12 Feb, 2024
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Suspension or reduction of state financing of political parties’ statutory activities for the duration of martial law or state of emergency?
Event
On January 10, 2024, Dmytro Kostiuk, a member of the Ukrainian Parliament, used his legislative initiative to submit to the Verkhovna Rada of Ukraine the draft law of Ukraine “On Amendments to the law of Ukraine “On political parties in Ukraine” (Registration No. 10401) on the suspension of state financing of statutory activities of political parties during martial law (hereinafter – the Draft Law).
According to article 88 of the Constitution of Ukraine, the Head of the Verkhovna Rada of Ukraine designated the Verkhovna Rada’s Committee on Legal Policy as the main committee for the preparation and preliminary review of the Draft Law.
The Draft Law proposes to amend Article 17-7 of the law of Ukraine “On political parties in Ukraine” (hereinafter – the Law) by supplementing it with paragraph five, as follows: “State funding of statutory activities of political parties shall be suspended for the entire duration of martial law”.
According to paragraph 1 of the explanatory note to the Draft Law, the deficit of the State Budget of Ukraine is expected to make up half of the total budget – that is, UAH 1 trillion 571.5 billion. Approximately half of the state budget is allocated to security and defense expenditures. As the state’s top priority during the war, it is planned to spend UAH 1 trillion 692.6 billion on these items, which amounts to 22.1% of the GDP. At the same time, in accordance with the Law of Ukraine “On the State Budget of Ukraine for 2024”, the budget program CPCEC 6331020 “Political parties’ statutory activities financing” approved the budget allocations in the amount of UAH 840 million 526.6 thousand.
In this regard, according to the Draft Law’s initiator, it is necessary to suspend the state financing of political parties for the entire duration of martial law. The funds released as a result should be redirected towards funding for the Armed Forces of Ukraine.
CPLR’s experts assessment
In analyzing the Draft Law, it is worth noting that the Law related to state funding of political parties was supplemented by Section IV by the Law of Ukraine №731-VIII of October 8, 2015. The legislative amendments of 2015, as follows from the title, relate to the preventing and countering corruption.
As previously mentioned in the explanatory note to the draft of the eventual Law №731-VIII:
“The main objective of the draft law is to reduce the risks of political corruption by introducing comprehensive amendments to the Ukrainian legislation on financing of political parties and election campaigns. The main objectives of the draft law are as follows:
1) strengthening financial independence of political parties, reducing their dependence on funding from private donors (oligarchs, industrial and financial groups, etc.), and reducing the corresponding corruption risks;
2) strengthening intra-party democracy, creating conditions for free and fair inter-party competition and development of new parties by introducing state financing of parties (including parties that did not participate in the distribution of parliamentary seats in the nationwide constituency, but received a significant number of votes), and establishing restrictions on private donations in favor of parties;
3) increasing transparency of financing of political parties and their local organizations, as well as increasing transparency of election campaign financing;
4) introducing effective state control over political party and election campaign financing;
5) establishing effective, proportional, and efficient sanctions for violations in the area of political party and election campaign financing;
6) integrating international standards in the area of policy financing and best European practices in this area into the national legislation of Ukraine;
7) creating financial incentives to ensure balanced gender representation in the Verkhovna Rada of Ukraine and the relevant local councils;
8) implementing the recommendations of the Group of States against Corruption (GRECO), the Venice Commission, the OSCE/ODIHR, and other international organizations on improving the legislation on transparency of political financing;
9) strengthening the conditions for visa liberalization between Ukraine and the EU”.
A number of civil society institutions, including the International Foundation for Electoral Systems (IFES), Reanimation Package of Reforms, Transparency International Ukraine, Center for Political Studies and Analysis, CHESNO civic movement, and CSO “Centre.UA”, have been involved in the drafting of the eventual Law №731-VIII.
Subsequently, on June 17, 2022, the list of seven recommendations of the European Commission that Ukraine should implement in order to comply with or maintain the candidate status included the fight against corruption and money laundering.
In the conditions of russian full-scale aggression, parliamentary political parties are actually existing at the expense of the state budget, given the fact that private financing of parties during the war has significantly decreased and is likely to be at a minimum in the post-war difficult times. It follows that the abolition of state financing of parliamentary parties will lead to increased political corruption.
Moreover, it remains unclear as to why the Draft Law’s initiator believes that the suspension of state funding of political parties should be applied only during martial law and cannot be applied during the state of emergency.
As such, the suspension of state financing of political parties is unjustified and corruption-sensitive.
Nevertheless, it is suggested that, during the special constitutional regime of martial law or the state of emergency and in light of the significant deficit of the State Budget of Ukraine, it would be advisable to introduce a proportional and reasonable reduction in expenditures for state financing of political parties. However, any reduction of the State Budget of Ukraine expenditures on political party financing should be adequate to ensure full-fledged functioning of political parties, including payments for salaries to employees, maintenance of premises, as well as utilities, electricity, and communications.
Taking into account the above arguments, in our view, the Draft Law should be rejected.
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