The impact of finance regulations on political parties: The case of Bulgaria

Abstract

This article suggests that a successful explanation of the development of Bulgaria's post-1989 party system must include the rules governing funding of political organisations. By examining the composition of party incomes and spending practices, I evaluate patterns and trends in fund raising using official party self-reported accounts and other data for 2001 – 05. I conclude that the specific public funding regime led to the emergence of three tiers of parties. The case of Bulgaria suggests that in the absence of strict regulations for reporting and enforcement mechanisms, the image of parties as representatives of the public interest was seriously damaged.

Notes

¹While existing legislation also covers income from publishing and copyright and from renting, the three categories analysed here comprise more than 80% of total party revenues. Throughout the article, I use the terms ‘state subsidies’ and ‘public subsidies’ interchangeably.

² Political Parties Act, Art. 17, 1990, Republic of Bulgaria, National Assembly, available at: http://www2.essex.ac.uk/elect/electjp/bg_pp19098.htm, accessed 10 October 2005.

³For example, Decision #317 of the Council of Ministers, passed on 16 September 1991, specified the amount for gratuitous allocation from the state budget at BGL 7,200,000 ($380,000) (available at: http://www2.essex.ac.uk/elect/database, accessed 10 January 2006). Half of it was available for immediate distribution to parties that received more than 50,000 votes in the 1990 elections for the Grand National Assembly. In practice, those were parliamentary parties. The other participants were presented with the option of short-term loans of up to BGL 300,000 ($15,800) for a party or coalition, and BGL 10,000 ($530) for an independent candidate. The total allowable amount that a party could obtain gratuitously from the state budget was calculated by the number of seats won, multiplied by BGL 30,000 ($1,600) (The October 13 … 1992, p. 45).

⁴ LPP 2001, Art. 27 (Law on the Political Parties), available at: http://www.paragraf2.com/pravo/zakoni/otm/16474.html, accessed 12 October 2005.

⁵ LPP 2005 (Law on the Political Parties), available at: http://www.paragraf22.com/pravo/zakoni/zakoni-d/3919.html, accessed 12 October 2005.

⁶ Decision on the Access to the National Mass Media during Election Campaign, 1991, available at: http://www2.essex.ac.uk/elect/database, accessed 18 January 2006.

⁷Not all non-parliamentary parties could use even this opportunity, though. Another requirement for receiving free media access was that parties registered lists in at least one third in the 31 electoral districts.

⁸ Political Parties Act, Art. 21, 1990, Republic of Bulgaria, National Assembly, available at: http://www2.essex.ac.uk/elect/electjp/bg_pp19098.htm, accessed 10 October 2005.

⁹ LE 2005, Art. 71 (Law on the Election of People's Representatives), 2005, available (in Bulgarian only) at: http://www.bta.bg/site/izbori2005, accessed 11 October 2005.

¹⁰ LPP 2001, Art. 28 (Law on the Political Parties), available at: http://www.paragraf2.com/pravo/zakoni/otm/16474.html, accessed 12 October 2005.

¹¹ LPP 2005, Art. 36 (Law on the Political Parties), available at: http://www.paragraf22.com/pravo/zakoni/zakoni-d/3919.html, accessed 12 October 2005.

¹²Detailed comparable data on 2004 incomes and expenditures were not available at the time of writing. The NAO report for 2004 specifies only party generated incomes for parliamentary parties and does not provide the exact allocation of the BGL 4,500,000 state subsidy. Estimating the distribution of state money based on number of parliamentary seats is problematic for that particular year, because splits occurred within the parliamentary groups of the UDF and NMSII.

¹³The 2002 Statute of the BSP establishes that membership duties for Socialist MPs and public officials shall not be lower than 10% of their monthly income (Art. 87). If they wish, individual BSP members may decide to make additional voluntary contributions.

¹⁴ Report on the Results from the Auditing of the Political Parties' Statements on Their Incomes and Expenditures in 2004, National Audit Office of Republic of Bulgaria, 2004, available at: http://www.bulnao.government.bg, accessed 10 October 2005.

¹⁵Expenses reported by UDF, MRF, and PU for 2003 exceed their incomes, because the accounting method they applied did not transfer unused amounts from the previous year (Report on the Results from the Auditing of the Political Parties' Statements on Their Incomes and Expenditures in 2003, National Audit Office of Republic of Bulgaria, 2003, available at: http://www.bulnao.government.bg, accessed 10 October 2005).

¹⁶R. Haralampieva, ‘To Stop the Crisis of the Right’, Mediapool (Internet site for news from Bulgaria), 25 September 2005, available at: http://www.mediapool.bg, accessed 25 September 2005. According to estimates made by journalists, up to BGL 150,000,000 was spent in the 2003 municipal elections (A. Dimitrova & O. Stefanov, ‘Parties, Foundations, Money, Power’, 2004, available at: http://mediacenterbg.org/library/Partii.%20fondacii.pari.vlast.doc, accesed 27 October 2005). At a debate on party financing organised by Transparency International—Bulgaria in the autumn of 2005, experts emphasised that in the period 2001 – 05, party money spent on campaign advertising had increased four times and the price of one cast vote had inflated seven times. Their estimate for the 2005 parliamentary election campaign was around BGL 20,000,000 (M. Chertova, ‘The Expensive Campaigns Are with the Fewest Voters’, online news media, 25 November 2005, available at: http://www.vsekiden.com, accessed 25 November 2005). These numbers far exceed the spending amounts reported by parties and cast doubts over the reliability of official data.

