The state funding of statutory activities of political parties in Ukraine as an innovation against political corruption

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The state funding of statutory activities of political parties in Ukraine as an innovation against political corruption

Tkachuk Iryna

The existing methods of fighting against political corruption, which are used in Ukraine, are not effective. That is why the logic of financing the activities of political parties should be changed.

Purpose. The aim of the article is to investigate the peculiarities of introduction and application the State funding of statutory activities of political parties in the context of fighting with corruption in Ukraine.

Results. The political corruption as an element, which destroys the logic of relations between the State, Society, and Business was highlighted. The necessity of using democratic innovations to fight out the political corruption in Ukraine was proved.

The peculiarities of the provision of financial support to political parties from the State Budget of Ukraine were clarified and prospects for the period until the next parliamentary elections were marked. The main goals of implementation of the state funding of statutory activities of political parties in Ukraine and the result of it in the present stage were compared.

Conclusions. The study showed, that the introduction of state funding of statutory activities of political parties in Ukraine allowed not all the goals (and not fully) to be achieved. Nevertheless, it should be noted that in the countries with the experience of supporting the statutory activities of political parties from the state budget, the process has been adjusted and the law has worked "efficiently" only in 8-10years. Therefore, given the positive aspects that characterize the state support of political parties in Ukraine in such a short period of time, one should expect a positive final result.

Keywords: innovations, corruption, political parties, state financing, state budget, minimum wage.

Ключові слова: інновації, корупція, політичні партії, державне фінансування, Державний бюджет, мінімальна заробітна плата.

political party corruption society

Acknowledgment. This scientific article was created at the Fil. Dr. Jan-U. Sandal Institute, Finstadjordet, Norway under the supervision of Prof. Fil. Dr. Jan-Urban Sandal, Executive Director and Owner at the Fil. Dr. Jan-U. Sandal Institute (Excellence in Science and Education). The paper was created with the support of Summit Fund (ES-01-A- Scientific Entrepreneur Grant) awarded by Fil. Dr. Jan-U. Sandal Institute.

Actuality of research. In democratic countries, citizens delegate their rights to manage the state by participating in elections. In such way, they choose the particular persons and political parties, which they like. However, the activities of political parties in Ukraine are not trusted (Freedom house, 2018) by the public and are the subject of harsh criticism of it. The reason is the high level of corruption and the presence of significant financial costs in the periods of elections and between them. Thus, it is apparent that the policy of political parties is largely determined by their "sponsors", which can be their members or simply lobby for their interests through some of the members of political parties (Freedom house, 2018).

Obviously, the existing methods of fighting against political corruption, which are used in

Ukraine, are not effective. That is why the logic of financing the activities of political parties should be changed. One of the most suitable methods for this aim is the state funding of statutory activities of political parties, which is in common use in the economic developed countries, but it has been just established in Ukraine.

Literature review. Political corruption in Ukraine and State funding of political parties' statutory activities as an innovation has not yet been examined in interrelation. Thus, there are researchers of corruption and researchers of innovations. However, they are working separately. Some Ukrainian scientists paid attention to the financing of political parties in Ukraine. The most well-known of them are Obushny, S. (Obushny, 2008), Bondarenko, B. (Bondarenko, 2017), Brusencova, Ya. (Brusencova, 2016), Kopytko T. (Kopytko), etc. However, almost of all their researches of political parties were conducted to highlight the political aspects of political parties existing. Nevertheless, we are interested in it, in the context of fighting against political corruption in Ukraine, which must lead to strengthening the financial independence of political parties, their political power, and competitiveness.

The aim of the article is to consider the peculiarities of introduction and application of the state funding of statutory activities of political parties in the context of corruption fighting in Ukraine.

Information basis. Carrying out our investigation, we have used:

- Official data of State Statistic Service of Ukraine;

- Scientific publications related to the problem of political parties funding;

- Materials from the World Wide Web.

The methods of research.

To achieve this goal, a number of general and specific methods and techniques of research were used. Calculating the conditional amount of state financing of statutory activities of political parties that affects one citizen of Ukraine and comparing the amount of state financing statutory activity of political parties, which is equal to one person, with average salary index, we used deduction and scientific abstraction, a systematic approach. For the graphical presentation of the results of the investigation, we used the method of visualization.

