FINANCING DEMOCRACY IN THE AMERICASin Latin America. These organizations fund educa-tional and party-building activities by Latin American political parties. In October 2002, the OAS

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FINANCING DEMOCRACYIN THE AMERICAS

POLITICAL PARTIES,CAMPAIGNS, AND ELECTIONS

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FINANCING DEMOCRACY IN THE AMERICASPOLITICAL PARTIES, CAMPAIGNS, AND ELECTIONS

A CARTER CENTER CONFERENCE

AMERICAS PROGRAM

ATLANTA, GEORGIA

MARCH 17-19, 2003

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FINANCING DEMOCRACY IN THE AMERICAS

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As democracy evolved in Latin Americaduring the past two decades, people heldhigh hopes that it would improve their

lives and serve in a just and equitable manner.Yet many citizens have been disappointed in theperformance of their governments. Confidencein democratic institutions, especially political parties, is low.

That disappointment also is shared by many inthe established democracies of the Caribbean, inCanada, and in my own country where politiciansare often viewed as more responsive to campaigncontributors and special interests than to voters.Staggering sums of money are required to win election to national office, placing the presidencybeyond the reach of many qualified candidates,even where some public funds are available.

It is time to strengthen our democracies.Although democracy demands compromise andcan be tediously slow in producing decisions, itremains the best system we know for preservinghuman rights, civil liberties, and political choice.We must promote fairer electoral competition,more citizen participation, and better transparencyand accountability.

Reforming the way we finance political partiesand election campaigns is a vital step in this process.Sound political finance systems can restore faith inrepresentative institutions and assure that democratic

methods remain the most legitimate means of resolving policy debates and selecting leaders.

The Inter-American Democratic Charter commitsthe democracies of the Americas to establish balancedand transparent political finance systems and tostrengthen political parties. In support of that vision,The Carter Center convened a hemispheric

conference on Financing Democracy in the Americas.Participants reached agreement on the principlesthat campaign and party finance laws should honorand on the practical measures governments, citizens,and the international community can take to implementthem. I am pleased to present this report on thoseproceedings.

FOREWORD

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TABLE OF CONTENTS

Foreword by Jimmy Carter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Preface and Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Conference Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Welcoming Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Plenary Sessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Keynote Speeches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Working Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Working Group on the Role of the Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Working Group on Public, Private, and Mixed Systemsof Campaign and Party Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Working Group on Disclosure and Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Working Group on Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Concluding Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Follow-up and Dissemination Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

Agenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

Background Papers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

The Americas Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106

The Carter Center at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

Photos by Annemarie Poyo except where noted

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Declining support for democratic institutionssuch as political parties and legislatures,recorded through Latinobarometro cross-

time polling and other means, led the presidentsand prime ministers gathered at the April 2001Quebec Summit of the Americas to pledge actionin support of democratic deepening. That supportwas expressed in the summit declaration, theaction agenda, and the mandate to develop anInter-American Democratic Charter (subsequentlysigned Sept. 11, 2001).

The Carter Center’s Americas Program consultedon the development of the action agenda ondemocracy for the Quebec Summit and broadly onemerging regional norms with respect to democracy.Its conferences on Transparency in the Americas(1999) and Challenges to Democracy in theAmericas (2000) raised the visibility of corruptionand neopopulism as emerging regional problemsand made recommendations for strengtheningdemocracy, several of which were adopted at theQuebec Summit and the Organization of AmericanStates General Assembly meeting the followingmonth. These included the recommendation thatonly democracies be invited to participate in theFree Trade Area of the Americas and that irregularinterruptions of democratic governance be definedto include problems other than coups d’etat, suchas undemocratic elections or violation of separationof powers.

The Carter Center gave input on the draft textof the Democratic Charter through the NGO con-sultative process that followed the Quebec Summit.The Democratic Charter helped define democraticgovernance beyond elections and indicated how theOAS would respond to interruptions of or alterationsto the democratic process. The charter lists a plural-ist system of political parties and organizations, as

well as transparency in government, as essential elements of representative democracy uponwhich future participation in regional diplomacyis conditioned.

One element of the charter commanded imme-diate attention as the keystone to reversing theerosion of public trust in the region’s democraticinstitutions. Article 5 of the charter states, “Specialattention will be paid to the problems associatedwith the high cost of election campaigns and theestablishment of a balanced and transparent systemfor their financing.”

The Carter Center convened the conferenceFinancing Democracy in the Americas to act uponthat mandate by bringing the best political analystsand most experienced civil society and party leadersin the region together to exchange ideas on theproblem of political finance. The conference builtupon post-summit work by the OAS, theInternational Institute for Democracy andElectoral Assistance (IDEA), and TransparencyInternational (TI), among others, to address growingregional concerns about campaign and party finance.Those early steps by collaborating organizationsincluded:

◆ In June 2001, the Federal Elections Instituteof Mexico convened a meeting of scholars andexperts in Mexico City to analyze the problem ofcampaign finance worldwide.

◆ In December 2001, acting in coordinationwith its Office for Summit Follow-up, the OASconvened a meeting in Miami to address theweakness of political parties. The meeting resultedin creation of the Inter-American Forum onPolitical Parties.

◆ The forum undertook activities to strengthenparties and understand how they are funded. Thefirst such activity was a meeting in Santiago, Chile,

PREFACE AND ACKNOWLEDGMENTS

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with the internationals—the Christian DemocraticInternational, Socialist International, LiberalInternational, etc.—organizations based in Europethat network with ideologically like-minded affiliatesin Latin America. These organizations fund educa-tional and party-building activities by LatinAmerican political parties.

◆ In October 2002, the OAS and theInternational Institute for Democracy and ElectoralAssistance jointly convened a dozen scholars andpolicy practitioners in San Jose, Costa Rica, todesign a 34-country study of campaign finance lawsand practice in the Western Hemisphere.

◆ In December 2002, TransparencyInternational convened in Buenos Aires, Argentina,a working meeting of Latin American civil societyorganizations that monitor campaign expendituresin an effort to hold parties and candidatesaccountable.

◆ The OAS then held the second annual meeting of the Inter-American Forum on PoliticalParties in Vancouver, Canada, Dec. 4-6, 2002.

This series of events reflected growing concernabout campaign and party finance and their effects

on democratic governance in the hemisphere. TheCarter Center sought to provide support to theother organizations at every step along the way,committing its staff to active participation during themeetings and in preparatory periods between them.

Building on these efforts, and in cooperationwith the Organization of American States, TheCarter Center convened the Financing Democracyin the Americas conference March 17-19, 2003.The OAS Unit for Promotion of Democracyadvised on the working group themes and list ofparticipants and helped develop backgroundpapers. Secretary-General César Gaviria agreed toco-chair and offer welcoming remarks.

Many talented people took time out of theirbusy schedules to participate in the conference,and some made the extra effort of preparingkeynote addresses and remarks to the plenary sessions. The Carter Center offers special thanks to Bolivian Vice President Carlos Mesa, ChileanMinister of the Interior José Miguel Insulza, andU.S. Congressman Christopher Shays for theirinsightful comments at our opening dinner at King& Spalding. Working group chairs did a marvelousjob of keeping forward momentum as their groupsdiscussed the prepared questions, and in a heroicfeat, the rapporteurs distilled those lengthy discus-sions into summary form. Consensus did notalways come easily, and sometimes did not come atall, but every participant stuck with the problemuntil feasible recommendations emerged.

We want to give special thanks to the 10 members of the Council of Presidents and PrimeMinisters of the Americas who provided leadershipfor this conference. The council is composed of 35former and current heads of government whoadvise on and participate in the Carter Center’sefforts to support regional democracy and improveinter-American relations. While in office, they facedthe kinds of tough decisions that today’s leaders

OAS Secretary-General César Gaviria listens to the conferenceproceedings with Americas Program Associate Director ShelleyMcConnell.

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face and worked to move forward policy agendas viademocratic means despite deep economic andsocial constraints. Their recommendations are thustaken seriously as practical proposals for citizens,states, and the international system. Those policyrecommendations include strategic proposals, bestpractices, and also “tool kit” remedies that haveresulted from experiments in single countries butwhich show promise for others. The presence ofthese former leaders lends visibility to the difficultproblems at hand and inspires confidence in theregion’s ability to deal with those problemsthrough concerted action.

One of the Carter Center’s strengths is to shareinformation from multiple sectors and from aroundthe region, effectively integrating information fromthe Caribbean, Canada, and the United Stateswith information on Latin America. The confer-ence reviewed the various systems of campaign andparty finance in operation in the hemisphere andlinked those issues to media use and campaigncosts and to the question of “payback” after theelections when campaign donors seek favors fromelected politicians.

The plenary sessions and keynote addresses captured the broad considerations underlying thetheme, including the question of principles andvalues served by differing systems of campaign andparty finance and the constraints imposed on policyby poverty and underdevelopment. In the workinggroups, participants rolled up their shirtsleeves toexchange experiences and pound out possible solu-tions. The working groups examined four themes:the role of the media; public, private, and mixedsystems of finance; disclosure of contributions andspending, notably as a necessity for implementinglimits on donations and expenditures; and enforce-ment, even in countries where rule of law is weak.

The Center’s efforts sought to complement anddeepen those of the OAS and other groups workingon political finance in the Western Hemisphere.We began by bringing on board two participantgroups that have been largely absent from discussionsto date—the private sector and the media. Bothgroups frequently are deemed part of the problemof escalating campaign costs and special interestpolitics. However, solutions will be hard to imple-ment without the cooperation of these groups, and

Americas Program Director Dr. Jennifer McCoy (far left) and Associate Director Dr. ShelleyMcConnell (far right) pose with theformer presidents and prime ministersof the Americas who provided lead-ership for the conference: (left toright) John Compton, OsvaldoHurtado, Andres Pastrana Arango,Carlos Roberto Reina, Jimmy Carter,Luis Alberto Lacalle, LeonelFernández, Eduardo Frei, LloydErskine Sandiford, and Miguel Ángel Rodríguez.

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it is important to understand the pressures andincentives under which they are operating.

The Carter Center helped tie together the specialty subthemes of some of our colleagues —OAS efforts on political party strengthening,IDEA’s study of campaign finance laws and practice,and TI’s development of civil society monitoringtools. The conference also provided an opportunityto assess progress to date and assure that the effortsof the organizations involved are synergistic in nature.

Importantly, the conference provided a realitycheck from former presidents and prime ministersabout what sorts of recommendations will be feasi-ble and politically salable. While acknowledgingthat there is still a great deal we do not know about the dynamics of campaign and party finance,participants made initial efforts toward policy recommendations based on what we have learnedso far and helped distinguish three levels ofresponse that we can support—international, governmental, and civil society responses.

The Center also used this opportunity to drawattention to new research by launching severalreports at its conference. The Center invited USAIDto release Money and Politics, its forthcoming reporton disclosure, at the event. To explore the connec-tion between campaign finance and the media, theCenter cooperated with Duke University in releasinga new Spanish-language edition of Television andElections, which treats issues such as free televisiontime, paid propaganda, candidate debates, and theregulations affecting media use during campaigns.

The conference concluded with a press confer-ence by the Council of Presidents and PrimeMinisters of the Americas, who presented a finalstatement expressing their consensus on principles

that the hemisphere should follow in developinglaws, regulations, and practices affecting campaignand party finance. That statement is included inthis report. It is remarkable that 10 former presidentsand prime ministers from countries as different asChile, Honduras, Colombia, the United States,and St. Lucia recognized common problems andarrived at common principles to inform an array of policy options on such a complex problem.

The success of this endeavor was due in largepart to the hard work of Carter Center staff mem-bers. Americas Program Director Dr. JenniferMcCoy set strategic direction for the project, andDr. Shelley McConnell, associate director of theAmericas Program, was conference director.Together, they framed the issues and researched keyproblems and solutions. The Carter Center alsoextends heartfelt thanks to consultants BarbaraPetit and Dawn Chapman, who coordinated logistics;Senior Program Associate Laura Neuman, whoauthored a background article for the conferenceand assisted behind the scenes; Program AssistantDaniel Gracia; Americas Program interns RobertSchwartz and Ruth Michael; and all the volunteersand operations staff of The Carter Center for theirenthusiastic contributions.

The conference received generous support fromThe Coca-Cola Company, together with theAtlanta Consulate of the Republic of Germany;Atlanta, Georgia — Gateway to the Americas; DeltaAir Lines; King & Spalding law firm; the OpenSociety Institute; the Organization of AmericanStates; and the U.S. Agency for InternationalDevelopment. Financing Democracy in theAmericas would not have been possible withoutthis vital support.

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In memoriamCarlos Roberto Reina

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Citizens throughout the hemisphere increas-ingly question the integrity of politicalprocesses with opaque methods of financ-

ing and access. After a quarter-century ofdemocratic governance, money-conscious voters inLatin America’s troubled economies have begun toask whether elections really allow them to hold governments accountable for enacting promisedreforms or whether instead politicians respond primarily to the special interest groups who fundtheir campaigns. Democracy remains a valuedgood, but questions are being asked about howmuch it costs, who pays, and whether the need toraise funds distorts policy agendas.

Questions about how best to finance democracyare echoed in North America. Facing escalatingcampaign costs in an increasingly sophisticatedmedia environment and similar questions aboutprivileged access to decision-making by special inter-ests, both Canada and the United States have madechanges in their campaign finance legislation. Inthe Caribbean, traditionally stable party systems havesuffered from corruption scandals and increasing con-cerns that drug money may flow into party coffers.

Public financing of parties and election campaignscan create opportunities for all citizens, regardlessof financial resources, to run for office, but suchfinancing competes with other priorities on the

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OVERVIEW

Columnist Andres Oppenheimer, Peruvian civil society leader Percy Medina, and Mexican legislative leaderBeatriz Paredes converse during a coffee break.

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public agenda. Private financing depends on dona-tions by individuals and corporations and often issupplemented by the private fortunes of leadingcandidates, profits from businesses affiliated withthe party, auxiliary support from civil society organ-izations run by party leaders, and donations frominternational foundations linking parties withshared ideologies. The temptation to dip into pub-lic coffers or accept illicit funds is ever present, andeven legitimate contributions can come accompa-nied by expectations of future influence on policyor special access to government contracts.Campaign finance scandals have deeply damagedgovernments in the region, such as the Samper gov-ernment in Colombia and the Mahuad governmentin Ecuador, and raised questions about propriety inthe United States as well.

To address these issues, The Carter Center convened a conference March 17-19, 2003, onFinancing Democracy in the Americas: PoliticalParties, Campaigns, and Elections. The third in aseries of major conferences sponsored in large partby The Coca-Cola Company, the FinancingDemocracy conference brought together top govern-ment officials, multilateral organization representatives,business leaders, media professionals, scholars, andcivil society leaders from the Western Hemisphereto discuss how elections and parties can befinanced in ways that will be correctly perceived ashonest contributions to the public good.

As with the Carter Center’s highly successfulpast conferences, Transparency in the Americasand Challenges to Democracy in the Americas,the Financing Democracy conference included amix of plenary sessions and working groups result-ing in constructive, practical proposals forimprovements.

Participants examined the role of the media inforcing up campaign costs, informing the electorate,and empowering candidates—for good or for ill—toreach out to voters absent traditional party-building.They reviewed evolving campaign finance rulesthroughout the hemisphere, exploring the role forpublic finance and whether limits on campaignspending can be enforced given proper disclosure.They explored methods for strengthening institutionsand discussed prospects for international cooperation.

Based on their discussions, participants suggestedaction items for governments, civil society, and theinternational system. Members of the CarterCenter’s Council of Presidents and Prime Ministersof the Americas summarized these recommendationsin a brief public statement. The plenary sessionsand working group discussions underlying theseconclusions are more fully elaborated in this report.Carter Center staff members are currently assistingthe council in disseminating these ideas throughengagement with the OAS and regional summitpreparations, government advising, and transnationalnetworking with civil society organizations.

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Overview

No nationhas solvedthe problemof how tofinance acampaign so that theelectoratewill trust theresults.

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Conference Proceedings

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FORMER U.S. PRESIDENT JIMMY CARTER

opened the proceedings by recalling thatduring his presidency the majority of Latin

American nations were dictatorships. The firmcommitment to human rights led to an evolutiontoward democracy in almost every country in thehemisphere. Yet democracies require constantimprovement, and the international communityand civil society can help. For example, throughinternational and domestic election monitoring,election practices have improved markedly in manycountries. President Carter affirmed that the purposeof the present conference was to share informationand develop recommendations that could improvedemocratic practice with respect to cam-paign and party finance.

Transitions to democracy generatehigh public expectations for good govern-ance and socioeconomic improvements,but those remedies are not quicklyachieved. Democracies are slow-acting andcompromises are necessary, generating dis-appointment and even eroding confidencein political institutions. In many countriesin the hemisphere, including the UnitedStates, we have seen low levels of trust inpolitical parties, the political process, andour leaders. Such was the case when the2000 presidential election in Florida expe-rienced problems, and from that came arequest that former President Ford and former President Carter head a commission to reviseU.S. laws and make sure that ballots will be clear andcounted equally. The commission’s recommenda-tions have since been partially implemented.

The question of how to finance U.S. campaignshas been thrown into sharp relief by the staggeringamounts of money now needed even to seek the

nomination of one of the two major political parties.A serious candidate needs $50 million to seek thenomination, and George W. Bush raised over $100million. Such amounts suggest potentially strongcandidates who are not themselves wealthy may be unable to mount a viable campaign for the presidency.

The United States is among those democracies inthe region that can and should improve its democraticpractice with respect to campaign and party finance.“No nation has solved the problem of how to financea campaign so that any qualified candidate can partici-pate and the electorate will trust the results,” PresidentCarter said. “The answer is badly needed.”

WELCOMING REMARKS

No nation has solved the problem of how to finance a campaign so that the electorate will trust the results. The answer is badly needed.

Former U.S. President Jimmy Carter

OAS Secretary-General César Gaviria exploredthe crisis of confidence that has struck the region’sdemocracies. Low rates of growth, declining percapita incomes, increased poverty rates, andexpanding inequality have been accompanied byexpanding information technologies that createnew and healthy demands for social justice.

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Citizens tend to equate all of theproblems in their societies with thedemocratic system, leading to a lossof faith in public institutions.Although democracy, political free-doms, and civil rights have takenroot in the region, these problemsunderscore the need to strengthenpolitical parties, civil society, over-sight institutions, electoral practices,and campaign finance systems.Secretary Gaviria endorsed theCarter Center’s conference onfinancing democracy as timely inlight of these developments.

Secretary Gaviria explored thecontours of debate on how best to finance politicalparties and campaigns, a political problem alldemocracies face and which is by no means con-fined to the Western Hemisphere. He endorseddirect public funding of campaigns but alsoacknowledged fears that such funding would driveup campaign costs even further, invite governmentsto be overly involved in party organizations, andgenerate unhealthy competition for scarce stateresources which should be earmarked for basic socialservices. Nonetheless he insisted that, “Partiesshould have at their disposal the best technical andhuman resources to address new challenges in amanner that best articulates their fellow citizens’aspirations.”

Absent adequate sources, illicit funding may fillthe gap. This is a growing cause for concernthroughout the Americas, even threatening thelegitimacy of democratic systems. “The rise of illicitmoney can significantly distort electoral processes,calling into question the transparency of our elec-tions, and, as a result, seriously compromising thelegitimacy of democratic systems,” warned Gaviria.

The proliferation of elections has not been accom-panied by development of clear rules guaranteeingthe transparency of campaign finance, and thatrules deficit has bred corruption and attempts to trade monetary contributions for favors fromelected officials.

Secretary-General Gavíria admitted that suchpoor practices are difficult to stop but took note ofthree types of institutional arrangements attemptedin the region to date: systems relying solely on voluntary accountability, implemented where thereare strong parties and a robust and loyal opposition;systems with ceilings on private campaign contribu-tions and with government-funded expenditures for publicity, implemented in consolidated democ-racies that can rely on effective oversight bodies butstill struggle to close loopholes; and systems thatemphasize state financing and guarantee the trans-parency of the origin and destination of publicfunds, not only through formal procedures but also by ensuring that the political environment iscompetitive and open. This latter type of system isvulnerable to the very close relationship betweenthe state and the political parties.

The rise of illicit money can significantlydistort electoral processes, calling intoquestion the transparency of our elections, and, as a result, seriouslycompromising the legitimacy of democratic systems.

OASSecretary-General César Gaviria

The welcome session concluded with remarksby Dr. Jennifer McCoy, director of the CarterCenter’s Americas Program. Dr. McCoy lamentedthat politics has become a dirty word for some citizenswho associate politics with corruption. Faced with askeptical public, we need to show that parties are avital component of healthy democracies. “It takesmoney to run campaigns and build parties,” shesaid. “The challenge is to prevent that money fromcontrolling politicians once they reach office.”

“We must find ways to motivate citizens to invest in democracy,” McCoy said, “which, in turn,requires that we implement effective and transpar-ent systems of accountability so that citizens canrest assured that their investment is wisely spent.”She urged conference participants to work togetherto develop a set of tools to manage campaign andparty finance and to assure that those tools can befeasibly implemented in countries where resourcesare scarce.

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All three systems of campaign and party financehave shortcomings, Secretary Gavíria noted, invitingus to explore via the conference which institutionalarrangements best match the problems and peculi-arities of each country. Campaign finance systemsshould reflect four objectives. The first is to preventcorruption, whether it comes in the form of a simplequid pro quo or money is derived from criminalactivity. Second, they should ensure political equality by avoiding huge discrepancies in access to power based on money. Third, they shouldlower the cost of election campaigns through suchmeasures as free access to certain media during cam-paigns and shortening the campaign period. Andfinally, most essentially, campaign finance systemsshould help preserve the credibility and integrity of the political system and of politics itself.

We must find ways to motivate citizens to invest in democracy, which, in turn, requires that weimplement effective and transparent systems of accountability.

Dr. Jennifer McCoyDirector, Americas Program

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The First Plenary: Contextualizing thePolitical Finance Problem

The first plenary session began by describingthe context in which regional democraciesare now struggling to function,

particularly persistent poverty and inequality.A second speaker emphasized the weak-ness of political parties in the face of sucheconomic challenges, noting both decliningpublic support for democratic institutionsand the regional commitments made tostrengthen them. Next the panel remindedparticipants of the values that laws and reg-ulations for campaign and party financeseek to uphold. The session ended with acomparative description of the laws andenforcement institutions for political finance thatare currently in place in Latin America, the subre-gion most at risk for democratic reversals.

Elena Martinez, regional director of the LatinAmerica and Caribbean Bureau of the UnitedNations Development Program, set the scene fordiscussion of political finance. She began byreminding the audience of the progress made inthe Western Hemisphere toward democracy andthe commitment in the Inter-American DemocraticCharter to defend that progress. Democracy has anenormous advantage as a self-correcting system, butin much of the Western Hemisphere it is losingvitality as citizens lose confidence in democraticinstitutions’ ability to remedy economic ills. LatinAmerica has high poverty levels — 44 percent livedin poverty in 2002, 7 million more people than in2001. The region also has the highest levels ofinequality in the world, with a Gini coefficient of.493 compared to a world average of .381.

Although countries that achieved growth in the 1990s were able to reduce poverty, they saw

increased inequality. It is now clear that the majori-ty of countries will have difficulty reaching theMillenium Development Goals to halve poverty by2015. Only seven of 18 Latin American countries

PLENARY SESSIONS

Elena MartinezUNDP regional director for Latin America and the Caribbean

The excessive marketing and mediasaturation of electoral campaigns,the lack of accountability, and therole that money plays in politicshave together contributed to theemptiness of politics.

could achieve those goals and only if they achieveunprecedented rates of per capita production. Evensmall reductions in inequality could dramaticallyimprove this scenario. In Latin America, countriesthat underwent structural adjustment and marketopening grew at a fraction of the rates they hadgrown between the 1950s and the 1980s. Economistsignore this fact at their peril.

This is the first time in history that an entireregion has experienced poverty, inequality, anddemocracy all at once. The subject of a democracyis not voters, it is citizens, meaning the men andwomen who strive to live free, develop, and havejustice. Democracy is more than a regime, it is away of organizing society. Economic, social, andpolitical development is indispensable for democracy.According to Latinobarometro surveys, 60 percentof Latin Americans say that democracy is the bestsystem, but of those, half would accept a militaryregime if it solved their economic woes.

Martinez also emphasized the crisis of leadershipaffecting the region and said the weaknesses of the

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Plenary Sessions

political institutions are negatively impacting gov-ernability. “The excessive marketing and mediasaturation of electoral campaigns, the lack ofaccountability, and the role that money plays inpolitics have together contributed to a practice of politics void of content, and hence the lack of credibility in politics, its agents, and actors,” she said.

In closing, Martinez warned that if democracydoes not deepen beyond its current electoral forms,and poverty and inequality are not remedied, theminimalist democracy in the region today will notsurvive. The key challenge is to diversify the formsof market-based economic organization to supportdemocracy. And we must also reform the state,which should be more than a mere bureaucraticnetwork in search of a zero deficit and should insteadbe able to integrate the society and economy withdemocracy. Unless we have a state capable of estab-lishing liberty and democracythroughout the national territory,democracy will die a slow death.The range of policy options avail-able to citizens and the inputcitizens can have in the debate ofpublic agendas are central issuesfor democracy. The trend todayreflects the tendency to reduce thescope of issues open to publicdebate. Furthermore, the statemust be internally powerful enoughso that elected officials can deliveron their promised platforms. Ifdemocracy is not perceived as aninstrument for development, it would inevitably leadto citizens’ perception that democracy is irrelevant intheir lives. And progressively there will be fewer andfewer women and men willing to defend it.

Elizabeth Spehar, executive coordinator of the OAS Unit for the Promotion of Democracy,

focused attention on political parties and their rolein effective democracy. Concern for the role of partiesin a democracy was clearly expressed at the QuebecSummit and in Article 5 of the Inter-AmericanDemocratic Charter which states, “The strengthen-ing of political parties and other politicalorganizations is a priority for democracy.” She welcomed the new interest in this topic, which for years has been considered too sensitive for treatment by multilateral institutions, noting thatmultilateral banks in particular now accept that“politics matter” when looking at economic andsocial development and that the role of partiesmust be considered when setting out to reformpolitical institutions.

Spehar drew on Latinobarometro data, notingthat confidence in political parties in LatinAmerica is as low as 19 percent, 53 points behind

the church and 30 behind television. Membershipnumbers are low in political organizations across theboard. One reason that citizens may be alienatedfrom organizational life is that parties do not reflectthe social and ethnic pluralism of their societies andwomen are not fully integrated into the leadership

Institutionalized, democratized, and transparent political parties do not come for free.

Elizabeth Spehar, executive coordinator OAS Unit for Promotion of Democracy

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positions in their parties. Consequently, parties areperceived as out of touch with the citizenry andunable to understand and offer concrete solutionsto pressing social and economic needs.

Nonetheless, parties remain the principal vehiclefor aggregating interests and seeking and holdingpower in a democracy. It is essential to improvetheir relationship with the public and strengthenparties by fostering internal democratization andinclusiveness, transparency, effectiveness in articu-lating and carrying out a political platform, andeffectiveness in government or opposition.Neighborhood associations, labor unions, andother civil society organizations are an importantcomplement to political parties in a well-functioningdemocracy, but where they dispute power with parties they generate nonconstructive controversy.

Citizens are concerned about corruption andthe influence of money in politics, including themoney used to finance parties on a regular basisand during election campaigns. To understand theexisting systems for political finance in theAmericas and to extract lessons learned from theserealities, the OAS has partnered with InternationalIDEA to conduct a comprehensive study of thelaws and also the practice of political party andcampaign finance in all 34 OAS member countries.The OAS has also founded the Inter-AmericanForum on Political Parties, in which parties are theprimary, but not the only, participants, to establish,promote, and bring into effect an inter-Americanagenda for the reform and modernization of politicalparties and party systems in the hemisphere.

One thing is certain—parties need reasonableamounts of money to fulfill their vital role in ahealthy democracy. “It is paradoxical that on theone hand, many cry out for fundamental changes forpolitical parties: that they choose leaders democrati-cally, that they formulate thoughtful national plansto address complex economic and social problems,

that they reach out in a meaningful way to minori-ties, women, and youth. Yet few admit that this willnecessarily require money,” Spehar noted.“Institutionalized, democratized, and transparentpolitical parties do not come for free.”

