Abstract
This article illustrates how the growing complexity of regulations regarding party funding in post-communist Romania is paralleled by practices employed by political parties in their attempt to gain increased access to state resources. Our document analysis indicate that political parties managed to exploit the weaknesses of the increasingly complex legislative framework. A cyclical process takes places: parties use the existing flaws in the legislation on party funding to indirectly obtain and exploit state resources for their (electoral) purposes, an improved law tackling those shortcomings is passed, but political parties are able to identify other flaws and use them to gain financial benefits. To make the case, we assess comparatively the evolution of legislative provisions and practices employed by political parties over two decades.
Introduction
Following the regime change of 1989, post-communist countries in Central and Eastern Europe (CEE) faced the crucial challenge of constructing and maintaining strong and stable political institutions. As representative democracies are unthinkable without political parties, 1 one major concern was to ensure the (re)establishment of multi-party systems in which independent and competitive actors had the opportunity to fight in free and fair elections. In the new multi-party CEE systems, three types of political competitors can be identified: continuous (i.e. successors or satellites of the former communist parties), revived (i.e. historical parties with interrupted existence during communism), and newly emerged. 2 Among these categories, only the first enjoyed and, subsequently benefited from structural and human resources before the first post-communist elections. Consequently, a solution was necessary to foster the development of revived and newly emerged parties.
In this respect, public funding appeared to be the most likely type of support as it provided a number of advantages for the competing political actors (i.e., organizational costs, subventions for electoral campaign, etc.). Moreover, greater resources allowed parties to develop complex organizations, recruit more and higher-quality candidates, strengthen ties with the electorate, and mobilize voters. 3 At the same time, public funding was aimed at increasing the transparency of the political system, 4 the party system stability, 5 and the accountability of the competitors. 6
Consequently, with isolated exceptions (e.g. Latvia), the post-communist political parties share the common feature of using state subventions for their funding. 7 The intensity of state support differs: in the Czech Republic, Estonia, Hungary, and Slovenia parties are highly subsidized by the state, 8 whereas in Romania it amounts to considerably less. 9 In the latter case, the parties expend far more than the state subsidy. For example, the main parties’ self-reported evaluations after the 2008 legislative elections indicate expenditures 20 times higher than state subventions for the whole year—even while the laws on private funding are particularly prohibitive. This constitutes an interesting paradox, which will be the main empirical puzzle addressed in this article. Thus, the central research question of the study is, To what extent has the increase in complexity and severity of the Romanian legislation on party (private) funding succeeded in curtailing illegal financing?
Using document analysis, we illustrate how the Romanian political parties found means to supplement the reduced state financial aid. Taking advantage of the flaws in the regulations, parties have developed tools to indirectly obtain and use state money. Our study covers the last three parliamentary elections of 2000, 2004, and 2008, which are the ones with the largest spending in the country since the advent of democracy in 1990.
In this context, our article constitutes the first systematic attempt to map the evolution of the legal regulations concerning campaign financing in Romania. We have to emphasize from the onset that despite party finance regulations having attained some of their goals, the Romanian case is not a success story. In spite of stricter regulations that diminished some of the problems, political parties found ways to avoid the formal provisions and get access to supplementary funds. Although a single-case study, this analysis bears relevant implications for broader transitional contexts in which illicit party funding is involved, while the judiciary is too politicized to penalize it. Moreover, it speaks directly to the main policy assumption of international NGOs such as the Council of Europe’s Group of States against Corruption (GRECO) that tend to overestimate the positive impact of stricter funding regulations.
This article starts with a general description of the Romanian political system, also providing the context for party funding. The second section analyzes the growing complexity of the legal framework regulating party campaigns in the two decades since the fall of communism. Next, we illustrate the flaws in regulations that have allowed parties to get away with financing behavior that was beyond the legal provisions. In this respect, we use a few examples to illustrate the ways in which Romanian parties have developed tools to indirectly obtain (and use) state resources for electoral purposes. The conclusion synthesizes our findings and points to avenues for further research.
The Romanian Political System and the Party Funding Challenge
The relative stability of the political competitors over the recent two decades is one feature of the Romanian political system. Since 1992, no new parties gained seats in the legislature (there were only exits without return), and the political space usually opposes the same actors. Illustrative for this situation is the composition of coalition governments where, with the exception of radical right and ethnic party, each parliamentary party joined forces with every other competitor. The current party system includes four political parties: two major actors and a medium and a minor political party. All but the medium-sized one have had uninterrupted presence in the legislature since the first free elections after regime change (1990).
