Keeping an eye on political finance- recent AIIS book opens Pandora box

The Albanian Institute for International Studies has recently published a study that delves upon the complex and difficult dynamics of political finance in Albania. The study is a pioneering project in its sort since it deals with a topic considered hot and taboo: money in politics. Wrapping up a project financed by the Olof Palme center and the SIDA programs, which are constantly present in Albania with democracy promotion incentives and contributions; AIIS has compiled a bilingual study, in Albanian and English, for a comprehensive audience that includes key actors.
Political parties form the cornerstone of a democratic society, representing the interests of citizens and translating them into public policy. Hence, corruption related to political party financing poses a grave threat to democratic development. Post-communist Albania has witnessed a range of problems associated with the illicit access and influence of money in political decision making. A non-exhaustive list includes: vote buying, access of ‘dirty money’ coming from criminal sources, lack of disclosure and regular reporting towards institutions, unusual political leverage towards businesses and unaccounted media biases.
The most important consequences of these problems are: loss of legitimacy, bad governance and finally state capture. Loss of legitimacy occurs when elected politicians are detached from the interest of the electorate they officially represent and are instead associated with sponsoring entities. Bad governance is often the result of decision making and policy implementation that promotes specific interest at the expense of the public one. State capture through party capture is a situation in which law making is at the hands of obscure and illicit groups that seek rewards for having supported the political subjects financially. The first two are clearly visible in the Albanian case while the third has the potential of being actualized, unless serious reform is undertaken to address the issue.
Putting the phenomenon in the historical context one can say that some of the key economic and social occurrences that led to the creation of incentives for political corruption in Albania are: lack of democratic traditions, a chaotic first decade with minimal material resources at the disposal of political parties and the emergence of a new rich class which consolidated links with politics in order to protect and enhance their interests. These key developments paved the way for the corruptive practices that followed.
The current dynamics of political party finance in the Albanian context has three major dimensions: legal, political and economic. On the one hand there is the lack of a proper legislation that would solve the problem at least de jure. The Albanian legislation that tries to regulate the finances of political parties and especially electoral campaigns is incomplete, controversial and ambiguous; there are major loopholes that can be exploited to the damage of the public good. There is no clear allocation of capabilities to any mechanism of implementation and no independent institution of control and oversight exists. Whereas in other areas Albania seems to be performing better in law then in practice, when it comes to political finance, there is ample room for the development of a new, comprehensive and updated legal framework. On the other hand, even the existing legal provisions are violated frequently on both the political and the business level. These violations that are mostly assisted by the existence of legal loopholes consist in a range of irregular practices that hurt the public interest.
Political incentives of the current system are inbred characteristics of the political arena. They favor financial corruption and the entry of corrupt individuals in political decision making. In the case of Albania, these are the majoritarian electoral system and parliamentary immunity, and they have a historical record of their influence upon the issue. The majoritarian electoral system promotes individual candidates with financial resources and strong local connections despite their integrity. Parliamentary immunity attracts wealthy business people who are interested in avoiding legal scrutiny. One of the recent proposed electoral reforms addresses the first element, by suggesting to changing the system into a pure proportional one, eliminating the need for ‘strongmen’ in Albanian politics. This measure though does nothing to eliminate the incentive on the business, or as the study calls it, the supply side.
Politics attracts lucrative funds from business by offering them privileged and often illegal assistance in the promotion of their interests. The traditional ways of accomplishing this are well-know and they consist in practices such as manipulated tenders and procurement agreements. There is another mechanism used in this regard: exerting leverage on businesses through the taxation authorities. Preferential taxation treatment and most importantly selective tax punishments for ‘noncompliant’ business have produced a controversial phenomenon in Albania. Whereas specific businesses were previously loyal to one wing of politics, recently they have started to support both sides of the political spectrum in order to avoid problems.
The growing importance of the media sector and the influence it exerts on the political agenda warrants a special attention towards its engagement in promoting financially activities related to party organization and electoral campaigns. Unequal time allocated to parties creates asymmetrical incentives to seek more media coverage through illicit ways. The ownership association of powerful media with business entities in Albania produces further difficulties in accounting for electoral finances.
Problems related to political party and election campaign finance are not unique to Albania. They have been manifested in different ways throughout the region and given the similar historical background of communist societies show significant similarities with the Albanian dynamics. What has been different is the willingness and engagement of other countries to address the issue and especially amend the legal framework in order to strengthen it.
This book after analyzing the problem in all its manifested dimensions for the specific case of Albania provides examples of the regional experience as well as concludes with an important set of recommendations for relevant actors such as political parties themselves, media, civil society, international donor community, oversight institutions, etc. Finally as also mentioned in the book, the most important step towards improving the transparency and accountability in political parties and election campaign finance is the recognition of this problem as a priority.