Wednesday

17th Oct 2018

Analysis

New EU party finance rules short circuit accountability

The EU's response to weeding out corruption when it comes to financing European political parties is a lesson in how to short circuit accountability.

On Tuesday (17 April), EU lawmakers passed a raft of new rules that will make it a lot easier for parties and their think tanks to spend taxpayer money without getting into trouble.

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But, in fact, the latest rules simply lower the bar for EU grants without directly challenging the dodgy donations and loans that underpinned numerous scams in the lead up to the reforms.

Even warnings from the European Court of Auditors fell on deaf ears. It had demanded EU policy makers to specifically regulate donations and loans.

Parties have to raise their own seed money before getting grants from the EU. Most struggled, others scammed the system.

But instead of tackling the loans and donations culture behind recent scandals, lawmakers simply dropped the amount of its own resources a party needed to get the EU grants.

Such tactics were in full display last summer. In fact, MEPs in the constitutional affairs committee wanted the threshold lowered even further - from the current 15 percent down to 7.5 percent.

"Imposing a contribution in own resources, which is difficult to find, might be too great of a constraint," said Didier Klethi, the EU parliament's director general of finance. Klethi pointed out three foundations had since gone into liquidation.

On Tuesday, 561 MEPs agreed, 89 opposed, and 36 abstained in a vote that launches the new EU rules. Among other reforms, the level for own funding is now set at 10 percent for parties, and five percent for foundations.

The issue originally kicked off in April 2016, when the centre-right EPP, the centre-left S&D, and the liberal Alde, drafted a letter to then president of the European Parliament, Martin Schulz.

That letter was in part a response to media revelations on how far-right parties were cheating the system by gaming donations and racking up massive loans.

The image broadcast painted the EU parliament in a bad light and was a public relations nightmare given its struggle to claim greater democratic legitimacy.

The letter demanded the regulation on funding parties be reformed, which included, among other things, reducing the 15 percent co-financing obligation. The cut was later supported by the Greens, who had up until then been sidelined in the internal reform talks.

The Greens were unhappy about earlier proposals to increase the number of MEPs required to form a European political party. The three other groups bargained with the Greens, agreed to lower the number of MEPs needed to create a party. In exchange, the Greens supported moves to reduce co-financing limits.

But easier access to taxpayer money is not the only dubious result from this week's vote.

History

A look back at how these rules came about provides an indication into the thinking and the ideals that have morphed over the years. It shows the legal wrangles in the wider effort to create the semi-mythical European public space.

The process took some twenty years, starting from the 1992 treaty of Maastricht to the first EU regulation on political parties in 2004.

The Maastricht treaty made bold statements. It said political parties at European level are important as a factor for integration within the Union. It said they contribute to "forming European awareness" and in "expressing the political will of the citizens."

Five years later, the Amsterdam treaty laid down the legal basis allowing them to receive money from the EU budget. But it was national parties that ended up getting the cash, undermining the spirit of Maastricht.

It then took another four years before the treaty of Nice decided to regulate the funding spree.

Later, a 2004 regulation opened the EU parliament's budget to party grants. Those rules were amended in 2007 to adjust the minimum co-financing requirement and officially recognised party foundations in the hopes of increasing voter turnout.

More importantly for the parties, it authorised them to spend the money on European parliament elections.

The European Commission in 2012 then proposed further funding reforms, put in place minimum standards on donations, and set up an new oversight authority.

It was signed off by the co-legislators, paving the way for the 2014 European Parliament elections and an agreement on how to nominate and elect the next European commission president.

Although the visibility of European parties increased, voter turnout remained consistently in a slump, a phenomenon that has gone broadly unchanged since 1979.

The next EU elections are in 2019. What to do?

Semi-state agencies

With European parties and their foundations now being almost entirely financed by the public purse, questions are being raised on how well equipped they are to uphold the civic contract first highlighted in the Treaty of Maastricht.

"You can easily argue that this turns the parties – at least financially – more and more into 'semi-state agencies', since they depend almost entirely on European subsidies for their existence," said Wouter Wolfs, a researcher at KU Leuven, a Belgian university, in an email.

He noted lowering the co-financing rate also lowers the incentive for parties and foundations to strengthen their 'financial' ties to society, because from now on, they'll have to collect fewer own resources.

The EU response to strengthening those ties is to force national parties to publish the logo and programme of 'their' Europarty on their websites. Those logos now have to appear some 12 months before a Europarty submits its application for funding.

Investigation

EU passes new rules to prevent far-right funding abuses

Political funding of European parties is being overhauled ahead of the European parliament elections next year. The latest rules will cut funding for smaller parties, with an aim to squeeze out duplication and over-representation of the far right.

Danes criticise EU political party funding

Four Danish parties represented in the European Parliament have protested against the Commission's plans to distribute 8.4m euros of taxpayers' money among "European parties", as they will not be entitled to a share of the money. It is "undemocratic to support some parties and not others," says an MEP.

Bavarian election puts Merkel on defensive

Voters in Germany's largest state hived off to the left and right of the ruling conservatives in Sunday's elections - posing questions for Merkel's authority.

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