How are the political parties în Romania funded?

After legislative modfications from the beginning of 2018 Romanian parties benefit from generous state subsidies

Vladimir Mitev

This article was published on 2 July 2019 on the site of the Bulgarian newspaper „Word”.

In Bulgaria Romania has been given as a shining example in justice and economic development for years. We have become accustomed to the notion, that Romanian are ”excellent students”, even though that they, just like us, feel dramatic the reality, which places their country in the last and the penultimate place in a number of European rankings. But even the successes, which Romania made after its entering the EU, have their shadow.

The fight against corruption put in jail a number of the dinosaurs of transition. It opened space for new faces in politics. But in the last years various abuses in the work of prosecutors and the illegal intervention of the secret services in the work of justice were mediatised. As far as the economic development is concerned, it should not be reduced only to the greater GDP. The business in Romania is empowered, after reforms of Labour code and the Law on social dialogue in 2011 have hit hard the labour unions, as they created a similar structure with limite rights – “representatives of workers”. Due to a number of reasons the GDP growth in Romania (just like in Bulgaria) is not felt by a large number of the population. At the same time the salary rises are undermined by the fact the social security payments were transferred from the employer to the employee…

It is probably tempting to think that somewhere exists somebody, who succeeds and from whom we can learn. Knowing our neighbours can also serve as a means to know better who we are, where we stand in the world and in regard to them. In this sense it is notable that no one proposed that we take example from “the excellent country” Romania with regard to the party’s funding. Why? Maybe because in the end of 2017 and the beginning of 2018 Romanian parties vote a significant growth of the subsidy.

In Bulgaria it is being discussed that oligarchy could overtake the parties easier than until now, if their subsidy is drastically cut. At the same time in Romania the discussions are focused on the partocracy, which has been affirming itself in the last two years. Due to the peculiarities of the Romanian political model, the people who want weakening of the oligarchy there usually support the fight against corruption, which neutralises the corrupted elites of transition. Namely in this period did the Romanian oligarchs affirm and the urban middle class now wants to see them behind bars or out of politics.

A look to the site of the Permanent Election Authority in Romania shows that only in March 2019 the Romanian parliamentary parties have received 13 350 939 lei (2 826 552 euro). More than the half of this money is given to the Social Democratic Party, which is the oldest and strongest party in Romania and has left the strongest footprint on Romanian transition. In 2018 the Social Democratic Party has received close to 97 million lei state subsidies (20,54 million euro). For the whole of 2018 the Romanian parties have received 37 million euro state subsidies, points out the site of Expert Forum – a liberal non-governmental organisation, based in Bucharest. According to the law for the Romanian state budget in 2019 this year the state subsidies for the Romanian parties will amount to 269 million lei (56,96 million euro). Expert Forum notes that the party subsidies in 2018 have been over 20 times greater than those given annually in the period 2008-2015.

This happened after in the end of 2017 and the beginning of 2018 the PSD-dominated parliament voted in support of the text: ”the subsidies, given to the political parties from the state budget are at least 0,01% and no more than 0,04% from GDP”. Before these changes accordng to the law for the political parties of 2006 the point of reference has not been GDP, but the budget income in Romania. In 2018 the Romanian GDP has been 202 billion euro.

A curious detail is that according the the current rules the political parties, which ”promote women in the electoral lists at eligible places receive a doubling of the subsidy, proportionally with the number of mandates, which the have been received by the elected women candidates”. Romanian social networks often ironise the fact that at high level politicians are almost completely men and when they make a photo at some meeting the lack of women in the picture is immediately noted. But one shouldn’t forget that one of the most hated political persons of Romania in the recent times has been the prime minister Viorica Dancila. She fulfills the requirement to be a woman, but creates the feeling that she is incapable of autonomous political action.

In this case what matters is the fact that Romanian parties managed to impose to have much larger subsidies. At the same time the budget of the intelligence services was cut on the indication of Liviu Dragnea. This happened before his entering in prisons. There has been renstion between two poles in Romanian politics for quite some time: the technocratic one, connected with the anti-corruption prosecution and the secret services, and the political one – the parties, whose line is best expressed by the Social Democratic Party. That is why one shouldn’t wonder why the reduction in the budget of the institutions from one of the poles is concomitant with a rise in the money for the institutions of the other pole.

