However, the Saeima recently approved People`s Party proposals to the law on financing political organizations (parties), which contain absolutely nothing of the promised "complex approach".
A “complex approach” to state capture
It was very recently that the chairman of the People's Party (TP) faction in the Parliament, Maris Kucinskis, was trying to calm down the public by saying that a "complex approach" is to be taken in improving the system of political party financing in this country. However, the Saeima recently approved TP proposals to the law on financing political organizations (parties), which contain absolutely nothing of the promised "complex approach". One can only ask whether this approach is meant to deal with shortcomings in the party financing system or to destroy the system outright.
History of 'Spending Cap'
If we look back at the history of campaign spending cap in Latvia, we can remember that innovations implemented before the 2002 parliamentary election did not produce the expected results, and the resources spent during that campaign were among the most massive in comparison to older democracies in Europe. It became clear that in terms of ensuring transparency in party finances, which was the stated goal of the law, it was not enough to limit party income, because that did not reduce the need for parties to look for resources for the election campaign. They used various fancy techniques to continue their arms race. Information about the average sum of money spent by parties to attract votes was shocking, and politicians decided to limit not just party income, but also expenditures so as to make it less necessary for parties to seek money.
Spending cap were introduced in 2004 with a limitation of 20 santims per voter. Experts and the KNAB [Corruption Prevention and Combating Bureau] argued that there must also be regulations concerning so-called third-party advertising campaigns, but this was not done. In advance of the 2005 local government election, there were a few cases in which third parties engaged in campaigning, but this did not attract much attention on the part of the KNAB or the legislature. During the 9th Saeima, however, this "loophole" in the regulations became a gateway to the whole world. The TP was helped by the "Public for Freedom of Speech Organization" to violate the spending cap by at least 506,683 lats, while the First Party of Latvia (LPP) use the organization "Toward the Sun" to overspend by 309,365 lats. The Administrative Cases Department of the Supreme Court Senate has declared this to be so.
Soon afterward, the TP got busy with an initiative to improve the party financing system. Kucinskis appeared on the television program "That is Who We Are" to explain that the party was working on a "complex approach" to closing up loopholes in the law on party financing. He promised that there would be consideration not only of eliminating spending cap, but also about implementing rules on third-party campaigning and on the length of the official campaign period. If party spending cap are repealed, there will be no need for the other two proposals, but the politician's statement did not make it clear whether he really had a sense of what the TP would be proposing in the Saeima. The proposals, which were eventually submitted by the parties of the governing coalition, contained nothing of the promised "complex approach", and on February 8 of this year, the Saeima voted only in favor of sending the TP proposal on eliminating party spending limitations to parliamentary commissions for their consideration.
Limitations and Principle of Transparency
The only argument presented by the TP in favor of these amendments is that this will ensure transparency in party financing. One might agree, but one has to think about something , which the prime minister (Aigars Kalvitis) told the media: "It is quite enough to have very strict financial controls over donors, because all other limitations cause deformations. If someone has money and wants to influence political processes, then it is always possible to find a way to spend that money." This statement allows us to draw at least two conclusions.
First of all, this suggests that the prime minister does not think that decisions can be taken without the influence of "moneybags". In this context, it appears that the governing coalition considers party spending cap to be a "bureaucratic" barrier which keeps sponsors from achieving favorable terms or a specific political decision. That, however, is the specific goal in limiting party spending — ensuring that political parties are less dependent on wealthy sponsors, and there are no business relationships between parties and their sponsors. It is absolutely out of the question to compare party financing to market principles, where people with money can spend it freely to obtain the desired benefit just because they have the necessary resources, the necessary money. During campaigns, there is a battle over which political party and which politician will be authorized to take decisions on issues that are of importance to the public at large. Those who have money must not be allowed to determine voting results. This is something that must be resolved in a competition among parties and their programs. Later this means the implementation of more balanced policies, and that is why strict rules of the game are necessary.
Second, it appears that the prime minister and the TP feel that limited party spending and transparency in party financing are incompatible things. Here we must recall once gain that the cap on party spending were introduced specifically with the goal of promoting transparency in party financing. If the Saeima approves the amendments to repeal the limitations, then we can predict with fair certainty that parties will return to the same closed politics, which existed before the 2001 local government election and the 2002 Saeima election. Without spending limitations, those who investigate party finances will find it all but impossible to know whether spending is at all in line with party income in terms of what the law permits. Without limitations on party spending, there will be absolutely no reduction in the need for parties to arm themselves with the finances of a few oligarchs in the battle over power. The point is that if the law preserves the norm which says that a party cannot receive more than 10,000 lats a year from an individual in donations or gifts, but it can spend as much money as it wants on election campaigns, it is most likely that the party will find a way to state the legal amount, but spend far more than those resources. For instance, party sponsors can pay for campaign-related spending directly or use fictive donors for that purpose.
Finally, without any limitations on spending, the situation will be that the wealthiest parties and their parties receive disproportional influence on elections and all three pillars of government. It would be very difficult to say that this promotes transparency in party financing. This explanation is not convincing, and it leads one to ask why the TP does not instead propose to regulate third-party advertising campaigns. Why does the TP not propose that Parliament finally approve a law on campaigning and resolve a series of other painful problems which have to do with party financing so as truly to improve the system?
By proposing to eliminate the spending cap, the TP is obviously trying to avoid punishment and to legitimate its own violation of campaign rules with the amendments. Given the aforementioned statement by the Supreme Court, it is very likely that the KNAB will order the party to return half a million lats to the national budget as punishment for this violation. That will not be possible if the amendments take effect before the punishment is ordered, because a gentler punishment has retroactive effect. Later amendments, too, could significantly improve the party's positions in any possible legal proceedings against the state to dispute the punishment that has been ordered.
For that reason, the party's proposal to lift the campaign spending cap correspond to a classic attempt to capture the state -- to ensure a system in which a cartel of politicians and business oligarchs completely take control over government institutions. Members of the cartel manipulate politics to receive advantages, to ensure benefits for themselves or their clique. The political party which has significantly violated the law has achieved its goal (power) and then proposes to change the violated law, reducing the punishment even before its liability for the violation has taken effect. The cartel escapes punishment. It appears that this is the "complex approach" of which TP representatives speak, but one really doubts whether this has anything to do with improving the system of political party financing.