Four important aspects of political party financeare 1) access to the media, 2) public and privatefinancing regimes, 3) disclosure, and 4) enforce-ment, themes that were adopted for the workinggroups of the conference. “Most believe that cam-paign spending limits and some sort of equitableand affordable access to the media is needed forelected leaders to concentrate more on governingand less on raising money,” Spehar said. Publicfinancing ought to be examined, as it can help pro-vide equal opportunity for political parties, butunless it is accompanied by spending limits, it candrive up campaign costs. Disclosure is essential forsuch limits to work. USAID is publishing a hand-book on disclosure, which the OAS will translateinto Spanish and distribute to member states andwhich indicates that although 85 percent of thecountries surveyed have some sort of disclosurerequirement, only 15 percent have full disclosure.Noncompliance with existing legislation results froma lack of enforcement more than the loopholes thatinevitably exist in legislation, and that absence ofenforcement reflects either a lack of political will ora lack of resources or both.

Burt Neuborne, professor of law and legaldirector of the Brennan Center for Justice at NewYork University Law School, set out to deconstructthe values at stake in a political finance system if weare to make democracy the best that it can be. Howdoes one ensure that the campaign creates aninformed electorate? How do we create a civic culturethat will support democratic politics? How do wesee to it that an election is the expression of thepeople’s will? Since incumbents are likely to steercampaign finance reform toward systems that benefit

overlooks the fact that respecting one person’sautonomy may involve crushing another’s, such aswhen the autonomy of the wealthy crushes theautonomy of the poor.

Political equality of citizens is another centralvalue, and democracy is premised on it. Conflictsin a democracy should be based on the merit ofideas, not the power of the people involved. Everydemocracy must decide how much inequality is tolerable. Political finance systems can have theeffect of preserving power in the same hands.

Transparency, or the absence of corruption, isanother democratic value. Quid pro quo corrup-

tion is obvious, but much subtler formsexist, and learning how to deal withthem is essential. One example is thelegislator who cannot make independentdecisions because he needs to satisfycontributors to his campaign and raisemoney for re-election.

An informed electorate is alsoessential for a healthy democracy. Ifwe lower the amount of money in thepolitical finance system, e.g. throughlimits on campaign spending, we mayinadvertently decrease the electorate’sknowledge of issues and candidatesand thereby hamper informed choiceat the polls. An informed electoratealso requires disclosure of contribu-

tions before the election, not after, so that citizenscan more accurately assess how candidates mightact after election.

Flexibility is another important value whenestablishing laws and regulations. Government regulations have unanticipated consequences, andwe need to build in safety valves to deal with these.Bureaucratization can also decrease flexibility, so weneed to build in measures that will permit spontaneity.

Enforceability is essential. Absent enforcement,

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themselves, we need to examine the available optionsand the values underlying them to determine howbest to protect and promote democracy.

Democracies fund themselves using one of fivemodels. The dominant model is a laissez-faire systemin which money is provided by interested persons,sometimes subject to disclosure. A limited regulatorymodel limits the size of contributions but notexpenditures. Such a system emerged in the UnitedStates as an illogical product of interbranch conflict.Full regulation limits both contributions andexpenditures. A public subsidy system provides government subsidies to parties and candidates,

whether they be complete, limited, or targeted subsidies. Finally, a mixed system will combine government subsidies with private contributions,thereby maximizing the money in the system without unfairly balancing it.

Reformers may wish to consider how each system serves democratic values. Liberty is one suchvalue, emphasizing the right to be left alone andthe respect for human freedom and dignity. Itseems to argue in favor of a laissez-faire system but

We must debate underlying values,because conflicts between them occur and some values will be sacrificed to others in our efforts to maximize the democratic process.

Burt Neuborne, law professorNew York University Law School

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laws and regulations cease to be respected. Thislack of enforcement contributes to negative views ofpolitics and politicians and to public cynicismabout democracy. We must develop rules that canbe applied in the real world, keeping our feet onthe ground and our heads out of the clouds.

Finally, we must consider the effects thatreforms have on the status quo. Critics argue thatcampaign finance reform will serve incumbents.This is particularly true where reforms are designedto limit spending, since newcomers must buildname recognition and advertise their programs tobecome known and compete effectively with incum-bents. We want to avoid designing political financesystems that lock in the current array of politicaloptions as the only ones available.

These values—liberty, political equality, trans-parency, an informed electorate, flexibility,enforceability, and impact on the status quo —cannot all be equally honored at once. As weengage in reforming our political finance systems,

Professor Neuborne urged,“We must debate underly-ing values, becauseconflicts between themoccur and some values willbe sacrificed to others inour efforts to maximizethe democratic process.”

Daniel Zovatto tookup the task of explainingthe various politicalfinance systems that existin Latin America, the sub-region in the hemispherewhere reforms are nowcoming under considera-tion and where lendingsupport could have animportant impact for

democracy. Defining political finance as theincome and expenditures of political parties, incash and in kind, for electoral and ongoing activi-ties, Dr. Zovatto elaborated seven interconnectedideas essential to our understanding of politicalfinance. He began by noting that money in politicsis both a necessity and a problem. The relationshipbetween money and politics is complex but also keyfor the health and quality of democracies. Theright relationship generates equality, guaranteestransparency and the efficient use of publicresources, and prevents influence trafficking andinflows from illicit sources.

The topic of political finance was not amongthose initially treated during the third wave of transitions to democracy, which began in the1970s, but has been receiving more attentionrecently as democracies have tried to consolidate.Although it is not a new theme, it has special char-acteristics that derive from past politics. We mustacknowledge the perception, be it correct or not,

Former Colombia President Andres Pastrana and APRA leader Jorge Castillo listen to the plenary presentations.

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Plenary Sessions

that the cost of politics has risen significantly whilethe resources of political parties have decreased.This has created a cash-flow problem that partiesare tempted to resolve by accepting illegal funds,sometimes from narcotraffickers or organizedcrime. In short, the pathological relationshipbetween money and politics generates corruption,aggravating the crisis of confidence that LatinAmericans feel with respect to democratic institutionsand placing parties under suspicion.

Dr. Zovatto then mapped out the various systemsin use in Latin America, providing comparativedata to the extent that it is known, with the caveatthat the laws are not always the best indicators ofactual practice.

Seventeen of the 18 Latin American countriesstudied have mixed systems of political finance,with the exception being Venezuela, where politicsare entirely privately financed. Fourteen of those 17countries have both direct and indirect forms ofpublic finance (such as subsidized media access),while two have only indirect public funding andone has only direct public funding. Of the 15 coun-tries where direct public funding is given, 11 permitit to be used both for electoral activities and forordinary party development, whereas the other fourlimit its use to elections. Private funds remain theprincipal source of political finance. The effect ofpublic finance has been more additive than substi-tutive, and more study is needed to learn how tostrike an appropriate balance between public andprivate funds.

Allocation systems for public funding vary bycountry. In nine of the 15 countries, the formula is determined by the number of votes cast, i.e., the number of votes received by parties in national(presidential or parliamentary) or municipal elections,thereby reinforcing the status quo distribution ofpower. In five countries the distribution of funds isdetermined by a combined criterion: Part of the

funds is assigned according to the number of votescast, and part is distributed equally among the par-ties. In one country the distribution is againdetermined by a combined criterion: Part of thefunds is assigned according to the number of votescast, and part is distributed according to parliamen-tary representation. Twelve of the 15 countriesrequire that parties meet some sort of qualificationin order to receive funds. Although funding couldtheoretically be employed to redress inequalities inthe political system, such as the relative absence ofwomen candidates and party leaders, such mecha-nisms have not been used in Latin America.

Thirteen of 18 countries regulate the source offunding. The main prohibitions exclude foreigndonations (11 of 18 countries), anonymous dona-tions (10 of 18), and contributions from companiesor individuals who hold contracts with the state

Political finance reform should beseen as an integral part of broaderpolicy reforms.

Daniel Zovatto, IDEA representative

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(nine of 18). Seven countries limit the size of privatecontributions, but these rules are not alwaysenforced. Most countries grant parties cost-freemedia time on state and/or private media, but thisapplies predominantly to state-owned media andonly during the official campaign period.Nonetheless, access to the media remainsinequitable, especially with respect to television.Only 11 of the 18 countries have disclosure laws,and these have varying degrees of thoroughness.Levels of transparency in funding remain low.

In 16 of the 18 countries, it is the electoral author-ities who enforce campaign and party finance rules,either alone or in combination with other agencies.Sanctions for violation of these rules range from finesto reduction or suspension of public funds to suspen-sion or cancellation of the party’s registration andother measures. Yet the weakness of oversight andenforcement mechanisms is the Achilles heel ofpolitical finance in Latin America. Impunity is common, and rules are honored in the breach. Civil society groups and the media have becomemore active in monitoring compliance, which helpsadvance enforcement but does not substitute for theformal mechanisms of government.

Dr. Zovatto urged that better use of publicfunding will increase legitimacy and can generatefairness in electoral competition. This can beaccomplished by controlling the factors that increasecampaign costs and by practicing transparency anddisclosure. We must regulate private finance, butdo so realistically so that it is enforceable. We shouldalso guarantee equitable access to the electronicmedia, especially television, but be careful to balancethe integrity of the electoral process with protectionof freedom of expression. Echoing Dr. Spehar’sconcern about gender inequities, Dr. Zovatto urgedthat we put in place mechanisms to compensate forthem. Finally, the administration of publicresources should be handled by an independent

agency with integrity, and the enforcement regimeshould provide for a range of appropriate sanctions.

Aside from these basic outlines, little is knownabout campaign and party finance in LatinAmerica, and more study is required. That workshould be targeted based on what we already know.Campaign finance reform is sometimes called“never-ending legislation” because parties are inven-tive in finding loopholes or interpreting rules tosuit their interests, but that should not make ushesitate to move forward. “Political finance reformshould be seen as an integral part of broader policyreforms,” Zovatto advised. There are no perfect sys-tems or absolute truths, but there is better policy,and we should pay attention to both the desiredand undesired effects of systems in place.

The Second Plenary: A Reality Check With Key Groups

The second plenary session looked at practiceand the role of key actors in political finance systems.Speakers came from the business sector that makescampaign donations and is called upon to complywith regulations governing them; the televisionindustry, which is both an information agent and aprofit-making enterprise during campaigns; civilsociety groups who monitor campaign spendingand politicians’ voting patterns in relation to dona-tions; and researchers seeking to understand howcampaign and party finance systems work and canbe improved.

Larry Noble, executive director and generalcounsel of the Center for Responsive Politics,asked, “Why do donors give money to campaigns?”and examined the problem of payback in U.S. politics. Most candidates in the United Statesfinance their campaigns primarily from privatefunds, creating a need to continually generate newfunds for re-election, which Noble described as “aconstant hunger that must be constantly fed.”

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While some argue that donors give to candidatesand causes with which they already agree, othersargue donors give their support in order to getsomething in return, notably access to politiciansonce they reach office. Donors are looking forinfluence over the political process, includingfavors that shape lawmaking. For most donors, campaign donations are made as a business decision,

justified as an investment that will bring later profitsor as a maneuver to counterbalance donationsmade by a competitor. A “bribery theory” of contri-butions suggests that donors give money to createinfluence, but an “extortion theory” of contribu-tions suggests donors respond to demands frompoliticians simply to assure they can do business at all. It seems likely that at least some businessesgive donations in order to improve their access todecision-makers.

Most societies believe that giving money for favors constitutes bribery and is wrong. We think politicians should do what is in the greater good, not base decisions on who has given money to their campaigns.

Larry Noble, executive directorCenter for Responsive Politics

“Most societies believe that giving money forfavors constitutes bribery and is wrong,” Noble said.“We think politicians should do what is in thegreater good, not base decisions on who has givenor may give money to their campaigns. This is theheart of the challenge.” Citizens often conclude thedonor’s power is much greater than theirs, and thatperception creates disenfranchisement and disillu-sionment. Transparency in campaign finance is keyto empowering citizens to make informed choices atthe polls. Pre-election disclosure of donations allowscitizens to cast their ballot with fuller informationabout the candidate and his supporters.

The impact of funding lies less in the value ofany one contribution than in the collective value ofan industry or special interest. It is essential, there-fore, not only to disclose donations but to havesufficient information about the donor to aggregatethe data. After politicians reach office, citizens canexamine policy proposals and nominations for government appointments in light of this aggregatedonation data. These data can be collected and presented by nonpartisan agencies and disseminatedpublicly with the help of technology such as theInternet and via the press and civil society organiza-tions. The public is smart; presented with thenumbers, citizens can draw their own conclusionsas to how and why things happen. Conversely,when the information on campaign contributions isabsent, it is difficult to understand governmentdecisions.

Alexandra Wrage, senior counsel internationalfor Northrop Grumman Corporation and founderof the anti-corruption organization TRACE, provideda private-sector perspective on transparency in cam-paign finance. She agreed that Noble's extortiontheory is increasingly appropriate as transnationalcorruption shifts from supply side to demand side.The shift appears to be driven by the increasingly tightregulations under which multinationals must operate.

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Wrage argued three central points. First, shestated that corporations have the will and themeans to comply with reasonable campaign financelaws and regulations, especially in the wake ofrecent corporate scandals. Second, corporationsbenefit from greater transparency. Corruptionintroduces uncertainty and risk into the businessenvironment and results, at best, in legally unen-forceable agreements. In addition, corrupttransactions undermine free trade, foster a permissiveatmosphere for other business crimes, undermineemployee confidence in management, and put acompany's value and reputation at risk. Finally, corporations have the tools for compliance availableto them because of laws, such as the U.S. ForeignCorrupt Practices Act, under which U.S. firms haveoperated for more than 25 years. The tools developedfor compliance with these laws would translatereadily to compliance with campaign finance laws.

Under existing anti-corruption laws, U.S. com-panies have strong incentives to establish, fund, andenforce compliance programs for their employeesand business intermediaries. The presence of suchprograms can help company executives detect anddeter rogue employees who may otherwise betempted to engage in corrupt acts that they perceivecould benefit the company or themselves.

In establishing comprehensive complianceplans, multinational corporations frequently choosethe highest common denominator of the laws in allthe countries where they work and implementthose rules across the board in order to avoid theproblems inherent in compliance programs that differ by country. "If we proceed together, so thatno company is required to go first or go it alone,"Wrage said, "most multinational corporations willbe committed partners in implementing compliancewith campaign finance laws."

Wrage added: "Corporations are not idealistic;they have legal obligations to maximize shareholder

returns. They operate within a strict regulatoryenvironment, however, and if they have detailedguidelines and clearly defined goals, you will findthat most multinationals will be both serious andeffective in their efforts to increase transparency inpolitical contributions."

One type of business that drew special attentionat the conference was the media, and ChileanMegavision Chairman Ricardo Claro shared hisperspective on the media’s role in campaigns. Hecharacterized the media as public interest agents, notmere businesses. His television channel’s editorialline is intended to increase respect for citizens, government, the Catholic Church, and Chile’s eco-nomic system. There are laws governing television,and owners understand that television servicesmust abide by the law and show permanent respectfor such national values as democracy, freedom,peace, and the family.

Alexandra WrageSenior counsel internationalNorthrop Grumman Corp.

Most multinationals will be both serious and effective in their efforts to increase transparency in political contributions.

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Plenary Sessions

During campaigns in Chile, parties and candi-dates are prohibited by law from purchasingpolitical advertising on television. They presenttheir ideas during the time slots given by the mediafree of charge, allocated in accordance with eachparty’s political weight in the legislature. Thesespots make general reference to candidates and theparty platform. Further information flows to thepublic in the form of televised news programs, panels composed of party representatives airingtheir opinions, and candidate debates of the issues.“Sometimes television can create polemics,” Claroconceded, “but the channels should provide citizenswith impartial and independent informa-tion.” Television owners know they havean obligation to respect pluralism andprovide balanced news coverage that features all the candidates.

Television news contributes to publicknowledge of the candidate and can sell acandidacy by fostering name recognition,much like selling a brand. However, polit-ical programs are unpopular with theviewing audience and carry low ratings,leaving television channels with littleincentive to feature candidates outside ofrequired time slots. Moreover, there is noconsistent pattern demonstrating that tel-evision time increases a candidate’schances of victory; indeed, in Chile’s 1997 election,the candidates who appeared most frequently ontelevision tended to lose their races.

Advertising is a lucrative business. Newspapercirculation has declined so that only 10 percent ofChileans read editorials, while television and radioaudiences have grown. Television advertisementsare expensive to produce, and television airtimeusually costs much more than radio. However, during elections television advertising is free andlimited, while radio can charge for publicity in

unregulated amounts. Thought should be given tothis inequitable side effect of Chile’s advertisingprohibitions for broadcast media. Overall, however,Chile’s media regulations are useful in serving thepublic interest, despite having caused some disloca-tion and painful restructuring in the televisionindustry.

Christian Gruenberg, director of internationalrelations for Poder Ciudadano, demonstrated howcivil society organizations (CSOs) can contribute toimproving campaign and party finance. “The regu-lation of political finance should balance meetingthe economic needs of the political parties for

Sometimes television can create polemics, but the channels should provide citizens with impartial and independent information.

Ricardo Claro, chairof Chile’s Megavision

developing their activities and reducing the possibil-ities of corruption and capture of those parties byeconomically powerful groups,” Gruenberg said.

Gruenberg reported on a collaborative effort byCSOs to measure and monitor campaign spendingin Argentina, Brazil, Chile, Mexico, Peru, theDominican Republic, Costa Rica, and Venezuela.The organizations involved work with TransparencyInternational, the Lima Accord group of electionmonitors, and the Inter-American Network forDemocracy. The results contribute to Transparency

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International’s regional project in Latin America,whose goals are to develop a tool kit of mecha-nisms for improving transparency, conduct researchand diagnosis, help develop and uphold interna-tional standards, and pursue collective actionamong civil society groups.

The groups adopted techniques for monitoringpolitical party spending on mass media. Methodo-logically, this is a source of data to which citizenshave access. Strategically, the media are importantbecause advertising is a major cost in most campaigns.Television is particularly vital to the political equationbecause it is the institution in which citizens havethe second highest confidence ratings (after thechurch), according to Latinobarometro polling data.

By measuring the length of publicity spots ontelevision and radio and then calculating their costbased on the published prices for airtime, civilsociety groups can measure a portion of the mediaexpenses of a given campaign. Similarly, they canmeasure the space bought in newspapers and calculate their cost.

One finding is that where official advertising is

The regulation of political finance should balancemeeting the economic needs of the political parties for developing their activities and reducingthe possibilities of corruption and capture of thoseparties by economically powerful groups.

Christian Gruenberg Director, international relations Poder Ciudadano

not banned during election campaigns, candidatesfrom the governing party can use public funds forwhat is, in practice, electoral advertising. For example,government advertisements dropped 78 percentafter the April 2000 presidential election in Peru,93 percent after the October 1999 presidential election in Argentina, and 50 percent after theOctober 2001 presidential election in Argentina.The patterns suggest that governments are indeedcontracting additional advertising in the monthsprior to the vote, which may reflect an indicationof an effort to affect the outcome by promoting theparty in power.

Civil society studies suggest that candidates areunderreporting their expenditures. As measured bycivil society groups in Argentina, media costs alonein the Duhalde campaign went 34 percent over theamount his campaign reported spending, while DeLa Rua’s spending appeared to be 44 percent overhis claims and Cavallo 47 percent above what hehad reported. Since political parties typically receivea 40 percent discount, the calculations by civil soci-ety may have been too high, but the figures still

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are adjusted for inflation, the increase is small. The research covered local as well as national cam-paigns, as well as the costs of party organization,and suggests that political spending as a percent ofgross domestic product has been flat for decades.

In addition, a recent piece of research on politicalfunding in Latin America by Dr. Kevin Casas finds

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show some underreporting. The same data for themayoral race in Buenos Aires in 2000 showed dif-ferences of more than 60 percent between reportedexpenditures and measured cost of media time forthe top three candidates, clearly indicating underre-porting even assuming the discount.

Civil society groups attempting to measure theimpact of various systems of campaign financenoted the direct relationship between access to freemedia and spending levels. In Chile, where partiesand candidates are prohibited from purchasingpaid television advertising, campaign spending isfar lower than in other countries, including smallercountries. In Brazil, which also bans purchase oftelevision advertising, spending per capita is alsolower than in Venezuela, Peru, Mexico, theDominican Republic, Argentina, or the UnitedStates. This lends support to the thesis that banson paid political advertising may be an effective way to limit campaign spending without formallyplacing ceilings on expenditures, and bans are comparatively simple to enforce.

The panel concluded with cautionary remarksby Michael Pinto-Duschinsky, who noted that westill know relatively little about how campaign andparty finance really work in Latin America andwarned that some of the prevailing assumptions are probably false and are used as the basis for controversial policy prescriptions. He pointed tothe regional tendency to focus on what the laws say ought to happen rather than what really does.

Meanwhile, the research that has been completedcreates serious doubts about the conventional wisdomon the United States and United Kingdom thatoverall spending on politics is skyrocketing. Pinto-Duschinsky’s own research on the United Kingdomand that by a group of researchers at theMassachusetts Institute of Technology on trends in political spending in the United States showthat when statistics of overall political spending

We still know relatively little abouthow campaign and party financereally work in Latin America.

Michael Pinto-Duschinsky Senior research fellow Brunel University

that in Costa Rica, for example, the costs of televi-sion advertising in national campaigns is no morethan 10 percent and that political costs have notbeen escalating. In the narrow field of LatinAmerican laws and subsidies relating to parties andelections, we know more than we did just five yearsago when this topic gained salience in the hemi-sphere. But actual patterns of political income andspending remain a matter of conjecture. As AlonsoLujambio of Mexico’s Federal Electoral Institutehas pointed out, we need to know not only aboutthe costs of television advertising but also aboutinformal costs such as gifts of bags of beans by candidates to electors in poor rural areas as inducements for voting for them.

“The evidence seems to point to the surprisingconclusion that old-fashioned, face-to-face politickingcosts more than the new mass marketing, media-

heavy approach,” says Pinto-Duschinsky. He concludesthat research should cover not just national legislativeraces and presidential elections; it should embraceall kinds of campaigns, including local electionsand party primaries as well as the expenses of partiesbetween elections. We should expand the scope ofresearch beyond the costs of television and otherforms of political advertising to include investigationsinto the forms and extent of vote-buying, the use ofstate resources for partisan campaign purposes, andthe costs of party organization and of traditionalforms of machine politics. This research effortshould be backed up with resources and shouldwelcome the efforts of younger scholars from a variety of countries in Latin America.

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Senator Trevor Munroe of Jamaica’s governing People’s National Party and Senator Bruce Golding of the oppositionJamaica Labour Party sit together to learn about options for political finance reform.

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Keynote Speeches

Three keynote addresses were offered at theopening night dinner. CongressmanChristopher Shays, who played a leading

role in sponsoring campaign finance reform in theUnited States, commented on the challengesinvolved in building legislative coalitions for reformamong legislators whose campaigns succeededunder the status quo rules. Chilean Minister of the Interior José Miguel Insulza spoke about theemerging consensus to regulate political finance inhis country. Bolivian Vice President Carlos Mesaemphasized the limited room for maneuver thatpoliticians have with respect to reforming policy in poor societies where weak states are trappedbetween international pressures for austerity, con-frontational opposition parties, and demands forfavors from their own coalition members and campaign supporters.

Congressman Christopher Shays acknowledgedthat campaign finance reform is not easy. In theUnited States it can cost legislators their jobs, and

elsewhere it can sometimes cost more than that.Incumbents are disinclined to change politicalfinance rules that helped get them elected, so cam-paign finance reform often requires that reformistlegislators offend their peers and their leaders andeven lose friends.

In the United States, it helps that legislators areaccountable to their constituents. Congressmen dohave allegiance to their party, but ultimately arefueled to do what is right by their allegiance to thevoters. “Your country is too important and the peopleyou represent are too important for them to seeanything less than your best effort and your totaland complete conviction that you are willing to losean election over this issue, and maybe even more,that you are willing to press the most politicallypowerful people,” Mr. Shays said.

It also helped that the particular reform he wasseeking to implement, known as the McCain-Feingold bill after its Senate sponsors, was inessence a restoration of three earlier laws that had

KEYNOTE SPEECHES

U.S. Congressman Christopher Shays

Your country and the people you represent are too important for them to see anything less than your best effort and your complete conviction that you are willing to lose an election over this issue, and maybe even more, that you are willing to press the most politically powerful people.

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limited corporate, union, and individual privatedonations. Posing the question of campaign financereform in these terms, 80 percent of Mr. Shays’constituents agreed that our democratic processwas being harmed by unlimited contributions from unions and corporations.

Legislators can always envision a better reformbill than the one under discussion and can reject iton the excuse that it is too weak, so consensus-building becomes essential. In the United States,nongovernmental organizations pressuring for campaign finance reform became important allies,giving the bill their stamp of approval.

And last but not least, leadership matters. NewtGingrich, the Republican head of Congress, andPresident Bill Clinton had publicly committed tocampaign finance reform in a bipartisan gestureand could be held to that promise. John McCain alsoexercised essential leadership by drawing attention tothis issue against the best advice of his staff anddespite poorly designed opinion polls that suggestedthis was not an important issue for the public.Congressman Shays attested that when he neededmotivation he looked to historic leaders such asGeorge Washington who rejected a third termbecause “he knew that the best contribution hecould make was to have people depend on aprocess and not on a person.”

Minister José Miguel Insulza recognized thatthere is a new energy around the topic of politicalfinance in Chile, driven in part by unfortunatescandals.

Currently, Chile has few campaign and partyfinance rules. “The reality of political financing inmy country is that it is, at best, largely unregulatedand sometimes plainly illegal,” he said. True, smallamounts of free airtime are provided to parties andindependent candidates on television, but more ofa campaign is needed, and so each candidate is leftto finance his campaign however he or she can.

The electoral law does not cover campaign finance,and the political parties’ law has only minor rulesabout acceptable sources and light disclosurerequirements. Worse, the law is not enforced, so accounts reported blatantly understate realexpenditures.

A culture of secrecy has developed around campaignfinance. “Nobody wants to admit that most of themoney comes from private sources with no legalregulation, avoiding the taxation system, and manytimes from companies that will later declare thismoney as an expense,” he said. This unruly andshadowy form of finance exposes candidates andparties to undue influence of private donors.

“I believe that this is by far the largest weaknessof Chilean democracy and that the delay in facingit has had and continues to have serious consequences,”Minister Insulza asserted, referring to the lack of astrong regulatory framework for political finance.Campaign finance reform efforts were rejected bythe opposition several years ago. Legislation intro-duced in the lower house was accepted in generalform, but each article was weakened to the point

I believe that this is by far the largest weakness of Chilean democracy and that the delay in facing it has had and continues to have serious consequences.

José Miguel Insulza Interior minister, Chile

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where the law could have no impact. Now theSenate has approved in committee a stronger versionthat restores much of the initial intent, and publicconsternation over recent scandals has created awindow of opportunity for getting this meaningfullegislation passed.

There are a variety of reasons why legislators arereluctant to pass strong political finance legislation.Some are concerned that it will lead donors towithdraw their contributions. Others do not wantto publicize the enormous difference in resourcesbetween certain candidates’ campaigns. For many,it simply was not a priority issue until recently. Butunderlying these is a more fundamental problem ofan ideology that despises politics and sees no rolefor political parties. There is a vision of politics ascorrupt and useless, rejecting parties, campaigns,government, and public officials. This view isencouraged by some business and media leaderswhose preferred approach to politics is to condemnit even as they themselves run for office. Thus thecitizenry is not interested in giving public financeto campaigns and parties. This is a negative devel-opment everywhere on the continent.

Contextual events now offer a solution, havingplaced political finance reform squarely on theagenda. The problem is older than the current government, but it is we who must offer solutions,beginning with respect for the ongoing court casesand decisive action to modernize the state and correct the problem. President Ricardo Lagos, likePresident Frei before him, required all high officialsto declare their net worth and demanded full trans-parency with respect to income so that governmentofficials only receive one salary. The governingparty also reached accord with opposition parties to push forward legislation on political financing of campaigns and elections, on the regulation oflobbying, on declaration of assets and conflicts ofinterest by elected officials, and on merit-based

selection of the civil service, among other things.The proposal is for legislation that will give partialpublic financing, place limits on spending and onprivate donations, require transparency in privatedonations, and assure government neutrality inelections. The definition of these issues is crucialfor their effectiveness. Minister Insulza warned that“[i]f the public financing is insignificant, if the limitsare too high, if transparency is restricted to only afew donors, and if there are no institutional formsof enforcement, the problem of political financingin Chile will not be solved, and it must be solvedfor the sake of our democracy.”