The Social Democratic Party (PSD) is the largest Romanian party. It was formerly known as the Democratic National Salvation Front (FDSN) and the Party of Social Democracy in Romania (PDSR). It won five out of six national elections, was the main component of the government coalition three times, supported once a minority government (based on a “silent agreement”), and took part twice for a year in the recent government coalitions of 2008 and 2012. Starting 2000, the party has a relatively constant electoral support of approximately 35 percent of the votes (very low levels of electoral volatility). Its president, Ion Iliescu, won the presidential elections three times (1990, 1992, and 2000). In three other instances, the PSD presidents lost the presidential runoff elections: Iliescu in 1996, Adrian Năstase in 2004, and Mircea Geoană in 2009. The party is a successor of the National Salvation Front (FSN) that split prior to the 1992 elections. In 2001, it absorbed the Party of Social Democracy in Romania (PSDR) and it formed electoral alliances with the Conservative Party (PC) for the 2000, 2004, and 2008 national legislative elections. Half way through the 1996–2000 parliamentary term, the party suffered a split: a few political leaders formed an intraparliamentary party (The Alliance for Romania [APR]) that failed to gain any seats in the subsequent elections.
The Democratic Liberal Party (PDL) is the second largest party in post-communist Romania, formerly known as the Democratic Party (PD). It formed together with PSD the umbrella organization winning the first elections after the regime change (FSN). Iliescu’s guard left the party in 1992 (to form the FDSN) after the election of Petre Roman as president of the FSN. Although it did not win any legislative election, the party joined four government coalitions—twice as junior partner (1996 and 2004) and twice as the senior party (2008 and 2009). It left all the governments in which it did not act as the main party. The leadership change from 2001 set the party on an ascending slope in terms of electoral support, while in 2005 the party shifted from a centre-left ideology to centre-right (declarative shift as policies included in the party manifestos do not support such a claim). Their new leader, Traian Basescu, won the presidential elections in 2004 and 2009.
The National Liberal Party is the third largest party, being the political organization with the most splits and mergers in post-communist Romania. It was part of the electoral alliance winning the 1996 elections and was three times part of the coalition government (1996, 2004, and 2012). Its 2004–2008 government experience was divided in two different periods: it was the senior coalition partner until the beginning of 2007, and for another year and a half it led a minority government (supported by the PSD on the basis of a “silent agreement”). None of its candidates won the presidential elections. The Democratic Alliance of Hungarians in Romania (UDMR) is the fourth party in the current setting. As an ethnic party, it has disciplined voters and a stable support of around 7 percent of the votes both in the legislative and presidential elections. It joined four coalition governments and supported once the PSD minority government based on a silent agreement (2000-2004).
Apart from these parties, two other political competitors were relevant during the post-communist period, but failed to gain parliamentary representation. First, The Christian-Democratic National Peasants’ Party (PNTCD) was a historical party revived after the collapse of the communist regime. It had a relevant presence in interwar Romania, and its initial leader Ion Ratiu returned from exile abroad. The PNTCD was the leading actor of the alliance winning the 1996 elections (Romanian Democratic Convention [CDR]). Its leader, Emil Constantinescu, won the presidential elections in 1996 and the party ruled the coalition government until 2000. It gained seats only in the legislatures from the first post-communist decade. In 1992, as a member of the CDR, it was the main opposition party. In 2000, it failed to gain parliamentary representation as a result of popular discontent following its four-year term in office. Since then, the party managed to pass the electoral threshold neither alone nor in an alliance. Second, the radical Greater Romania Party (PRM) was formed before the 1992 elections and has gained seats in all but the most recent legislature. It was for a short period part of the 1992–1996 government coalition. Since then, it was always excluded from the government coalition formation talks. In terms of popular support, the party reached its peak in the 2000 elections when it got second in the legislative elections with almost 20 percent of votes. It had the same leader for more than 20 years, Corneliu Vadim Tudor, who got into the runoff of the presidential elections in 2000.
One of the major downsides of this political stability is the gradual cartelization of Romanian politics. With the same parties in the legislative arena and modest changes over time in the political elite, the control over resources was exercised by a limited amount of political actors. The absence of new political parties and leaders decreases the likelihood of conflict over substantive policies and increased the chances of polarization on personal, symbolic grounds. Along these lines, the Romanian political actors shaped the rules of the game with no real challenge to their behaviors and practices. Nye has argued that the financing of political parties is crucial in developed democracies and corruption plays a relevant role in gathering the necessary money. 10 Consistently with this, the International Country Risk Guide (ICRG) has included the secret financial support of political parties in its corruption rating next to patronage, nepotism, or close ties between politics and economy. 11 Corruption has long been considered as one of the main causes for the disadvantageous privatization of most Romanian state assets and industries after 1989, for the malfunctioning of the bureaucracy, and the failure of the pre-accession EU assistance programs. 12 Some scholars even claimed that corruption was the driving motivation for a large part of the Romanian politicians. 13 The politics of party finance was influential in perpetuating this problem from two perspectives. First, the gradual limitation of access to state funding for nonparliamentary political organizations diminished the chances of more reform-oriented new parties to make a breakthrough. Second, the insufficiency of direct state financing paved the way for unlawful private donations and the strengthening of clientelist relations—generous donors being rewarded with public contracts without tenders and through other similar rule-twisting mechanisms.