Results of the research.

The understanding of the concepts of "innovation" and "corruption" is basic for our research. Therefore, we will study the existing approaches for understanding these concepts in order to identify the most suitable for Ukrainian practice. Today there are a large number of approaches to the interpretation of the above concepts.

The concept of corruption covers the everyday life of every Ukrainian, but it is often used without a deep understanding of its very nature. The key element for understanding corruption is an affiliation with the authorities and the power to make decisions in favor of one or another person. Otherwise, there is no concept of corruption, but the concept of business relations, etc.

The most popular and common used definition was given by World Bank. According to it, corruption is "the abuse of public power for private benefit" (Baghava, 2005).

Transparency International defines it as the "misuse of entrusted power for private gain" (Transparency International).

Begovic B. gives us one more useful explanation of the essence of corruption. He highlights corruption according to the enforcement point of view. Thus, "corruption is a contract. It is an informal contract because it is illegal" (Begovic, 2005).

According to the aim of such contracts, corruption is divided into three main types (Begovic, 2005):

- Individual, "selfish" corruption.

- Administrative corruption.

- Political corruption.

The first one occurs when an individual wants to speed up obtaining a result using existing rights.

The second one "corresponds to the principle-agent model of corruption, as the total supply of corruption (demand for the bribe for violating the rules) is provided by the civil servants" (Begovic, 2005).

Political corruption is a type of corruption that is "aimed at changing the rules and regulations into rules and regulations that favor the interests of the corruptor" (Begovic, 2005).

It is obvious that these types of corruption are distinguished not only by the aim of corruption but by the level of corruption too. Therefore, the individual corruption occupies the lowest level of society and the political corruption occupies the highest one and is the most dangerous one because it eliminates the fundamental principles of interaction between society and the state; reduces the role of the power authorities.

In this meaning, it is very important to investigate the essence and the role of political corruption. The director of International Affairs of the World Bank Vinay Bhargava regards it as that power that makes lawmakers act not in the interests of citizens but in the interests of their supporters, who gave them political or personal benefits (Baghava, 2005). This definition is very important for us, as it gives the basic understanding of corruption, which means transferring the benefits of the state power activities from the state and all the citizens to the particular persons.

In the absence of external interference in their interaction, there is a natural exchange of goods, works, and services received by the population and business in exchange for the payment for them (in the form of taxes). Fig. 1. demonstrates how political corruption destroyed the natural interaction between state, business, and citizens. Business and citizens pay taxes (black lines) and are waiting for receiving of their benefit, but this process is distorted (green dashed line). The reason is that some economic actors (particular persons or representatives of business) give bribes or other advantages to the lawmakers or public persons, who can influence the process of decision-making (orange line) and wait for their own advantages (blue line).As the instruments of fighting against corruption using in Ukraine were not effective, it became clear, that it should be used innovations in this field.

There are many approaches for the explanation of the innovation. In the common use, innovations are divided into two large groups: product innovation and process innovation.

"Product innovation is the act of bringing something new to the marketplace that improves the range and quality of products on offer and process innovation is a new way of making or delivering goods or services" (Princeton asset). However, recently one new type of innovations started to be the object of investigation. This type is democratic innovations.

Brigitte GeiGel (2012, p.164) states that democratic innovation is a "new practice consciously and purposefully introduced in order to improve the quality of democratic governance in any given state, irrespective of whether the innovation in question has already been tried out in another state". In addition, she specifies, those democratic innovations "involve citizens in the decision-making process" (GeiGel, 2012, p. 163). Smith (2009, p. 1), who writes that democratic innovations are "institutions that have been specifically designed to increase and deepen citizen participation in the political decision-making process", shares this opinion.

Today, many problems accompany the activities of political parties in Ukraine. As we have mentioned, we can overcome them by using democratic innovations. Eltsub and Escobar (2017) share this opinion. They emphasize, "The focus on democratic innovations has arisen in the context of perceived limitations and failings of representative democracy's dominant institutions such as elections and parties. Democratic innovations are thought necessary to help overcome these problems".