On May 20, 2003, two months after the confer-ence, the Chilean Congress approved the country'sfirst legislation on "limits, public transparency, andfinancing of politics," which will be applied in thenext municipal elections in December 2004.

In a broad-ranging intellectual tour de force,Bolivian Vice President Carlos Mesa explainedthe roots of Bolivia's recent political crisis andexplored its significance for other countries in theregion. The police revolt in La Paz on Feb. 12, 2003,resulted in a confrontation with the soldiers guard-ing the Presidential Palace, leading to the tragicdeath and injury of many citizens and forcing us toask how such an event could occur in a countrythat has been democratic for two decades.

Bolivia adhered to structural adjustment policiesfaithfully, and its citizens were forced to tightentheir belts in spite of their predominant poverty.The capitalization of the five major state-ownedenterprises, the pension reform, popular participation,and the education reform marked the main reformsof the first half of the 1990s. The citizenry stillawaits the harvest of the positive results of thesepolicies, and today it is very difficult for politiciansto insist on their requests for new sacrifices fromthe population. We must admit that there is nocorrelation between political practice and the

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national economy. The economic reform set fortha new model to replace statism, but parts of thatmodel are not yielding the expected results, inas-much as high levels of dependence and economicfragility persist. We must overcome this situation or run the risk of a social explosion. The currentadministration has the responsibility to respond tothese challenges, but it is also the responsibility ofthose who conditioned the current macroeconomicpolicies, not taking into account flesh and bloodcitizens who must bear the results of those policies.

The violent incidents that occurred in La Paztook place in an explosive context whose contourswere set by the demands of the InternationalMonetary Fund (IMF) and the government’s need tocompromise between social obligations and budget-ary constraints. In the wake of that tragedy, theIMF rapidly reached agreement with the govern-ment on outstanding differences that had boggeddown negotiations for six months, showing thatflexibility is economically viable. It should not takebloodshed to generate such flexibility.

In Bolivia there has also been a breakdown of state-society relations that is echoed in othercountries, Vice President Mesa said. Political partieslack credibility and are thought by the majority ofthe public to be synonymous with corruption,refusing to change their structure or mentality withrespect to their responsibility in government.Political parties that should be the protagonists inthis democratic scenario insist on privileges thatdivorce them from their base and produce increas-ingly conflictive state-society relations. We mustalso keep in mind that the mass media persist inmaintaining a very hard critical stance that is oftenunfair when reporting on the government’s handlingof day-to-day affairs, fueling a pessimistic viewpointthat oftentimes presages societies’ present andfuture doom.

In Bolivia there is little public finance for campaigns (and in spite of this fact, public opinionconsiders it excessive) and even less control over useof the media and clear rules of the game, so thatmounting a political campaign requires using one’s

Carlos Mesa, vice president, Bolivia

The objective reality is that our governing coalitions have parties who have not received a clear popularmandate, forcing us to form coalitionswhose cost is so high that it occa-sionally is paid with corruption orthrough mechanisms that are lessthan transparent.

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own resources from a successful business or elseaccepting donations from the private sector.Companies that donate funds often expect privi-leges in return, including special access togovernment contracts. This restricts the freedom ofany elected official who finds his policy constrainedby the need to repay certain debts.

In countries where no single party can obtaina majority in the legislature, agreements withminority parties who can leverage their votes arenegotiated in exchange for political posts. “Theobjective reality is that our governing coalitionshave parties who have not received a clear popularmandate, forcing us to form coalitions whose costis so high that it occasionally is paid with corruptionor through mechanisms that are less than transparent,”Mesa mentioned. The financial structure of politicalcampaigns imposes a logic that institutionalizes theallocation of high- and medium-level governmentposts on the basis of political affiliation and notnecessarily based on merit. Mesa warned that ifpolitical parties cannot forego that logic, they willlose legitimacy and be replaced by other parties, ashas occurred in many countries.

The result of this form of party politics andrelationship with society leads to “a growingprocess of dissolution of the state and dissolutionof the concept of compliance with the law.” State-society relations are characterized by confrontation.The link between the opposition and the state isexpressed not in legislative bargaining but in block-ades and strikes that result in an almost permanentstate of emergency during which no policy-makinggets done. Confronted with the need to defend theconstitutional order in the face of demands thatare often irrational or excessive and that the statecannot possibly meet, government leaders are some-times forced to use repression, which creates ahuman rights problem.

In a historic watershed, Bolivia’s indigenouspopulation now has significant representation inthe legislature, led by the coca-grower advocate EvoMorales, whose electoral support was barely 1.5 percent below that of President Gonzalo Sánchezde Lozada. In turn, a difficult situation hasemerged because the United States, which placesdrug policy at the top of its foreign relations agendawith Bolivia, has labeled the opposition leader acriminal drug trafficker. Inasmuch as government,not Morales, is the international interlocutor, anuncomfortable triangle has been created in whichlegislative consensus is lost as the government triesto pursue policies within a framework acceptable toexternal as well as internal pressures. Where politicalparties do not represent the citizenry, adheringinstead to their own pursuit of privilege and powerthrough tactics such as roadblocks, Congress cannotmediate state-society relations.

Vice President Mesa concluded by urging thatwe rethink the “end of history” thesis, which positsthat the decline of competing ideologies has leftmarket economics and liberal democratic politics asthe inevitable path for development. We cannotaccept the status quo for lack of better ideas. Thesehypotheses—whose value cannot be ignored—haveclearly proven to be insufficient. The world is miredin confusion about how to resolve problems such asthose generated by the contradictions he described.Hence, today more than ever, Latin Americans mustpropose their own solutions.

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WORKING GROUPS

The heart of Carter Center conferences isthe working groups, where participantsbreak up into subgroups of roughly 20

people to share their experiences with respect tospecific problems and make practical recommendationsfor improvements.

Topics: To support the ongoing work of otherorganizations, the Carter Center agreed to use thefour themes that the OAS had identified as impor-tant in their work on campaign and party financeand party strengthening. These were access to themedia, the nature of funding systems (public, private,and mixed), disclosure of donations and expendi-tures, and enforcement. We amplified those themesslightly, asking about the role of the media beyondthe access issue and linking disclosure to limits oncampaign contributions and expenditures toemphasize that such ceilings cannot function without disclosure.

Preparation: The Carter Center prepared alengthy briefing book and sent it in advance to theparticipants so that they could have backgroundinformation with which to engage the discussion.Where the Center’s research revealed gaps in theliterature, we attempted to remedy those gaps bygenerating papers on access to information as ameans to obtain disclosure and on patterns of partyfunding in nonelection years. To assure that theworking groups were focused and productive,Carter Center staff members drafted guidelines fordiscussion and issued them to participants in bothEnglish and Spanish. The guidelines identifiedpoints of departure to avoid rehashing old debatesand posed questions to direct discussion towardinnovative ideas.

Participants: The working groups were composedof participants from many walks of life, assuringthat various viewpoints were presented. Each groupincluded a core of experts to act as a resource forthe discussion. Participants from the sectors with themost at stake on each topic were well-represented.For example, there was a concentration of mediaowners, editors, and journalists in the group exam-ining the role of the media and a concentration ofbusiness leaders in the group on disclosure, becausethe private sector is a major donor and disclosurerules would likely apply to them. In addition, severalmembers of the Council of Presidents and PrimeMinisters of the Americas were requested to partici-pate in each group, and as former candidates withhands-on experience in campaign finance andparty-building, they took an active role.

Procedures: A moderator was appointed foreach group, and a rapporteur took notes. Themorning session was dedicated to diagnosing theproblems related to each topic, and the afternoonsession to developing recommendations for actionat three levels—the international system, governments,and civil society. In each group, two experts offeredbrief introductory remarks to stimulate discussion.Participants then set to work, articulating their concerns and debating controversial points with afrankness encouraged by the fact that the workinggroup discussions were not for attribution. Moderatorsclosed the groups around the diagnosis of the problem and recommendations for action, and thesewere summarized by rapporteurs and presented at areport-out session the following day.

The points of departure and guideline questionsfor each working group are presented in the follow-ing pages, together with opening presentations,diagnostic analysis, and recommendations producedby each group.

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Mediais part of the problem and part of the solution.

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Working Group on

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Discussion Guidelines

Points of DepartureThe group should bear in mind key messages

from the plenary sessions and background papers,such as:

◆ A diversity of rules exists with respect tomedia access, including unregulated systems andthose where regulation is prohibited as a limit onpress freedom.

◆ Countries differ in treatment of televisionadvertising, including some in which media time isallocated on public television stations, those whereit is also allocated on private stations, and thosewhere purchase of spots beyond allocated time isprohibited.

◆ Countries requiring television or radio toprovide free time for public interest advertisements,including campaign advertisements, often do so by

invoking a legal claim to public ownership of theairwaves and do not always offer compensation tothe private media.

◆ Where television advertising beyond desig-nated public interest spaces is prohibited, televisionstations lose an important source of revenue.

◆ Television stations frequently offer discountsto candidates and parties but are rarely transparentabout precisely what price is paid, complicatingcivil society efforts to determine whether candidateshave superseded spending limits.

◆ Some countries require discounts be report-ed as campaign contributions, but enforcement ofsuch provisions is difficult.

Diagnostic Questions

Is the increased use of expensive television adver-tising the most important factor in campaign costs?

It has been argued that television advertisementsare the major expenditure for most campaigns, atleast in national races, and that the increasingimportance of the television media for reaching

voters explains rising campaigncosts. Others contend that cam-paign costs are sometimes higheven where purchase of televisionads is prohibited (e.g. Japan), andtherefore the rising costs of cam-paigns must be explained by otherfactors, such as the form of elec-toral system in use. In addition,traditional mobilizing factors (rallies, caravans, door-to-door canvassing) remain important in many countries and can beexpensive. Finally, old-fashionedpatronage and vote-buying candrive up costs tremendously.

THE ROLE OF THE MEDIA

George Vickers from the Open Society Institute chairs the working group on the role of the media with advice from formerLa Paz Mayor Ronald Maclean-Abaroa.

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What aspects of media coverage are important indetermining electoral outcomes? Is balance in newscoverage more important than political advertising?What is the relative power of television versus radioor print press?

The media are typically depicted as facilitatingagencies who present information about a variety ofcandidates and parties. Others argue that it is moreaccurate to view them as powerful actors attemptingto influence the outcome of the vote. These criticspoint to affiliations between certain media and indi-vidual candidates, including family and social classties, and to partial news coverage that can favor or dis-advantage individual candidates. In addition, mediadecisions about whether to accept political advertisingfor a candidate, and at what price, may affect the candidate’s chances. Media professionals respond that they are not so powerful; on the contrary, they aresubject to substantial pressure from candidates andparties, especially those who hold government office.They point out that many media outlets are sufferingfinancially and therefore vulnerable to governmenttaxation and withdrawal of government advertising.

Exploring Alternatives

Will limits on purchase of television advertisementsharm the public’s ability to make an informed choiceat the ballot box?

One purpose of campaign advertising is toassure that voters know who the candidates are anddistinguish sufficiently among them to make aninformed choice based on party platforms, character,etc. Without informed choice, elections are notconsidered to meet international standards. Chileand Brazil are countries where purchase of televisionadvertising is prohibited. Does this affect voters’capacity to make an informed choice?

Where media time is allocated to candidates andparties, what guidelines should govern the formulafor allocating time?

Free media slots are allocated based on a varietyof formulas, some of which provide time based onpast party performance (seats in the legislature) andothers of which emphasize equality among registeredparties in each race. The former method favors thestatus quo, and the latter makes it easier for new parties to form. A more progressive method mightgive new parties additional time, because they have agreater burden in establishing name recognition thando established parties. The formulas available reflectvalue choices, such as equity, fairness, and stability.

What can be done to improve the media’s abilityand willingness to investigate violations of campaignfinance regulations in an objective manner?Specifically, will access to information laws help?

Most investigative reporting is conducted byprint press. Even so, few newspapers in LatinAmerica and the Caribbean have specially trainedinvestigative units that permit long-term investiga-tions and pay journalists on salary rather than bythe word. Violence against journalists involved incorruption investigations is still a problem. So-called desacato laws exist in over a dozen countries,pressuring journalists to self-censor. Nonetheless,important investigations of campaign finance scandalshave taken place, including the Samper case whereillicit funds were alleged to have been channeledfrom narcotraffickers to a presidential campaign.On the other hand, false allegations of wrongdoingin campaign finance are sometimes made as a politicaltactic. In the absence of strong judicial systems,people are “tried in the press,” losing their reputa-tions. The creation of false scandals may increasenewspaper sales but also increases public skepticismabout democracy. New access to information lawsmay provide journalists with hard information thatwill preclude speculation on political donationsand expenditures. (See the background paper onSouth Africa for the Disclosure working group.)

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Working Group Findings

Opening RemarksThe session began with comments from a work-

ing journalist and an NGO leader who measuresthe impact of television on campaigns.

The journalist urged that we clarify where corruption has entered the democratic process. He lamented the absence of laws and regulationsgoverning campaign and party finance as well astransparency more generally, particularly laws pertaining to conflict of interest. Without a legalframework, politicians engage the private sector inways that do not reflect the public interest. Weneed to know who is financing campaigns if we areto understand the real objectives of those campaigns,and this need to know implies the need for disclosureof contributions. Voicing the declining confidencethat citizens have with respect to democratic institu-tions, he did not see a positive future, especially wherecitizen tolerance for corruption is high and increasing.

The NGO leader explained her group’s programfor monitoring television coverage tomeasure the level of coverage candidatesreceived beyond the direct publicity theypresent. Rather than demonstrating bal-ance and equal treatment of candidates innews coverage and other informationalprograms, the data show a chaotic cover-age pattern. Some candidates receivedmore coverage than others, potentiallybolstering name recognition, whereas others—particularly independent candi-dates—got no coverage at all. The qualityof coverage also varied, often showingonly one side of an issue, renderingdebates incomplete.

Diagnosis of the ProblemThe use of media in politics is highly complex,

especially during campaigns, and the working groupexplored the many aspects of that role. They notedthat while politicians come and go, the mediaremains. Most agreed that the media are enormouslypowerful, but heavy political advertising does notguarantee election. Participants arrayed themselvesalong a continuum from those who felt the mediawere in essence a business and those who viewedmedia as an information agent with social responsi-bilities. In many countries the media have beenprivatized, and while some participants felt thatcontributed to freedom, others felt that media pro-vide a public service operating under a governmentlicense and, therefore, should not be treated as strictlyprivate. The introduction of cable and satellite televi-sion as well as the ability of media to broadcastacross national boundaries complicates regulation.

Despite differing points of emphasis, participantswere able to agree on the following:

Jamaican Oliver Clarke, publisher of The Gleanernewspaper, listens to a comment from Nicaragua’sChannel 2 television owner Marta Pasos de Sacasa.

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◆ Corruption is a societal problem, not merelya political one. Media is part of the problem andpart of the solution.

◆ High media costs, particularly for televisionadvertisements, are part of the corruption problem.

◆ Although campaign spending and coverageare important, the issue is not merely the amountof media time used but also the efficiency withwhich it is used.

◆ Successful campaigns are not always thosethat spend the most money.

◆ It is vital to increase transparency in mediause during campaigns.

◆ The role of the private sector in connectionto media use is especially important.

◆ Increasingly, the role of foreign media isimportant in some countries.

◆ Although television is the most importantcampaign media, radio and the Internet meritattention as well.

◆ Ultimately, regulation of media and campaignexpenditures must be tailored to individual countries.

RecommendationsThe working group on the media reached con-

sensus on measures that could improve politicalfinance in the Western Hemisphere. These are:

Recommendations to the international system (to the international community of democratic nation states and multilateral organizations)

◆ Strengthen the role of the OAS Rapporteurfor Freedom of Expression in promoting trans-parency of political campaigns.

◆ Support and study the impact of new technologies such as the Internet on political cam-paigns as well as the relation between internationaland national media coverage.

Recommendations to governments, notingwhether this is a recommendation to the execu-tive branch or to the legislature

◆ Legislatures should regulate fair and equalaccess by political parties to the media for politicaladvertising.

◆ Legislatures should require disclosure ofmedia spending by political parties and of ratescharged by media for political advertising.

◆ Legislatures should adopt freedom of infor-mation laws that ensure transparency in the use ofstate resources for campaign purposes.

◆ Legislatures should ensure that libel laws nothamper effective campaign coverage by the media.

Recommendations to civil society, includingprivate sector organizations and nongovernmentalorganizations

◆ Support and encourage the development of acode of ethics by political parties and citizen groupsthat, among other things, limits campaign expendi-tures and ensures transparency.

◆ Support and encourage the development ofvoluntary standards by the media regarding balancedcampaign coverage and the separation of reportingfrom opinion.

◆ Support and encourage the capacity ofNGOs and civic groups to monitor media coverageof campaigns.

◆ Alongside multilateral organizations, supportand study the impact of new technologies such asthe Internet on political campaigns as well as therelation between international and national mediacoverage.

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Systems will differbut shouldpromotecommonprinciples.

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Working Group onPublic, Private,

and Mixed Systems of

Campaign and Party Finance

◆ The special difficulties faced by developingcountries in funding democracy in a context ofpoverty and inequality

◆ The costs associated with internal democratization of political parties

◆ The evidence from Japan, where campaign costshave been extremely high despite the prohibition onpurchase of television advertisements and a shortcampaign period


Are campaign costs rising?Some studies suggest that in the United States

and Britain campaign costs have not risen signifi-cantly in real dollars and may have declined as apercentage of GDP. The data on Latin America,Canada, and the Caribbean are less complete, butparticipants may have some experience to lend in

answering this question. Even if the relativecosts are not increasing, is the rise in absolutecosts adverse for democracy, especially incountries where there is a large and increasinggap between rich and poor?

What is the nature of a campaign donationtransaction? How does finance really work? Isthere any evidence that public funding reducescorruption or reduces the amount of privatefunding sought by parties and candidates?

Because campaign donations are some-times illicit, the nature of such transactionsis ill-understood. Recent studies have veryfrankly treated donations as a form of contract between the donor and the candi-date/party receiving the money, arguingthat the contract cannot be enforced by lawbut is enforced through tit-for-tat patternsof giving: Candidates who do not honor

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from the plenary sessions and background paperssuch as:

◆ The values and principles at stake in campaignand party finance and the ways in which public vs.private finance expresses those principles

◆ The diversity of systems within the WesternHemisphere and the likelihood that no single system is appropriate for all countries

◆ The relative paucity of information aboutcampaign finance, party finance, the cost of admin-istering elections, and the consequent need formore research

◆ The increasing concern in most countriesabout the weakness of party systems

PUBLIC, PRIVATE, AND MIXED SYSTEMS OFCAMPAIGN AND PARTY FINANCE

Former Uruguay President Luis Alberto Lacalle shares his campaignexperience with members of the working group on comparative politicalfinance systems.

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their “debts” to donors are not given furtherfinance. The weakness of parties and party systemsmakes such implicit quid pro quos viable, whereasdonors cannot afford to make demands of strongparties in stable systems. Is the only solution tostrengthen parties, or are there systems to reducethe appearance and reality of quid pro quos?

Does television drive campaign costs?It is often asserted that the apparently rising

cost of campaigns is explained by (1) the high costof television advertisements and (2) television’sincreasingly important role in campaigns in thelargely urban populations of the WesternHemisphere. However, there is conflicting evidencefrom two countries where purchase of televisionadvertisements has not been permitted, Chile andJapan. In Chile, campaign costs are reportedly low,whereas in Japan they are high, likely driven bypatronage costs.

Do electoral systems determine campaign costsand patterns of spending?

The political science literature has increasinglyfocused on electoral systems as determinants ofboth campaign costs and patterns of funding (howit is given and to whom). Where more than onecandidate from any given party may run for election,candidates cannot differentiate themselves by plat-form and, therefore, build highly personalisticcampaigns that drive up expenses in order to construct clientelist networks.

Will internal democratization of political partiesdrive up campaign costs?

Democratization of political parties is oftenurged as a “second generation” goal for democrati-zation in the hemisphere. Democratization ofparties has included calls for inclusion of women andethnic minorities, sometimes achieved via quotas. Ithas also meant that parties increasingly hold someform of primary election to select candidates. Do

these processes impose extra costs on parties? If so,does the need to obtain those extra funds causeparties to be more beholden to financiers andarguably, therefore, less democratic in other ways?


Would shortening campaigns reduce campaignspending?

Anecdotal data suggests that campaign spendingis less in parliamentary systems, and this has some-times been attributed to their short campaign periods(three-five weeks). The argument is that only somuch money can be spent effectively in any givenday, so a shorter campaign necessarily cuts costs.Others argue that the hypothesis only holds truewhere the election date is not fixed and parties cannot then engage in anticipatory spending duringthe “precampaign.” However, critics contend thatparliamentary systems engage in permanent campaignsprecisely because the election date is uncertain andthat if campaign costs in those systems are indeedlower, it must be due to another factor. Finally,there is a measurement problem in that most campaign spending laws only cover the official campaign period, so parties and candidates are not required to report on precampaign spending,meaning that reported expenditures understateactual campaign costs, especially where the campaignis short. Are there ways to measure, regulate, andreduce precampaign spending?

What is the best way to reduce the financialinequalities between governing parties and politiciansand those in opposition? Are there ways to limit the“incumbent advantage” of access to state resourcesand prevent abuse of state resources for partisan pur-poses?

One possibility might be that opposition partiesin the legislature receive special grants such as thescheme in the United Kingdom of “short money.”

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Public financing systems that do not allocate fundsprimarily based on past elections give new parties orminority parties more of a chance at competitionthan do allocation systems based on past electoralperformance. On the other hand, such schemescan also encourage a proliferation of nonviable parties tempted by access to public funding.

Is it possible to develop guiding principles forparty and campaign finance that would be acceptablethroughout the region?

Although countries will continue to havediverse systems of campaign finance, the WesternHemisphere is composed of representative democ-racies that adhere to a variety of agreements for thecollective defense of democracy. It may be possibleto envision a set of principles to which the regioncould collectively adhere as countries individuallyreform and develop their campaign and party

finance rules. TransparencyInternational has developedguiding principles for cam-paign and party finance inEurope that are now beingdiscussed in civil society and will potentially have animpact on individual coun-tries and even multilateralorganizations.

If political parties andcandidates are prohibited fromreceiving foreign funding, isthere any justification for civilsociety advocacy groups toreceive such funding? Do inter-national organizations have a legitimate role to play in policy-making relating to thefinancing of politics? If so,what is it?

A few countries permit foreign funding, but themajority prohibit it. Critics of foreign sources ofcivil society organization funding argue that it cancreate an unhealthy dependence, that it encouragesthe proliferation of NGOs created to chase foreignfunding to serve personalistic purposes, and thatsuch NGOs (or their directors) often have politicalambitions and eventually turn into political move-ments competing with political parties.


Opening RemarksThe working group opened with two presenta-

tions on comparative systems, one drawing lessonsprimarily from Latin America and the other fromWestern Europe. The main thread running throughboth presentations was an effort to gauge the utilityof public funding.

Michael Pinto-Duschinsky, seen here at a coffee break with OAS political parties specialistand conference rapporteur Steve Griner, notes that to design better systems we need to knowmore about what drives up campaign costs.

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The first presenter boldly stated that it is timeto go beyond a discussion of laws and instead focuson realities. Political finance corruption comes inmany forms and does not always involve personalenrichment, so the contours of the quid pro quoshould be explored. We must set aside assumptionsand test our theories in order to recommend betterpolicy. For example, given the fiscal pressures it hasproduced in Mexico, we might want to learn howeffective public finance really is in promoting equality,preventing corruption, and meeting other goals.Public funding is a heterogeneous instrument, andallocation rules are particularly divisive. If the fund-ing is given to candidates instead of parties, it cancontribute to party weakness and splintering. Otherenduring questions concern whether campaign costshave indeed risen and to what extent televisioncosts drive overall campaign costs. Are we on theright track?

Western Europe is by no means immune to thecorruption that has plagued developing countries.The main incentive to engage in corruption comesfrom the decline in political party membershipdues, which have fallen everywhere in WesternEurope. Certain kinds of party systems drive upelection costs, notably in France and Italy.Important corruption cases have emerged inFrance, Germany, Italy, and Great Britain. Twogroups that have been instrumental in revealingthis political finance corruption are judges andjournalists. Public pressure has caused France toadopt campaign finance legislation and Britain toreform the laws it first put in place as early as 1883.Britain remains a privately funded system, whileBelgium is a classic mixed system and Spain a pre-dominantly publicly funded system. Public fundingin Europe has succeeded in weaning parties fromlabor unions, but at the price of making themdependent on the state.

Diagnosis of the ProblemA wide-ranging conversation about campaign

and party finance systems then commenced, withparticipants recognizing commonalities across coun-tries in terms of the dimensions of the problem.Some countries, such as Barbados and, until recently,Peru, have had no political finance regulation. Perurelied on the private sector to furnish funds andsaw increasing corruption and the decline of itsparties. Barbados relied on tradition more thanlaw, and there was neither transparency nor limitson contributions or spending. Nonetheless, electionswere competitive, due in part to regular issuance ofexecutive grants of assistance to parties for generalactivities and for constituency offices as well assome free broadcasting.

Participants noted the problems posed in meas-uring the cost of campaigns. How you measure maydetermine whether you conclude costs are rising.Cross-country comparisons based on expendituresas a percent of gross national product overlook therelative value of the dollar. Media costs are theproduct of negotiation and, therefore, vary by party.These problems make precise numbers problematic,but politically experienced participants made aqualitative conclusion that the barriers to entry inthe electoral arena are high. Most participants con-curred with the impression that publicity is themain campaign cost, notably television advertising.However, in Chile, where television advertising isnot permitted, campaign costs are low but risingdue to the nature of the electoral system. The costsof traditional campaigning, such as rallies, road caravans, giving away T-shirts, and direct forms ofvote-buying are also important and can be hard tomeasure.

Regulation of costs poses dilemmas in terms ofwhat to regulate and how to enforce regulations.The restrictions on electoral advertising in Brazilhave worked quite well but require a very active role

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by the regulating agency. Limiting large privatedonations could help curb special interest politics,but we do not want to discourage citizen participa-tion in the funding of campaigns. Althoughparticipants were willing to limit private donations,perhaps by capping private contributions as a pro-portion of total funds, they were wary of limitingthe money candidates might choose to spend fromtheir own fortunes, as no argument could be madethat undue influence would result.

The group then explored the dilemma of weak-ened party systems. Politicians argued that unlikeNGOs, political parties have popular legitimacy verified at the ballot box. This implies parties aresubject to more obligations but also argues for pub-lic funding of parties, they said. Public funding canhelp protect electoral equity. Some participants feltfunding was only important for opposition partiesas a check on the power of the incumbent. Otherssaid public funding was more important for regularparty-building activities than during campaigns. Toprevent abuse of public funds, such as investingthem abroad for nonelectoral purposes, parties andcandidates must report publicly on their use ofpublic funds. Transparency is essential, because thesecrecy surrounding party operations has fueledpublic cynicism about them.

In sum, the critical issues that need to beaddressed by any political finance legislationinclude how to:◆ Control rising electoral costs. Election campaigns

are more costly than we would want them to be,mostly due to television spending and votermobilization costs. Rising costs may lead toincreased corruption.

◆ Find a balance between public and private funding.

◆ Establish who should be entitled to make privatecontributions.

◆ Establish how public funding should be distributed.

◆ Find ways to strengthen political parties and institutions.

◆ Strengthen the internal democratization of parties and their ability to provide enough information about their platform to the public.

RecommendationsThe systems group proved fruitful in generating

recommendations for the Western Hemisphere.

Recommendations to the international system (to the international community of democratic nation states and multilateral organizations)◆ Encourage existing arrangements between political

parties and international foundations and insti-tutes for the training and education of partymembers.

◆ Encourage the involvement of multilateral organ-izations and international NGOs in the topic ofpolitical finance policy-making by raising the profile of political finance issues, advising on the adoption of political finance legislation, and convening meetings where these issues arediscussed and agreed upon.