¹⁷The decrease in the number of contestants in the 2005 election is a result of the introduction of monetary deposits for participation in elections: BGL 40,000 for coalitions, BGL 20,000 for parties, and BGL 5,000 for candidates nominated by citizens' committees. (The PR system in Bulgaria allows for registration of independent candidates if nominated by a certain number of voters.)

¹⁸Around 300 over 2001 – 05.

¹⁹‘Nations in Transit 2006: Bulgaria’, Freedom House, available at: www.freedomhouse.hu/nitransit/2006/bulgaria2006.pdf, accessed 12 October 2006. Small parties may decrease in number however, because of two new types of regulations in the 2005 law on political parties: (1) a new requirement for at least 5,000 member signatures for registration; and (2) stricter measures for violation of party financial disclosure. The latter may have some serious consequences. At the time of writing, the report of the NAO for 2005 was being released indicating that out of 357 registered parties, 297 did not file financial reports as the law requires. The registration of these organisations is expected to be cancelled (‘The Audit Office Uncovers Many Violations in the Financing of Parties’, Mediapool, 6 November 2006, available at: http://www.mediapool.bg, accessed 6 November 2006).

²⁰Election observers note that BSP ministers used state-owned vehicles including helicopters to attend rallies in the countryside (Report on the Parliamentary Elections in Bulgaria 6 July 1990, Washington, DC, Commission for Security and Cooperation in Europe). Many believe, both in Bulgaria and abroad, that the victory of the BSP in the first competitive multiparty election was pre-determined by the capacity of the incumbent party to send its message to large groups within the electorate who were not reached by the less well resourced opposition.

²¹In the aftermath of the 1996 – 97 economic and government crisis, the UDF declined to accept a public subsidy to finance its campaign, arguing that the party could not take money from the state in such hard times, that people were already familiar with their programme, and that resources should be focused on helping the poor (Report on Bulgaria's Parliamentary Elections 1990, p. 5). At the same time, political opponents accused UDF leaders of gaining disproportionately from leading the caretaker government, which was allegedly providing them with daily access to the press, TV, and radio news programmes.

²²While the former mechanism perhaps did some good to incumbents' electoral performance, the lottery turned out to be a big failure with the country scoring its lowest turnout rate and the NMSII losing seats.

²³ Report on the Results from the Auditing of the Political Parties' Statements on Their Incomes and Expenditures in 2003, National Audit Office of Republic of Bulgaria, 2003, p. 2, available at: http://www.bulnao.government.bg, accessed 10 October 2006. A total of 154 (44.5%) parties filed reports for 2004. Despite the higher rate, reporting often does not meet required standards: 63 parties reported zero incomes and expenditures, and many did not maintain accounts or did not declare the incomes of their regional structures (Report on the Results from the Auditing of the Political Parties' Statements on Their Incomes and Expenditures in 2004, National Audit Office of Republic of Bulgaria, 2004, pp. 8 – 9, available at: http://www.bulnao.government.bg, accessed 28 October 2006).

²⁴‘Honest and Personal, Dogan: We Have a Ring of Firms—They Finance Us, We Help Them’, Mediapool online, 26 June 2005, available at: www.mediapool.bg/show/?storyid=106410, accessed 26 June 2005. Ten months later, at the national conference of his party in April 2006, Dogan openly blamed the media for launching accusations for ‘surfeit with power’ against MRF. He claimed that ‘circle of firms’ is not a dirty concept, and went further to explain that the ‘circle of firms’ develops along with democratic society, market economy, and competition [V. Kasiyan, ‘Dogan Declares War on the Media: The MRF Leader Got Angry at the “Crazy” Journalists’, Vsekiden (Internet site for news from Bulgaria), 2 April 2006, available at: www.vsekiden.com, accessed 2 April 2006].

²⁵See Rose and Haerpfer (1999), Transparency International Global Corruption Barometer, 2004, TI Policy and Research Department, Berlin, Germany, available at: http://www.transparency.org/surveys/barometer/dnld/barometer2003_release.en.pdf, accessed 29 October 2006; Eurobarometer: Public Opinion in the European Union, National Report, Executive Summary, Bulgaria (Brussels, Belgium, European Commission), 2005, available at: http://ec.europa.eu/public_opinion/archives/eb/eb64/eb64_bg_nat.pdf, accessed 29 October 2006. These studies have used different scales to compare trust in institutions across countries. However, the results in all of them concur that parties are the most distrusted political institutions in Bulgaria.

See Eurobarometer: Public Opinion in the European Union, Eurobarometer 62 and 64, for full details see above footnote.

When asked ‘If you had a magic wand and you could eliminate corruption from one of the following institutions, what would your first choice be?’, the largest group (20.2%) among the Bulgarian respondents to the 2003 Global Corruption Barometer survey of Transparency International chose political parties.

²⁸Participation in presidential elections has declined from 75% in 1992 to 42% in 2001 and 43% in 2006.