The Evolution of the Party Funding Regulations in Romania
Political funding regulations aim at ensuring sufficient resources for political competitors (either institutional or individual) in order to fulfill the functions of representation. State funding of parties may be direct (i.e., subventions, direct public funding), indirect (i.e., access to state media, tax relief), or both. Previous studies indicate that political parties in all the CEE countries have access to free airtime and most of them receive in-hand subsidies. 14 With some exceptions (e.g., Latvia, Moldova, Ukraine), public funding is widespread in European political systems, whereas tax relief appears to be the least popular type of state support (noticeable only in Hungary and Slovenia). Direct funding may be either party or campaign based. In particular, while the former refers to organizational costs of (parliamentary) parties between elections, the latter targets specific costs for the electoral campaign, available to all the competitors on a different basis. 15 The line separating the two budgetary categories is rather thin as the money received for general expenses and specific campaign finance is used for the same final goal of electoral success. 16 Consequently, we do not differentiate between these two categories, treating public funding as a monolithic source.
Party financing in Romania gradually evolved from very general provisions valid for the first post-communist elections held in 1990 to very specific regulations applicable starting with the 2008 parliamentary elections. Table 1 summarizes the evolution of legal regulations concerning the parties’ and individual politicians’ campaign expenditures for the entire post-communist period. Although our analysis occasionally touches upon this issue, our primary aim is not explaining why governing parties have engaged in public finance reforms, 17 but to assess the overall development of the latter. The following two subsections differentiate between the type of regulations and reasoning behind party financing legislation in the first (1990–2000) and second (2001–2010) post-communist decades.
Party Funding Regulations through Time (1990–2012)
Note: BS = base subsidy; NMS = national minimum salary; PP = parliamentary parties; ROL = “old” leu (Romania’s currency) RON = “new” leu (Romania’s currency from July 1, 2005); SB = state budget; SS = state subsidy.
Broad Legislation and Political Calculus
For the first three elections—1990, 1992, and 1996—the issues related to party funding were included in broader general laws and changes were often driven by political reasoning. To start with, the decree issued in March 1990 for the organization of parliamentary and presidential elections guarantees free access to public radio and television (Article 51). Furthermore, it stipulates that all competing parties and political organizations will receive state subventions, whereas donations from foreign sources are not permitted (Article 53). The decree was issued by the Provisional Council for National Union (CPUN), the caretaker government until the first elections, and had the character of a law as no legislature was in place. The provisions of the decree had a strong component of electoral strategy, obviously accounting for context-specific motivations. Thus, free access to media did not provide equal opportunities, but favored the FSN whose president and candidate in the 1990 elections was also the leader of the CPUN. The FSN featured prominently in every broadcast as there were solely public media assets and the CPUN was identified with the state. 18
State subventions were also a strategic tool for the FSN, the successor of the former Romanian Communist Party, which controlled the financial resources of its predecessor and thus had substantial funding without using this provision. Public funds were introduced by the FSN to encourage the proliferation of parties with two goals. On the one hand, the electorate was confronted with an afflux of new parties to which FSN was the stable alternative competitor. 19 On the other hand, the creation of new parties divided opposition voters, thus no political party apart from FSN was to have a strong representation in the new legislature. Apart from allocating some financial resources to the opposition parties with this decree, 20 the FSN reached both goals as it gained more than two-thirds of the popular vote in the legislative elections, while its candidate was elected as president of the country with more than 85 percent of the votes. Furthermore, the prohibitions toward private funding had a specific goal: they were aimed at limiting the opportunities for the leader of one opposition party (the PNTCD) to use in the electoral campaign his personal fortune amassed during his exile in Great Britain. 21
For the 1992 elections, party funding was again included in the general law referring to the legislative elections for the two Chambers of Parliament (Law 68/1992). The provisions regarding access to media and the public or private funding suffered modifications compared to the previous decree as a different goal had to be reached. The 1990-1992 period was marked by internal unrest (e.g. miners called to Bucharest to oppress street protesters) and political opposition intensified. As a result, the goal of the incumbent National Democratic Salvation Front (FDSN) party—the conservative faction after the split of FSN in the spring of 1992—was to reduce the number of opponents getting access to Parliament. It did so by two measures. First, it introduced an electoral threshold of 3 percent for access to Parliament. Second, it promoted discriminatory party funding legislation making it difficult for extraparliamentary parties to obtain financial aid for the electoral campaign. In this respect, free access to media was granted to all the political organizations and independent candidates represented in Parliament, whereas the extraparliamentary competitors had to pay for it (Article 46, par. 2). Moreover, not only did parliamentary parties receive twice as much access to media than other competitors but the distribution was made according to the number of seats in the legislature (Article 46, par. 4).