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Recommendations to governments, notingwhether this is a recommendation to the execu-tive branch or to the legislature

About the cost of elections, governments andlegislatures should:◆ Establish and measure what the real costs of

elections and party activities are.◆ Encourage transparency rules as a way to tame

large contributions.◆ Adopt reasonable contribution limits, possibly

including the money contributed by candidatesto their own campaigns.

◆ Limit spending on those items that are easy tomonitor, mainly media. This can be accomplishedby banning paid political advertising or capping it.

With respect to the balance between public andprivate funding, it is desirable to:◆ Create mixed funding systems with a substantial

public funding component.◆ Allocate public funding by a combination of pro-

portional rules and flat subsidies to all parties.The adoption of reasonable access thresholds todiscriminate serious from rent-seeking parties isalso desirable.

◆ Provide parties with public funding for their permanent activities.

◆ In allocating public funding, give particularattention to imbalances between incumbent andopposition parties, perhaps by introducing publicgrants earmarked for the activities of the latter.

◆ Use the public funding system to create incentivesfor widespread political participation, perhaps bylinking its distribution to the achievement of goalsof gender and minority representation and to theenlargement of membership.

◆ Stress the importance of internal democratizationwithin parties and its implications for politicalfinance, particularly in light of the visible trendtowards the adoption of primary presidentialelections within Latin American parties. Perhapswe should not rule out the adoption of a systemof public funding for presidential primaries.

◆ Give a set of broad guidelines for political partiesto spend public resources, but preserve theirautonomy to use those resources in the ways thatbest suit them.

Recommendations to civil society, includingprivate sector organizations and nongovernmentalorganizations◆ Recognize that the role of international and local

NGOs and civil society has been positive, particu-larly in the monitoring of elections and politicalfinance practices and, more generally, in thestrengthening of fair elections and democracy.

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An absenceof regulationpermitssecret donations to corrodethe politicalprocess.

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◆ Countries will adopt a variety of rules on disclosure for donors, parties/campaigns, and vendors and for public and/or private funds.

◆ Some countries will introduce ceilings onexpenditures or donations, which can only beenforced when there is disclosure.

◆ Some countries will limit the source of donations; for example, not allowing foreigners or private companies to donate.

◆ No single formula will be right for all coun-tries, and even if one could find categories (e.g. allcountries with a certain type of electoral systemought to have a certain type of disclosure), it isdoubtful that these could be implemented with any consistency.


Should limits be placed on either contributions orexpenditures?

In Canada, the perception has been that equalityand fairness are priority values that call for limitson expenditures rather than only donations. In theUnited States, limits on expenditures have beenruled out as curtailment of freedom of speech.How can we balance these principles? Are limitseven practical if they are not easily enforced?

Should the limits on donations be raised or lowered?High limits can give disproportionate influence

to wealthy donors. Low limits may curtail the abilityof candidates and parties to meet campaign costs.Is there a way to balance the goals of equitable participation of citizens and capacity of candidatesto compete?

Do the merits of disclosure always outweigh argu-ments against?

Merits of disclosure include increased trans-parency, ability of citizens to better hold candidatesaccountable and detect “capture” of elected officialsby moneyed interests, and increased ability todetect the potential for corruption. Private sectorarguments against disclosure have included thepotential for retribution by winning candidatesagainst companies who contributed to the losingopponent and potential for consumer backlash orboycott against companies who have contributed toperceived “dirty politicians.”

DISCLOSURE AND LIMITS

Former Guatemalan Foreign Minister Eduardo Stein chairs theworking group on disclosure and limits.

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How can we motivate business to prefer disclosureand limits so that the systems become self-enforcingdespite weak rule of law?

Democracy is a public good that requires collec-tive support. If public financing is not provided,private financing—principally business—becomes anecessary source of funding. Can we compose atool kit of mid-level policy recommendations thatcould motivate business to donate but also con-

The South African case suggests access-to-information legislation may sometimes be able tobe used to require disclosure by the donor or by thepolitical party recipient even where no disclosurelaw exists. Access to information could also helpthe media to investigate scandals or help citizens’watchdog groups track and enforce compliancewith limits. Do the potential benefits of increasedtransparency in reducing perceptions of undueinfluence of money in politics outweigh potential

drawbacks such as breaches ofprivacy or confidentiality?

Can voluntary codes of conduct adopted by private com-panies be effective in ensuringdisclosure even where the law isweak or unenforced?

One company in SouthAfrica responded to theInstitute for Democracy inSouth Africa’s (IDASA) access-to-information request fordisclosure of campaign donationsby generating a new companycode of conduct. Might morecompanies be interested in

practicing corporate leadership of this kind? Aresuch codes really effective or are they typically merepublic relations tactics? How could a broad movementfor voluntary campaign finance codes of conduct bebegun? What would the essential elements of sucha code include?

In countries with existing disclosure laws, howcan information about such donations be disseminatedeffectively and cheaply?

The Center for Responsive Politics has developeda tracking tool to categorize disclosed donations byindustry and compare them on the Open SecretsWeb site to candidates’ voting records on issues related

strain them from donating to cultivate favors? Suchtools could potentially include a combination of rigorous tax collection and tax incentives for campaigncontributions; having campaign contributions bemade via buying bonds; and reducing the perceivedrisks of disclosure, such as consumer rejection ofthe company if it is known to contribute to anunpopular candidate or political retribution if one has donated to the “wrong” candidate.

Can access-to-information legislation help promote disclosure by political parties and privatecompanies?

Carter Center working groups are informal discussions where participants share theirexperience about what works and what doesn’t.

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to each industry. Another tool is the Money andPolitics (MAP) project developed by InternationalFoundation for Election Systems/USAID.


Opening RemarksThe working group began with presentations

on the role of the private sector in campaign financein Latin America and on access-to-information lawsas a means of obtaining disclosure where no disclosure law exists.

Contrary to common belief, the private sectoris not highly motivated to donate to political par-ties or candidates. Business cannot hold politiciansand parties accountable for such donations, andthe transaction is not transparent and can sully thereputation of the donor. In addition, there may be reprisals from other parties, such as denial of government contracts, if they win the election.Business leaders also know that they can wait andinfluence politics after the election, probably moreeffectively and cheaply, through straightforwardlobbying and consulting to government as well ascorrupt practices such as bribing of ministers.Politicians thus have a shorter time horizon thanbusiness leaders when they ask for campaign contri-butions; for candidates, campaign contributions arean urgent matter, but business can afford to awaitthe electoral outcome.

Latin American business leaders generally support disclosure and recognize it is important fordemocracy. They support the development of insti-tutions to monitor contributions and expendituresand can provide the expertise to improve theadministration of these institutions. Because of the private sector’s longer time horizon and the lowlevels of trust between business and governmentleaders, business leaders are motivated to helpassure that the rules of the game for practicingbusiness are consistent from one administration to

the next. The private sector can help oversight insti-tutions to become part of the permanentbureaucracy that is autonomous from changes ingovernment.

In South Africa, new agencies to combat cor-ruption proliferated in the wake of the transition todemocracy, but there is no regulation of campaignand party finance. As in some Latin Americancountries, there is a political crisis in which trustbetween citizens and their political leaders has brokendown. One remedy is to empower citizens to haveaccess to information about public processes,including the role of the media and the relationshipbetween money and politics.

In some circumstances, access-to-informationlaws can be used to obtain disclosure from politicalparties and corporations where no direct disclosurelaw exists. In South Africa, the private sector provedmore responsive to civil society calls for disclosurethan political parties. When a civil society organiza-tion requested disclosure of political contributions,none of the 13 political parties volunteered to disclose,but only three corporations failed to do so. Thecourts must define the extent to which political parties are public institutions and, therefore, subjectto disclosure requests made under the access-to-information law. Legislation to require disclosuremay emerge soon due to campaign finance scandals.Access-to-information legislation should comple-ment, not replace, other enforcement mechanismsfor obtaining disclosure. Citizens must understandaccess to information in order to use it effectively.

Diagnosis of the ProblemParticipants engaged in a lively discussion of the

problems related to disclosure and limits on campaigndonations and expenditures. Disclosure is relativelyadvanced in the United States, but because it is notaccompanied by limits on spending, the costs of campaigns are rising and this creates equity and participation problems. By contrast, disclosure is a

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cutting-edge issue in most Latin American andCaribbean countries, and they, therefore, have anopportunity to design more comprehensive politicalfinance systems that effectively link disclosure and limits.

Participants began by emphasizing the factorsthat make donors prefer to give their contributionsin secret. These included the winning candidate’spotential to use government powers for reprisalsagainst donors to losing candidates, particularly taxaudits that are costly even when they do not turnup evidence of wrongdoing. Another factor is theweakness of national economies whose poverty andinequality generate popular protest against the per-ceived wealth and corruption of the political class.Where politicians have low prestige, citizens opposetrusting them with public funds for campaigns, andbusiness becomes the key donor but prefers not tobe openly associated with politicians.

The limitations on disclosure were evident.Incumbents have access to reserve funds and officialpublicity that are not declared as contributions.Auditors are often restricted to verifying the validityof the reports submitted rather than being authorizedto actively pursue fraud. Minor donations may fallbelow the disclosure floor but be used to launderillicit contributions that collectively constitute amajor source of funding.

In sum, the group coalesced around the follow-ing diagnosis:

◆ Two contextual factors—rising inequality andloss of faith in democratic institutions—provideincentives for moving toward development of disclosure rules.

◆ Important democratic principles underliethe discussion of disclosure systems, including:

– The right to know and have access to information

– The right to privacy– The right of speech– Political equality

◆ Disclosure is not practiced or only partiallypracticed in the countries of the Americas.

◆ The absence of disclosure feeds growing cyni-cism about politicians because the public suspectsthey are more responsive to wealthy donors andspecial interest groups than to the average citizen.

◆ Disclosure does involve dangers, such as possibilities for reprisal, but should nonetheless be required because democracy is worth the price.

◆ Financial controls are needed to assure faircompetition and reduce the negative impact ofmoney in politics.

RecommendationsThe working group grew concerned that hard

trade-offs would have to be made in terms of policy,because much needs to be done and their recom-mendations cannot all be fulfilled to the sameextent. Each country will need to design its owndisclosure system. Nonetheless, they agreed on thefollowing recommendations:


◆ The region should strive to establish standardsfor campaign and party finance.

◆ Multilateral institutions should developguidelines to express those standards.

◆ Regional governments should guaranteetransparency in political finance and bring theirlegislation into compliance with those goals.

Recommendations to governments, notingwhether this is a recommendation to the execu-tive branch or to the legislature.

◆ Governments should improve transparencyby requiring disclosure of donations and expenditures,specifically:

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– Candidates and parties should be required topublicly disclose donations and expenditures,pre-election and postelection, and accountsmust be itemized.

– Media should be required to disclose standardadvertising rates and report discounts aspolitical donations.

◆ Auditors should be required to provide anopinion on the degree to which reports achievecompliance with the financial provisions in thecountry’s legislation.

◆ The state should invest in institutions, par-ties, and citizen capacity rather than long/negativecampaigns and develop further the regulatoryframework for equitable competition.

◆ Governments should seek to reduce thedemand for private funding by controlling the factors that escalate campaign costs. Measurescould include:

– Limits on spending – Shortened campaigns – Guaranteed access to media– Public financing – Making lobbying an open and

regulated activity

◆ Governments should promote equity andcompetition via the following measures:

– Balance the limits to expenditures withreduction of need for funds.

– “Democratize” donations. Limit large individualdonations and encourage small ones.

– Provide some form of public financing.– Strengthen political parties in their represen-

tation and participation functions.

Recommendations to civil society, includingprivate sector organizations and nongovernmen-tal organizations

◆ Companies should disclose political contri-butions in their annual reports.

◆ For adequate auditing, invest in training anddevelop auditors’ capacity to trace illicit money.

Jamaican businessman Earl Jarrett expresses the private sector’sviews on campaign and party finance regulation. He is seen herewith IDASA’s Richard Calland who urges voluntary disclosure bybusinesses.

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Laws must besimpleand clearandenforced.

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Points of Departure The group should bear in mind key messages


◆ Rule of law is weak in most countries in thehemisphere, and this weakness can complicateenforcement of even the best-written legislation.

◆ Enforcement can be direct/proactive (basedon auditing by officials) or indirect/passive(responding to complaints only).

◆ Enforcement can be formal (conducted bygovernment) or informal (conducted by civil society).

◆ Key elements of successful enforcementinclude (1) channeling donations and expendituresthrough registered bank accounts, (2) requiring thateach party, in order to register as a party, have aqualified treasurer who will be held accountable for violations of the law, (3) the existence of anoversight agency that conducts proactive checkingof accounts, and (4) the existence of a sanctionsregime.


Does it matter which institution is authorized to carry out enforcement? (electoral bodies, the judiciary, ombudsmen)

Some countries place their oversight within thejudiciary, some in the electoral branch, etc. Somehave the power of prosecution; others only refercases. Some have leaders appointed independently;others do not. Some have penal sanctions; othersonly administrative sanctions, and they may be subject to appeal. What difference do all theseinstitutional choices make? Are there powers ofinvestigation that enforcement bodies must have inorder to do their job?

What role should civil society groups and electionmonitors play to help with enforcement?

Civil society groups and election monitors,both domestic and international, have providedhuman resources to serve as watchdogs and collect

ENFORCEMENT

information. Though they lack enforcement powerother than moral suasion and public embarrassment,these resources may still be important.

Can alternative enforcement mechanisms beimplemented even where judiciaries are weak?

Mexico and Brazil have been developingenforcement mechanisms for campaign and partyfinance alongside judicial improvements. In theUnited States, although the judiciary is strong, thepartisan nature of the Federal Elections Commissionmay weaken enforcement. Steps may be taken tostrengthen enforcement even where judiciaries arenot yet strong, but the question is how to accomplish it.

Daniel Zovatto stresses the importance of independent enforce-ment institutions to CAF President Enrique Garcia (left) andformer Ecuadorean President Osvaldo Hurtado (right).

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Should enforcement bodies such as election admin-istrations be given prosecutorial power or at leastthe power to directly investigate and impose finesfor administrative infractions?


What forms of international cooperation will berequired in order to assure adequate investigationand prosecution?

Campaign finance is not purely a domestic issuebecause, legally or not, money can flow into campaigncoffers from overseas. Money can also be stored inoffshore bank accounts and hidden in numberedaccounts. Illicit contributions from drug money, etc.,can be laundered through third countries. So theinternational system will be needed to supportdomestic tackling of enforcement issues. People haveappealed to the U.S. government for help in accumulat-ing evidence and can use the Freedom of InformationAct to marshal evidence, but international cooperationmust go beyond bilateral efforts.

Can the Inter-American Democratic Charter beused to encourage compliance with finance regulations?

The charter states in Article 5, “The strengtheningof political parties and other political organizations isa priority for democracy. Special attention will bepaid to the problems associated with the high costof election campaigns and the establishment of abalanced and transparent system for their financing.”How can this be operationalized?

Should loans from the IDB, CAF, World Bank,IMF, and bilateral donors be conditioned on adequateenforcement of political financing regulations?

Conditionality is a controversial issue, as itimposes burdens that the neediest states are theleast able to meet. Still, conditionality has been suggested with respect to corruption, and nontrans-parent campaign finance that is poorly enforcedsurely permits corruption.


Opening RemarksThe working group began with presentations

on enforcement in Mexico and Brazil.The Mexican system offers an example of hyper-

regulation, in which campaign and party finance isgoverned by dozens of laws administered by manydifferent entities from federal down to local levels.It has a mixed finance system in which public fundsmust predominate, and those funds are substantial,creating a dilemma concerning how to practiceoversight in their use. Mexico is working to create aculture of accountability: appointing auditors, institu-tionalizing political party accounting systems, anddemanding disclosure and regular submission ofreports. However, it also relies on citizen denuncia-tions of violators. Denunciations require offeringwhistle-blowers anonymity. The Friends of Foxinvestigation has suffered from lack of access tobank accounts. Although vote-buying is illegal, citi-zens do not denounce it, suggesting that publiceducation is needed to teach citizens the law andtell them how complaints will be processed.

In Brazil, by contrast, there is no direct publicfunding, so corporate and individual contributionscomprise the most important sources of finance.Comprehensive provisions for disclosure are thehallmark of the system, with sanctions up to 10times the amount spent in excess of limits. There are publicly financed access to the media and pro-hibitions on privately purchased television ads.Violation of campaign publicity rules may lead tojudicial rulings that can include disqualifying theparty. The highest number of cases brought beforethe courts pertain to lack of party compliance withthe law rather than any disagreement with it, andjudges can give relatively prompt rulings so thatconsequences of violations are felt during the campaign.

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Diagnosis of the ProblemParticipants engaged in a wide-ranging discussion

concerning enforcement and the problem ofimpunity. They reached consensus on the most pertinent deficits in enforcement systems, including:

◆ An absence of laws in some countries, andconversely, in others a set of laws that are overlycomplex and therefore difficult to enforce.

◆ Lack of autonomy and resources for enforcement agencies.

◆ Absence of monitoring organizations, including civil society watchdogs.

◆ Political parties’ and candidates’ low capacityfor compliance with laws and regulations, includinga lack of resources for proper accounting and fewcodes of conduct.

◆ Rules that focus on sanctions rather thanincentive systems to encourage party and candidatecompliance.

◆ Permissive societies in which there is littleincentive for citizens to denounce wrongdoing.

RecommendationsA spirited discussion of alternative practices

and policies ensued. Participants debated the valueof prosecuting small violations, employing stingoperations, and pursuing anonymous accusations,expressing concern for the effects such policiescould have on development of a democratic civicculture. They questioned whether even firm andwell-implemented enforcement policies couldaddress the special problem posed in some countriesby clandestine contributions, particularly wheredrug trafficking is present. Ultimately, however,they reached consensus on a set of recommendationsfor improving enforcement.


◆ OAS member states should encourage ratifi-cation of the Inter-American Convention AgainstCorruption.

◆ In order to advance in deepening democracy,all countries should agree to cooperate and shareinformation necessary for the enforcement of politicalfinance laws (subpoena of documents and access tobank accounts, etc.). That might be an amendmentto existing documents (the excellent foundationprovided by the Inter-American DemocraticCharter, OAS Convention Against Corruption) or as an additional statement.

◆ The international community should supportthe efforts to include in the OECD ConventionAgainst Bribery in International BusinessTransactions some additional text prohibiting for-eign bribery of party officials.

◆ Election observation missions should examinerules and regulations related to political financeand compliance.

Former Costa Rica President Miguel Ángel Rodríguez shareshis thoughts with chair Michele Schimpp and others in theenforcement working group.

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◆ Multilateral lending institutions shouldinclude political finance as an element within theirrule of law and anti-corruption programs.

◆ Bilateral and multilateral organizationsshould expand efforts to help election managementbodies, political parties, campaign contributors,and election monitors comply with and enforcepolitical finance laws.

Recommendations to governments, notingwhether this is a recommendation to the executivebranch or to the legislature

Without rule of law, any efforts to enforce control on political finance will be only partiallyeffective. Efforts to strengthen the rule of law arecritical and need to be sustained. In the past, toolittle attention has been given to whether lawswould be enforceable, and this inattention has contributed to the problem of impunity in financing politics.

To the drafters of legislation and regulations◆ Laws must be simple and clear and enforceable.

Immediate and public disclosure is the cornerstoneof political finance control.

◆ An effective enforcement system has to bebased on incentives and sanctions. In order to beeffective, sanctions have to fit the offense. A rangeof sanctions, from engaging in remedial action tofines to criminal prosecution and denying office,should be considered.

◆ Candidates, political parties, and contributorsshould be equally subject to enforcement.

To executives and legislators◆ The institutions responsible for enforcement,

whether electoral management bodies or the judici-ary, should be independent, nonpartisan, andequipped with sufficient human and financialresources and authority to enforce the countries’laws. This authority ranges from monitoring toinvestigating to prosecuting. The capacity ofenforcement bodies should include a range of effective and adequate instruments such as subpoenapowers, whistle-blower protection, and access tobank accounts.

To electoral bodies◆ Equally important is the effort of electoral

bodies and civil society to monitor and acknowledgecompliance.

Recommendations to civil society, includingprivate sector organizations and nongovernmentalorganizations

◆ Political parties and private sector organizationsshould develop codes of conduct, statements ofethics that commit themselves to the practice oftransparency in donations and expenditures.Political parties and private sector organizationsshould devote adequate resources to building theircapacities for complying with political finance rulesin an accurate and timely fashion.

◆ For civil society and media, disclosure is anessential precondition for monitoring compliancewith political finance rules. By their nature, civilsociety and media have a comparative advantage inindependent monitoring of contributions andexpenditures, generating information and publicdebate, educating the public, and offering publicrecognition for those who comply with the rules.These efforts help re-enforce and complement thework of those public institutions responsible forenforcement.

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Politics matters forimprovingthe lives ofall of our citizens.

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Concluding Statem

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The Carter Center convened the conference FinancingDemocracy: Political Parties, Campaigns, andElections in collaboration with the Organization ofAmerican States’ Inter-American Forum onPolitical Parties. A group of government and politicalparty leaders, prominent scholars, policy experts, privatesector representatives, civil society leaders, media professionals, and international organizations fromthe Western Hemisphere met for two and one-halfdays in plenary sessions and working groups to discussthe dilemmas of political financing. They offered

CONCLUDING STATEMENT BY THECOUNCIL OF PRESIDENTS AND PRIME MINISTERS OF

THE AMERICAS

their advice to the Carter Center’s Council ofPresidents and Prime Ministers of the Americas, agroup of 35 leaders, 10 of whom participated in theconference and another one of whom sent a represent-ative. Based on the group’s findings, the council nowoffers the following conclusions and recommendations.

I. INTRODUCTION

Politics matters for improving the lives of allof our citizens. Political parties are a vitalcomponent of our democratic politics, and

they need money to function. Largely because ofmany improper practices in financing campaignsand corruption scandals, politics unfortunately hasbecome a discredited activity to many people.Confidence in democratic institutions is falling.We need to reverse this perception. We need toinvest in the capacity of our political parties toinform and inspire citizens, not spend millions on negative campaign ads. We need to encourageparticipation of all citizens, not just the richest orthose looking for special favors. We need to findways to restore confidence in democratic institutionsby ensuring clean, fair, and competitive electionsand governance.

The hemisphere is making progress, but notwith the necessary pace and energy. Mandates fromthe Quebec Summit of the Americas led to the creation of an Inter-American Forum on PoliticalParties to address these issues, and through thatforum the OAS has begun an effort to catalogueexisting legislation and practice. Citizen watchdoggroups are monitoring campaign expenditures in anattempt to hold their leaders accountable. We areready to address the next stage of regularizing, moni-

Former Chile President Eduardo Frei consults preparatorypapers. He is accompanied by former Honduras PresidentCarlos Roberto Reina.

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toring, and enforcing standards of political financingto reduce corruption, promote citizen participation,and enhance political legitimacy of our democraticinstitutions.

There is no single formula on political financingthat will solve the problems permanently and forall countries. Indeed, the struggle to improve thedemocratic process is a continuous one, requiringthe active involvement of all of civil society. Basedon work done by the OAS Inter-American Forumon Political Parties, International IDEA,Transparency International, USAID, and others,we have identified a set of principles for politicalfinance. We urge our governments to endorsethese principles and our citizens to watch care-fully to ensure that they are implemented.

We strongly encourage the development of ademocratic political culture, moral commitment, andethical standards that will provide an atmosphereconducive to the implementation of these measures.

II. PRINCIPLES FOR POLITICAL FINANCING

Rules on financing of politicalparties and campaigns will differ foreach national context, but theyshould all promote the followingbasic principles:

PRINCIPLES◆ Fostering stronger repre-

sentative and accountable politicalparties: In their representation andparticipation functions, political parties need access to adequateresources to function effectively and ethically.

◆ Ensuring effective electoral competition:Parties and candidates must have a fair chance tocampaign for their ideas; access to the media andadequate resources is crucial. Unfair incumbencyadvantages should be addressed, and the use ofstate resources that are not made available to allcandidates in the electoral campaign should be prohibited.

◆ Promoting political equality and citizenparticipation: Citizens, rich or poor, must haveequal opportunity to participate in the politicalprocess and to support candidates or parties oftheir choice. Financial contributions are a legitimateform of support. Inequalities related to gender,race, ethnicity, or marginalized populations shouldbe compensated. The principle of one person, one vote must be preserved.

◆ Preserving the integrity of the electoralprocess through transparency: Voters need to beempowered to choose as autonomous and informedcitizens, free from pressures, intimidation, orseduction through economic benefits and need tobe informed about the resources and support forcandidates and parties.

Former St. Lucia Prime Minister John Compton (left) and former Barbados PrimeMinister Lloyd Erskine Sanford (right) share a light moment with Jamaican Ministerof National Security Peter Phillips.

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◆ Enhancing accountability and eliminatingcorruption: Elected officeholders should representtheir constituents as a whole and be free fromfinancial dependence on a few. Donations should notbe used to buy access to politicians or civil servants,for personal favors (contracts, tax breaks, etc.), orfor policy favors.

controlling the factors that escalate campaign costs.Measures could include limiting spending; shorten-ing campaigns; providing equitable access to themedia, including free media time to the candidatesduring prime time; banning or capping paid politicaladvertising; promoting public financing; eliminatinginflammatory ads; and adopting and enforcing prohibi-

tions against vote-buying.◆ Improve transparency

and reduce the influence ofmoney by requiring disclosureof donations and expenditures.Parties and candidates shouldbe required to publicly discloseitemized donations above certainamounts and their sources,including in-kind contributions,before and after the electionsso that future undue influenceby the donor could be assessed.

Parties and candidates should make public auditedreports of itemized expenditures on a regular basis,including in-kind expenses, with all funds flowingthrough identified bank accounts managed by specified individuals who can be held accountable.Media should be required to disclose standardadvertising rates, report discounts as political dona-tions, and maintain advertising rates that do notexceed the commercial rates used between campaigns.Campaign contributions from foreign sourcesshould be prohibited, with the exception of citizensliving abroad, if allowed by national law. Campaignsand candidates should refuse donations fromorganized crime or drug trafficking.

◆ Promote equity, participation, and compe-tition. Mixed funding systems with a substantialpublic component are recommended. Public fundsshould be provided as a substitute for or a comple-ment to private donations at all phases of thepolitical and electoral process. Public funding for

◆ Strengthening rule of law and enforcementcapacity: There must be assurances of timely justiceand an end to impunity in abuses of politicalfinancing. The enforcement of political finance lawsand regulations requires the existence of independentoversight authorities and an effective system ofsanctions to end impunity.

We recognize that each country has a differentstarting point, but all countries should move at anappropriate pace to achieve the following objectivesand tools, derived from the principles.

OBJECTIVES AND TOOLS◆ Invest in the democratic character of parties

rather than long or negative campaigns. Thepressures of fund raising should be reduced by

At the close of the conference, members of the Council ofPresidents and Prime Ministers of the Americas hold apress conference and release a concluding statement ofrecommendations.

Concluding Statem

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ongoing party activities and campaigns should beallocated by a mix of proportional rules and flatsubsidies to all parties that meet reasonable thresh-olds. Large individual donations should be limited;small donations that the average citizen can affordshould be encouraged, perhaps by offering tax credits;and voluntary media standards for balanced mediacoverage should be developed.

◆ The institutions responsible for enforcementshould provide both incentives and sanctions.Oversight entities, whether electoral management

and include subpoena powers, whistle-blower protection, and access to bank accounts. Sanctionsshould include remedial actions, fines, criminalprosecution, and denial of office and/or futureaccess to public funding.

III. SUPPORTIVE MEASURES

In improving the financing of democracy, citizens’groups and international organizations have animportant role to play in helping achieve theseprinciples. We urge the following:

Roles for InternationalOrganizations

◆ The OAS Inter-American Forum onPolitical Parties, other inter-national organizations,multilateral banks, and universities should sponsorresearch to help us betterunderstand the contributingfactors of campaign costs,the effectiveness of poten-tial tools to control thosecosts, and the impact ofnew technology such as theInternet and direct televisionprogramming. For example,conflicting informationexists with regard to whetherand how fast campaign costsare rising relative to GDP

and what the sources may be: television and radioadvertising costs in modernizing campaigns; taxationsystems; patronage politics and vote-buying inmore traditional campaigns; internally democratizingparties; length of the campaign; the nature of theelectoral system.

bodies or judicial organs, should be independent,nonpartisan, and equipped with sufficient humanand financial resources and authority to enforce the country’s laws. Without this, none of the other measures suggested here will be effective.Enforcement capacity should be developed foreffective monitoring, investigating, and prosecuting

Former Dominican Republic President Leonel Fernández listens to the plenary presentationswith Peruvian civil society leader Percy Medina.

