Ukraine: New party financing law aims to break oligarchs’ grip on parliament, experts say

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Endemic political corruption has plagued Ukrainian democracy for decades, and the situation ahead of the local elections scheduled for Oct. 25 seems to be no different. Political parties still franchise out local party branches to tycoons with deep pockets and local business interests to secure, activists from around the country say.

At the national level it was even worse. Top spots on party lists, which would virtually guarantee a seat in parliament, have allegedly been up for sale at prices reaching millions of dollars.

The sums involved meant that corrupt, individual interests - not the common good - often determined the outcome of political decisions. Experts say political corruption has been one of the major reasons why the country’s economy and living standards have lagged behind those of its Central European neighbors.

But the Oct. 25 elections could be the last to feature this kind of “democracy for sale.” Beginning in July 2016, the nation’s political parties will have to open up their books, under a new law approved by parliament on Oct. 8. In return, they will be eligible for financing from the state budget, much like the system in some Western countries.

Under the new law, individuals will be allowed to donate up to Hr 500,000, while businesses can provide up to double that figure. Records of all donations will be accessible to the public, and subject to auditing by anti-corruption bodies. Moreover, the new state financing of parties comes at a price of only 80 kopecks per month to the taxpayer.

Beginning from 2017, all parties receiving two percent or more of the popular vote will be eligible for state financing.

The authors of the law and reformist lawmakers like Serhiy Leshchenko hope that the new legislation will deal a “significant” blow to political corruption by introducing transparency to party financing.

“This law breaks the ties between the oligarchs and the political system, said Leshchenko, a pro-presidential MP and promoter of the law in parliament. “Now citizens will pay for the parties (they vote for). Eighty kopecks is a low price for a democracy - instead of oligarchs looting state finances through their henchmen (in parliament).”

”We should have done this 10 years ago,” Leshchenko said while presenting the law in parliament.

But will the law make that much of a difference? “Yes,” says one of the co-author’s of the law, Dmytro Kotliar, a leading anti-corruption expert with the Reanimation Package of Reforms group.

Kotliar told the Kyiv Post that the implementation of the new party financing rules “will transform the political system and decrease, if not eliminate, the oligarch's influence on parties. It will bring transparency to money in politics. Parties will (have to) report about all their revenues and expenses, and all party donators will be known to the public.”

Kotliar expects public scrutiny to maintain oversight of party finances and ensure compliance with the law. Public support was high for election finance reform, with 74 percent demanding disclosure of campaign contributions, according to a June survey commissioned by the International Foundation for Election Systems, which promotes free and fair elections worldwide.

But how was it even possible to get the party financing law approved by a parliament that is still heavy influenced by shady oligarchical interests antipathetic to transparency?

Well, it almost wasn’t. It took several rounds of voting and debating, and the law was eventually passed with a slim three-vote majority in the 450-strong parliament.

“This law will free the parties from the oligarch (burden),” deputy parliament chairman Andriy Parubiy said prior to the vote.

But not all parties wanted that link broken, it appeared. The factions representing the former Party of Regions ruling elite, the Opposition Bloc and Vidrodzhenya, as well as the populist Radical Party of Oleh Lyashko didn’t back the law.

And with oligarch influence also present in the governing coalition, it took foreign pressure to pass the law. The European Union tied the passing of the law to the issue of granting Ukrainians visa-free travel to the union – which has long been a topic of concern to the broader public.

In fact, if the EU hadn’t tied the adoption of the law to the issue of visa liberalization, the law wouldn’t have stood a chance of passing, Yaroslav Yurchyshyn, advocacy manager at the Reanimation Package of Reforms civic initiative, who also lobbied for the law, told the Kyiv Post.

Parliament considered the party funding law along with a package of other anti-corruption measures to meet EU and Council of Europe minimum standards under the Public Order and Security block of the EU Visa Liberalization Action Plan.

The law was passed on the last session day before a three-week break for local election campaigning. The EU is to scrutinize Ukraine’s progress on the action plan’s benchmarks in late October.

Yurchyshyn also said that the parties now would have to scramble to clean up their books. “It will be a challenge for parties to qualify” for state financing, he said.

Kotliar co-authored a previous party financing transparency law back in 2003 together with the main author of the current law, Denys Kovryzhenko, for the Laboratory for Legislative Initiatives, a nongovernmental organization, while still law students at the Kyiv Mohyla Academy.

The law was set to take effect in 2005, but the required financing wasn’t provided from the state budget, and the law was later repealed altogether. Appointed deputy justice minister after the 2004 Orange Revolution, Kotliar was unsuccessful in defending the law.

He saw a “similar risk this time too,” if the funds for the party financing aren’t included in state budget in the coming years.

But Kotliar was still hopeful, as the current “reform is much more comprehensive (and) provides a comprehensive system of restrictions on party financing, with more detailed transparency and accountability requirements.”

“These include mandatory independent audits of party accounts, an elaborate system of state controls overseen by the National Agency for Corruption Prevention, and strict sanctions,” including criminal liability for violations, Kotliar said.

 

Source: Kyiv Post 12th October 2015: http://www.kyivpost.com/content/ukraine/new-party-financing-law-aims-to-...