Foreign funding for political parties: why should we care?

Last year, scandals in Germany and Austria put a spotlight on illegal party financing and political corruption demonstrating the importance of regulations and systematic monitoring of party funding. Considering the fact that EU elections are conducted under national rules, a minimum standard of transparency in party funding across all member states should be a priority of the EU.

A Comment by Laurence Herzog

 

More relevant than ever before: transparency of party funding

Switzerland – one of the oldest democracies on this planet – is the only member state of the Council of Europe that has no federal regulations on the disclosure of party and election financing. This has led to criticism from the Council of Europe’s anti-corruption monitoring body, GRECO, on several occasions

The Swiss government has not shown much effort to improve the situation. However, the launch of the popular initiative ”For greater transparency in political financing (Transparency Initiative)” may change this as it has generated new, controversial discussions in the country since its launch in 2017.

Party financing has not only been a controversial topic in Switzerland, but also in various other European countries. Germany and Austria, for example, have been the place of two major scandals involving illegal party donations in recent years. The German right-wing party “Alternative for Germany” allegedly tried to hide a large donation made through a Swiss-based company in 2017.

The Austrian government meanwhile had to resign in 2019 after a video showed the deputy chancellor and leader of the right-wing “Freedom Party of Austria” proposing a shady deal in a sting operation in Ibiza. These scandals undermine the political system as well as public trust therein and underline the importance of a minimum standard of regulations and transparency on political funding.

 

The European dimension to party funding

But why is this a foreign policy issue and why should the European Union care about national rules on party and election financing? Unlike the Eurovision Song Contest, there is no uniform voting system for EU elections. Not only national elections but also the elections of the EU parliament are conducted under national rules. 

To allow for free and fair elections, however, it is crucial to ensure a certain level of transparency and monitoring across the Union. In times when political systems and values are being challenged and the democratic deficit of the EU is subject to criticism, it is essential to strengthen the trust in democratic systems.

The GRECO publishes regularly evaluation reports on the provisions in each country. The reports of the third evaluation round – which focused on transparency of party funding – showed that in all member states some form of regulations exist. Moreover, in recent years, regulations have become more similar as most countries have introduced or reinforced bans and limits on transnational and private funding. 

This is a positive development. Nevertheless, there are still major differences between the member states leaving loopholes and opportunities for major corporations and foreign stakeholders to influence the national outcomes of EU elections.

 

The role of the EU in preventing foreign interference in EU elections

The differences in regulations are especially worrisome in view of foreign interference – a topic that was at the center of the EU elections in spring last year. While many newspapers discussed the spreading of misinformation and cyber threats in great length, the financial influence of foreign actors in party and election funding has not generated much media interest. 

Even though there are a number of countries with a full ban on foreign donations, such as Slovenia, more than half of all EU member states do not have any restrictions or allow foreign donations in specific circumstances (e.g. under a certain threshold or for selected foreign actors). This lack of strict regulations allows foreign money to flow into political campaigns in a large number of EU member states. Consequently, the disparate and sometimes lax regulations on the national level represent a major vulnerability on the European level.

So, what needs to be done? First and foremost, it is crucial to address this vulnerability and reduce the risk of foreign interference in European elections. For this to happen, the EU has to promote cooperation between its member states and European institutions to develop a common guideline and a minimum standard on transparency of party and election financing. 

Such a European guideline would ideally include a ban on foreign donations with a strict definition of foreign actors in order to close any possible loopholes. In other words, the EU could lead the way and show countries like Switzerland – which always joins the international party fashionably late – what can be achieved in a strong community.

 

Read part 1: Why Germany will not come to the UK’s rescue in Brexit negotiations

The Polis Blog serves as a platform at the disposal of Polis180’s & OpenTTN’s members. Published comments express solely the authors’ opinions and shall not be confounded with 

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This article is part of our blog series “Polis180 goes OpenTTN.” In this series, members from our partner think tanks within the Open Think Tank Network (OpenTTN) regularly publish articles on foreign policy topics that are relevant to Germany’s relations with the countries of the respective think tanks.

The OpenTTN unites young and participative grassroots think tanks from all around Europe – namely Agora from the UK, foraus from Switzerland, Argo from France, Ponto from Austria, and of course Polis180. We use innovative crowd-sourcing methods and participatory structures to provide opportunities for participation in political debates and cooperation outside of the traditional fora. Together we share the common goal of developing constructive, coherent and future-oriented policy solutions relevant across national borders.

Laurence

Laurence coordinates the activities of the Open Think Tank Network (OpenTTN) since 2017. She holds an MA in Peace and Conflict Studies from the University of Oslo and has been working in the field of civil peace promotion. Besides her professional focus, she has a keen interest in Swiss and EU politics.

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