries mandated the OAS to address issues related to political party funding and access to the media.

In response, the OAS, in conjunction with the International Institute for Democracy and Electoral Assistance, embarked on an unprecedented 34-country comparative analysis that focused on four themes specific to political party and campaign financing: disclosure, enforcement, public financing and access to the media.

A separate analysis included the effects of financing on the political participation of women. Footnote 1 The purpose of the study was not just to catalogue norms, but to analyze how they are applied.

Ultimately, changing the relationship between money and politics is not primarily a technical task, but an unpredictably political one. This study takes into account the normative aspects of regulating party and campaign financing, but pays particularly close attention to the political contexts. Political leaders in countries as disparate as Canada, the United States, Mexico, Chile, Peru, Honduras and Guatemala have implemented new political financing regimes, each with its own objectives and each with its own consequences. The comparative analysis details these initiatives and offers some general recommendations for political reformers and the international community.

Disclosure

Within six months of voting day in a general election, each of Canada's registered political parties must submit a report on its campaign spending to the Chief Electoral Officer. Candidates and third parties that advertise for or against a candidate or party during an election also submit reports.

The methodology of this analysis included collecting hard information, such as political financing legislation, cost estimates and regulations affecting media access. Footnote 2 Additionally, national researchers attempted to place this information in its appropriate political context by interviewing political leaders, academics and representatives of civil society. Political leaders in particular decried the escalating costs of politics, attributing most of this increase to media expenses. Paradoxically, though, few could say with any precision how much elections actually cost. This revelation should not come as a surprise, however. While disclosure in Latin America is on the books, it is hardly enforced. In the Caribbean, disclosure, especially for parties, is practically non-existent. Canada and the United States are the exceptions, although information can be slow in coming and totalling the expenditures of groups not directly affiliated with parties or campaigns can be challenging.

Estimates of campaign expenditures vary from region to region. In the Caribbean, some political leaders in Jamaica speculate that financing a general election campaign could run as high as C$7.4 million (US$6 million), while in Antigua and Barbuda the price tag might reach C$2.5 million (US$2 million). The preponderance of public financing in Mexico offers the clearest picture in Latin America. For the presidential elections of 2000, parties received C$453 million (US$366 million) from the State, mandated to represent 90% of total financing.

President George W. Bush (right) and Democratic challenger Senator John Kerry, pictured here at one of their televised debates as presidential candidates, both ran very expensive campaigns in 2004.

Canada and the United States both held elections in 2004, both under new campaign financing rules. Vigorously controlled limits on campaign expenditures in Canada helped keep the spending of the political parties, candidates and third parties to a relatively modest C$101.5 million (US$83.2 million) – while in the United States, the totals of the two presidential campaigns, political parties and advocacy groups ("527s" Footnote 3) approached C$3.7 billion (US$3 billion), with a little more than C$1.38 billion (US$1.1 billion) spent on congressional campaigns. Footnote 4 Electing a chief executive and a legislature cost about 50 times more in the United States than in Canada, or about five times as much per capita when their respective populations are taken into account.

Enforcement

Canada and the United States aside, disclosure is dramatically lacking in the Western Hemisphere. A study by the United States Agency for International Development revealed that the Caribbean and Latin America required less information from their candidates and parties than most other regions of the world. Footnote 5 Even where disclosure is required, it is seldom enforced.

Political Party and Campaign Financing in the Caribbean
Country Disclosure By party By candidate Contribution limits Spending limits Public funding Media limits
Antigua and Barbuda Yes, not enforced No Yes No, anonymous contributions No No No
Bahamas No No No No No No No
Barbados Yes No Yes No Yes, limited to candidates Yes Partial, on TV and radio
Belize No No No No No No No
Dominica No No No No No No No
Grenada No No No No No No No
Guyana Yes, not enforced No Yes No Yes, not enforced No No
Haiti No No No Yes, not enforced No No No
Jamaica Yes, not enforced No Yes No Yes, not enforced No No
St. Kitts and Nevis No No No No No No* No
St. Lucia No No No No No No No
St. Vincent and the Grenadines No No No No No No No
Suriname Yes No Yes No No No No
Trinidad and Tobago Yes No Yes No Yes, limited to candidates; not enforced No No

Political Party and Campaign Financing in Latin America
Country Disclosure By party By candidate Contribution limits Spending limits Public funding Media limits
Argentina Yes Yes No Yes Yes Yes Yes**
Bolivia Yes Yes No Yes No Yes Yes
Brazil Yes Yes Yes Yes No Yes Yes
Chile Yes Yes Yes Yes Yes Yes Yes
Colombia Yes Yes Yes No Yes Yes Yes**
Costa Rica Yes Yes No Yes No Yes Yes
Dominican Republic Yes Yes No No No Yes No
Ecuador Yes Yes No Yes Yes Yes Yes**
El Salvador No No No No No Yes No
Guatemala Yes Yes*** No No No Yes No
Honduras Yes Yes No No No Yes No
Mexico Yes Yes No Yes Yes Yes Yes**
Nicaragua Yes Yes No No No Yes Yes
Panama Yes Yes Yes No No Yes No
Paraguay Yes Yes Yes Yes No Yes Yes**
Peru Yes Yes No Yes No Yes Yes
Uruguay No No No No No Yes No
Venezuela Yes Yes Yes No No No No

Political Party and Campaign Financing in North America
Country Disclosure By party By candidate Contribution limits Spending limits Public funding Media limits
Canada Yes Yes Yes Yes Yes Yes Yes
United States Yes Yes Yes Yes Yes**** Yes**** No

* There is no public funding, other than remission of customs duties for vehicles and some other election-related materials brought in by political parties.