On the other hand, all competitors received public funds on the basis of a complementary law that was planned to be adopted by Parliament, but all those that failed to receive more than 5 percent of the votes at the national level had to return the money within two months of the elections (Article 45, par. 1). Private donations were allowed without a ceiling as long as they were publicly declared, but foreign aid was banned (Article 45, par. 3). Similarly, accepting money from public institutions and authorities was forbidden. Two problems were clearly visible with respect to these provisions: (1) the legal absence of necessary control mechanisms—state institutions were supposed to implement these provisions, but no specific instructions regarding the control and enforcement were stipulated; and (2) none of the competitors in those elections received public funding as the complementary law was never adopted.
The 1996 elections brought new regulations, and specific attention was paid to party finance and electoral campaigns (Law 27/1996). According to Article 33 (par. 1), the funding sources of a political party were membership fees, donations and contributions, revenues from its own activities, and subventions from the state budget according to the annual budget law. As membership fees were considered to be tax-free, the total paid by an individual per year should be less than 50 times the minimum salary (Article 34, par. 3). The yearly donations could not exceed 0.005 percent of the state budget revenues, whereas this percentage increased to 0.01 percent in electoral years. An individual donation could not be more than 100 times the minimum salary, whereas an institutional donation ought to be less than 500 times the minimum salary. All private contributions had to be reported, but the donor could remain anonymous when the amount did not exceed 10 times the minimum salary. A party could receive anonymous donations up to 20 percent of the state subvention in a year (Article 35). Donations from public institutions, companies where the state held the majority of shares, and from foreign states or organizations were completely forbidden. However, a party could receive funding from international political organizations which it was affiliated to or from foreign parties it collaborated with on political grounds (Article 36).
State support for parties included extra-parliamentary political organizations, but severely discriminated against them. A four-step procedure of money distribution dominated by parliamentary parties was then established (Article 39). The amount designated for political parties could not be more than 0.04 percent of the state budget. The first phase included the equal distribution of one-third of the total amount to parliamentary parties as a base subvention. In the second phase, the remaining two-thirds of the amount were divided among the same parliamentary parties proportionally to the number of their seats, up to a maximum of five base subventions. The third phase took the leftovers from the second phase and distributed them equally to all the parties getting at least 2 percent of the votes in the previous elections. The share of money for individual parties could not be higher than a base subvention. The final phase implied the proportional (i.e., seats) distribution of the leftovers from the third phase to all the parliamentary parties. One major observation to be made with respect to the content of such a law is that parliamentary parties tended to receive considerable amounts of public money, whereas extraparliamentary parties received next to nothing. As a result, it comes as no surprise that since 1992 no new political party has gained seats in Parliament.
Party Funding Tailored to Maintain the Representation Status Quo
The regulations from the second post-communist decade follow a different path and are characterized by the attempt to maintain the status-quo and prevent extra-parliamentary political forces from gaining representation. We will discuss in detail the manner in which the new provisions reflected the specific interests of parliamentary parties. The problems of the 1996 law, occurring mostly at the 2000 elections, determined the creation of a special law on the funding of political parties (Law 43/2003). 22 The basic provisions regarding the sources of income for political parties stayed the same as in the previous law, but some of the revenue thresholds were modified. Thus, private donations could now total up to 0.025 percent of the state budget and 0.05 percent in electoral years, while individuals could make donations of up to 200 times the minimum salary, with companies being able to do so up to 500 times the minimum salary. As in the previous law, confidential donations could not be larger than 10 times the minimum salary instead they ought to add up to no more than 15 percent of state funding in a year (Article 5). State support for political parties remained unchanged with just one exception. In the third phase, the 2 percent vote share for the extra-parliamentary parties was replaced by a percentage of votes of maximum 1 percent below the electoral threshold. 23
Following this modification, no extra-parliamentary party competing in the 2000 and 2004 elections was entitled to financial assistance. Similarly to the 1992 law, there were special state subsidies provided to political parties for the electoral campaign on the basis of a complementary law. The parties that did not gain access to Parliament had to return the money within two months of Election Day (Article 13). At the same time, the 2003 law imposed maximum expenditure caps to political parties relatively to minimum salaries. For example, every candidate to a seat in any of the two Chambers of Parliament was entitled to expenses of maximum 150 times the minimum salary (Article 21). Importantly enough, this was also the first law in which strict control mechanisms and sanctions were explicitly mentioned (Articles 24-32), an issue extensively discussed in the following section.