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◆ International party foundationsand other organizations should continueto provide training and education forparty members and electoral workers, but only in a manner consistent withnational laws.

◆ Governments should cooperate tohelp in tracing the international moneytrail of illicit political donations throughoffshore tax havens, money laundering,and organized crime and cooperate witheach other to bring violators to justice.International assistance in training andcapacity-building to trace illicit money isneeded. Governments should codify thesetypes of cooperation in internationalagreements. Governments should alsoamend money-laundering legislation torequire disclosure of cash transactionsover a specific amount.

◆ International agreements such asthe OECD Convention Against Briberyand the Inter-American Convention

Against Corruption should include corollaries oradditional protocols prohibiting the bribery of polit-ical parties and candidates and prohibiting foreigndonations when they are illegal in domestic law.

◆ International election observer missionsshould incorporate political finance as an elementto be monitored.

◆ Multilateral lending institutions shouldinclude political financing as an element withintheir rule of law and anti-corruption programs.Bilateral and multilateral organizations shouldexpand efforts to help election management bodies,political parties, campaign contributors, and electionmonitors to comply with political finance laws.

◆ Hemispheric governments should adopt the Principles on Political Financing at the nextSummit of the Americas as a concrete measure to implement Article 5 of the Inter-AmericanDemocratic Charter.

◆ Nongovernmental organizations such as The Carter Center and Transparency Internationalshould work in collaboration with multilateralorganizations such as International IDEA to developa set of standards and benchmarks to assessprogress on implementing these principles.

◆ The OAS and other organizations active inthe region should provide assistance to memberstates to apply the principles adopted, in the formof best practices and model laws and with advicefrom the OAS Special Rapporteur for Freedom ofExpression and other entities.

Alonso Lujambio from Mexico’s highly praised Federal Elections Institute (left)shares Mexico’s experience on enforcement issues with polling expert MiguelBasáñez.

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Roles for Civil Society and Political Parties◆ Businesses should voluntarily adopt codes of

conduct to disclose donations where laws do notyet exist requiring them to do so or to disclosemore fully where laws require only narrow disclosure.

◆ Political parties and candidates should volun-tarily adopt codes of conduct to fully disclosedonations and expenditures where laws do not yetexist requiring disclosure or to disclose more fullywhere laws require only narrow disclosure. Civilsociety organizations can encourage such codes.

◆ The media should voluntarily adopt a codeof ethics and norms that guarantees equitable treat-ment to the parties and candidates in electoralcampaigns.

◆ Civil society organizations and media shouldhave independent and critical roles in monitoringcampaign finance rules and publicizing violations,including monitoring expenditures and media coverage of campaigns, generating information, and encouraging public debate.

◆ Watchdog groups should explore the potentialto use access-to-information laws to request infor-mation on donations and expenditures frompolitical parties and corporations and to ensuretransparency in the use of state resources.

◆ So that the media may support enforcement,expose corruption, and produce transparency, libellaws should be amended to follow the principles laiddown in the New York Times vs. Sullivan case, insultlaws should be repealed, and the assault or murderof journalists should be investigated immediately andprosecuted to the fullest extent of the law.

Signed by:

Jimmy Carter Former president of the United States of America

John Compton Former prime minister of St. Lucia

Leonel Fernández Former president of the Dominican Republic

Eduardo FreiFormer president of Chile

Osvaldo HurtadoFormer president of Ecuador

Luis Alberto LacalleFormer president of Uruguay

Andres Pastrana ArangoFormer president of Colombia

Carlos Roberto Reina Former president of Honduras

Miguel Ángel Rodríguez Former president of Costa Rica

Lloyd Sandiford Former prime minister of Barbados

Cristiana Chamorro representing Violeta Chamorro Former president of Nicaragua

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Dissem

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Carter Center staff have been actively dissem-inating the conference conclusions. Webegan immediately with a public session in

Atlanta, reporting on the conference just hours afterit concluded, as part of the Conversations at TheCarter Center public education series. FormerUruguay President Luis Alberto Lacalle, formerDominican Republic President Leonel Fernández,and media foundation leader Cristiana Chamorro,

standards and benchmarks for measuring the extent to which campaign and party finance rules are practiced and are democratic.

Our staff visited Washington to review the conference conclusions with key nongovernmentalorganizations and OAS ambassadors. We visited theOAS on March 26, 2003, to share our findings withthe Consultative Group of the Inter-AmericanForum on Political Parties. On March 28, 2003, wejoined other civil society groups affiliated with theOAS to provide input to the next Summit of theAmericas. We then made available our conferencefindings directly to the Summit ImplementationReview Group on April 2, 2003, urging that politicalfinance be considered as an important element ofgovernance at the extraordinary summit planned forfall 2003. In June, the Center carried the message tothe OAS General Assembly meeting in Santiago, Chile.

The Council of Presidents and Prime Ministersof the Americas will help to disseminate their con-ference conclusions. Many of them write opinionpieces and offer interviews to media that provideopportunities for underscoring these messages. Inaddition, they visit with incumbents and other former leaders with whom they can share theirthinking. With The Carter Center, the councilmembers present at the conference agreed to host ameeting specifically to develop recommendations tostrengthen implementation of the Inter-AmericanDemocratic Charter, and the conference conclusionson campaign and party finance will provide animportant baseline for that meeting.

We hope this conference has made a solid contribution to regional efforts to implement theDemocratic Charter, including initiatives to strengthenthe democratic character of political parties andreform campaign and party finance so that it is transparent and sufficient for a healthy democracy.

FOLLOW-UP AND DISSEMINATION ACTIVITIES

representing her mother, Violeta Barrios de Chamorro,who was president of Nicaragua, reflected on the con-ference findings at an open session. Drawing on theirexperiences in running newspapers, competing in election campaigns, and raising funds for their parties,these leaders focused on the realpolitik of campaignfinance. They considered how the problems exploredin the working groups were made manifest in theircountries and how the principles set forth at the conclusion of the conference might be implemented.

In scholarly meetings of the Latin AmericanStudies Association and the International PoliticalScience Association, Americas Program staff membersreviewed the conference findings and encouragedmuch-needed further research. We are working todraw on networks of informed scholars from acrossthe globe who can help in the development of

IDEA representative Daniel Zovatto meets with AmericasProgram Director Jennifer McCoy.

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Agen

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AGENDA

Monday, March 17, 2003Welcome and Introduction

Presentation of the panel by Dr. Shelley McConnellWelcome by former U.S. President Jimmy Carter Welcome by OAS Secretary General César GaviriaIntroduction to the conference theme by Dr. JenniferMcCoy

First Plenary Former Barbados Prime Minister Lloyd Erskine

Sandiford moderating◆ Financing Democracy in the Context of Poverty

Elena Martinez, UNDP ◆ Strengthening Political Parties

Elizabeth Spehar, OAS ◆ Principles Underlying Campaign Finance: What Is

at Stake? Burt Neuborne, New York University ◆ Campaign Finance Law and Practice in Latin

America Daniel Zovatto, IDEA

DinnerKeynote speakers hosted by King & Spalding law firm◆ Congressman Christopher Shays, R-Conn.◆ Minister José Miguel Insulza, Chile◆ Vice President Carlos Mesa, Bolivia

Tuesday, March 18, 2003

Second PlenaryFormer Chile President Eduardo Frei moderating◆ Calling in Favors? Post-election Demands on Government by Campaign Donors

Larry Noble, Center for Responsive Politics, United States◆ Dilemmas Facing the Business Sector

Alexandra Wrage, Northrup Grumman International, United States◆ The Media: Balancing Roles as Business Entities and Public Interest Agents

Ricardo Claro, Megavision TV, Chile ◆ Civil Society’s Role in Measuring and Monitoring Campaign Spending

Christian Gruenberg, Poder Ciudadano, Argentina ◆ What We Think We Know About Campaign Finance

Michael Pinto-Duschinsky, United Kingdom

President and Mrs. Carter greet Georgia Governor SonnyPerdue at a cocktail party hosted by Atlanta, Georgia—Gateway to the Americas.

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Working Groups: DiagnosisParticipants will discuss the various problems related to their assigned topic, based on the working

group guidelines and any other questions they feel are relevant. By the end of the session, the rapporteurwill have a short assessment of the problem.

◆ Working Group #1—The Role of the Media◆ Working Group #2—Public, Private, and Mixed Systems◆ Working Group #3—Disclosure and Limits ◆ Working Group #4—Enforcement

LuncheonPanel presentation by Gene Ward, USAID, and Ellen Mickiewicz, Duke

University, introducing publications on disclosure and the media in elections.Former Costa Rica President Miguel Ángel Rodríguez moderating.

Working Groups: Exploring AlternativesParticipants reconvene to discuss policy options at the international,

state, and civil society levels, submitting a written list of recommendations.

Reception Georgia Gov. Sonny Perdue will make brief remarks on behalf of

Atlanta, Georgia—Gateway to the Americas. Presidential Museum open, featuring a special exhibit of portraits of every U.S. president. Gardens open and in spring bloom.

Wednesday March 19, 2003

Third PlenaryReport-outs and discussion of the draft statementFormer U.S. President Jimmy Carter presiding

Council Luncheon Council members finalize the concluding statement of the conference.

Press ConferenceCouncil members present the concluding statement and respond to questions.

Public OutreachConversations at The Carter Center, an evening panel presentation by former Uruguay President

Luis Alberto Lacalle, former Dominican Republic President Leonel Fernández, and Cristiana Chamorro,representing former Nicaragua President Violeta Chamorro. Hosted by Shelley McConnell.

Duke University’s Ellen Mickiewiczspeaks to luncheon guests aboutthe changing role of the media inelections as she introduces theSpanish language edition ofTelevision and Elections.

Agenda

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COUNCIL MEMBERS

Jimmy Carter, 39th President of the United Statesof America, Chairman of The Carter Center, andCouncil Chair

John Compton, Former Prime Minister of St. Lucia, Legal Consultant

Leonel Fernández, Former President of theDominican Republic, Global Foundation forDemocracy and Development

Eduardo Frei, Former President of Chile

Osvaldo Hurtado, Former President of Ecuador,Corporación de Estudios para el Desarrollo

Luis Alberto Lacalle, Former President ofUruguay, Chairman, Partido Nacional

Andres Pastrana Arango, Former President of Colombia

Carlos Roberto Reina, Former President ofHonduras, Bufete Reina

Miguel Angél Rodriguez Echeverría, FormerPresident of Costa Rica, J.B. and Maurice C.Shapiro Visiting Professor of International Affairs,George Washington University

Lloyd Erskine Sandiford, Former Prime Ministerof Barbados, Distinguished Fellow in the SirArthur Lewis Institute of Social and EconomicStudies at the University of the West Indies, CaveHill Campus, Barbados

POLITICAL LEADERS

José Miguel Insulza, Chile, Minister of the Interior

Carlos Mesa, Bolivia, Vice President

Peter Phillips, Jamaica, Minister of National Security

José Antônio Dias Toffoli, Brazil, Legal Counselto the Chief of Staff of the President of the Republic

LIST OF PARTICIPANTS

PARTICIPANTS

María Teresa Almarza, Venezuela, Public Affairsand Communications Director, The Coca-ColaCompany

Augusto Álvarez-Rodrich, Perú, Director, Perú 21 Newspaper

Jaime Aparicio, Bolivia, Ambassador to theUnited States of America, Bolivian Embassy

Miguel Basañez, México, President, Global QualityResearch Corporation

Michael Beaulieu, United States of America,Special Adviser to the Secretary-General, OAS

José Antonio Dias Toffoli, legal counsel to the chief of staff ofthe president of the Republic of Brazil, networks with AmericasProgram Associate Director Shelley McConnell.

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Gerardo Blyde, Venezuela, Diputado, Primero Justicia

Hans-Joerg Brunner, Germany, Consul General,German Consulate in Atlanta

Liza Caceres, Puerto Rico, Regional Manager ofCorporate Communication, Latin America, Delta Airlines

Edmund Cain, United States of America, Director,Global Development Initiative, The Carter Center

Rodrigo Calderón, México, Vice President for Public Affairs and Communication, The Coca-Cola Company

Richard Calland, South Africa, Executive Director,Open Democracy Advice Center

Jorge Canelas-Sáenz, Bolivia, Director, Semanario Pulso

Rosalynn Carter, United States of America,Former First Lady and Vice Chair of The Carter Center

Kevin Casas, Costa Rica, InternationalConsultant, International Foundation for Electoral Systems

Jorge del Castillo, Peru, Secretary General, Partido Aprista Peruano

Cristiana Chamorro, Nicaragua, ConsejoDirectivo, Fundación Violeta Barrios de Chamorro

Jorge Claissac, Chile, Adviser, Ministry of Interior

Oliver Clarke, Jamaica, Chairman and ManagingDirector, The Gleaner Company Limited

Ricardo Claro, Chile, Chairman, Megavision

Jack Correa, Brazil, Director, Strategic Affairs, The Coca-Cola Company

Chuck Costello, United States of America, Former Director, The Democracy Program, The Carter Center

Edmundo Cruz, Peru, Co-editor, La República Newspaper

Henry Day, Peru, Director, Repsol YPF Comercial

Hatuey de Camps Jiménez, Dominican Republic,President, Partido Revolucionario Dominicano

Humberto de la Calle Lombana, Colombia, Consultant

Carlos de Leon, Guatemala, Fiscal General,Ministerio Público

Journalists such as Miguel Rivadeneira from Radio Quito (left)investigate and report on campaign finance abuses.

Pedro Pablo Diaz, Chile, Director, UniversidadJesuita Alberto Hurtado

Stephen Donehoo, United States of America,Managing Director, Kissinger McLarty Associates

Jorge Fernández, United States of America, Latin American Director, Delta Airlines

Participants

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Rafael Fernández Quiros, México,Communications Manager, The Coca-ColaCompany

Carol S. Fuller, United States of America,Counselor for Political and Economic Affairs, U.S.Mission to the Organization of American States

L. Enrique García, Bolivia, President & CEO,Corporación Andina de Fomento

César Gaviria, Colombia, Secretary-General,Organization of American States

Bruce Golding, Jamaica, Senator, Jamaica Labour Party

John Graham, Canada, Chair, CanadianFoundation for the Americas

Steven Griner, United States of America, SeniorSpecialist, Organization of American States

Christian Gruenberg, Argentina, Director,International Relations, Poder Ciudadano

John Hardman, United States of America,Executive Director, The Carter Center

Troy Hatch, United States of America, SeniorOperations Counsel, BellSouth International

Linda Hemby, El Salvador, Regional Coordinator, Probidad

Matthew Hodes, United States of America, Director, Conflict Resolution Program, The Carter Center

Edmundo Jarquín, Nicaragua, Division Chief,Inter-American Development Bank

Earl Jarrett, Jamaica, General Manager, JamaicaNational Building Security

Hernán Lanzara, Peru, Global CommunicationsManager, The Coca-Cola Company

Gerardo Le Chevallier, El Salvador, RegionalDirector, Latin America and Caribbean Programs,National Democratic Institute

Axel Leblois, France, President, World Times, Inc.

Christine Leblois, France, Manager, World Times, Inc.

Chuck Lewis, United States of America, ExecutiveDirector, Center for Public Integrity

Adam Lioz, United States of America, DemocracyAdvocate, U.S. Public Interest Research Group

Alonso Lujambio, México, Consejero Electoral,Instituto Federal Electoral

Ronald MacLean-Abaroa, Bolivia, President,Poder Vecinal

Elena Martinez, Cuba, Regional Director, LatinAmerica and Caribbean Bureau, United NationsDevelopment Programme

Shelley McConnell, United States of America,Associate Director, Americas Program, The Carter Center

Jennifer McCoy, United States of America,Director, Americas Program, The Carter Centerand Georgia State University Professor of Political Science

Danny L. McDonald, United States of America,Commissioner, Federal Elections Commission

Thomas McLarty, United States of America,President, Kissinger McLarty Associates

Robin McLay, Canada, Director, Governance,Human Rights and Social Policies Division,Canadian International Development Agency

Percy Medina, Peru, General Secretary, Transparencia

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Ellen Mickiewicz, United States of America,Director, DeWitt Wallace Center forCommunications and Journalism, Terry SanfordInstitute of Public Policy at Duke University

Arnauld Miguet, United Kingdom, Lecturer inEuropean Politics, The London School of Economics

Trevor Munroe, Jamaica, Senator, People’sNational Party, and Professor of Government andPolitics, University of the West Indies, Mona

Burt Neuborne, United States of America, John Norton Pomeroy Professor of Law, New York University

Laura Neuman, United States of America, Senior Program Associate, Americas Program, The Carter Center

Larry Noble, United States of America, ExecutiveDirector and General Counsel, The Center forResponsive Politics

Andres M. Oppenheimer, United States ofAmerica, Latin American Correspondent,The Miami Herald

Beatriz Paredes, Mexico, Diputada, PartidoRevolucionario Institucional, Camara de Diputados

Robert A. Pastor, United States of America, Vice President of International Affairs, American University

Henry Pease García, Perú, Congresista, Congresode la República del Perú

Roxana Pereda, Mexico, Public Affairs andCommunications, The Coca-Cola Company

Teodoro Petkoff, Venezuela, Director, Tal Cual Newspaper

Silke Pfeiffer, Germany, Regional Director, LatinAmerica, Transparency International

Michael Pinto-Duschinsky, United Kingdom,Senior Research Fellow, Brunel University

Paul S. Reichler, United States of America,Managing Partner, Foley Hoag LLP

Juan Rial, Uruguay, Consultant, Peithos

Miguel Rivadeneira, Ecuador, News DirectorEcuadoradio, Radio Quito

Juan José Rodil Peralta, Guatemala, Adviser tothe Fiscal General, Ministerio Publico

Marta Pasos de Sacasa, Nicaragua, Vice President,Televicentro de Nicaragua, S.A., Canal 2

Angelita Sandiford, Barbados, Deputy Principal,Barbados Community College

Andrea Sanhueza Echeverría, Chile, ExecutiveDirector, Corporación PARTICIPA

Michele Schimpp, United States of America,Senior Election Adviser, USAID

Elizabeth Spehar, director of the OAS Unit for Promotion ofDemocracy, exchanges views with Bolivian Vice PresidentCarlos Mesa.

Participants

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Christopher Shays, United States of America,Congressman, U.S. House of Representatives

Adele Simmons, United States of America, ViceChair, Chicago Metropolis 2020

Frederick B. Slattery, Canada, Former SeniorExecutive, Elections Canada

Richard Soudriette, United States of America,President, International Foundation for Electoral Systems

Elizabeth Spehar, Canada, Executive Coordinator,Unit for the Promotion of Democracy of theOrganization of American States

Eduardo Stein Barillas, Guatemala, Consultant,Organización Internacional para las Migraciones

Gordon Streeb, United States of America,Associate Executive Director, Peace Programs, TheCarter Center

Luis Verdesoto, Ecuador, Consultant to theUnited Nations and the Universidad AndinaSimon Bolivar

George Vickers, United States of America,Regional Director, Latin America, Open Society Institute

Gene Ward, United States of America, SeniorDemocracy Fellow, USAID

Alexandra Wrage, United States of America,Senior Counsel International, Northrop Grumman International

Nelly del Carmen Yánez, Chile, Journalist,Political Sector, Diario El Mercurio

Michelle Zebich-Knos, United States of America,Professor of Political Science, Kennesaw StateUniversity

Andreas Zimmer, Germany, Consul General,German Consulate in Atlanta

Daniel Zovatto, Argentina, Senior Executive,International Institute for Democracy and Electoral Assistance

Carter Center conferencesdraw news coverage.

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Background P

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There areno perfectsystems but there is better policy.

Background Papers

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INTRODUCTION

In the past decade, South Africa has reinventeditself. From the darkness of apartheid injusticeto the enlightenment of Nelson Mandela’s

democratic governance, South Africa’s transitionhas set a shining example for its own continent andbeyond. At its heart lies a remarkable constitutionthat enshrines a bill of rights and creates a frameworkfor open, accountable government.

Also included in the new constitution was themandate to establish a broad right to access to infor-mation, related to but separate from the right tofreedom of expression. In 2000, the South AfricanParliament ratified the progressive Promotion ofAccess to Information Act (POATIA). This right toinformation law has been utilized creatively to “fill”other transparency gaps, including the absence ofbroad political financing and disclosure laws. Forexample, last year the Institute for Democracy inSouth Africa (IDASA), South Africa’s largest andpre-eminent democracy organization, under the auspices of POATIA, requested financial recordsrelating to donations from all political parties andthe 13 largest private corporations.

South Africa’s struggle to further transparencyin the financing of democracy is not unique. Othercountries, including those in the Western Hemisphere,are now similarly seeking to perfect their systemsand to fill the gaps. As with South Africa, in theabsence of effective disclosure laws, new access-to-information legislation may serve as the channel for increasing accountability and tempering thecontaminating potential of shrouded political

financing in theAmericas. This paperwill examine the useof modern access-to-information laws andconstitutionally pro-vided access toinformation rights tocompel political partyand campaign financ-ing disclosure inSouth Africa and thepotential applicabilityin Latin America andthe Caribbean.

BACKGROUNDThe South African

government attemptedto build a new cultureof accountability after the transition to democracyin 1994. Naturally for an authoritarian regime, theapartheid-era government was both secret and

1 Laura Neuman is the senior program associate in the CarterCenter’s Americas Program. Formerly, she practiced law inWisconsin for six years, representing persons under the poverty line,specializing in public benefits and disability law.

2 Richard Calland is the executive director of the Open DemocracyAdvice Centre, Cape Town, South Africa, and the program managerof the Political Information and Monitoring Service at the Institute forDemocracy in South Africa. Formerly, he practiced law at the LondonBar for seven years, specializing in public and human rights law.

The authors wish to thank Alex Little for his assistance with designingthe disclosure diagrams.

COMPELLING DISCLOSUREOF CAMPAIGN CONTRIBUTIONS

THROUGH ACCESS -TO-INFORMATION LAWS:The South African Experience and Relevance for the Americas

Laura Neuman1 and Richard Calland2, March 2003

Americas Program SeniorProgram Associate LauraNeuman co-authored a back-ground paper on access toinformation as a tool for obtaining disclosure.

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corrupt, endemically so, especially in the so-called“Bantustan” states that it established in eight differentpockets of South Africa. Despite an inevitablehangover from this period of history, the SouthAfrican government has made valiant attempts todevelop the necessary institutional framework tocontrol corruption.

Nevertheless, a great lacuna still exists, exposed by a number of scandals that illustrate the potentiallycontaminating effect of secret donations on demo-cratic politics.

In 1999 South Africa entered into its largest-evercontract, in this case for arms, with five different foreign suppliers. The overall deal, costing around$10 billion, attracted huge controversy and a greatdeal of scrutiny following a wide range of allega-tions of corruption, many of which were laterverified by the joint investigating team’s report(published in November 2001). One of the allegationsthat went unproven to the grave of the formerMinister of Defense Joe Modise was that a donationof $10 million from British Aerospace, one of thesuccessful main contractors, directed to a fund forveteran members of the liberation army of the rulingAfrican National Congress (ANC) was, in fact, adirect donation to the party itself. In 2002, another political party contribution scandal broke when it emerged that a German fugitive from justice,Jurgen Harksen, who was fighting extradition toGermany from South Africa, had made several cashdonations to the Democratic Alliance (DA), which,at that time, was part of a ruling alliance in theWestern Cape. This year, additional evidence ofpurchasing influence in policy-making by secret private donations has surfaced in connection witha large development in the Western Cape province.In this case, the provincial minister for the environ-ment, David Malatsi, accepted a large donation tothe National Party days before granting permissionfor the development, in which the donor would

have a large commercial stake. Malatsi was suspend-ed from the party pending an internal investigationand in February was arrested by the elite seriouscrime unit, The Scorpions.

As related in the above examples, unregulatedand secret contributions can increase the risk ofcorruption and influence trafficking in public contracting, concessions, and government decision-making. Additionally, the electorate is deniednecessary knowledge of the relationship betweenpolitical parties and its donors, thus limiting itsability to evaluate these associations and their influence on politics.

Countries have adopted a wide range ofresponses to the potential threat of opacity and corruption generated by private donations. “InLatin America, as in many European politicalregimes, public financing was opted for in order to circumvent or diminish the influence of specialinterest groups and of de facto forces in the carryingout of partisan operations.”3 In other countries, thefocus has been on financing limitations and strictdisclosure. Unfortunately, regardless of the systemin place, there still remains a wide chasm betweenthe goals of transparency and the realities of partyand campaign financing.

Civil society groups have tried to breach thisdivide by comparing completed campaign financingdisclosure forms with estimated expenditures, suchas that spent on publicity and media, looking forpotential discrepancies.4 Others, such as the case ofSouth Africa, have compared reported income toreported donations: in other words, comparingincome to income. In all circumstances, however,

3 Comparative Study of the Legal and Practical Characteristics of theFunding of Political Parties and Electoral Campaigns in LatinAmerica, Daniel Zovatto, Handbook of the Funding of PoliticalParties and Electoral Campaigns, IDEA, 2000, p. 11.

4 Christian Gruenberg, “Políticos Ricos y Riesgos Políticos:Indicadores del Gasto en el Financiamiento de las CampañasElectorales,” presented at Participa Debate, August 2002.

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modern access to information laws may serve as auseful tool to compel disclosure or enhance diffusionof information.

DEBATE ON DISCLOSUREOF PRIVATE DONATIONS

Although the advantages of political party dis-closures seem clear, there remains a debate over theappropriateness of compelling disclosure directlyfrom the donor. Those who favor such disclosureargue that there is a diminishing power of thenation-state and that the main benefactors of thisshifting power alignment are private corporations.More and more, government services are being pri-vatized or licensed to outside corporations, and themoney held by these conglomerates often out-weighs the national economy. In 2000, for example,Glaxo Wellcome SmithKline Beecham was createdthrough a merger with an estimated value of U.S.$100 billion. The South African gross domesticproduct (GDP), the worth of the entire country, incontrast, is U.S. $98 billion, and Peru’s GDP isapproximately U.S. $54 billion, one-half that of asingle corporation.

Furthermore, simply legislating political partydisclosure does not assure full accounting of alldonations. Political parties are increasingly subvertingsuch disclosure requirements through:

◆ creative accounting◆ exploiting loopholes◆ encouraging donations directly to candidates◆ accepting anonymous donations, or ◆ establishing “dummy” organizations and

so-called charities.All are mechanisms that can be used to channel

money back to the party.5

To increase the effectiveness of funding limitsand disclosure requirements, both sides, thedemand and the supply, must be addressed.Disclosure via the private corporate donor will helpclose the otherwise burgeoning loopholes employed

by the political parties. Thus, in light of enforcementand monitoring needs, disclosure by private corpo-rations, whether mandatory or voluntary, should be sought.

Corporation leaders, however, have argued thatmandatory or compelled disclosure will serve toreduce private donations to political parties, thusfurther weakening the democratic party system.Concerns range from political retribution from the“winner,” if that is not the party that was supported,to backlash from the consumers and stockholdersfor championing “dirty” politicians. These legitimatearguments can be tempered, given the particularcountry context, by, for example, permitting a high-er threshold for disclosure so as not to deter smallor even middle-sized donors.

LEGAL FRAMEWORKTO COMPEL DISCLOSURE

Political PartiesMany electoral laws are now calling for

increased disclosure of party financing. In systemswhere reforms establish strict limits on privatedonations and legislated reporting requirements,diffusion of such information is less complex. Thenational electoral commission can publish and disseminate the mandatory reports, or where therecoexists an access-to-information act, citizens canrequest the documents from the public body.

In Mexico, for example, recent electoral guide-lines mandate a maximum percentage of privatecontributions to political parties, a party’s annualsubmission of financial reports, and additionalreporting in election years. These reports are profferedto the national electoral commission, InstitutoFederal Electoral (IFE). Mexico, like Jamaica and

5 “Comparative Study of the Legal and Practical Characteristics ofthe Funding of Political Parties and Electoral Campaigns in LatinAmerica,” Daniel Zovatto, Handbook of the Funding of Political Partiesand Electoral Campaigns, IDEA, 2000.