In economic and democratic developed states of the world, the problem of the influence of the owners of large capital on the activities of political parties also existed always. Therefore, in order to reduce the level of dependence of political parties from sponsors, to strengthen democratization, and to increase the level of fair competition between political parties in many countries, state funding of statutory activities of political parties was introduced.

Financing statutory activities of political parties has been introduced in almost all European countries (excepting Andorra, Belarus, Malta, Moldova and Switzerland) [Financing of political]. Access to funding is practically the same for political parties of all states and is provided by obtaining some support in parliamentary elections. At the same time, the mechanism of distribution of the funding in different countries varies significantly. Thus, in some states, the funding is distributed in proportion to the number of votes cast for a particular political party or seats received by political parties in parliaments in the elections (Belgium, France, Estonia, Finland, Spain, Bulgaria, etc.). In other states, a certain share of the fund is distributed equally, and the other - in proportion to the support received by voters (Hungary, Portugal, Slovenia, etc.).

It is interesting, that in almost all states that have introduced direct state funding for the activities of political parties, it is not the only source of their budget financial support. For example, various tax deductions are granted in countries like Belgium, the USA, Croatia, Cyprus, Czech Republic, Germany, France, Hungary, Italy, Denmark, Estonia, Finland, France, Latvia, Malta, Netherlands, Portugal, Romania, Slovakia, Norway, Turkey, Australia, Canada, India, Japan, Korea and others. In addition to the tax reductions, other methods of direct and indirect state support of the activities of political parties are used in the developed world. Such methods are supporting the promotion of political parties, providing them with a simplified procedure, with a certain discount on premises, and even free or subsidized shipping costs (CESifo DICE, 2016).

The Group of States against Corruption (GRECO), the Venice Commission, the Organization for Economic Cooperation and Development, the OSCE, Bureau of Democratic Institutions and Human Rights (BDIHR), and the International Foundation for Election Systems required introducing the state funding of statutory activities of political parties in Ukraine (Verkhovna Rada of Ukraine, 2015).

According to all the above, the introduction of direct State funding of statutory activities of political parties in Ukraine was expected and predictable.

The introduction of State financing of statutory activities of political parties in Ukraine pursues a number of goals, among them the most important are the following (Verkhovna Rada of Ukraine, 2015):

Strengthening the financial independence of political parties and reducing the corresponding corruption risks;

Strengthening intra-party democracy, creating conditions for free and fair inter-party competition and the development of new parties;

Increasing the transparency of funding of political parties and their local organizations;

Introduction of effective state control in the field of financing of parties;

Establishment of effective, proportional and effective sanctions for violations in the sphere of financing of parties;

Taking into account international standards in the field of financing of the policy and best European practices in the relevant field in the national legislation of Ukraine;

Creation of financial incentives for balanced gender representation within the Verkhovna Rada of Ukraine, relevant local councils;

Strengthening the conditions for the liberalization of the visa regime between Ukraine and the EU.

Taking into account the above-mentioned goals, we will analyze the peculiarities of providing state financing of statutory activities of political parties in Ukraine.

The procedure for calculating the annual amount of state financing of statutory activities of political parties involves taking into account the established minimum wage and the number of voters who took part in the last regular or snap elections of people's deputies (Fig. 1).

Figure 1 - Procedure for determining the annual amount of financing of statutory activities of political parties of Ukraine from the State Budget (The Law of Ukraine, 2016)

Fig. 1, shows us that in order to maximize the financing of their statutory activities, political parties are interested not only in obtaining the highest percentage of votes but also in increasing the overall turnout of elections because the annual volume of State financing of statutory activities depends directly on it.

This volume also depends on the indicator of the minimum wage. That is why, for those political parties, which are represented in the Parliament, it is beneficial to contribute to raising the welfare of the population by increasing this indicator.

Since the total number of voters who took part in the parliamentary elections is a constant number throughout the period of public funding, then during this period, the total amount of financing depends only on the size of the minimum wage. According to the Central Election Commission (2014), the number of voters who participated in the recent snap elections in Ukraine is 16,052,228 persons. Thus, the size of the minimum wage in Ukraine and the total amount of state financing of statutory activities of political parties in Ukraine in 2015-2019 are presented in Table. 1.

Table 1 Minimum wage and total state financing of statutory activities of political parties in Ukraine in 2016-2019 (in annual terms)