In 2006, a new law regarding party finance came into effect (Law 334/2006), slightly modifying the previous 2003 regulations. Although the new law includes more sanctions than the previous, its deterrence capacity is low. In particular, it is from this moment that discounts higher than 20 percent to goods and services provided to political parties and candidates are considered—for the first time—private donations (Article 6). At the same time, the total amount of private donations is calculated in relation to state budget revenues rather than to state subvention, as it was before (Article 7, par. 3). The most important modification was with respect to the distribution of state subventions. The presence in Parliament is complemented by a new criterion—the share of votes obtained in local elections. Thus, 75 percent of state subventions are proportionally divided—according to the seats—between parliamentary parties, whereas 25 percent is proportionally divided—according to the share of votes—among the parties that have at least fifty county 24 councilors (Articles 15-16). The establishment of a special department, the Permanent Electoral Authority (PEA) (Article 35) in charge of control mechanisms for party financing is another novelty. However, the PEA’s capacity of supervising the parties’ financial activities was from the onset rather weak—as the law did not separate clearly its responsibilities from those of the Courts of Accounts, nor did it allow it to introduce effective sanctions; that is, the largest fine it can impose amounts to around €6000. 25
The 2006 law maintains the ban against donations received from foreign states or organizations, public institutions or agencies, companies where the state holds the majority of shares, trade unions, and religious cults (the next to last was introduced in 2003, whereas the last item only in the 2006 version). As in the previous law, the value of goods and services received by political actors is estimated in money and considered donations (Article 8). The limits of expenditures were loosened, political competitors being allowed to spend more money on candidates. Thus, every candidate in the legislative elections is entitled to expenditures of maximum 350 times the minimum salary (Article 30, par. 2).
Four general remarks are directly observable at the end of this brief overview. First, the provisions regarding party finance have clearly become more specific with time. Whereas, at the beginning, legislators were preoccupied with ensuring the framework for funding, the most recent versions of the law focus on details regarding expenditure caps and control mechanisms. Second, strictly related to the previous point, the lawmakers’ caution also increased mainly because of the fact that numerous problems occurred (as illustrated in the following section). Third, the amounts of money provided to political parties significantly increased from one law to another. Thus, while limitations imposed on private donations have decreased, expenditure caps targeting political parties have increased significantly. Finally, parliamentary parties tend to enact laws on public funding that obviously favor them. Starting with the 1996 law, the vast majority of public funds reached parliamentary parties. Although not obvious from the provisions of the law, private contributions mostly target parliamentary parties as they return this help in the form of other benefits. This point will become more evident in the section discussing the 2000–2008 elections.
Campaign Financing and “the Honey Jar” of Public Money
The flawed provisions of the party funding laws allowed parties to considerably supplement their revenues. Despite the obvious progress with respect to the declaration of unknown sources of money from private donations, the laws on party funding could not cover the entire spectrum of tricks political parties have devised to abuse state resources. Romanian parties have extensively made use of various tools to illegally gather campaign resources and/or to reward their benefactors. This section provides a few illustrative examples that emphasize how political parties used public money in an indirect manner, bypassing the law. Our analysis focuses on the 1996, 2003, and 2006 laws as they represented the framework in which the elections of the last decade were organized.
The 1996 law had three major shortcomings, mostly related to the private donations, which were carefully exploited by the political competitors. First, the provision of goods and services was not included among the contributions. The solution to calculate the value of goods and services at market value and to declare them as part of private donations occurred as late as the 2003 law. Second, there were no control mechanisms with respect to the expenses of political parties, and public institutions were unable to trace the destination of money. The 2003 law filled this gap by demanding political parties to present full reports of the revenues and expenditures and by enforcing a rigorous control of campaign materials. The absence of these first two components from the 1996 law generated a few scandals. One of the biggest involved the 1996 campaign of the former president Ion Iliescu: $5.79 million were illegally spent on campaign materials through a public contract for the creation of a luxury album presenting Romania. Such a situation was also possible because of the fact that control mechanisms were loose. The only requirement for political parties was to publish the list of their private donors by the end of the following March. 26 Thus, all the financial revenues in an electoral year were reported long after the elections. At the same time, no punishment was included for breaking the law.