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Peru, has recently passed a robust access-to-informa-tion act, and, in this case, the law explicitly providesfor requests of IFE-held documents.6 Thus, inMexico persons have the ability to more easilyreceive party financing information, allowing themto hold the party and its members accountable.

This, unfortunately, is not the norm. In SouthAfrica, the private funding of political parties isentirely unregulated: There is no requirement todisclose, there are no limitations on donations, andno caps on campaign expenditure. Essentially, it isthe survival of the fittest. Despite the justifiedeuphoria of the founding election of 1994, elec-tions in South Africa have since become more of abattle of wallets, not ideas. The inequities of thissituation are compounded by the fact that there ispublic funding of political parties. Pursuant toSection 236 of the Constitution, a law was passedin 1998 providing for the public funding of thoseparties represented in either the national or provin-cial legislatures. The constitutional provision statesthat the funding must be on the basis of two principles:proportionality and equity, in pursuit of an overridingprinciple, that of multiparty democracy. After thePublic Funding of Represented Political Parties Actof 1998 was passed, Parliament produced regulationsdetermining the division of monies under the newscheme: 90 percent provided to political parties onthe basis of proportionality and 10 percent on thebasis of equity. In other words, the vast majority ofthe funds are spent in a way that simply reinforcesthe status quo in terms of multipartism.

The 1998 act is silent on the question of privatefunding. At the time of its passage, the then ministerfor constitutional affairs promised that a second lawto regulate private funding would follow soon.Nothing came. And, despite further vague indicationsfrom government from time to time, there has untilvery recently been no move towards regulatory reform.Indeed, various commentators have concluded that

the status quo suits the larger parties very well: Theycan legally collect private donations in secret, without limit or other circumscription.

For those many countries with unregulatedparty financing systems and no requisite reporting,access-to-information laws can be even more criticalfor filling the gap and ensuring disclosure.

On the right to information, South Africa’sconstitutional assembly, an amalgam of its twohouses of Parliament that wrote the country’s finalconstitution in the two years that followed the firstdemocratic election of April 1994, decided thatopenness must be a cornerstone of the new demo-cratic dispensation. As Justice Kate O’Regan, amember of the South African constitutional courtand a former legal academic, asserted, “The right toaccess to information should not be seen as anafterthought or optional extra in our constitutionaldispensation. It is integral to our conception ofdemocracy that our Constitution adopts—a concep-tion that encourages participation, abhors secrecy, andseeks to ensure that public power will not be abused.”7

Section 1 of the South African Constitution, itsfounding provisions, reflects this emphasis by stat-ing that the founding values include “…a multi-partysystem of democratic government to ensureaccountability, responsiveness and openness.”Section 32 of the final constitution enshrined theright of access to information and required the legislature to pass legislation within three years thatwould give effect to the right. Accordingly, POATIAwas passed, a law that has been described by one ofthe leading freedom-of-information experts,

6 Although many Latin American and Caribbean countries still lackspecific access-to-information laws and regulations, the majority havea constitutionally based right to information that may be applicablein compelling political party funding disclosure.

7 K. O’Regan (2000) “Democracy and access to information in theSouth African Constitution: some reflections” in The ConstitutionalRight of Access to Information Seminar Report No. 5, 2001, 15Johannesburg: Konrad Adenauer Stiftung.

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Tom Blanton of the National Security Archive inWashington, D.C., as “probably the strongest in the world.”8

Although South Africa lacks mandatory politicalparty reporting, over the past year IDASA has led anew civil society call for openness in the privatefunding of political parties. In 2002, IDASA madeformal requests under the provisions of POATIA tothe 13 political parties represented in the nationalparliament, seeking records of all donations aboveR20,000 (approximately U.S. $2,000) made to theparty since 1994. In making these requests, IDASAis arguing that political parties, in terms of theirfunctions in Parliament and in the performance offunctions associated with the public funding thatthey receive, are public bodies as defined under theaccess-to-information law.9 When fighting electionsor in terms of its representation in the public insti-tutions of national and provincial legislatures, thepolitical party is performing a public function, anargument that is reinforced, as noted above, by thefact that public funds are now spent on enhancingthe capacity of political parties to perform thesefunctions. The definition of “public body” inPOATIA means that to succeed in this argument,it will be necessary to show that the politicalparty is fulfilling a public function in terms ofthe constitution or any legislation. South Africanelections are, of course, controlled by an electoralact that governs the rules of the election and theterms of entry into the electoral race. Public fundingis provided to political parties so that they can contestelections and retain organized structures betweenelections. Whether either set of acts constitutes theperformance of a public function “in terms of anylegislation” is a point that would need to beresolved by the court.10 But the argument, inessence, is that while some aspects of the activitiesof a political party are private, when it enters therealm of contesting elections and representing the

public through the national and provincial legislatures,it performs a public function that is inherently connected with the institutional fabric of a democratic state. (See Figure A.)

If the political parties are not “public bodies,”there is still a possibility to compel disclosure.POATIA is distinctive in that it covers not onlypublicly held information but also private.Section 32(1)(b) states that “everyone has the rightto access any information that is necessary to protector exercise another right” (emphasis added). This“horizontal” right — i.e. citizen to citizen or citizen toprivate body, as opposed to “vertically” from citizento state — is given effect in the detailed provisionscontained within Part 3 of the act. The reasons forthis unprecedented approach are noteworthy.

The South African government of NelsonMandela was acutely aware of the power of the private sector, both domestic and transnational. As the literature on state power and its structuralchanges in the last 20 years describes, many of thefunctions that used to be carried out by the state,under public ownership or control, are now carriedout by the private sector. Privatization and publiccontracting are the most obvious examples of this,but it also influences individual rights. The humanrights agenda has had to catch up with these profoundstructural adjustments in the organization and

8 Blanton T. (2002). “The World’s Right to Know”. Foreign Policy.July/August 53.

9 POATIA Section 1 defines public bodies broadly: “(a) Any department of state or administration in the nationalor provincial sphere of government or any municipality in thelocal sphere of government; or(b) any other functionary or institution when—

(i) exercising a power or performing a duty in terms of theConstitution or a provincial constitution; or

(ii) exercising a public power or performing a public function in terms of any legislation.

10 The court is likely to rely on the growing jurisprudence onadministrative law and justice, where other jurisdictions have had torule on what does and does not constitute a public body for the pur-poses of judicial review.

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administration of public services; the question ofwho is accountable for what to whom has ensureda vigorous debate about how human rights are usedto elicit greater accountability from the corporatesector. After all, it matters little to the average citizenwhether the school, the garbage collection, theadministration of welfare payments, or the railwayservice are owned by the private or public sector.What they are interested in is a good quality servicethat is responsive to the needs of the community atan affordable price. It was with these factors inmind that the makers of the South AfricanConstitution created its unique horizontal right to information.

Therefore, even if political parties are deemedprivate bodies, under the South African access-to-information act they are still covered, provided thatthe requester can overcome the initial hurdle ofbeing able to show that the information is necessaryto protect or exercise another right. It will have tobe shown, for example, that the individual’s right topolitical equality (Section 19 of the South African

Constitution) is infringed by the lack of transparencyin eliciting and spending private donations.

Private CorporationsIn addition to requesting political party disclo-

sures, IDASA made requests under the access-to-information law to the 13 companies listed at thetop of the Johannesburg Stock Exchange. Asdescribed above, in order for a private body to becovered, IDASA must demonstrate what other con-stitutional right it seeks to exercise or protect thatnecessitates the disclosure of the records. This willbe a difficult hurdle to overcome. In its request,IDASA cites Section 19 of the constitution—theright to political equality—and is likely to argue thatcitizens should not be disadvantaged by the factthat they are unable to “purchase” secret influenceover political parties, unlike wealthier donors.

To date, no single political party in SouthAfrica has presented the information, whereasthree of the 13 companies have provided an appar-ently full account of their donations. Sevencompanies claimed that they make no political

FIGURE APolitical Party Reporting and Disclosure

No political partyreporting law

No ATI* or Constitutionalright to information

Fulfilling public function:Receipt of public fundsManages public funds

Contesting public electionsRepresenting public

Information necessary toexercise another right: e.g.quality of representation

No compelleddisclosure

Political partyas public body

Political partyas private body

ATI or Constitutionalright to information

ATI or Constitutionalright to information

Request for disclosureunder right to information

Compel disclosure via rightto information



Election commission mayautomatically discloseinformation to public

Laws for reporting toelection commission

*access to information

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donations; two have not responded to the request;and the 13th has claimed that they have no legal obli-gation to provide the records. This 13th company,SABMiller, the world’s fourth largest beverage corpora-tion, offered three main reasons for denying therequest of information. First, they claim that therequest did not establish the right that IDASAseeks to exercise or protect (the primary thresholdfor private information requests). Second, they arguethat compelled release of their political donation history infringes on the company’s right to privacy.Finally, they proclaim the company’s “right to asso-ciate with whomever it pleases and in whatsoeverform it deems desirable.” SABMiller then went onto state that it had provided donations to a “spreadof political parties” in the four elections since 1994(two national and two local elections) but gave nofurther details as to the identity of the parties orthe amounts involved.

IDASA has written to all the nondisclosersreminding them that the access-to-information act

provides for severability — i.e. that where an exemp-tion bites only on one part of the record, then therest of it must be disclosed. With this in mind,IDASA argues that, for example, even if the identityof the donor or recipient attracts the protection ofthe confidentiality exemption or right of association,the date, number, and amounts of the donationsdo not. (See Figure B)

In those countries in the Americas that haverecently passed access to information laws, there are narrow circumstances in which certain privatecompanies may fall under the purview of the act.The Peruvian Ley de Transparencia y Acceso a laInformación Publica, passed in August 2002 andamended in February 2003, states that bodies whichprovide public services or exercise administrativefunctions, in virtue of concessions, delegation, orauthorization by the state, must conform to the requisites of the act.11 Similarly, in Mexico, the lawprovides that whatever bodies manage or apply fed-eral resources are covered by the provisions of the

FIGURE BDisclosure by Private Donors

(Corporations) via Right to Information

South Africa

Severability Public interestbalancing test

Compel somedisclosure

Compeldisclosure


Compeldisclosure


public interestoutweighs

exceptionoutweighs

public interestoutweighs

exceptionoutweighs

Compel somedisclosure

Public interestbalancing test

Severability

Latin America & Caribbean

Information necessary toexercise another right: e.g.quality of representation

If argue ATI* exception:e.g. confidentiality/privacy

If argue ATI exception:e.g. confidentiality/privacy

Manages public fundsGovernment owned

Provides public services

(*access to information)

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act.12 Under such a framework, one might arguethat private companies that have received publiccontracts to provide, for example, electricity, water,or waste disposal, or where there has been completeprivatization of an industry, are covered by the access-to-information law. In other words, one can requestrecords of their donations to political parties.

The Jamaican Access to Information Act ismore limited in its coverage of private actors. The Jamaica legislation defines “public authority”broadly as a company wholly owned by the govern-ment, or in which the government holds more than50 percent of the shares, or “any body or organizationwhich provides services of a public nature whichare essential to the welfare of the Jamaican society.”13

However, unlike the automatic coverage conferredin the Peruvian and Mexican laws, a minister mustdeclare that the act applies to these bodies.

Access-to-information laws generally containexception clauses that allow certain information to bewithheld from release. In South Africa, for instance,all of the political parties and private companies thathave responded claiming that they are not required todisclose the information have cited the exemption ofconfidentiality—that the confidentiality of the thirdparty must be protected because the donation wasmade in the belief that it would not be disclosed. Thecourt will need to rule on whether the donor’s confi-dentiality, on balance, outweighs the public interest of transparency and accountability and then whetherthrough redaction some parts of the record remainappropriate for disclosure.

Thus, in both South Africa and the Americas,there is a plausible argument under a modernaccess-to-information regime to compel disclosure

of campaign and party contributions from privatecorporations. This, then, allows for an informedcomparison of income claimed by the political parties to donations made by the private sector.

Additional positive effects of requests to compeldisclosure have been to concentrate the issue in theminds of the executive. For example, at a conferencein November 2002, the ruling South African ANC,along with the minority parties, all made publicstatements of commitment to the principle of political party and campaign financing reform.Moreover, the requests have elicited great mediaattention, thus further galvanizing the call forreform and attracting public interest and support.Finally, it has prompted some companies to volun-tarily revise their approach to the subject. The hugeSouth African mining company AngloGold, forinstance, has, with the invited assistance of IDASA,prepared a code to govern their donations from nowon, containing a set of criteria and a commitment totransparency. Such voluntary codes could include:

◆ criteria for distribution of funds, such asattaching greater weight to principles of equity anddiversity in a party than to previous electoral per-formance, when determining donation allocations

◆ prerequisites for political party funding eligi-bility, ranging from party philosophy that advanceshuman rights to capacity for assuring accountabilityand furthering meaningful debate

◆ detailed disclosure requirements; for example,that the company will automatically disclose contri-butions, and policy used to determine distribution.

NEXT STEPSIn the quest for ensuring that private donations

do not unduly and undesirably influence politics,more exacting legislation compelling complete dis-closure from the demand side—the political partiesand candidates—as well as the corporation supplyside must be passed and enforced.

IDASA, in South Africa, will continue to litigate

11 Articulo 2, Entidades de la Adminstración Pública; Ley Numero2744, Ley de Procedimiento Administrativo General, Articulo 1 (8).

12 Ley Federal de Transparencia y Acceso a la Información PúblicaGubernamental, Capitulo 1, XI.

13 The Access to Information Act, 2002, Part I 3(a); 5(3).

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their requests for party financing information via theirexceptional access-to-information act and facilitateinterested corporations in drafting voluntary codes forpolitical party donations. Additionally, IDASA hassubmitted to Parliament a draft law that will providefor disclosure of donations above R20,000 (approxi-mately U.S. $2,400) as well as create a ceiling ofR100,000 (U.S. $12,000) for any single donation.

In the Americas, there is still an overridingneed to pass campaign and political party financelaws that mandate reporting and disclosure as wellas effective enforcement of these provisions. Moreover,although legislation is pending in a number ofcountries, only a handful have passed modernaccess-to-information laws. To enable citizens toassess their politicians and to ensure a more democratic flow and distribution of information,far-reaching ATI legislation must be enacted.

Finally, extant international tenets, such as theOrganization of American States ConventionAgainst Corruption, and national laws must beexpanded to include not only elected officials butalso political parties. In September 2002, theAfrican Union drafted a political party financingprovision to be included in their Convention onPreventing and Combating Corruption, whichcould serve as a model for the Americas.14 Codes ofconduct for representatives and parliamentariansshould be expanded to political parties and theircandidates, and the electoral office or ombudsmust be tasked and equipped to monitor adherenceto these ethical and legal provisions with civil society involvement.

14 Article 10 Funding of Political PartiesEach State Party shall adopt legislative and other measures to:(a) Proscribe the use of funds acquired through illegal and corruptpractices to finance political parties; and(b) Incorporate the principle of transparency into funding of politi-cal parties.

15 Jacobs S., Power G., & Calland R. (2001). Real Politics: The WickedIssues. British Council: London; IDASA: Cape Town.

CONCLUSIONThe South Africa case highlights new alternatives

to achieving transparency in political financing. Anincreased focus on the supply side and disclosure viaaccess-to-information rights will augment other effortsaimed at increased accountability and openness. In aregime where there coexists an access-to-informationlaw or constitutional right to information and politicalparty reporting laws, the national electoral commis-sion can either automatically disclose such reportsor respond to specific citizen requests. Where thereis no regulation requiring political party disclosure,information may be induced by arguing that theparty meets the definition of “public body,” asdetailed in the relevant access to information law, or“private body” where such organisms are covered.Utilizing modern access-to-information laws, certainprivate corporate donors can, likewise, be mandatedto disclose political party donations. The ATI lawswould primarily apply to those corporations thatprovide “public services” or, as in South Africa,where the information is necessary to exercise someother right. Finally, new instruments such as voluntarycodes for funding and disclosure, national laws, andinternational conventions can strengthen the existingvehicles for compelled disclosure.

The quest for what has been described as “realpolitics” requires that for trust in political partiesand representative institutions to be rebuilt, a newopenness in the provision and control of informationmust occur, including transparency in the relation-ship between money and politics.15 As the SouthAfrican case shows, an absence of regulation per-mits secret donations to corrode the politicalprocess and enhance a sense of mistrust in the citi-zenry. However, where the citizens have rights, suchas the right to access information, simple requestsfor disclosure can be used to prompt reform andpromote accountability in the use of both privateand public power.

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INTRODUCTIONToday, a major part of the political process

takes place in the media. The media conditions thepublic going to the polls on election day as well asthe rhythm and the issues of the campaign. It influ-ences the knowledge of the candidates and theirmessage. The media sets the agenda for politicaldiscussion both for the government as well as forthe opposition in the arena where the legitimacy ofthe decision-making process is either won or lost.

The political agenda set out by politicians, insti-tutions, nongovernmental organizations, andeditorials published by the media gets feedbackthrough public opinion polls, and the results ofthese polls become part of the public agenda whenbroadcast by the media.

However, the “media” is not composed of purelypolitical institutions. The media is also part of:

◆ cultural organizations that inform, entertain,educate, manipulate, and form public opinion.Included are activities that result in immediate politicalissues as well as those that exert indirect politicalinfluence and those that ignore it altogether.

◆ the private service sector pursuing profitthrough their everyday activities independentlyfrom political icons.

◆ political entities and, as such, the mediaexpresses or voices the interests of the differentfinancial and social sectors aligned to these entities.

Although institutional representation by way ofpolitical parties and organizations foreseen by the

constitutions and parliaments is still the principalarena for legal decision-making, this concept is particular to the societies and economies of technologically developed states. Today, the politicalcontests in democratic systems take place in themedia, especially at election time when it is importantto have a dominant influence.

Today, the successful politician must be a communicator—someone who has the capacity toseduce the camera and charm the microphone. Hemust have enough influence so that the “priming,"that imprinting the media places on public opinion creating a public discussion forum, favors himwhen deciding on the issues to be debated.

We are talking here about the politician ratherthan the party, which takes a back seat. In a time ofpersonalized politics, the leader is above the collectivemass. Misalignments between the institution andchanges in society are notorious.

Today, the politician must reach the various sectors that have increasingly different interests andlifestyles. The media is great at leveling the playingfield as well as creating barriers. Programs try toreach social groups of a specific age or gender.Programs also attempt to reach various socialgroups who, in turn, are influenced by several factorsto create opinions and attitudes geared mainly toconsumerism. This consumerism is also geared topolitical ideas and sympathies, and more specifically,to political leaders.

The politician not only has to negotiate spacewith the media, but also he must learn severalmethods of communication. Thus, some participatein popular shows; in some cases they even sing anddance. The politician finds himself in the positionto play yet another character in the info-entertainmentindustry. He must accept and conform to changes

ACCESS TO THE MEDIA1

Juan Rial

1 Preliminary document presented at the Second Annual Meeting ofthe Inter-American Forum on Political Parties in December 2002 inVancouver, Canada, as part of the Comparative Analysis on PoliticalParty and Campaign Financing, conducted by the OAS Unit for thePromotion of Democracy and International IDEA in the 34 coun-tries of the hemisphere.

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of political symbols. Old symbols that referred togroup identification, such as a social group, havelost their meaning because today we talk abouteveryday issues. A political leader must “represent”the average citizen, that great majority who wants toexpress its opinion even though it does so “obliquely”through “someone like me.”

Symbolic and institutional representation havesplit apart, and the job of the politician and politicalparties nowadays is to try to come to an arrangementor pact with those who manage the latter. The mediais the great protagonist, but to date, all arrangementsbetween the two sectors have been less than satisfactory.

MAIN ISSUES AND CURRENT STATUSThe relationship between the media and political

parties presupposes a confrontation of basic principles,principally the preservation of freedom of expressionagainst the need for equity in the political contest.Obviously, equity is not equivalent to equality.Equity presupposes equal opportunity, not justequality of all the actors, by considering the abilitiesand the differences of each. Likewise, there is theconfrontation between the freedom of associationand the social responsibility of the media with itsgreat potential to influence public opinion.

Next, the problems between the interests of themedia as a corporate entity and its relationshipwith its employees—the reporters—introduce confrontation at a different level: between freedomof expression and freedom of association.

The advent of electronic media changed theissue of access significantly, given that radio and television occupy a finite spectrum allocated by thestate, which can reserve all existing bandwidth forits own use. This model, adopted by democraticcountries just recently, presupposes built-in safeguardsto prevent the situation of totalitarian governmentswhere only the official version is broadcast.

Regulatory measures resulted in the creation ofad hoc organizations to manage and/or supervisethe media and to ensure the state’s neutrality orattenuate the government’s dominance over theelectronic media.

The media’s social and political responsibility is a constant topic of discussion. The media hasbecome an essential ingredient of the politicalprocess to the point that words such as “mediacracy”and “videopolitics” have been coined to indicate itsimportance. Within this context, there has been anincreasing need for regulation and self-regulation.The media has become a two-faced Janus: on theone side, asking for higher political expendituregiven that the Media has become a supplier andproducer of political propaganda, while on theother, denouncing abuse and corruption, amongthem the excessive expenditures in political campaigns.

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MODELS OF RELATIONSHIPS BETWEEN THEMEDIA AND POLITICAL PARTIES

The main issue is the use of the media duringelection campaigns, especially in advertising of theparty and of candidates. The market model hasbeen dominant until recently. In this model, accessrelates exclusively to the parties’ and candidates’ability to pay. Where there are no regulations,access is not equal, especially if we take into accountthe interests of the media in both economic andsociopolitical forces. This situation results in accessdiscrimination and the use of time slots to favorsome political currents to the detriment of others.Even though this situation does not always guaranteethe election of media darlings, there are significantdisadvantages for minor contenders and for thosewho do not share the same political ideas.

As a result, a new model that imposes regulationson access to the media has taken shape. It may havevarying characteristics, but it usually includes theimplementation of “election slots,” which are adver-tising slots available to political parties andcandidates. In some cases, election slots are alsoavailable between elections to allow the party to putforth its point of view on everyday political issues.

This model can be implemented in severalways. In some cases, the slots are granted exclusivelyin state-run media, while private operators followthe market model. In other cases, the regulationsare applicable to the private media as well.However, there are several ways in which these slotsare granted. They may be exclusive, which meansthat any political advertising can only be broadcastduring regulated slots, or they may be mixed orblended, where some slots are regulated and othersare available at market price.

Moreover, there is a significant problem to besolved, and that is production of the time slots.Obviously, those who have access to money or facilitiescan produce better ads than those who don’t.Therefore, recent regulations take into account theneed to provide free assistance for production ofslot materials.

Rules regarding access vary. Small parties andminority candidates always demand equitableaccess, the same for every political party. Dominantparties and majority candidates maintain theimportance of taking the electoral currents intoaccount. Essentially, they start on an equal basisand then, the times slots are granted according tothe results of the previous election, either by thenumber of votes or positions gained.

As far as indirect information, often the mostrelevant, it relies on codes of ethics and agreementsbetween media license holders, journalists, electoralauthorities, candidates, and parties. Advertising intimes of indirect information and its characteristics(positive, negative, neutral) is one of the keys thatlittle by little has been adopted in practice. In somecountries, the debates of the main candidates arealso regulated, with the result that in some casesthey become obligatory. Regulations also cover pre-election polls seeking to guarantee the technicalquality of the data as well as the information providedto those who pay for the studies.

SCOPE OF INTERVENTIONBY ELECTORAL AUTHORITIES

Usually, electoral organizations are in charge ofcontrolling the enforcement of rules and regulationssuch as setting limits for advertising space andexpenditures. In Latin America, these organizationslack the means to deal with the issue of handlingpolitical advertising and social communications.Usually, these organizations are headed by lawyers,which hinders the understanding of the topic.

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In some cases the matter is resolved by creatingad hoc organizations, either within the electoralorganization or establishing specialized organizations.There is a good example in South Africa where atemporary body, the independent media Council,was created to regulate the media during the campaign.This body was to monitor all advertising accordingto the law and refer all controversies to the ElectionsCommission. In Latin America, organizations withwell-defined management structures, such as theMexican Instituto Federal de Elecciones, are betterpositioned to deal with the issue.

CONCLUSIONSThere are two ways to maintain equity and free-

dom in this area. On the one hand, self-regulationfor each player in the process—owners or licenseholders, journalists, publicity agents, pollsters, ana-lysts and commentators, consultants, andpoliticians—so that they all commit to a clean campaign. Let’s take an example; although it ispreferable to stay away from negative campaigning,it is a fact that it is part of the arsenal in the politi-cal contest. In this case, the right to respond mustbe ensured. It will depend on the degree of politicalculture and the degree in which negative advertisingis accepted or not and whether it intrudes intoareas that have no direct connection to politics,such as the private life of the candidates.

On the other hand, it is possible to reach a consensus and legislate controls or dictate measuresto ensure equity within a framework of politicalfreedom. Among such, there are rules to empowerelectoral organizations to control the tone of thecampaign by imposing punitive sanctions to thosewho go outside the accepted limits as well as implementing rules to favor free access to the electronic media.

There are still no clear studies that indicate thatfree access to the media or time limits for such accessor the ban of paid advertising have any marked influ-ence or change the results of an election. But itappears to be clear that taking these measures has helped, not only the relationship between theparties and the media, but it has also helped toimprove the tarnished image of the political parties.

Limiting the cost of politics is a necessity. Tothis end, there has to be a limit to the amount offunds going to the parties, as well as disbursementsand expenses. Since the money spent on the mediais a substantial part of all campaigns, it is recommendedto implement rules to limit such expenditures. Thebest way is to set free and exclusive time slots to avoidextra expenditures in this area. At the same time, thepossibility of undue influences to repay favors owedby broadcasting the party line is reduced. Likewise,it is important to monitor the use of indirect adver-tising in the media.

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For comparison purposes, we have included areview of the situation in some Latin Americancountries.

Brazil. Paid advertising on radio and televisionis banned. In return, the government provides freespaces for the various political parties. Schedulingis free during the campaign period between 19:30and 22:00 hours. There are two ways to have access,one on the national channel and the state channelsto a 20-minute maximum. The second consists of30-second spots to a maximum of 10 or five one-minute spots within the same time frame. The totalspace allowed to each party is in proportion to thenumber of seats in Parliament. The same schemeapplies to presidential candidates. Presidential candidates on their first campaign, without thebacking of any seats in Congress, are granted atleast one minute. The party platform may be dis-closed, as well as events and comments on the workdone in Congress to achieve party goals. Negativecampaigning is not allowed. When the rules wereintroduced for the 1988 elections, cable TV hadnot been introduced and so is not included in the regulations and was exempt from showing anyadvertising. The electoral organizations had feltthat they could not receive paid advertising andthen felt they should follow the regulations.Currently, the same issue is at hand regarding satelliteTV, which has not been possible to integrate intothe system. As far as TV ratings at election time areconcerned, they fall when there is a long period ofuse. Regarding middle- and upper-class voters whohave videocassettes, DVDs or satellite TV, the lackof attention to political advertising is noticeable.The quality of the advertising has to be taken into

account as well. In the case of independent candidatesor small groups lacking the necessary resources,their appeals are least attractive by comparison to thehigh quality of Brazilian TV advertising, especially itstechnical aspects. The larger parties and their candi-dates rely on the advertising industry to producebetter quality ads for their assigned slots. There are no regulations regarding polls or their use.

Chile. Since 1965, there has been legislationregarding the free use of television that has beenobserved since 1988. The slots are granted in pro-portion to the number of registered voters in theprevious election, regardless of the fact that theremay be those who are participating in the politicalprocess for the first time, either as candidates for aparticular party or as independents. There are atotal of 40 minutes available per week for all theparties before a general election, 20 minutes forpresidential candidates and 20 for candidates forCongress. For other elections, the total is 20 minutes.Party programs are limited to between five and 20minutes. Time slots are assigned by the ConsejoNacional de Television (appointed by the Senateand proposed by the president) with a plurality ofrepresentation. Paid advertising is not allowed ontelevision although it is on the radio.

