Plans to increase state funding for Latvian political parties

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Funding for political parties is about nine times less than in Lithuania and Estonia, and therefore state support should be increased, according to a new initiative. This concept already gained government support at the start of 2019, but Saeima did not follow through with the action for an unknown reason. That is why the Ministry of Justice is repeatedly raising this issue. Researcher Iveta Kažoka believes that additional funding would be a good investment in democracy, reported LSM's Latvian service on July 4. 

In short:

  • In the coalition agreement, the parties agreed to increase public funding for parties.

  • For 7 years already, parties have been paid 71 euro cents for every vote they receive during elections, if a 2% barrier has been overcome.

  • Overall, the state spends around half a million euros a year on party support.

  • Lithuania allocates a lot more for party support.

  • The coalition is moving towards an increase in funding, but specific amounts have not yet been agreed upon.

  • One option: if the 2% mark is passed, to pay 190 000 euros + bonus for votes and members.

  • Another option: if the 2% mark is passed, to pay for the votes and members. 

  • Both options would call for 3 to 5 million euros.

  • Kažoka: additional funding would be a good investment in democracy. 

  • The issue has not progressed in Saeima, so the TM are taking it up again.

  • KNAB: If the state provides more support, it will also be possible to demand more from the parties.

  • KNAB: The donation limit should be reduced in the future.

By signing the coalition agreement, the parties constituting the government promised to reduce the dependance of Latvian political parties on private donations by increasing the state budget funding to the average level of the Baltic States.

The State has been paying the parties since 2012. The formula is simple – if a party overcomes the 2% barrier, it is paid 71 euro cents for every vote it receives during elections. Overall, the state spends around half a million euros a year on party support. Lithuania and Estonia, on the other hand, spends more than five million euros (in 2015 – Lithuania spent 5 800 000 and Estonia 5 400 000).

Latvian Radio estimates: State Support for political parties after the 13th Saeima elections 

Partiju finansējums

Latvia should also be striving for this, noted Deputy Prime Minister and Minister of Defense Artis Pabriks (Development/For!), as it would “reduce dependence on different sponsors, which is the main goal”.

Additional funding from the state budget is needed to do this, but the coalition parties have yet to agree on a specific sum, “because there are many models, and we're going to discuss the issue in the Development Committee working group, where we will make the most appropriate offer”.

Possible models were developed by the Ministry of Justice in February this year. The principle remains that the state will pay only those parties which receive more than 2% of the vote during elections. But it will pay a lot more.

Two options are in view. The working group of the Ministry of Justice offers all these parties a guaranteed funding of at least 190 000 euros, plus bonus for the number of votes received and the number of existing members. 

The Corruption Prevention and Combating Bureau's (KNAB) option does not provide guaranteed funding and focuses instead on how much a state should pay for each collected vote and member in a party. 

Both of these options would cost more than the current public funding system for political parties. The sum could range from 3 to 5 million euros. Which is still less than the support the political parties in Lithuania and Estonia receive, which is closer to 6 – 7 million euros.

Valsts finansējums politiskajām partijām Eiropas Savienības dalībvalstīs (eiro)

Itālija 180 000 000
Vācija 150 800 000
Spānija 78 000 000
Somija 34 000 000
Polija 31 106 241
Zviedrija 22 000 000
Ungārija 19 577 040
Nīderlande 15 000 000
Īrija 13 480 749
Austrija 11 574 815
Portugāle 8 520 000
Horvātija 6 616 680
Lietuva 5 800 000
Igaunija 5 400 000
Slovēnija 2 741 823
Luksemburga 1 600 000

2015. gadā Amsterdamas Universitātes apkopojums par valsts finansējuma apjomiem  partijām ES dalībvalstīs.

It is less than Latvia's Baltic neighbors, affirmed the spokeswoman for the working group and researcher at the public policy center “Providus” Iveta Kažoka.

“To put it bluntly, the parties lack the resources to make smart decisions. The only resources available to them come with some quite specific requirements about the returns the benefactors will receive from the decisions the parties make. Therefore, this small bill for party financing given to the taxpayers is deceptive. As a society, we often pay much more for the unreasonable and corrupt decision the parties make in order to repay the funding they receive mostly from companies,” Kažoka noted.

“Therefore, I would say that those four or five million euros the state budget would pay for democracy in Latvia, and for the making of smart decisions, is definitely a very good contribution to the democratic future of the country,” said Kažoka.

Although these options gained support from the government at the start of 2019, Saeima has not advanced these concepts. That is why this week, the Minister of Justice Jānis Bordāns (New Conservative Party) had raised the issue again.

“In the Ministry of Justice, we agreed that representatives from all parties – one from each coalition party – will gather to decide which model we'll be adopting, and then we are immediately drafting the bill, and it may be ready in September.

We could submit it both for the government and for Saeima to consider, but the main thing will be that the Ministry of Justice has prepared the bill,” said Bordāns.

After the previous Saeima elections, Progressives receive the least of the state budget – 15 000 euros a year. Harmony receives the most – 118 000 euros a year. The first behind the line is the party For Latvia from the HeartThe leader of the party Inguna Sudraba believes that sheer enthusiasm is not enough to keep professionals in politics.

“There are some expenses that are necessary for simply maintaining a political party on a daily basis. And it's better when they are transparent than when there's all kinds of roundabout ways. Because those people who work in other political parties, if the party is in power, it is an essential administrative resource used to maintain a political party. This applies not only the central power. It applies also to the municipalities, where the political power is closely entwined with the administrative power, with the business environment. Therefore, in many regions, business depends on the decisions of the political power,” explained Sudraba.

Jānis Urbanovičs, the parliamentary leader of Harmony, supports the increase in party funding. He drew attention, however, to the parties' past use of the money.

“I think that KNAB would be able to provide information on at least two or three questions. Firstly, how is it that the parties are credited? I think most of the parties in Saeima have a debt of some kind. What is it really? Where does it come from? Is it a hidden credit? Secondly, how is it that, when the time of the elections comes, different PR companies and the media, all as one raise their prices to cosmic proportions. Then it would be not the independence of the parties that is being financed, but rather the liveliness of the media groups,” noted Urbanovičs.

If the state provides more support for the parties, it will be able to demand more from them, KNAB pointed out. The bureau also emphasized that in the future it would not only be necessary to reduce the donation limit but also define the maximum donation that a party may receive. Otherwise, increasing the proportion of party income from the state budget will not guarantee independence from donation of private individuals and, accordingly, from the benefactor.

KNAB also mentioned that the government's action plan, which came into force on May 7, included the request for the Ministry of Justice together with KNAB to draft amendments to the Law on the Financing or Political Organizations (parties) in accordance with the state funding allocation model approved by the Saeima. The deadline for fulfilling this request is March 31, 2020.

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