What were the consequences of these shortcomings? Table 2 illustrates the discrepancies between the parties’ officially reported spending and the evaluations derived from the campaign monitoring undertaken by the largest civic NGO in the country, Asociatia Pro Democratia (APD; “Pro Democracy Association”). 27 Relevant differences were registered in the 2000 parliamentary elections when the aggregate sum acknowledged by the parties was more than nine times smaller than the APD estimations. The fact that such a disparity existed in the framework of a law that did not impose any spending limits (Law 27/1996) may mean only one thing: the parties could not justify where the(ir) money was coming from. This argument was further corroborated by the shocking declaration by Valeriu Stoica, an MP of the PNL, and Justice Minister at the time of the 2000 elections, stating that “80% of the parties’ campaign financing was illegal.” 28 The figures reflect that the discrepancies are similarly high for both the incumbent (the PNL, the PNTCD, and the PD) and major opposition parties (the PDSR). Interestingly enough, however, a party size “effect” can be observed here: as it follows from the table below, small parties were closer to the real figures, but this was mainly due to the fact they could not attract too many private donations.
Campaign Expenditures in Euros a at the 2000 Parliamentary Elections
Source: “Fondurile partidelor politice din România în anul electoral 2000” (The funds of the Romanian parties in the electoral year 2000), APD, Bucharest, 2001.
Note: PDSR = Romanian Social Democracy Party; PNL = National Liberal Party; PNTCD = Christian Democratic National Peasants’ Party; PRM = Greater Romania Party; PD = Democratic Party; UDMR = Democratic Alliance of Hungarians in Romania; PSDR = Romanian Social Democratic Party; UFD = Union of Rightist Forces; APR = Alternative for Romania Party; PSM = Socialist Party of Labor.
All sums are converted in euros.
Extra-parliamentary party.
To partially overcome such shortcomings, the 2003 law introduced control mechanisms. In this respect, it demanded political parties to declare their revenues and expenditures to the Court of Accounts within 15 days from the announcement of the final election results. The validation of elected candidates was conditioned by such financial reports (Article 25). At the same time, this law included a series of measures that the Court of Accounts could take whenever irregularities were noticed (Article 27). In a similar vein, the introduction of expenditures caps was supposed to diminish the incidence of money that could not be justified. The direct effect is seen in Table 3, where a diminishing discrepancy between the declared and monitored expenditures at the 2004 elections is clearly observable. One major exception to it is the governing party at the time (i.e., the PSD), which declared much less than observed as a result of the monitoring process. This is not surprising if we take into account that the party very effectively colonized state resources in those years and developed clientelistic networks run by the so-called local barons, presidents of the county councils. Moreover, the big difference appears mainly because the APD also evaluated the discounts made by the newspapers to the party in exchange for publicity bought by state agencies. 29
Campaign Expenditures in Euros a at the 2004 Parliamentary Elections
Source: Cristian Pîrvulescu, Adrian Sorescu, Costel Popa, and Florin Poenaru, “Alegeri la limita democrat.iei. Analiza procesului electoral din România, octombrie-decembrie 2004” (Bucharest: APD, 2005).
Note: PSD = Social Democratic Party; PUR = Humanist Party of Romania; PNL = National Liberal Party; PD = Democratic Party; PRM = Greater Romania Party; PNG = New Generation Party; URR = Union for Reconstruction of Romania.
All sums are converted in euros.
Extra-parliamentary party.
Less information is available for 2004 than for the previous (2000) elections (we lack data for the spending made by the UDMR and the PNTCD). Still, it is important to note that discrepancies remain large (Table 3). Three of the parties participating in the 2000 elections were the subject of a merger through absorption into larger competitors: APR and UFD were swollen by the PNL, while the tiny PSDR united with the giant PDSR to form PSD (Social Democratic Party). There was even further simplification and polarization of the political scene, as PNL and PD formed the Justice and Truth Alliance (DA) in order to mobilize the right-wing electorate against the PSD. The latter party ruled Romania (2000-2004) with a rather strong hand and politicized many aspects of public life, starting with media freedom limitations and the indirect control of newspapers through strategic subsidies. These developments seem to explain, although only to a certain extent, why the total amount of money spent in the 2004 parliamentary elections seems to have been smaller than the campaign costs in 2000. Even so, the APD monitoring campaign estimated the total spending to have surpassed by €2.3 million the amounts the main parties officially reported.