Colombia. The Consejo Nacional Electoraltogether with the Comisión Nacional de Television(a public corporation) provide time slots on publicradio and television (until the mid 90s the only television available was in the public networks) forpolitical parties. Sixty percent of the time is allottedaccording to the number of seats that each partyhas in Parliament. The law does not specify theallocation of the remaining 40 percent, but recent

THE LEGAL SYSTEMREGARDING THE USE OF THE MEDIA

IN POLITICAL CAMPAIGNS IN LATIN AMERICA

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practice shows that it is distributed equally amongall candidates. Overall, this time is used threemonths before elections. Paid advertising is allowedin all the media.

Guatemala. The Tribunal Supremo Electoralallots 30 minutes per week to each party or coalitionof parties in both television and radio, withoutrestrictions on the purchase of time slots.

Mexico. The Dirección de Prerrogativas yPartidos Políticos and the Comisión deRadiodifusión del Instituto Federal Electoral (IFE)are the two institutions charged with the organiza-tion of radio and TV programming for politicalparties. The executive director of prerrogatives ofthe Comisión de Radiodifusión and a representativefrom each of the political parties with decision-making powers agree on the content of the programsto be broadcast. The parties must provide thescripts for approval. These can be for the diffusionof ideological principles, action programs, and elec-tion platforms. Access by the parties to radio andtelevision is assured. Each party is granted 15 minutesper month, and twice a month they can participatein a joint program organized by the DirecciónEjecutiva de Prerrogativas y Partidos. It is possibleto have regional programs for half the time allottedto each party, and this amount is added to theavailable national allowance. The IFE must ensurethat license holders assign these slots in peak time.During presidential elections, the total amountallotted is about 250 hours of radio and 200 hoursof television. For parliamentary elections, the avail-able time is half of the above. Furthermore, duringelection campaigns, the IFE acquires up to 10,000

30-second radio spots and 400 20-second TV spots,available on a monthly basis, to be distributedamong all parties. Seventy percent is distributedaccording to parliamentary seats and the remainderon an equal basis among all parties. Parties withoutrepresentation receive up to 4 percent of the totalavailable time. Furthermore, the parties are allowedto purchase slots in the media. The IFE Comité deRadiodifusión monitors compliance by sampling.IFE also has to ensure that there are no negativecampaigns and that candidates maintain the partyline and avoid campaigning on behalf of others (toavoid the image of the candidate or party for hire).

Nicaragua. The rules allow each party 30 min-utes per day on public TV and 45 minutes per dayon public radio station. Distribution is egalitarian.

Paraguay. This country offers negative controlsby setting limits. There are no free slots, but limitsare set to prevent a particular party from having anoverwhelming presence through advertising andpublicity. The period established for political cam-paigns is 60 days for national elections and 30 daysfor campaigns within the party or coalition. Thelimits consist of no more than five minutes in eachradio or television station per day, and no morethan one-half of a newspaper page or equivalent centimeters of written column space.

Peru. State radio and television allocate 30-minute daily slots between 1900 and 2100 hours for the sum of all parties during the last month before elections.

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INTRODUCTIONThis document compares the various schemes

for public/private financing in the region. Theisland states of the Caribbean have not beenincluded, as they will be part of a later study. Thiswork does not pretend to be an all-inclusive academicexercise but rather a short and practical instrumentfor political operators to engage in discussion froma common starting point.

Although there have been advances in thedevelopment of representative democracies, partyand campaign financing continues to be a complexand difficult issue, which seriously affects the solvencyof political systems. A study of this reality, legislation,and institutional conduct shows serious deficiencies.The effectiveness of the proposed solutions is constantly tested throughout the hemisphere.

BASIC CONCEPTS—DESCRIPTION OF THE PROBLEMS

Currently there is no way to imagine the exerciseof politics without money. The relationship betweenmoney and politics is a mutual necessity that couldbe neutral and free from monetary considerationsif it were not because in several instances, it has

caused serious problems. Among them we can citethe following:

a. Higher costs: Almost unanimously, analystsfeel that the cost of doing politics has increasedconsiderably. This has contributed to the fragmen-tation of the political parties, excessive emphasison the personality of the leaders, weakening ofideological patterns, and the increase of electronicmedia.2 3

b. Donor concentration: A few tycoons pro-vide a very high percentage of the income of bothparties and candidates. This affects the transparencyof the decision-making process.

c. Recipient concentration: This may put theequality of the democratic debate at risk.

d. Dirty money and illegal contributions:Allegations of illegal financing respect no borders.In some cases, the money comes from illegal activities,money laundering, and drug trafficking. A portionof the informal or unreported funds is the result ofthe illegal use of resources and public servicesthrough a network of favored clients.

Some of the behaviors that could be describedas clientelism include the following: diversion oflabor (employees who instead of doing their pre-scribed job are involved in party activities), creationof nonexistent positions, vote buying, exchange ofmoney for favors, and influence peddling.

e. Institutional weakness: Controls fail onmany occasions. In some cases, the capacity of thestate to enforce the law is insufficient, resulting inan environment of impunity.

Current situation and models

The most common responses to these problemsgo from increasing the contributions of public

THE NATURE OF PUBLIC, PRIVATE,AND MIXED FINANCING1

Humberto de la Calle


2 There will be a separate paper on the media during the seminar.

3 Versus Pinto-Duschinsky, Michael, Comparative Analysis on theFinancing of Electoral Campaigns and Political Parties. San Jose,October 2002. Unpublished. Also, Sorauf, J. Frank, Inside CampaignFinance. Yale University Press, 1992.

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funds (in varying proportions) to private financing,as well as setting controls such as top limits,accountability, and campaign finance disclosure.

A quick glance at the current state of affairsregarding the formal characteristics of the financingschemes shows the following:

a. Regarding financing, the predominant systemthroughout the region (except Venezuela) is amixed system; that is, political parties receive bothpublic and private funds to finance their campaignsand/or to cover the organization’s overhead.

b. Most countries provide direct grants (cashor bonds) or indirect grants (services, tax benefits,training, etc.) within the public financing schemes.

c. There are four ways of distributing publicfunds in the region: equitable (in equal parts), pro-portional to the electoral strength; a mixed systemwhich distributes one portion of the funds equi-tably to all parties and the other according to theelectoral strength; and another mixed system whichdistributes proportionately to the number of voters,and the other portion according to parliamentaryrepresentation. However, the prevailing system isone that distributes the funds based on the electoralstrength followed by the hybrid system that combinesthe electoral strength and equitable distribution.

d. Most countries provide some sort of legalthreshold to gain access to public financing, specifi-cally that eligibility for the above-mentioned grantsis subject to obtaining a minimum percentage ofthe votes cast and that the party is represented inParliament.

e. As far as the disbursement of public fundsis concerned, there is no homogeneous patternbecause in some countries it takes place after elec-tions (reimbursement), while in others it is given atthe stage prior to elections and in yet a third groupof countries, disbursement is done in two stages,one before and one after the elections.

f. Most of the countries have banned certaintypes of private financing, mainly donations fromforeign governments, individuals, and organiza-tions; nonindividual contributions; andanonymous donations.

g. Some countries set upper limits on privatecontributions.

h. Most countries grant political parties freeaccess to state-controlled or private media or toboth. The predominant custom is to grant freeaccess to the media during the political campaign.

i. In most countries there is some sort ofmechanism for regulating and auditing of politicalparties, and in the majority of cases, this task hasbeen assigned to the elections organizations.

j. Finally, most countries provide punitivemeasures for those who do not observe the rulesregarding party financing and electoral campaigns.On the one hand, there are pecuniary penalties andon the other (to a lesser extent), the decertificationof the party or reduction or suspension of publicfunds for parties that have breached the law.4

Underlying values and objectives

There is a basic trilogy: Equity, in order to pre-vent the total amount of resources from generatingunfair advantages in favor of some of the candidates.Promoting participation,5 so that lack of funds isnot an insurmountable obstacle to political activismor to the diffusion of the political message. Andtransparency, to increase public trust and ensurepolitical legitimacy.

Starting from the premise that parties play adetermining role in the democratic systems that areoften seen as private associations engaged in functions

4 Here and elsewhere, we have taken into account an unpublisheddocument Dinero y Política en América Latina: una visión compara-da. Daniel Zovatto. San Jose. October 2002.

5 There is no proof that the use of public funds has increased voterparticipation.

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of public or general interest, it was decided thatpartial public financing was the alternative bestsuited to diminish the incidence of private interestsin the political process.

In developing these values, political financingregimes seek one or several of the followingobjectives:

a. Promote political equality.b. Fight corruption.c. Reduce campaign costs.

Establish shorter campaigns.d. Preserve the integrity of the political system.e. Strengthen the parties.f. Provide the public with better and more

balanced information about the political platforms of the parties and of the candidates.

g. Promote a better use of the funds used in politics by investing in more productive activities rather than using it as fast food for the insatiable political machinery.

h. Strengthen legislation and organizations, especially enforcement agencies.

i. Fight impunity.From the perspective of the “must be,” the

quintessential values that have garnered a highdegree of consensus could be distilled into the ten commandments of public finance in the following terms:

1. There shall be transparency regarding theincome and expenses of political campaigns. Partyaccounts shall be public.

2. State assistance shall be used to creategreater equity in the political contest.

3. The influence of privileged groups on theelected governments shall be avoided. The winnershall not assume power as if it were booty.

4. There shall not be foreign contributions.5. There shall not be anonymous contributions.6. There shall not be contributions originating

from sources involved in criminal or dubious activities.

7. Regulations shall attempt to prevent, as muchas possible, any risk to the freedom of politicalexpression.

8. Regulations shall seek a way for political cam-paigns to require less rather than more funding.

9. There shall be bodies dedicated to enforcingthese principles.

10. Violators shall be punished.

Tendencies and options; Advantages and disadvantages

Public, private, or mixed financing?Only a few defend exclusively private financing

nowadays. In the region, with the exception ofVenezuela, no state has opted for an exclusively private financing scheme. All others have mixedfinancing with a varying proportion of privatefinancing. Although almost no one defends onlypublic financing, two countries deserve specialmention.

In Mexico, as a result of major changes in thepolitical system, public financing has been increasedto about 90 percent of the total. Some6 think of thisas a timely effort to seek greater equity.

Colombia is currently discussing constitutionalreform to ban private financing. The current envi-ronment appears to be receptive to this type ofsolution.

Chile and Peru receive only indirect publicfinancing, and it is quite restricted.

There is the need for examining the proposal to adopt a method of full and exclusive publicfinancing to see if it increases the problems insteadof solving them.

Those who seek illegal financing are not goingto stop merely because the conduct is prohibited.

6 Molinar Horcasitas, Juan. Las elecciones federales de 1997 enMéxico: Evaluación del Sistema de Partidos y la reforma electoral enmateria de regulación financiera. Internet www.trife.gob.mx

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In such cases it is possible that public financing isjust going to increase the funds spent rather thanreplace them. The prohibition may increase theamount of money that is not reported officially.Likewise, there are some who feel that this type of solution leads to bureaucratize the parties anddisconnect them from society. It is also importantto take into account any tax consequences of anydecision of this nature. Generally, public financingshould be based on a system that allows theamount to vary according to economic and financialvariables, such as is the case in Costa Rica.

A mixed regime (with a good balance betweenpublic and private monies) with the application ofcontrols is surely the better road.

Criteria for the distribution of public goodsAt one end of the spectrum, there are those

who believe that a truly democratic distributionshould be based in just one criterion: proportionalityaccording to elections results. At the other, thereare those who argue that if one of the essential values in this institutional architecture is equity, the only criterion should be equality. The majoritytends to favor a combination: a basic egalitarianlevel, or first floor, together with a distribution offunds proportionate to the votes or seats gained.Another subspecies refers to matching funds, granting public funds based on private donationsreceived.

In any case, all evaluations of the options musttake into account that financing is not an isolatedcomponent. It influences and is influenced by theparty system and by the political system as a whole,that is to say, both the formal as well as the real elements of the process.

Limits to personal donations and campaignexpenses?

It could be said that the majority agree on anaffirmative response to the above question,although in the United States there is the perceptionthat such prohibitions may violate freedom ofexpression.7 There is no general trend. Some countrieshave set limits, either by source or by amount ofresources. Colombia only limits the total amountper campaign. El Salvador, Guatemala, Panama,Peru, and Uruguay have no limits.

AccountabilityThis is one of the key elements. The general

tendency is that the parties have to be accountable,8

just as the candidates are accountable in Brazil,Colombia, Paraguay, and Venezuela. In other countries,the donors must also be identified. In Argentina,Bolivia, Colombia, Chile, Ecuador, Mexico,Nicaragua, and Peru, the accounts are subject topublic disclosure.

Barriers to access financing?Naturally, countries such as Peru and Chile,

which have only a weak public (indirect) financingsystem, lack legal barriers. There are none in ElSalvador, Honduras, and Paraguay either. Venezuelais out since they have no public funding. The resthave some requirements or barriers, normally calculated on a percentage of the votes.

7 For Herbert Alexander, “Finding a way to protect the integrity ofthe electoral process and respecting freedom of expression at thesame time, is the fundamental problem to be faced by those whoseek to reform the financing of electoral campaigns.” (USIA. Temasde Democracia, Publicaciones Electrónicas de USIS, Vol.1, No. 13,September de 1996. Page 1)

8 There will be a separate study on this topic during the seminar.

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Enforcement bodiesWith the exception of Uruguay, all Latin

American countries have enforcement bodies(Electoral Councils, etc.). In some cases, there arespecialized judges. In others there is a combinationof these and other government organizations suchas the office of the auditor general.

Who receives the funds?Depending on the distribution of parties, some

countries allow the parties, as well as the candidatesand support organizations, to receive funds. Thismakes the task of auditing more difficult.

DEGREE OF CONSENSUS: A DYNAMIC MATRIX

Is there consensus among the parties regardingthe need for legal mechanisms to guarantee trans-parency regarding the source, management, andapplication of financial resources? One obstacle isthe double-talk used. Generally, the party leadership,subject by definition to a closer scrutiny by the citizens and the media, appears more willing toaccept various mechanisms. Grass-roots politicians,however, are more reticent to the various advanceswhen they are not openly breaking the rules.Looking at another aspect of the issue, a chart ofvariables could be designed to show the dynamicsof each party with respect to its characteristics andthe expected response in each case. A preliminaryscheme could be formulated like this:

a. The greater the crisis (that is, greater vulnera-bility of the parties), the greater the desire toincrease public financing.

b. The greater the split of the parties, thegreater the emphasis for financing to go to the candidates.

c. The larger the party, the greater the interestin adopting distribution mechanisms according tothe number of votes. The smaller the party, themore they defend neutral mechanisms.

d. The newer the party with fewer votes, the greater the interest in an early distribution.

e. The greater the clientelism, the lower degreeof acceptance of control mechanisms.

f. The greater the weight of public opinion inthe votes cast for a particular party, the lower theresistance to independent control mechanisms.

g. The more closed and protected the economy,the greater the tendency for economic groups tohave a decisive influence in the financing of elections.9

h. The greater the entrenchment of the tradi-tions of the party, the greater the resistance toprohibitions and donations by artificial persons.

The previous statements must be subject to agreater empirical scrutiny. It is suggested to researchthese issues.

A good financing system: the best dealThe credibility of the political process and the

representative democratic system are going througha crisis of trust. This is especially true in LatinAmerica.10 There is no better deal for anyone, especially for them, than to improve the degree oflegitimacy and trust in the institutions. Putting inplace an equitable and transparent financing systemis a good way to begin the road to reach this goal.

9 See works by Fernando Carrillo (Internet)

10 Democracies in Development, Payne, Zovatto, Carrillo,Allamand, IDB, 2002, especially Chapter 2, “Gauging PublicSupport for Democracy.”

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INTRODUCTIONDevelopment experts as well as democracy

practitioners are now realizing that politics is asimportant to successful development as economics.2

The question of how to promote the growth ofgood governance has now reached parity with thetraditional question of how to best promote sus-tainable economic development. According to theWorld Bank3, good governance leads to higherinvestment and growth, and “political accountability”is one of the variables identified in the governanceequation. Political accountability is defined in partby "transparency in party financing" as well as “assetdisclosure.”

Many researchers in the field of money and politics claim that too much money is either hidden,goes unreported, or is from illicit sources, andLatin America is no exception nor is it alone in facing this challenge. Secret money and corruptionhurt the economy and the polity of a nation as wellas distort the behavior of politicians, hence devel-opment falters and citizen confidence in democracywanes. Many of the countries in the region still donot openly reveal the sources and origins of theirpolitical party and campaign funds. This is particu-larly true for private funding sources where thereare many uncertainties about the amounts andidentities of these funds generally across the 34-member OAS countries.4

This paper briefly discusses the anatomy andstatus of disclosure and transparency in LatinAmerica and considers some of the benefits ofopen political finances. It poses the following questions:

◆ Why is disclosure in Latin America important?

◆ What does transparency in political fund raisingin Latin America mean?

◆ What does disclosure of money in politicslook like in Latin America?

◆ How does Latin America compare to the restof the world?

◆ What, if anything, can be done about it?

DISCLOSURE REQUIREMENTS IN POLITICAL PARTYAND CAMPAIGN FINANCING1

Gene Ward, Ph.D., Democracy Fellow, USAID


2 United Nations Human Development Report 2002, Foreword byUNDP Administrator Mark Malloch Brown.

3 World Development Report, 1997.

4 Zovatto, Daniel, "Internal Democratic Processes and Financing ofPolitical Parties," in Democracies in Development, Inter-AmericanDevelopment Bank, 2002.

Gene Ward presents USAID’s forthcoming report on disclosureat the conference luncheon.

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WHY IS DISCLOSURE INLATIN AMERICA IMPORTANT?

There are three main reasons why countries inLatin America can benefit by increasing emphasison transparency:

◆ Increased legitimacy and confidence by theelectorate: Illicit or illegal money can too easilyfind its way into the governance equation and castaspersions on all. Without disclosure, money cancome from anywhere in the world and in anyamounts. Since money often determines who winsa political contest, transparency in its origins anduse are key.

◆ All political finance regulations begin withdisclosure: No disclosure means no enforcement ispossible: Without disclosure reporting requirementsfor contributions, there would be no way to enforcecampaign contribution limits. Without disclosureabout spending, there could be no way of enforcingspending limits. Without disclosure of a donor'sidentity and citizenship, there is no way to enforcebans on foreign contributions. Countries that haveweak enforcement of political finance therefore willalso likely have weak or non-existent disclosure.

◆ Transparency builds confidence in the democratic process: In a democracy, the underlyingprinciple behind disclosure is that the more trans-parent and open a nation with its public andpolitical finances, the more trusted the governmentand the more confident and legitimate its citizensconsider it. It makes citizens feel confident andcomfortable with their government and politicalleaders when they know what they are doing withpublic and political finances.

WHAT DOES TRANSPARENCYIN LATIN AMERICA MEAN?

Disclosure is only one of the many ways thatnations have tried to control the flow of money intopolitics. (See Annex 1 for an overview of spending

limits, bans, prohibitions, etc.) Disclosure, however,means different things to different people. From theperspective of NGOs and civil society organizations,disclosure is being able to see where political moneyoriginates and flows and how it may influence leg-islative behavior.

From the point of view of a candidate or a political party, disclosure means giving up some privacybut gaining credibility through accountability. Andfrom the point of view of the media, disclosure isrevealing a scandal involving political finances anda public figure. All of these perspectives share thecommon goal of requiring more openness regardingpolitical finances.

The need for more disclosure laws on the books,however, does not assume that there is dishonestmoney in a political system. It could mean that parties simply need to be more open about theirhonest money and allow some transparency. In ademocracy, disclosure reports are to politics whatfinancial statements are to businesses. Both are“accounting systems;” one for the accuracy of prof-its, the other for the level of “accountability” ofelected leaders to the public and to their members.

TRANSPARENCY DEFINEDFor political financial disclosure laws to be

credible as well as enforceable, they should containtwo major structural components:

◆ A disclosure law should first contain in clearlanguage a provision that money and "anything ofvalue" (including in-kind resources such as loans orequipment, etc.) should be accurately and promptlyreported to the government or a designatedagency/commission.

◆ Secondly, a disclosure law should contain aprovision that the government will facilitate makingthese financial reports available to the public forreview and analysis as soon as practicable.

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A country's legislation containing the above twocomponents, however, could still fail to be truly adisclosure law that promotes transparency andopenness in political finance if it does not pass the"transparency test" listed below in the form of thefollowing five questions.

◆ Who gave? (The donor identity question)◆ How much? (The itemized amount attached

to the donor's name)◆ When? (The date of the donation)◆ To Whom? (The name of the party or candidate

receiving the money or "anything of value")◆ For What? (The name of the vendor or person

receiving the money identified by name andcategory of the expenditure)

A considerable proportion of those involved inpolitical life in this hemisphere, and indeed theworld, try to keep their fund-raising activities privateor simply ignore laws about disclosure; alternatively,they may seek legal ways to circumvent the rules vialoopholes.

This is not to say that disclosure is immediatelyapplicable for all countries. Threats of intimidationand harassment often accompany disclosure ofpolitical finances in countries such as Ukraine andEgypt. Still, as democracy matures these incidencesdecrease, and transparency is able take root.Getting transparency codified and into law is a crit-ical eventual step.

WHAT DOES DISCLOSURE LOOK LIKEIN THE WORLD?

Based upon a USAID survey of 118 nations5, 37percent of the countries surveyed had no disclosure

laws. Another 13 percent have “hidden transparency”where finances are reported only to the government,and the public is not allowed to view the reports.Another 35 percent of the countries surveyed pro-vided reports that were so brief that they were oflittle value, particularly for informing the publicabout the political finance of their leaders.

When added together, 85 percent of countriessurveyed have hidden, partial, or no disclosure,with only the remaining 15 percent of the coun-tries examined by USAID actually reporting openlyand fully to their governments and people.

WHAT DOES DISCLOSURE LOOK LIKE INLATIN AMERICA?

How open is political finance in Latin Americacompared to the rest of the world? Overall, itappears that requiring disclosure of donors andvendors in an itemized fashion is in short supply inLatin America.

Disclosure Levels ComparedLatin

World AmericaPresidential CandidatesMust Disclose 29% 6%

ParliamentariansMust Disclose 29% 14%

Donor IdentityMust be Disclosed 31% 16%

Parties Must Disclose 49% 40%

According to the above table, presidential can-didates are considerably less likely to have to reporttheir finances in Latin America than the worldwideaverage. Legislative candidates in Latin America arealso less likely to have to report the origins andamounts of their monies. On the other hand, politi-cal party financial reporting is about on par withthe rest of the nations surveyed, though slightly lessin Latin America.

5 "Money & Politics Handbook: A Guide to Increasing Transparencyin Emerging Democracies." USAID draft publication, Washington,D.C., October 2002. Though 118 countries is a large sample todemonstrate disclosure laws, it is not a scientifically drawn randomsample of the 191 official nations in the world, hence any generaliza-tions drawn must be tentative. The number of Latin Americancountries in the 118-nation survey was 30. See Annex 2 for details.

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A country's legislation containing the above twocomponents, however, could still fail to be truly adisclosure law that promotes transparency andopenness in political finance if it does not pass the"transparency test" listed below in the form of thefollowing five questions.

◆ Who gave? (The donor identity question)◆ How much? (The itemized amount attached

to the donor's name)◆ When? (The date of the donation)◆ To Whom? (The name of the party or candidate

receiving the money or "anything of value")◆ For What? (The name of the vendor or person

receiving the money identified by name andcategory of the expenditure)

A considerable proportion of those involved inpolitical life in this hemisphere, and indeed theworld, try to keep their fund-raising activities privateor simply ignore laws about disclosure; alternatively,they may seek legal ways to circumvent the rules vialoopholes.

This is not to say that disclosure is immediatelyapplicable for all countries. Threats of intimidationand harassment often accompany disclosure ofpolitical finances in countries such as Ukraine andEgypt. Still, as democracy matures these incidencesdecrease, and transparency is able take root.Getting transparency codified and into law is a crit-ical eventual step.

WHAT DOES DISCLOSURE LOOK LIKEIN THE WORLD?

Based upon a USAID survey of 118 nations5, 23percent of the countries surveyed had no disclosure

laws. Another 17 percent have no public disclosurewhere finances are reported only to the government,and the public is not allowed to view the reports.Another 25 percent of the countries surveyed pro-vided reports that were so brief that they were oflittle value, particularly for informing the publicabout the political finance of their leaders.

When added together, 87 percent of countriessurveyed have partial, or no disclosure, with onlythe remaining 13 percent of the countries exam-ined by USAID actually reporting openly and fullyto their governments and people.

WHAT DOES DISCLOSURE LOOK LIKE INLATIN AMERICA?

How open is political finance in Latin Americacompared to the rest of the world? Overall, itappears that requiring disclosure of donors andvendors in an itemized fashion is in short supply inLatin America.

Disclosure Levels ComparedLatin

World AmericaPresidential CandidatesMust Disclose 29% 6%

ParliamentariansMust Disclose 29% 14%

Donor IdentityMust be Disclosed 31% 16%

Parties Must Disclose 49% 40%

According to the above table, presidential can-didates are considerably less likely to have to reporttheir finances in Latin America than the worldwideaverage. Legislative candidates in Latin America arealso less likely to have to report the origins andamounts of their monies. On the other hand, politi-cal party financial reporting is about on par withthe rest of the nations surveyed, though slightly lessin Latin America.

5 "Money & Politics Handbook: A Guide to Increasing Transparencyin Emerging Democracies." USAID draft publication, Washington,D.C., October 2002. Though 118 countries is a large sample todemonstrate disclosure laws, it is not a scientifically drawn randomsample of the 191 official nations in the world, hence any generaliza-tions drawn must be tentative. The number of Latin Americancountries in the 118-nation survey was 30. See Annex 2 for details.

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Overall, in terms of transparency and opennessrequired by extant laws, Latin America as a regionhas less transparency and openness than Europe andformer members of the Soviet Union but consider-ably more disclosure than Asia and Africa, which hasthe least amount of disclosure. If accountability ofonly private funds is considered, it is possible thatLatin America would score even lower on disclosurein comparison to the rest of the world.

LATIN AMERICAN AND CARIBBEANCOUNTRIES COMPARED TO EACH OTHER

Within the Latin American region, however, aneven more diverse picture of transparency emerges(see table below), with Brazil being the most "open"and almost half of the region being totally "closed"with no transparency laws. However, it should benoticed that most of these closed nations are in theCaribbean with populations of under 1 million.

It should also be noted that the table belowonly represents the disclosure laws that are on thebooks, not whether or not laws are enforced orwhether loopholes exist in these laws. For example,the table below rates Argentina rather high on itslevel of disclosure and transparency. According toTransparency International of Argentina, however,only political party funds, which comprise about 10percent of revenues spent on campaigns, are coveredby the disclosure laws of Argentina. Another 90percent of campaign funds are raised by Argentineancandidates themselves through the establishment oftheir own private nonprofit organizations andentirely escape having to report to the governmentor the public. The point is that there is a distancebetween the existence of the law and the practice of the law. What can be done about disclosure inLatin America?

LEVELS OF PUBLIC COUNTRIES EXHIBITING LEVELS DISCLOSURE OF PUBLIC DISCLOSURE (N=27)

High Public. . . . . . . . . . . . . . . . . . . . Brazil DisclosureN=1 (4%)

Medium Public. . . . . . . . . . . . . . . . Argentina, Bolivia, ColombiaDisclosureN=3 (12%)

Low Public . . . . . . . . . . . . . . . . . . . . Barbados, Costa Rica, Jamaica, Nicaragua, Disclosure Peru, Trinidad and TobagoN=5 (20%)

Hidden Public. . . . . . . . . . . . . . . . . Ecuador, Mexico, ParaguayDisclosureN=3 (12%)

No Public . . . . . . . . . . . . . . . . . . . . . Antigua and Barbuda, Bahamas, Dominica, DominicanDisclosure Republic, El Salvador, Grenada, Guatemala, Honduras, N= 15 (52%) Guyana, Panama, St. Kitts, St. Nevis, St. Lucia,

St. Vincent & the Grenadines, Uruguay, and Venezuela

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Overall, in terms of transparency and opennessrequired by extant laws, Latin America as a regionhas less transparency and openness than Europe andformer members of the Soviet Union but consider-ably more disclosure than Asia and Africa, which hasthe least amount of disclosure. If accountability ofonly private funds is considered, it is possible thatLatin America would score even lower on disclosurein comparison to the rest of the world.