More money for the parties means a great resource, which they can distribute in their clientelist networks, more possibilities for local structure and media activity. But here there are some differences in comparison with Bulgaria too. For example, in Romania for years exists the phenomenon of the political televisions. These are channels, which report exclusively political news, have permanent shows with analysts speaking and take clear positions on the division between the technocratic and the party sector in politics. But these televisions are not party channels. According to the law for political parties, the parties don’t have the right to have commercial economic activity with small exception, related to their propaganda activity. In spite of that the phenomenon of the political televisions, owned by oligarchs exists. People massively know that Romania Tv or Antena 3 are close to the Social Democratic Party, while B1 or Realitatea oppose it. If man informs from the televisions and wants to know what is going on, it is recommended that he watches channels with opposing political lines, because otherwise he risks to fall prey to propaganda and become a blind fan of one or another political lobby.

In spite of the generous subsidies the Romanian parties don’t fill their budgets only from the state budget. Other sources of income are: membership fees, donations, own economic activity and loans. For each of these sources there are some peculiarities.

The general sum, which a given party can receive in a given year as membership fees is unlimited. But each separate member can’t pay more than a given sum for membership – 48 minimal salaries, according to the value of the minimal salary on 1 January of the respective year. This means that the maximal level of membership fees payment for one member of the party is 91 200 lei (19 308 euro). Apart from that the name of each party member, who has paid a membership fee of more than 10 minimal salaries should be announced publicly. According to the data for 2016, quoted by the site of the civil society “Clean Romania” 55% of the income of the Social Democratic Party have come from membership fees. The share of this kind of income at the National Liberal Party is 23%, while at the party of the young in Romanian politics – the Union “Save Romania” it is 1%.

Otherwise look the budgets from the standing point of donations. The rule there is that the donation by a given physical person can’t overcome the level of 200 minimal gross salaries. In the case of juridical persons the limit is 500 minimal gross salaries. 90% of the income of the Union Save Romania have come from donations in 2016. At the National Liberal Party the share of donations has been 50%, while at the Social Democratic Party it is 15%.

The proper economic activity of the parties is limited to distribution of propaganda brochures or publications, sell-out of tickets for participationin parties’ events, rents for the real estate they own, interest rates, etc. This is usually a small share of the parties’ income. Loans, just like other income from proper economic activities have a modest share of the overall income. In present the greatest share comes from the state subsidies.

The rise of the subsidies creates concern in the institutions of the civil society, which usually approach critically the symbiosis between the parties and clientelism. In Romanian politics exists not only the divisiosn between the technocratic forces and the party political structures, but also between the so-called old and new parties. It is considered that the parties, which have realised the Romanian transitions – to the greatest extent the Social Democratic one, but also the National Liberal party, are representatives of the clientelist political model. They gain influence by the capability to distribute public resouces towards sponsors and members. That is why most of the condemned for corruption in the golden era of anti-corruption (when Laura Kovesi headed DNA) were among their ranks.

At the same time the classical new party in Romanian politics is the Union “Save Romania”. It has the least problems with justice. It expresses the interests of younger people, who are economically independent and generate their income to a lesser extent through redistribution of resources by the state. This party aims to privatise various social system, including because her members and supporters have the resources to live in a market society.

These divisions are seen also in the data for party funding, which are published on the site “Clean Romania”. While “the old” parties have more income from membership fees and state subsidies, the Union “Save Romania” relies most of all on donations. Therefore, it is better prepared to exist in a world, where there are no state subsidies for the parties.

For the time being it looks like the generous state subsidies for the Romanian parties are not contested seriously. The non-governmental organisations such as The Expert Forum call for increased control on the used funds in campaigns and on spending of state subsidies on part of the parties. Romania is getting ready for the presidential elections at the end of the year, from which depends what will be the future balance between the technocratic and political lobbies. If the new parties and the technocratic forces in Romanian strengthen their positions, for sure there will be cuts in the state subsidies. But for the time being we only read from time to time in Romanian press that “the most profitable business is the party business”.

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