In the context of the 2003 prohibitive law, one of the most notorious scandals over campaign finance regarded the 2004 presidential elections. More specifically, it tackled the way in which Adrian Năstase, Prime Minister between 2000 and 2004 and PSD’s candidate in the presidential elections, obtained some of his campaign funds. Under his government, an official agency, the State Inspectorate in Constructions, organized a competition named the “Quality Trophy in Constructions” for state companies and state monopolies, even if they had little to do with constructions—like the National Veterinary Agency or ROMSILVA (The National Authority for Forests). These state companies had to pay a considerable participation tax and in the end €1.74 million was collected from the “workshop.” According to the National Department for Anticorruption, the resulting funds were collected by four private companies in exchange for fictitious services. The operation also included several money laundering maneuvers. Finally, half of the entire sum was spent on buying personalized propaganda materials for Năstase’s campaign: from lighters to T-shirts. 30 Recently, Năstase was convicted to a two-year prison sentence for this case. 31
The 2006 law brought two important modifications. First, it requires political parties to present to PEA detailed financial reports, concerning their expenses during election campaigns. However, the law did not authorize the PEA to follow the claims and debts declared by the parties. 32 This proved a major shortcoming given the massive debts reported by some parties and the fact that these debtors might not have other means to repay the debts than through public contracts.
Second, the law introduced the provision of considering discounts above 20 percent of the values of goods or services as belonging to the private donation category. The steady economic growth that Romania registered until 2008 is reflected also in the exponential increase of the money spent by the three main parties: PSD and, especially, PDL and PNL in the campaign for the general elections held in that year (Table 4). Due mainly to the significant increase of control and the strict regulation of the spending caps achieved through this law, at the 2008 local elections the amounts of money declared by the parties have for the first time conformed to a large extent to the APD monitoring. 33 This is why the organization did not monitor anymore the campaign spending at the general elections held that same autumn.
Campaign Expenditures in Euros a at the 2008 Parliamentary Elections
Source: Official data from the Romanian Permanent Electoral Authority (www.roaep.ro).
Note: PDL = Democratic Liberal Party; PSD = Social Democratic Party; PC = Conservative Party; PNL = National Liberal Party; PRM = Greater Romania Party; UDMR = Democratic Alliance of Hungarians in Romania; PNG-CD = Christian Democratic New Generation Party.
All sums are converted in euros.
Extra-parliamentary party.
However, political parties found a way out. A recurrent practice for the entire period analyzed here is the scenario in which the most generous campaign donors of the parties that will form the government/the presidential party are rewarded with lavish public contracts and political protection from unfavorable judicial decisions. This definitely triggers a perception of patronage practices, even if they may not be legally punishable. In this sense, one of the most telling cases is that of the Cluj-based businessman Arpad Paszkany, who officially donated €340,000 to the 2008 parliamentary campaign of the PDL. Previously, the PDL authorities of Cluj (largest city in Transylvania) endowed Paszkany with the leasing, under very advantageous conditions, of more than 200 hectares for his real estate developments. 34 At least one of these transactions included illegal transfers, blackmails, and money laundering, allegations for which Paszkany has become the subject of an official investigation.
In this context, the Romanian President Traian Băsescu favored him and intervened in 2006, writing a note to the General Attorney Laura Kovesi in which he referred to the businessman as an “honest citizen” and urged “analysis and a legal solution to the case.” 35 In the same category of party sponsors that received huge public deals, one should also include the sanitary companies and those in charge of road building. They are ranked first among the donors of the governmental party PDL, and in turn they have been offered contracts for extended periods—up to 15 years. Many of these activities imply consumables, which are then easily over-estimated so as to boost the costs artificially, while the proofs of their ‘consumption’ are by definition unavailable. 36
From 1990 until 2008, all parliamentary elections took place in a closed proportional representation electoral system. Then, the candidates who were better positioned on the party ballot had to contribute substantially to the costs of the common campaign. Indeed, this was shown to hold true even for generally unattractive elections, such as those for the European Parliament. 37 The introduction of SMDs at the 2008 elections meant also the replacement of the general party campaigns from the PR era, conducted with unique political advertising materials for all the candidates present on the party list, with personalized campaigns. The consequence was a partial shift which moved the financial burden away from the party and the most privileged candidates, to a more balanced distribution in which the vast majority of those running had to contribute. 38 In this context, it is not surprising that approximately hundred politicians donated to the campaigns (PNL, PDL and PSD) sums several times larger than the revenues they reported to have obtained during their entire year. 39
As a final remark, the exponential increase in campaign spending in 2008 can certainly be perceived as one of the main causes for the all-encompassing patronage scheme implemented by the grand coalition PDL-PSD and then by PDL alone, a move that exceeded everything the Romanian parties had managed before. Although partisan appointments at all administrative levels have been quite common for the entire post-communist period, the 2009–2010 operation was several times larger in scope, reaching even the management of publicly financed local sports clubs. In this way, party sponsors and activists were rewarded for their money and efforts. Beyond the deprofessionalization of public management, the partisan sackings and appointments generated thousands of lost trials for the state and a schizophrenic situation in which politically backed directors continue to run agencies despite the fact that the courts obliged the re-hiring of the dismissed directors.