LATIN AMERICAN AND CARIBBEANCOUNTRIES COMPARED TO EACH OTHER

Within Latin America and the Caribbean, adiverse picture of transparency emerges (see tablebelow), with Brazil being the most “open” and one-third of the region being totally “closed” with notransparency laws. However, it should be noticedthat most of these closed nations are in theCaribbean with populations of under 1 million.

It should also be noted that the table belowonly represents the disclosure laws that are on thebooks, not whether or not laws are enforced orwhether loopholes exist in these laws. For example,the table below rates Argentina rather high on itslevel of disclosure and transparency. According toTransparency International of Argentina, however,only political party funds, which comprise about 10percent of revenues spent on campaigns, are coveredby the disclosure laws of Argentina. Another 90percent of campaign funds are raised by Argentineancandidates themselves through the establishment oftheir own private nonprofit organizations andentirely escape having to report to the governmentor the public. The point is that there is a distancebetween the existence of the law and the practice of the law. What can be done about disclosure inLatin America?

LEVELS OF PUBLIC COUNTRIES EXHIBITING LEVELS DISCLOSURE OF PUBLIC DISCLOSURE (N=30)

High Public. . . . . . . . . . . . . . . . . . . . Brazil DisclosureN=1 (3%)

Medium Public. . . . . . . . . . . . . . . . Argentina, ColombiaDisclosureN=2 (6%)

Low Public . . . . . . . . . . . . . . . . . . . . Barbados, Bolivia, Chile, Costa Rica, Ecuador, Jamaica,Disclosure Mexico, Nicaragua, Peru, Trinidad and TobagoN=10 (33%)

No Public . . . . . . . . . . . . . . . . . . . . . . Dominican Republic, Guatemala, Guyana, Honduras,Disclosure Panama, Paraguay and VenezuelaN=7 (25%)

No . . . . . . . . . . . . . . . . . . . Antigua and Barbuda, Bahamas, Belize, Dominica, Disclosure El Salvador, Grenada, St. Kitts and Nevis, St. Lucia,N= 10 (33%) St. Vincent & the Grenadines and Uruguay

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Generally speaking, disclosure and transparencytend not to be planned. Scandals revealed by themedia are probably the biggest driver of reformsand calls for more transparency.

However, some countries choose to set theirlegal framework for disclosure from the outset. Forexample, most all of the former Soviet Union coun-tries have financial reporting to the governmentwith copies being shown to the public. On theother hand, some countries chose gradualism and a slow approach to disclosure by implementing "personal asset disclosure" as a way of opening thedoor for later, more comprehensive reporting bycandidates and parties.

Whichever route a country chooses, it usuallyfollows along the lines of what is politically realisticat the time. If a party or leaders feel not yet readyto make public their funding sources, they may wellbe vulnerable to public embarrassment if disclosurewere implemented. Every country works throughthis at a difference pace. In the United States, forexample, it took almost 40 years between disclosurelaws being enacted and disclosure laws being enforced.

For this reason, there is a disclosure continuumalong which countries fall, from being totally wideopen with public participation to no disclosure ofpolitical funds and public engagement. Every countrymust work from the vantage point of its presentlocation. What's clear, however, is that there aremore benefits of transparency than secrecy forLatin American democracies.

USAID's commitment to work in the area ofpolitical finance began with the publication of ahandbook on money in politics and is now movingto providing technical assistance to political parties,nongovernmental organizations, election commis-sions, and the media related to disclosure insupport of Latin American countries initiatingreforms. For example, any Latin American countryinterested in placing its political party and cam-paign finance reports on the Internet is invited tosee the MAP (Money and Politics) "Transparencythrough the Internet Program" presentation byIFES (International Foundation for ElectionSystems) and sponsored by USAID at theVancouver OAS conference, Dec. 5-6, 2002.

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STICKS (restraints)Unintended

Type of Restraint How Implemented Expected Outcome Consequences

1. Contribution Limits: Dollar caps Restrict funding Disguised income

2. Contribution Bans: Corporations & unions Stop illegal contributions “Soft money”/Dirty money/Laundered money

3. Contribution Thresholds: Financial reporting Ease reporting burden Reporting deception

4. Spending Limits: Spending caps Restrict spending to make Disguised spending andcampaigns less expensive Spending still skyrocketing

5. Spending Limits In-kind: Control of “freebies,” Full accounting of costs Largely ignoredLoans, borrowed equip.

6. Timing Limits: Shorter campaigns Less $ required Underground campaignsand “off-season” campaigns

7. Public Exposure: Financial reporting made Honest reporting and Dishonest reportingaccessible by public in Public accountability or disregard for laws, plustimely fashion information so old is useless

8. Enforcement: Audit of reports, Compliance with laws, Nondisclosure and ignoringInvestigations conducted Accountability of politicians of the law

CARROTS (incentives)

9. Public Financing: % of seats won Decrease corruption and Little effect on privatecosts of elections fundraising & reliance

on big donor

10. Tax Incentives: Taxpayer deductions Attract small donors Little interest by public

11. Free Media: Gov't provides TV, radio Equal airtime Incumbent advantage

12. Tax Credit: Donor incentives Encourage more donors Not too attractive

ANNEX 1MONEY AND POLITICS: CARROTS & STICKS STRATEGIES

MAJOR REFORM APPROACHES TO LIMIT MONEY IN POLITICS

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ANNEX 2BASIC DISCLOSURE RULES IN SELECTED COUNTRIES

ANY BY PARTY BY CANDIDATEDISCLOSURE Income List of Presidential Parliamentary

RULES and/or DonorsExpenditure

Accounts

COLUMN NUMBER 1 2 3 4 5

Antigua and Barbuda no no no n.a. no

Argentina YES YES YES no no

Bahamas no no no n.a. no

Barbados YES no no n.a. YES

Belize no no no n.a. no

Bolivia YES YES no no no

Brazil YES YES YES YES YES

Chile YES YES no no no

Colombia YES YES YES no no

Costa Rica YES Subm YES no no

Dominica no no no n.a. no

Dominican Republic no Subm no no no

Ecuador YES YES Subm. no no

El Salvador no no no no no

Grenada no no no n.a. no

Guatemala no Subm no no no

Guyana no Subm no n.a. no

Honduras no Subm no no no

Jamaica YES no no n.a. YES

Mexico YES YES Subm. no no

Nicaragua YES Subm YES no no

Panama no Subm. no no no

Paraguay no Subm Subm no no

Peru YES YES no no no

St. Kitts and Nevis no no no n.a. no

St. Lucia no no no n.a. no

St. Vincent & the Grenadines no no no n.a. no

Trinidad and Tobago YES no no n.a. YES

Uruguay no no no no no

Venezuela no Subm no no no

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NOTES: The information has been prepared by MichaelPinto-Duschinsky, a member of the board of directors of theInternational Foundation for Election Systems, with the assis-tance of Violaine Autheman and Jeffrey Carlson. DanielZovatto of IDEA also contributed to the data collection phaseof this matrix. The matrix records laws and regulations inforce in some countries as of 1 January 2000 and for otherson 1 September 2001. Laws are not always clear and theassignment of categories is some cases a matter of judgement.While care has been taken in the preparation of the matrix,there is always the possibility of error. Corrections and com-ments on interpretations of categories will be gratefullyreceived at [[email protected]].

Col. 1. Measures the present or absence of campaign orparty finance law(s) on disclosure.

Col. 2. ‘YES’ means that income AND/OR expenditureaccounts must be submitted to a public authority and madeavailable for public scrutiny. 'Submit' means that incomeAND/OR expenditure accounts must be submitted to a publicauthority but need not be made available for public scrutiny.

Col. 3. ‘YES’ means party must disclose identities ofdonors. Where donations need be disclosed only if theyexceed a certain threshold, this is recorded in Column 7.

Col. 4. ‘YES’ means the income AND/OR expenditureaccounts of the candidate must be disclosed as distinct fromthose of the candidate's party. 'N.a.' (not applicable) means thatthere is no election for the position of chief executive in thecountry concerned. Panama: except for independent candidates.

Col. 5. 'YES' means the income AND/OR expenditureaccounts of the candidate must be disclosed as distinct fromthose of the candidate's party. Brazil: Senators only;Colombia, Panama: except for independent candidates.

Col. 6. ‘YES’ means donors themselves must disclosetheir donations. Where donations need be disclosed only ifthey exceed a certain threshold, this is recorded in Column 7.Bolivia, Colombia: by corporations.

Col. 7. ‘None’ means that there is no threshold for dis-closure and that all relevant donations must be disclosed orsubmitted. Bolivia: all donations from private companiesmust be disclosed.

Col. 8. This column is a Disclosure Index which indi-cates how many types of disclosure laws are on the books in acountry. The three types of laws are: disclosure by politicalparties of income and/or expenditure accounts; disclosure bycandidates for presidential or legislative office; and disclosureof the identity of specific donors. Coding is as follows:4=countries with three types of disclosure laws; 3=countrieswith two types of disclosure laws; 2=countries with one typeof disclosure law.; 1=countries with no disclosure laws.

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BY DONOR THRESHOLD DISCLOSUREFOR DISCLOSURE INDEXOF DONATIONS

(by parties, candidates or by donors, in US Dollars)

6 7 8

no n.a. 1

no none 3

no n.a. 1

no n.a. 2

no n.a. 1

YES none 3

YES 581 4

no n.a. 2

YES none 3

no none 2

no n.a. 1

no n.a. 1

no n.a. 2

no n.a. 1

no n.a. 1

no n.a. 1

no n.a. 1

no n.a. 1

no n.a. 2

no n.a. 2

no n.a. 2

no n.a. 1

no n.a. 1

no n.a. 2

no n.a. 1

no n.a. 1

no n.a. 1

no n.a. 2

no n.a. 1

no n.a. 1

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Enforcement is a key component of any polit-ical finance regime. In addition to beingbased on sound policy and administrative

practice, to be effective, enforcement must also relyon checks and balances that encourage respect forthe law. Political culture is part of the foundationupon which the system is built. An effectiveenforcement regime is one that enjoys legitimacy inthe eyes of the parties, the candidates and, especially,the electorate.

CONCEPTUAL FRAMEWORK, RELEVANCE, AND VALUES

Enforcement is essential to any regulatory system,including the regulation of political finance. Thereason for this is quite simple: without enforcement,laws—no matter how well-intentioned—have littlevalue. This fact has been recognized by lawmakersand scholars alike. To quote just one: "Enforcementdemands a strong authority endowed with sufficientlegal powers to supervise, verify, investigate and ifnecessary institute legal proceedings. Anything lessis a formula for failure."2 Without adequate enforce-ment, therefore, political finance regulations—whether they involve limits, bans, or simply disclosurerequirements—have little meaning and are unlikelyto be respected.

Enforcement comprises several elements. At aminimum, it necessitates that offenses and penaltiesbe clearly identified in law. Enforcement cannot beleft to chance or to purely informal arrangements.Lawmakers must anticipate that parties and candi-dates will seek ways to get around limits and disclosurerequirements. Thus, penalties should be clearly providedin statute—and they should be appropriate to theparticular offense.

Secondly, enforcement implies an authorityendowed with the capacity to monitor for compliance,investigate alleged infractions and, where necessary,the power to apply the appropriate penalties.Rigorous audit procedures are necessary to enableeffective monitoring. Sufficient resources—in theform of training and personnel—are also necessaryto enable timely and effective investigations.

Finally, enforcement mechanisms must be neutralor independent of government. Without such inde-pendence, a political finance regime will lack legitimacy,both among the entities being regulated and amongthe general public. Public trust is a key to any effectiveenforcement regime.

RELEVANCE OF THE CONCEPTEnforcement is central to any study of political

financing for at least three reasons. First, because alack of enforcement brings the entire politicalfinance regulatory regime into question, the integrityof the process is at stake. And just as enforcement iskey to maintaining the legitimacy of politicalfinance regulations, so the latter are integral to thedemocratic process. According to one observer,“Unenforced limits are worse than no limits becausesome day they will produce a scandal which willdamage people’s trust in democracy as a form of

ENFORCEMENT MECHANISMSFOR POLITICAL PARTY FINANCING1

Miriam Lapp, Senior Policy and Research Officer, Elections Canada


2 Khayyam Zev Paltiel, Party, Candidate and Election Finance: ABackground Report. Ottawa: Royal Commission on CorporateConcentration, 1976, available from Supply and Services Canada.

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government and in democratically elected leaderswho do not live up to their own laws.”3

Secondly, when one examines the situation on the ground in most countries today, it quicklybecomes clear that “There is … too much law andtoo little enforcement.”4 Any study with the aim ofproviding practical tools and solutions to policy-makers must therefore draw attention to thecentrality and necessity of enforcement mechanisms.

Finally, the state of knowledge concerning theenforcement mechanisms that do exist is quite limited. Very little has been written about enforce-ment from a practical point of view. There is stillno systematic study of enforcement mechanismsacross states. This is particularly evident withrespect to the OAS member states.

COMPLEXITYOne reason for the relative lack of study on

enforcement may be the complexity of the topic.One recent examination of the subject draws attention to the basis and content of the rulesthemselves—including the important issue of iden-tifying which actors are subject to politicalfinancing regulations—as well as to the applicationof the rules, which includes promoting and moni-toring compliance, conducting investigations, andapplying sanctions.5 Existing research points to considerable cross-national variation on each ofthese issues.

If scholars and practitioners are agreed thatenforcement is essential in order for politicalfinance laws to be meaningful, they differ greatlyon the best means by which to put it into practice.If too little enforcement renders political finance rulesmeaningless, too much enforcement can paralyze thesystem by rendering it overly rigid. Excessive reportingrequirements may also act as a deterrent to politicalparticipation by increasing the level of intrusioninto candidates’ personal lives and by raising thecosts of standing for elected office beyond the reach

of ordinary citizens. The challenge is to arrive at alevel of enforcement that makes political financeregulation meaningful without becoming a barrierto full citizen participation.

CURRENT APPROACHES ANDENFORCEMENT MODELS

1. What penalties exist?With respect to penalties, it is important that

they be linked to specific offenses. Penalties shouldvary in severity according to the seriousness of theoffense (administrative or criminal) and accordingto the degree of willfulness exhibited by the violator.

According to one survey, the most commontypes of penalties are:

◆ imprisonment;◆ loss of civil rights for those found guilty of

offenses (this may include a loss of the right to votefor a certain period of time and the loss of theright to stand as a candidate for office);

◆ forfeiture of seat in the legislature;◆ temporary loss of right to sit and vote in the

legislature;◆ forfeiture by a political party of part or all of

its entitlement to public funding;◆ forfeiture of contributions obtained in

contravention to laws or regulations;◆ fines (these can vary significantly in terms

of their severity).6

In addition to these, some jurisdictions alsoprovide for alternatives that are more remedial thanpunitive in nature. In Canada, for example, the

3 Karl-Heinz Nassmacher, “Monitoring, Control and Enforcement ofPolitical Finance Regulation,” in Handbook on Funding of Partiesand Election Campaigns, Stockholm: International IDEA (forthcom-ing).

4 Michael Pinto-Duschinsky, “Financing Politics: A Global View,”Journal of Democracy, 13.4 (October 2002), p. 80.

5 Nassmacher, “Monitoring….”

6 Michael Pinto-Duschinsky, “Breaches and penalties.” www.aceproject.org/main/english/pc/pcf.html (12/17/2001).

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commissioner of Canada Elections (the officialresponsible for enforcing the Canada ElectionsAct) has the authority to enter into complianceagreements with offenders or would-be offendersunder the act. A compliance agreement is a voluntaryagreement with the commissioner in which a contract-ing party agrees to comply with the requirements ofthe act and to fulfill the terms and conditions thatwere agreed upon to achieve compliance. Contractingparties avoid prosecution only if they comply fullywith the terms of the compliance agreement; otherwise, the commissioner can prosecute theoriginal offense. Compliance agreements must bemade public.

2. What implementing agencies exist?Annex A provides a partial list of enforcement

agencies in place in OAS member states. This prelim-inary information shows that the tendency is forenforcement to be the responsibility of the electoralmanagement body. Further research is necessary tocomplete the table for other member states.

EVALUATION OF ENFORCEMENT MODELSThere are a variety of ways by which the

enforcement process may be launched. Themethod requiring the least amount of resourceson the part of the enforcement authority is torely on complaints—by other parties, candidates,or political actors in the process or by a memberof the public. Monitoring and investigative func-tions under this model would not be automaticbut would instead be reactive. Another approachis to place responsibility for monitoring compliancewith the enforcement authority itself. This can bedone systematically or on a random-audit basis.Clearly, such approaches require considerably moreresources for the enforcement authority than a complaints-based model. A comprehensive approachwould rely on a combination of these models.

The choice of model will depend not only onthe level of resources available to the enforcement

authority but also to a significant degree on the pre-vailing political culture. For example, a complaints-based model is unlikely to work well where thereexists “…a culture of disregard for the law amongthe rival political parties and candidates.”7 Whereinformal “nonaggression pacts” between politicalrivals exist, a complaints-based system cannot berelied upon to reveal cases of noncompliance.8

Enforcement authorities in these circumstancesmust be given the mandate and resources to monitorsystematically and not be required to rely on theregulated entities to ensure compliance.

Even where the political culture is not a factor,a purely complaints-based model may prove ineffectivefor another reason: “… when legal challenges areleft to aggrieved individuals or parties (for instance,candidates who feel they have been unfairly defeated),the costs of initiating such an action may prove prohibitive.”9 Thus, regulators cannot assume that acomplaints-based regime will catch all violations—oreven the most serious ones. The truth of the matteris that effective enforcement requires adequateresources, regardless of who is responsible for initiating the process.

Political financing, by its nature, is a complexmatter, and the tendency is for legislators to renderit ever more complex by adding more and more regulations to try to close off existing loopholes. Asa result, “breaches of the rules … may be subtle andhard to detect. Without a qualified and properlytrained ‘detective force’ the authorities will frequently

7 Ibid.

8 For example, in late nineteenth-century Canada, political partiesengaged in the use of “saw-offs”— friendly agreements to withdrawequal numbers of contested election petitions before appealing tothe courts. This practice had the effect of diminishing the numberof complaints, making it appear as if fraudulent practices were indecline when, in fact, they were not. See: A History of the Vote inCanada (Ottawa: Minister of Public Works and GovernmentServices Canada, 1997), p. 44.

9 Pinto-Duschinsky, “Breaches and penalties.”

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take no action unless presented with a complaint.They will merely respond, but they will not initiateinquiries.”10

Political culture and level of resources are notthe only factors to consider. The nature of thepolitical finance regulations—whether they be located in a single law or in many—and of theenforcement authority itself are also important.According to Nassmacher, “the effective implemen-tation of political finance legislation is made moredifficult where different laws exist dealing with different aspects of the same subject. It is thereforeappropriate to distinguish between countries that have:

◆ One law regulating money in politics andonly one agency to implement it;

◆ Various laws and/or agencies for differentaspects of political finance; and

◆ No enforcement agency to implement thepolitical finance regime.

Evidence from established democracies indicatesthat only the first approach is likely to work well.”11

With respect to enforcement agencies, it isimportant to ensure that they are able to operateindependently, free of government or partisaninfluence. This may be achieved through a varietyof means, including:

◆ public expectations or a long tradition ofindependence;

◆ the status of a judge of the supreme court,auditor, or ombudsman;

◆ bipartisan or multiparty membership of thecommission, where members have to include theminority or the opposition;

◆ no reappointment of commissioners (lifetime or one-term appointments only);

◆ absence of budgetary strings (on an agencywhich has become awkward for the government); and

◆ absence of political pressure or governmentor party intervention on staff appointments.12

Further research on this question is necessary,however, to determine the degree to which thesevarious measures prove effective in ensuring theindependence of enforcement agencies. As with theissue of monitoring compliance, it seems likely thata combination of measures will prove most effectivein ensuring agency independence.

TENDENCIESPreliminary observations suggest that while

enforcement was once treated as a secondary issue,it is increasingly recognized as being as importantfor an effective regulatory regime as limits or disclo-sure. This recognition is by no means universal: Arecent study by the U.S. Agency for InternationalDevelopment showed that while many countrieshave well-developed legal frameworks with respectto disclosure, they still lack the political will toenforce them; as a result, disclosure laws in thesecountries must be said to be de facto only.13

Enforcement regimes tend to evolve over time,as they respond to changes in social context andpolitical culture. For example, with respect to penalties,some countries are moving in the direction of pro-viding alternatives that are less punitive and moreremedial in nature. As noted above, this has beenthe case in Canada, where since 2000, complianceagreements are available as an alternative to prose-cution. As an enforcement device, complianceagreements are less costly and time-consuming thanother alternatives, and serve to “decriminalize”minor offenses that are not criminal in nature.They have the added benefit of being applicable

10 Ibid.

11 Nassmacher, “Monitoring, Control….”

12 Ibid.

13 U.S. Agency for International Development -- Office ofDemocracy and Governance, Money and Politics Handbook: A Guide toIncreasing Transparency in Emerging Democracies, Technical PublicationSeries (September 2002).

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outside the court system, thus freeing up limitedresources.

It is generally recognized that effective enforce-ment should be based on a variety of mechanisms.It may be seen as an intricate web of checks andbalances that encourages respect for the law. Clearstatutory provisions with respect to what isrequired, who is responsible, and what penaltiesexist are one part of this web, but so too are lesstangible elements, such as agency expertise andlegitimacy, and most fundamentally, public trust inthe regulatory system as a whole. Civil society is seenas having a very useful role to play in helping toensure effective enforcement takes place, particularlywith respect to the monitoring function.

POLICY OPTIONSWhile there appears to be a consensus around

the general necessity of enforcement, with respectto its particular elements, no such consensus yetexists. Specifically, various policy options exist withrespect to:

◆ assigning responsibility for the use andreporting of political funds (e.g., requirement ofofficial agents to accept and spend political moneyon behalf of parties and candidates);

◆ identifying an agency responsible for imple-menting political finance regulations (single agencyor multiple agencies; relationship to government;resources; legitimacy);

◆ monitoring procedures (systematic, randomsample, or complaint-based? If complaint-based,does the system provide for timely public disclosureof relevant financial reports? Is there a requirementfor financial reports to be audited?);

◆ procedures for encouraging voluntary com-pliance (training of campaign workers; assistance;provision of material support; subsidies for auditingservices; public education);

◆ penalties (remedial or punitive?Administrative sanctions or criminal prosecution?Distinction between corrupt and illegal practices?Do sanctions vary according to severity of violation?).

In conclusion, it seems clear that no single solu-tion or mechanism is adequate to ensure effectiveenforcement. Those political finance regimes thatare recognized as being effective generally rely on acombination of factors—a web of checks and balances—to ensure that the system performs well. At thesame time, it must be recognized that no system, no matter how well-designed or resourced, is cast instone; periodic adjustments are necessary to ensurethat the system responds to changes in the politicalfinance environment, the law itself, and publicexpectations and values. Above all, an effectivepolitical finance regime is one that maintains thetrust of the parties, the candidates, the activists, and most importantly, the electorate.

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Argentina Federal judges with electoral jurisdiction

Bolivia Electoral management body

Brazil Electoral management body

Canada Electoral management body (specifically, the commissioner of CanadaElections, appointed by the chief electoral officer)

Chile Electoral management body

Colombia Electoral management body

Costa Rica Electoral management body/General Comptroller’s Office

Dominican Rep. Electoral management body

Ecuador Electoral management body

El Salvador General Comptroller’s Office

Guatemala Electoral management body

Honduras Electoral management body

Mexico Electoral management body

Nicaragua General Comptroller’s Office, electoral management bodyand the Ministry of Treasury and Credit

Panama Electoral management body

Paraguay Electoral management body

Peru Electoral management body

United States Electoral management body

Uruguay —

Venezuela Electoral management body

ANNEX A:ENFORCEMENT AGENCIES IN SELECTED OAS COUNTRIES

Sources: Data for Latin American countries provided by Daniel Zovatto. Data for Canada: www.elections.ca. Data for the United States: www.fec.gov/index.html

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The Carter Center established the AmericasProgram in 1986, when the WesternHemisphere was undergoing dramatic

political changes, striving toward democracy andopening economies. The program, a pioneer inmonitoring elections, made important contributionsto these profound changes in the region.

Today, the program helps deepen inter-Americanrelations through high-level policy conferences onhemispheric issues. The initial emphasis on promotingdemocracy through elections has evolved into second-generation projects to ensure new democracies aremeaningful in everyday life. Striving to make gov-ernments more accountable, the program helpscitizens and governments fight corruption, developmethods to make political financing more trans-parent, and involve civic groups in publicdialogue with governments on crucial nationalissues and laws.

The Council of Presidents and Prime Ministersof the Americas is key to these efforts. Based at theAmericas Program, the council includes more than35 current and former leaders from the WesternHemisphere led by former U.S. President JimmyCarter. The council uses its experience and voice togive visibility to pressing issues, search for cooperativesolutions to problems, bring together dividedcountries, and promote policy reform and concreteaction by multilateral organizations, governments,the private sector, and nongovernmental organizations.

INTER-AMERICAN RELATIONSCountries throughout the Western Hemisphere

struggle with an interrelated set of issues from debt,drugs, and deforestation to weak democracies.Many of these issues have both domestic and inter-national components and can only be resolvedthrough cooperative approaches involving severalcountries. Building on the findings of action-orientedconferences, the Americas Program has helped create coalitions to support stronger regional pro-tection of democracy and implementation of thehemispheric anti- corruption treaty.

DEMOCRATIC ACCOUNTABILITYThe Americas Program helps foster democracy

and builds accountability by promoting open, trans-parent interaction and communication betweencitizens and their government leaders, as well as bystrengthening systems of accountability within andbetween government agencies. The programstrengthens the citizen voice by promoting free andfair elections, broadening access to information socitizens can monitor government performance, fostering public discussion of proposed legislation,and encouraging routine publication of govern-ment documents—a crucial element of the people's"right to know" in a democracy.

THE AMERICAS PROGRAM

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THE CARTER CENTER


Overview: The Carter Center was founded in1982 by former U.S. President Jimmy Carter andhis wife, Rosalynn, in partnership with EmoryUniversity, to advance peace and health worldwide.A nongovernmental organization, the Center hashelped to improve life for people in more than 65countries by resolving conflicts; advancing democ-racy, human rights, and economic opportunity;preventing diseases; improving mental health care;and teaching farmers to increase crop production.

Accomplishments: The Center has observed45 elections in 23 countries; helped farmers double or triple grain production in 15 Africancountries; mediated or worked to prevent civil andinternational conflicts worldwide; intervened toprevent unnecessary diseases in Latin America andAfrica, including the near eradication of Guineaworm disease; and strived to diminish the stigma against mental illness.

Budget: $33.9 million 2001-2002 operatingbudget.

THE CARTER CENTER AT A GLANCE

Donations: The Center is a 501 (c)(3) charitableorganization, financed by private donations fromindividuals, foundations, corporations, and inter-national development assistance agencies.Contributions by U.S. citizens and companies are tax-deductible as allowed by law.

Facilities: The nondenominational Cecil B. DayChapel and other facilities are available for weddings,corporate retreats and meetings, and other specialevents. For information, (404) 420-5112.

Internships: The Center’s internship programhas been rated one of America’s best by thePrinceton Review.

Location: In a 35-acre park, about 1.5 mileseast of downtown Atlanta. The Jimmy CarterLibrary and Museum, which adjoins the Center, isowned and operated by the National Archives andRecords Administration and is open to the public.(404) 331-3942.

Staff: 150 employees, based primarily inAtlanta.

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The Carter Center, in partnership withEmory University, is guided by a funda-mental commitment to human rights

and the alleviation of human suffering; it seeks to prevent and resolve conflicts, enhance freedom and democracy, and improve health.

While the program agenda may change, The Carter Center is guided by five principles:

■ The Center emphasizes action andresults. Based on careful research and analysis,it is prepared to take timely action on importantand pressing issues.

■ The Center does not duplicate the effectiveefforts of others.

■ The Center addresses difficult problemsand recognizes the possibility of failure as anacceptable risk.

■ The Center is nonpartisan and acts as aneutral in dispute resolution activities.

■ The Center believes that people can improvetheir lives when provided with the necessary skills,knowledge, and access to resources.

The Carter Center collaborates with otherorganizations, public or private, in carrying out itsmission.

MISSION STATEMENT

ONE COPENHILL

453 FREEDOM PARKWAY

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FINANCING DEMOCRACY IN THE AMERICASin Latin America. These organizations fund educa-tional and party-building activities by Latin American political parties. In October 2002, the OAS