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Funding political parties from the public budget


October 4th, 2017


Д.Жаргалсайхан
@jargaldefacto


1434   0


9 min


Mongolia has spent almost a decade, moving from one decline to another. Although it is true that our economy is dependent on mining cycles and prices of coal and copper, what it is more dependent on is Mongolian politics. Our government has taken the shape of an oligarchy, as power is traded for wealth and money. Political parties obtain ruling power through democratic elections, but their overall and campaign financing is not transparent.

Since the start of the new millennium, our governments did not really last more than a year and a half, because of the endless struggles between oligarch groups fighting for power. Mongolian political parties have not developed their internal democracy while the legislative branch has become ‘the political police’ (as coined by MP Ts. Nyamdorj). Many cases have been hidden for a long time, and even cabinet members are spying on each other now. Mongolian government is transitioning from an oligarchy to a structure of criminal nature.

The underlying cause of these deterioriations is corruption. Mongolian society has realized that the source of corruption lies in political finance, and has been having robust discussions around how to stop corruption.

Corruption and political parties

The Asia Foundation has been conducting a corruption benchmarking survey that covered 1,360 households from Ulaanbaatar’s eight districts and 24 soums of six provinces. The survey, which uses random sampling methodology, has been conducted for the last 10 years, and revealed the five most corrupt institutions. In 2010, political parties were deemed the fifth most corrupt institution, and climbed to the second place in 2015 behind the land authority. A year later political parties became the most corrupt. In 2017, they were back to the second most corrupt institutions. Overall, Mongolian people consider that political parties and the land authority are the most corrupt organizations.

The most pressing challenge in Mongolian democracy today is keeping political parties away from corruption. Therefore, the Defacto Institute, an independent research think tank, has organized its first televised debate on the topic of whether political parties should be financed from the public budget. The debate saw the attendance of two scholars who represent the small number of people who do research work on this particular topic.    

Political parties should be financed from the public budget

S. Munkhbat, Professor at the National University of Mongolia, thinks that political parties should be partly financed from the public budget, arguing that it is the most realistic and reliable way to keep political party financing transparent. He referenced examples from Germany and Sweden among other countries, saying that it allows people to know and provides oversight on how political parties are being funded.

Over the last 20 years Mongolian political parties have been using different sources, such as membership fees, donations, and income from renting their own facilities, to find funding. However, the situation has never improved, and they have kept trying to keep their sources hidden. If political parties are financed from the public budget, people will be more inclined to provide oversight because they would know that the political parties are using the money they paid as taxes. Given they are working at a policy development level and have gained public support, only the political parties that have seats in the parliament should be funded from the public budget. However, their structure must be compact.   

Membership fees are never enough for political parties, which is why a small number of donors were able to establish their monopoly. But this can change if political parties are financed from the public budget. Political party financing must have two categories: day-to-day operational financing, and campaign financing. During elections, smaller political parties who do not have a seat in the parliament can be given some funding from the public budget, so that the playing field is level and there is fair competition.

When there is financing from the public budget, responsibility for oversight needs to be given to government organizations. Currently, the General Election Commission is lacking this authority.

Political parties shouldn’t be financed from the public budget

B. Erdenedalai, who teaches at the University of Finance and Economics, argues that drawing political party financing from the public budget is unfair, and it is doubtful that there would be enhanced oversight. He elaborated by saying that tighter oversight will make the true financing even more hidden. Public oversight will not yet work in our country, because public awareness, knowledge, and capabilities in politics are currently lacking.

The Constitution of Mongolia grants citzens the right to elect and to be elected, as well as the right to form a party. However, if political parties who have seats in parliament are financed from the public budget, it would weaken other parties. This would put an end to pluralism, which is essential to democracy. It also risks the larger political parties who obtains seats in parliament becoming disconnected from society because at present they need to listen to people and work with them when they need donations. 

Political parties do actually get some finance from the public budget today, but it is not disclosed to the public. Also, people are not actively trying to provide oversight. Political parties have inefficient structures and lack internal democracy. Mongolia is in the ‘bad’ section, according to 2014 international index for legal governance on political parties. High-level corruption is currently growing in Mongolia.

We need to increase the involvement from civil society. Political parties today are not providing information to people. The law requires that political parties report on their finances, but no one is publishing reports. Although the legal fine is 250,000 MNT, no one has been fined yet. The law on the right to information needs to include political parties.

Solution

The two scholars laid out the pros and cons of financing political parties from the public budget. We need to cover some part of political party financing from the public budget, and improve the mechanism that oversees political parties and make their performance more accountable.

A survey conducted by the U.S. National Democratic Institute in 22 developing countries showed that funding provided by government to political parties has been crucial in addressing corruption effectively.  

Graph 1. Percentage of government financing in political parties (Western and Northern European countries)

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Source: 2014 project on “Supporting law making process with citizen participation”

Our current economic circumstances will not allow full government financing of political parties, therefore private donations should be allowed to a degree. An opportunity to reduce expenditures on media could lie in increasing television and radio hours for political parties, and allowing candidates to feature for free. Other measures could include allowing political parties to use billboards free of charge and offering reduced taxes to those who make donations.   

Although the previous president revised the law on political parties and presented it to the parliament, our political parties did not even want to review and discuss. The draft legislation included a clause that requires financial reports from political parties when government support is offered.

In addition, whether political parties become open, transparent, accountable institutions depends on enthusiasm and capability of our civil society. A clear example is the ‘glass accounts’ law, which is currently being ignored by political parties. The development of robust civil society is dependent on media, however almost all media channels today are owned and controlled by politicians. This can be fixed by establishing a Voters’ Commission to replace the current General Election Commission.

2017.09.27

Translated by Amar.B


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