Review of “A Reflection of the Shortcomings in Legislation on Party Financing in the 2001 Finance Declarations" 0

This report is a valuable contribution to the growing body of research on political party financing in Latvia. This work builds on a previous report (Openness in Political Party Finances, SFL and Delna 2001) in identifying and emphasizing weaknesses in the existing legislation that result in a lack of transparency in party financing. It convincingly achieves its stated aim of proving the inadequacy of the current legislation.

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The first half of the report expertly outlines the shortcomings and gaps in the existing legislation controlling political party income and expenditure. The 1995 Latvian legislation is unflatteringly compared to the 1994 Estonian legislation (p. 7). However, as the report briefly intimates, there are actually serious problems in Estonia with parties having found ways to circumvent donor limits and many political parties actually failing to follow the stringent reporting requirements for their expenditure. This points to something that warrants more than just a brief mention in the introduction and conclusion. Namely, the best-designed party financing laws are only as good as the individuals and parties using them. While the Estonian laws are theoretically more transparent, in practice they are frequently circumvented and abused and there is no reason to believe that it would be any different in Latvia if new legislation were to be introduced.

The second part of the report analyzes the official 2001-2002 financial declarations provided by Latvian political parties. This section emphasizes the disparity between what parties initially claim to spend on election campaigns, and what they eventually lay out. The author repeatedly emphasizes that it is the incompleteness of the Latvian legislation that allows the financial reporting of political parties to be loose and thus of variable quality.

While the report is well written some issues beg to be developed further. For example, on page 13 the report states that there have been initiatives among several parliamentary deputies in developing tougher financing laws regarding income and expenditure. This leads to a number of questions that remain unanswered: Which parties? Opposition or coalition? etc. Also, I wonder why only 2 of the 6 parties currently represented in the Latvian parliament participated in the SFL and Delna project. Has the author attempted to get some feedback from them as to why they decided to not participate in the project?

In a more general context I find the main rationale for the research rather overstated. On pages 4 and 8 the report emphasizes that the transparency of party funding could effect electoral choice, but fails to offer any practical or theoretical evidence to support this argument. Moreover, on page 12 it is suggested that if voters were to realize the size of a particular political parties’ election campaign budget it could significantly influence their vote. I strongly disagree and would argue that ideology, policy choices and especially personalities are far more important in influencing the Latvian electorate. Indeed, it seems to me that the most important aspect of party financing is the impact it can have on policy decisions after government formation i.e. how far interest groups and other donors manage to influence the formation of public policy. While this topic was not within the scope of the current survey, it seems to me that it would be a logical continuation of this important work. While journalists do partly deal with this issue (e.g. the recent Saulesdarzs scandal), their approach is rather piecemeal and a more detailed academic investigation would prove a valuable addition to the current body of material.

Moreover, some of the general findings of the report are self-evident. It should surprise no one that political parties receive more funds at election-time and that this is spent on campaigning (p. 5, 11). Also, we would expect that the largest parties in the parliament, and especially those forming the government coalition, would have the greatest funding (p. 5). High campaign costs are inevitable in a modern democracy providing access to new media and modern campaigning methods.

The report could also have placed itself more in the current domestic Latvian and international debate on party financing. I find it surprising that the work makes no reference to the exhaustive report on the current status and future of political party financing in Latvia made by Bob Dahl in November 2001 or the briefer research of Janis Ikstens. The author could also have placed the Latvian experience in a more international context. After all, reform of party financing mechanisms are a feature of all major democracies following the decline in mass membership of parties (and the resulting decline in income from membership fees and free labour) from the 1950’s onwards and the rapidly rising costs of political campaigning. The current experiences of Latvia are not unique, and it would have been interesting to detail how other countries have dealt with these very same issues.

As a policy paper, this work successfully achieves its stated aim of detailing the major problems concerning Latvian political party financing legislation and the rather minimal reporting demands that the law places on parties. It convincingly adds to the growing body of evidence detailing the need for rapid legislative reform in order to make political parties in Latvia more transparent and accountable to voters.

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