Summing up, Romanian parties have indeed developed tools to indirectly obtain and use state resources for electoral purposes. These practices include offering lavish public contracts to campaign sponsors, relying on large-scale patronage to reward party sponsors and activists, and making state agencies contribute indirectly to campaign funds under the guise of innocent workshops. As long as the judiciary remains ineffective and politicized—as it is at present—any hope that this situation will improve is rather vain.
Conclusions
This paper systematically mapped the evolution of the legal regulations concerning campaign financing in Romania and linked them with practices used by political parties to gain access to large amounts of money. There are four main findings. First, the regulations of party financing fulfilled collateral goals such as dividing the opposition, putting an obstacle to the use of private money of opposition leaders, or reducing access to public money by extra-parliamentary parties. As a result, there has been no new entry in the Romanian legislature since 1992 and the parliamentary parties have access to more than 90 percent of public money (although the redistribution mechanisms differed in the 1996, 2003, and 2007 laws). Second, when the legal framework was loose (e.g., the first post-communist decade), political parties were oriented toward the use of private donations not properly regulated. Over time, the legal provisions addressed these shortcomings and got specific—indicating a learning process of the legislators—while the nature of illegitimate practices diversified, revealing the adaptation of political parties to new regulations. Accordingly, those promoting the laws (i.e. the incumbent parties) reaped the greatest advantage from them. The most recent examples indicate how public money is used for campaigning through indirect channels, such as public contracts given to donor companies. Finally, our analysis shows how the difference between public and private money diminishes over time. Whereas private money represents the sole resource to fill the financial gap in Central and Eastern Europe, the Romanian experience indicates that private donations are encouraged by the use of public money. Such an intertwined process reveals the complex web of corrupt procedures at hand to the contemporary Romanian parties.
The first relevant contribution that this paper makes to the scholarship on party finance consists in illustrating how a general increase in the complexity of the legal framework regulating campaign spending can diminish some shortcomings, but it will not impede political parties to seek ways to gain unlawful access to more financial resources. While there may be a certain impact of these legal reforms, this impact is not as pronounced as one would expect, following the policy assumptions of international stakeholders, such as GRECO. In its Evaluation Report of the transparency of party financing in Romania, the latter emphasized the discrepancy between “the strict requirements of the law and the situation in practice,” admitting that problems could be solved under the current legislation only “subject to real political and institutional will.” 40 Exactly the political will seems to be lacking, as a rather broad consensus emerged among parties—not to change much with respect to the 2006 law—at the first roundtable organized by PEA in June 2011 to discuss the possible solutions to the problems raised by the GRECO report. The second roundtable where two international experts presented their reports on the ways to reform party financing was actually boycotted by all the parties.
At the empirical level, we have emphasized the main practices developed by Romanian parties to indirectly obtain (and use) state resources for their own electoral purposes. The list presented is by no means exhaustive, but it certainly captures the most widely used methods of directing public money into campaign coffers. These practices were successful despite the more and more complex legal framework that attempted to prevent them. One limitation of the study resides in the fact that we have relied on a single source of data—which might imply a reliability problem if the APD coders had biases in certain directions. Although there are no reasons to believe that this was the case, alternative data are desirable. We have tried to compensate for this shortcoming by the use of qualitative assessments, based on media reports, and declarations of party officials.
Further studies could consider the impact of institutional changes on practices employed by political parties to gain access to funding. Apart from the legal framework under scrutiny in this article, there are numerous changes that may influence the intensity of directing public money to political parties. One such example is the recent modification of the electoral system (2008) in which the combination of SMD voting and PR requires party organizations to share responsibilities, finance, and visibility with their individual candidates. A second direction of research may target the causes for which particular funding regulations were chosen. While this article emphasized the general political system characteristics, party strategies, and elite behaviors, contextual factors remained largely unobserved. Finally, further studies can focus on the consequences of various party practices in gaining funding, for instance, analyzing to what extent the illegal donation practices determine parties to engage in state colonization through patronage and clientelism.
Footnotes
Acknowledgements
The authors are grateful to Fernando Casal Bertoa for his valuable input on earlier versions of this article. The research for this article was conducted under the framework of the project CNCS TE 299, “Political Myths in Post-Communist Romania” (2010-2013), financed by the Romanian National Research Council.