** There is an indirect limit, usually determined by the overall limit for the presidential campaign. Brazil has limits for radio and television. Chile has limits for television, but not for radio, cable or press. In Colombia, private media advertising is banned for parliamentary elections.

*** Only for public financing.

**** Only for publicly funded presidential primary and general elections and only if the candidate accepts the public funding. Public funding is provided to qualified political parties for their respective party conventions.

In most cases, electoral bodies are charged with enforcement of the political financing legislation, by any measure an ominous challenge. Usually, though, enforcement agencies are further handicapped by a lack of human, technological and financial resources. The lack of resources is a product of increasing fiscal austerity, but also of a lack of political will. Budgets provided to the electoral commissions pale in comparison to the resources of the parties and campaigns during elections. There are important exceptions, though. The Federal Electoral Institute in Mexico and the Electoral Tribunal of Panama demonstrate that robust enforcement is not impossible in Latin America. While a number of factors contribute to the effectiveness of these bodies, including juridical and administrative autonomy, the simultaneous distribution of public financing to the parties themselves provides an important "carrot and stick" for enforcement.

Public financing

A group of Ecuadorean women with candles and funeral attire march through Quito streets in 2002 to protest the low number of women candidates in that year's elections.

Many assert that disclosure cannot merely be forced on political parties. The "carrot," they argue, can be more effective than the "stick." The international community has been particularly enthusiastic about public financing as just such an alternative. Not only does public financing introduce an important element of transparency and accountability, it also provides a modicum of political equity and allows parties to exist between elections, making them more permanent institutions in democracy. Indeed, elements of public financing are present in 17 of 18 Latin American countries, although in the Caribbean, only Barbados provides state funds to parties and on a very limited basis.

State resources have allowed otherwise disadvantaged individuals (women, in particular) to become viable political candidates in Canada, Panama and Argentina and have helped level the playing field in Mexico, previously dominated by the Institutional Revolutionary Party. Despite the potential of public financing to make politics more equitable and transparent, evidence indicates that it supplements rather than supplants private funding. Using the public purse has not necessarily made campaigns cheaper. Moreover, increasing fiscal pressures as well as a growing public disenchantment with parties probably preclude the enactment of generous public financing regimes, although their role will remain important.

Access to the media

Indirect public financing through media exposure is a case in point. Access to the media in the hemisphere is a sine qua non to a viable candidacy, but this access does not guarantee electoral success. In an effort to provide equal opportunity, Brazil and Chile make free media time available to political parties. They provide this media time not only during elections, but between them as well, with the intent of institutionalizing parties and contributing to public discourse. Again, publicly provided media exposure has yet proven to limit – let alone decrease – the escalating costs of campaigns. Other issues currently being addressed in the hemisphere include more qualitative aspects of media, including the regulation of polls, the right of response and the concentration of media ownership. Attempts to legislate the quality of media coverage, however, bump up against freedom of expression issues and should be addressed with caution by politicians.

Does political financing affect the political participation of women?

Financing represents a formidable obstacle to women as they consider whether or not to run for office. In the United States, at least one poll indicated that women are much more hesitant to become candidates because they do not believe that they are as well positioned as men to raise funds. This poll of state legislators in the United States revealed that 37% of women admitted that they had never considered running for office until someone else suggested it to them and only 11% stated that the decision to run was entirely their own. The same poll revealed almost opposite results for men. Footnote 6 Anecdotal evidence suggests that women face similar doubts in Latin America andthe Caribbean.

EMILY's List, a large grassroots political network, is dedicated to recruiting, funding and electing Democratic women to federal, state and local office in the United States.

Their trepidation is not unfounded. Private contributors in Latin America and the Caribbean are few in number. It is often difficult for women with no previous political credentials to penetrate these circles and raise the funds to mount a viable campaign. In Latin America and the Caribbean, especially, and perhaps to a lesser degree in the United States and Canada, women are often the primary caregivers in the household. Interviews and the limited empirical research available in the hemisphere suggest that women have costs often not incurred by men when they decide to pursue public office, including child care and household responsibilities.

