A political regime where power belongs to a small, close-knit group of people is called an oligarchy. Oligarchs control both the means of production and the levers of power. They monopolize and exploit sectors of the economy to concentrate political power in their hands, and they exploit that power to expand their wealth.
In Ukraine, the word «oligarch»usually refers to a handful of the richest Ukrainians: Rinat Akhmetov, Ihor Kolomoiskiy, Viktor Pinchuk, Dmytro Firtash, Viktor Medvedchuk, and Petro Poroshenko. Some researchers believe that one thing every oligarch must own is TV channels, so they limit the list of oligarchs to such individuals.
But oligarchs primarily use their TV channels to promote their own political projects to help them maintain power. While just a handful of the richest oligarchs own nationwide TV channels, they all take advantage of parties. At the local level, however, oligarchs don’t necessarily need entire parties: an oblast or local branch will suffice.
Political parties – the main oligarchic tool
Local oligarchic groups buy the right to use the brands of highly rated parties from national oligarchs – essentially party «franchises.»This makes systemic influence over those in power the main characteristic of an oligarch, and TV channels are not the only way to wield this influence. The main instrument for holding on to oligarchic power is influence over political parties. It is through them that oligarchs promote people from their clans to power, who then act as their political pawns.
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In order to undermine that influence, ensure transparency of funding and increase control over party finances, the Verkhovna Rada introduced public funding for political parties in a law passed in October 2015. According to this law, all parties represented in Verkhovna Rada would receive public funding, and the ones that gained over 2% of the vote but did not pass the threshold to gain seats would receive it right after regular Rada elections. In 2019, the newly elected legislature dropped this rule.
This was the second attempt at introducing public funding for political parties in Ukraine. The first one was in 2003 and was abolished shortly after, too. Elsewhere in the world, this practice has existed for a long time. 78 out of 173 countries practice some form of public funding for political parties. For Ukraine, it was part of the «anti-corruption package of laws»and one of the conditions for visa-free travel with the EU.
Early results of the law on public funding for parties
The five years that the law was in force make it possible to draw some conclusions about its effectiveness and accomplishments. At least four stand out:
1. Party activities have become more transparent
Anyone can find out how a given party is funded and see its financial statements on the website of the National Agency for Prevention of Corruption. In the past, all information about political parties was unavailable unless a party chose to publish it, and there was barely any opportunity to verify such information. These days, party statements are interesting material for journalistic investigations and analytical research. They help understand whether a party really engages in any activities: whether it has staff and offices, holds events or commissions political advertising, or it was just registered for technical purposes.
2. It is harder for parties to work officially
The 2015 law seriously limited the options for parties to receive funding on their official accounts. The restrictions applied to donation sizes and to who might fund parties. In order to comply with the new law, parties had to meticulously track who made donations and return them if the donor did not meet the requirements of the law. This was not a problem for oligarch-funded parties, as their employees were paid unofficially, and official payments were only made when there was no other option. The parties that have decided to live on donations from their supporters also use shadow schemes to bypass restrictions. For example, Demokratychna Sokyracollects donations to the account of an NGO by the same name.
3. Public funding has not stabilized the work of parties
Of the six parliamentary parties with public funding, just two, European Solidarity and Batkivshchyna, managed to get seats in the latest convocation of the Verkhovna Rada. Others have either suspended their work or are limited it to a few branches. Narodniy Front, the biggest party in the previous Rada, was unable to run in any race despite receiving public funding. The parties currently in the Rada receive public funding, too, but they are not doing any work to build their parties, as the latest local elections showed.
4. Oligarchic influence on parties has not diminished
Not a single party has managed to get into the Verkhvona Rada without advertising on oligarch-owned TV channels. The lists of every party in the Rada feature some individuals who represent oligarchic groups. Every party in the Rada also pays «incentives»under the table to its MPs. And the way MPs vote shows which oligarch group’s interests they are promoting. This is true for both the Verkhovna Rada and local councils.
How to make party finance reform better
Of the four takeaways from the 2015 law, three are negative. This doesn’t mean the reform should be scrapped, even if voters would welcome the idea. The law cannot be rescinded because this is one of Ukraine’s international commitments. What that means is that the reform approach needs to be improved.
Stable public funding for parties cannot be the sole factor that reduces political corruption or the influence of oligarchs – or ensures sustainable development. Party leaders can always be bought or removed, and that is enough for the totalitarian organizations that Ukrainian parties are today.
This is why oligarchic funding of parties is not the problem, but the result of another problem. To solve it, parties should be made more democratic and procedures within them more transparent. In a nutshell, Ukrainians should be able to influence politics in general, while party members should be able to influence the decision-making of their parties. The reform of political parties cannot be limited to party funding. It needs to be comprehensive and have at least three components:
1. Democracy and publicness within parties
The election of party leadership and executives, the gaining of membership and expulsion, nomination for elections and approval of political agenda are key for any party. All meetings of the party executives where decisions are made on such matters should become public.
This will create honest intraparty competition and prevent bargaining in party franchises, seats or positions on election lists, and hostile takeovers of parties – raiding. Discussions of operational issues or strategic planning of political actions, and so on, can obivously take place behind closed doors.
2. A consolidated party registeration portal
In order to make an informed choice about which parties to support, voters need access to information about them. PR events for party politicians or political advertising is not enough. This portal should contain relevant information about every political party, including its platform, statutes, all party organizations together with the size of the membership and current contacts, all the executive bodies at all levels, all scheduled plans for public meetings of party executives (see #1), all financial statements, the number of votes gained in all elections at all levels by all deputies of all levels and UTC mayors elected from that party, and a note on the party’s history, including possible previous iterations, former leaders, and so on.
3. «Money follows the voter.»Funding through 1% income tax
To make parties more dependent on the opinions of their voters and less so on the opinions of the oligarchs, voters should be able to support them financially. This will also be considered public funding, just using a different model. Voters should also have the right to change their decision at least once every six months, but not more often than once every quarter.
This will be the most effective way for citizens to support the actions of politicians. Manipulated public opinion polls will no longer play an important role. In order to receive money for their work, parties will have to continuously communicate with the voters, explain their actions and implement their platforms, while voters will have a chance to continuously verify how much the parties’ actions match their declared agendas.
Other options for party funding should not be restricted. Quite the contrary, they should be simplified as much as possible. Transparency is the priority. Voters will know who funds the party and that will offer them a reason to support the party. Altogether, voters will be able to delve deeper into political nuances, develop a better electoral memory, and make more informed choices as a result.
Decentralizing parties
These three simple steps will allow Ukraine to break the oligarchic collusion at the national and regional levels. There will still be ways to influence party members, of course, but it will become far more difficult and costly – even unprofitable, in the language of business.
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Parties will become real parties. In other words, they will begin to represent the interests of their members first, then their voters, rather than the interests of a handful of rich folks. Parties and politicians will begin to value their reputations, nominate the best as candidates and elect the best as their leaders and executives. Social lifts will finally start working and political corruption will stay in a very curtailed and concealed form, if at all.
The clean-up of political parties will lead to the healing of Ukrainian politics and eventually to real reforms at all levels of government.
Translated by Lidia Wolanskyj
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