Many countries have introduced targeted training and economic incentives for political parties – either through legislation or voluntary means – to increase the participation of women in political structures, but much is still left to be done. Equal Voice, a multi-partisan advocacy organization that promotes the involvement of women in politics in Canada, has advocated reform of the electoral system and the lowering of many financial requirements that exclude women. According to this group, women's participation in Parliament has been slipping recently. With only 65 female members of Parliament (21%), Canada ranks 36th in the world among democracies in terms of women's representation in the national legislature, after Nicaragua. Footnote 7

Private funding mechanisms, such as EMILY's List Footnote 8 (Early Money Is Like Yeast) in support of Democratic women and its Republican equivalent, the WISH List Footnote 9 (Women In the Senate and House), in the United States serve as particularly interesting models that require further study and potentially modified replication. Tapping into the potential of women as politicians and contributors has made EMILY's List one of the largest political action committees in the country.

Again – do elections cost too much?

No doubt the cost of politics is rising. Public financing, free media exposure, and contribution and expenditure limits have yet to stem the tide. Reform-minded political leaders and the international community continue to seek ways to promote norms and strengthen practices that promote transparency, enforcement and equity, especially in the media. Public financing and free media exposure are important tools for achieving these goals, but the strategy must include other elements, such as incentives for political parties to abide by campaign legislation, and increased resources for enforcement entities to investigate and, if need be, sanction violators.

Controls and limits should not just be limited to the demand side of politics (i.e. the candidates and the parties), but the supply side as well. Business leaders and media conglomerates, especially in Latin America and the Caribbean, must respect legislation governing their participation in politics. Until the contributors as well as the recipients become an integral part of the regulatory framework, electing and being elected in an equitable and transparent manner will remain an unattainable illusion.

In the age of instant communication and increasing reliance on the mass media, it is probably unrealistic to believe that politics can be made cheaper. However, political financing regimes can be made more transparent and equitable through continued political reform and the support of the international community. Political reform begins with the parties themselves, but its effectiveness will also depend on enforcement agencies, advocacy groups and watchdog organizations. The international community must continue to offer practical know-how and promote best practices to support those seeking to reform political financing regimes and those ultimately charged with enforcing them.

Through this study, the OAS does not prescribe any particular formula for financing parties and campaigns, but offers instead some guiding principles and positive models that merit consideration. Ultimately, each political financing regime will reflect its country's political history and democratic values. The political financing regime in Canada promotes equity; the United States regime values freedom of expression and Mexico's remedies past inequities. As political reformers in the Western Hemisphere attempt to change the relationship between money and politics, the international community should stand ready to provide technical and political support with an appreciation of these varied political values.

Notes

* The views expressed are those of the author and do not necessarily reflect those of the Organization of American States.

Footnote 1 The comparative analysis was divided into three geographical volumes: De las normas a las buenas prácticas (Latin America); From the Grassroots to the Airwaves (Caribbean); and The Delicate Balance between Political Equity and Free Speech (United States and Canada). All three volumes can be accessed through www.ddpa.oas.org/publications.

Footnote 2 In each of the 34 countries covered in this study, national researchers were hired to complete an extensive questionnaire, conduct interviews with political leaders, electoral authorities, and academics, and provide a concise analysis of the effects of legislation and pending reform. The information from these national analyses served as the input for the thematic chapters on enforcement, disclosure, public and private financing regimes, access to the media and gender. Separate thematic authors were contracted in each of the three regions.

Footnote 3 The term "527" refers to the section of the U.S. Internal Revenue Code that regulates advocacy groups that raise money for political activities including voter mobilization efforts and issue advocacy, but do not expressly advocate the election or defeat of a federal candidate. Unlike political parties, 527s are not required to file with the Federal Election Commission.

Footnote 4 Figures for the United States were obtained from the Center for Responsive Politics and are current as of August 1, 2005 (www.opensecrets.org). The Canadian figures are as submitted by the political parties, candidates and third parties to Elections Canada. Expenses related to party leadership contests and candidate nomination contests are not included. The breakdown of expenses includes the following:

Campaign Spending in the Federal Elections of November 2, 2004,
in the United States and the 38th General Election for the House of
Commons on June 28, 2004, in Canada (millions)
  United States Canada
Presidential campaigns (including primaries) C$1,009.8 (US$828) N/A
Congressional/House of Commons candidates C$1,384.1 (US$1,135) C$49.8 (US$40.8)
Political parties C$1,934.3 (US$1,586) C$51 (US$41.8)
Advocacy groups/Third parties C$743 (US$610) C$0.72 (US$0.59)
Totals C$5,071.2 (US$4,159) C$101.5 (US$83.2)

Footnote 5 United States Agency for International Development, Manual de financiamiento de la actividad política: una guía para fomentar la transparencia en las democracias emergentes November 2003, p. 37. (Translation provided by the OAS Unit for the Promotion of Democracy.)

Footnote 6 "Is Financing an Obstacle to the Political Participation of Women?" Final Report, OAS Unit for the Promotion of Democracy, the Inter-American Commission on Women, and the International Institute for Democracy and Electoral Assistance, December 16, 2003. Available at www.upd.oas.org/fiapp.

Footnote 7 www.equalvoice.ca

Footnote 8 www.emilyslist.org


Note: 

The opinions expressed are those of the authors; they do not necessarily reflect those of the Chief Electoral Officer of Canada.