OAS's Gaviria: Financing democracy in the Americas

I would like to begin my remarks by thanking The Carter Center for extending this generous invitation to speak to you here today. The OAS has worked closely with The Carter Center on topics of paramount importance to the hemisphere. Dating back to 1990, we have coordinated our efforts to observe elections throughout the region and worked together to raise the standards by which elections are judged to be free and fair.

Most recently, The Carter Center has been an invaluable partner in the effort to facilitate a peaceful, democratic, electoral, and constitutional solution to the political impasse currently afflicting Venezuela. President Carter's proposal to "Restore Peace and Harmony in Venezuela" came at a critical juncture and gave new life to the process, further strengthening the Negotiation and Agreements Roundtable. Although progress has been slow, I am still optimistic a solution can be reached. Without a doubt, any resolution to the crisis is ultimately in the hands of the Venezuelans themselves.

Of course, one cannot speak of The Carter Center without referring specifically to President Jimmy Carter and his myriad achievements. Mr. President, your 2002 Nobel Peace Prize award was a long overdue acknowledgement of your humanitarian efforts. Your dogged work and unflagging commitment to peace is an inspiration to all those who work to promote and defend democracy and human rights around the globe.

Ladies and Gentlemen:

After the dark night of dictatorships, democracy dawned in the hemisphere. I am convinced that the process of democratization in the Americas cannot be reversed; democracy, political freedoms and civil rights have taken root in our countries and are here to stay.

Amid this new democratic dawn, the hemisphere is currently suffering through a series of economic and political crises marked by continued economic hardship, very low rates of growth, declining per capita incomes, increases in poverty rates, expanding inequality and lack of faith in public institutions. At the same time, the explosion of information technologies has created a new and healthy demand for social justice, raising people's expectations and resulting in a kind of political globalization. Compounding the unhappiness with globalization is a new phenomenon in which citizens equate all of the problems that exist in their societies with the democratic system and the institutions, which compose it. This has placed enormous pressure on our political systems; pressure that our governments have been ill equipped to address. One can understand why the public's opinion of democracy is weakening and also why this meeting is so timely.

There is no question that it is impossible to have an effective democracy without strong and pluralist political parties. But recent data show political parties rank dead last in surveys of people's confidence in public institutions in Latin America. As an alternative, people are now turning to NGOs. Undoubtedly, NGOs are essential elements of a flourishing civil society and are an important component of democracy that should be promoted and strengthened. But one must never make the mistake of believing that they can replace parties in a democratic system.

We must work to improve the performance of the hemisphere's political parties. Parties should have at their disposal the best technical and human resources to address new challenges in a manner that best articulates their fellow citizens' aspirations.

We must guarantee that free, transparent, and periodic elections are held, where candidates compete on an equal basis for the support of the electorate and in which the electorate is assured of all the necessary guarantees to exercise the right to vote.

I am of the opinion, along with most academics and politicians, that direct state financing of campaigns does have a salutary effect on politics. I also believe that well organized political parties and efficacious oversight institutions can give us a satisfactory environment for the holding of free and fair elections. Nevertheless, there are those who voice objections to these propositions. Many caution that public financing can lead to parties demanding more and more money, greatly increasing the costs of campaigning; others fear that governments may become overly involved in party organizations; while some believe that direct state financing in underdeveloped countries results in an unhealthy competition for scarce state resources which should be earmarked for basic social services.

The existence of illicit money in election campaigns is also cause for growing concern throughout the Americas. The rise of illicit money can significantly distort electoral processes, calling into question the transparency of our elections, and, as a result, seriously compromise the legitimacy of democratic systems.

In some countries of the hemisphere, the transition to democracy has involved holding frequent elections at both the national and local levels. This proliferation of elections has not always brought with it clear rules guaranteeing transparency in campaign financing and in some cases, has spawned corruption. In other cases, the increasing costs of campaign financing have led to attempts to trade monetary contributions for favors from elected officials.

Unfortunately, experience has shown us that these negative aspects of campaign financing are extremely difficult to stop. Numerous approaches have been tried. Although there is a wide range of institutional arrangements in this area, they can be grouped under three major headings.

The first approach is to rely solely on accountability. This was the principal strategy employed before the first election campaign scandals erupted roughly 20 years ago. For accountability to function, there must be strong parties that appeal to the electorate and constitute alternative options. Above all, the opposition has to be both robust and loyal, in order to assure transparency and effective political control. Even in the few democracies in which such conditions exist, it is becoming clear that accountability alone is not enough to prevent money from exerting improper pressure on politics.

The second approach has been adopted, in various guises, by consolidated democracies. It consists of what might be called the mixed approach, with ceilings on both individuals' campaign contributions and on the outlays permitted for political propaganda, using government resources. This approach may consist of funding provided to political parties by the state prior to the elections. This system also allows the reimbursement of electoral expenses based on the final number of votes obtained. For this system to work, it is essential that the oversight bodies enforcing compliance with the ceilings for both contributions and expenditures operate effectively.

In addition to the political factor, there is also a legal dimension. Campaign donors who want to flout the laws that restrict donations invariably exploit loopholes to make their contributions. This system can also become distorted when there are no ceilings on contributions or if they are ineffective and, as result, election campaigns request and receive substantial sums of money that are then later completely or partially reimbursed by the state with no significant benefit to the political system.

Countries in this situation are faced with a terrible state of affairs. Room for exerting excessive or improper influence on policy remains, while, at the same time, the state incurs a cost that is essentially lost and does not help to reduce corruption.

The third approach, which can also be described as a mixed system, places much greater emphasis on state financing of political campaigns. As the costs for the state may be considerable--albeit warranted given the importance of investing in democracy--there are few countries that have pursued this option. For it to function, it is essential to guarantee the transparency of the origin and destination of public funds, not only through formal procedures but also by ensuring that the political environment is competitive and open.

Obviously, the problem this system poses is the very close relationship between the state and the political parties, resulting in the parties becoming directly identified with election campaigns.

All three approaches present shortcomings and dangers. Their frailty has prompted us to ponder which institutional arrangements best match not only the peculiarities of the problem and the political system in each country, but also the four objectives that need to be considered.

The first objective is the prevention of corruption. Corruption may be no more than a simple quid pro quo. The corruption problem may be much greater, however, when the money is derived from criminal activities, in which case the favor expected in return is even more improper.

The second objective is to ensure political equality. It is not enough that each citizen have one vote to guarantee full political equality. It is essential to avoid huge discrepancies in access to power based on money.

The third objective is how best to lower the cost of election campaigns. This may involve free access to the media, particularly those outlets owned by the state, and setting a time limit on the duration of political campaigns.

Finally, the fourth objective is to preserve the credibility and integrity of the political system and of politics itself.

As we have seen, there are numerous questions associated with the agenda you have been asked to consider. How to ensure that election campaign financing does not impair transparency, freedom, and equity in elections? How to guarantee strict monitoring of such financing? What guidelines are needed with respect to ceilings, origins, and equity in contributions? What criteria should govern effective control and monitoring of those contributions? How can we guarantee that the outcomes of elections are not determined solely by better funding?

Naturally, no one should expect this meeting to come up with a definitive answer to these and many other questions. However, I do believe that partial answers based on different circumstances may prove to be the start of an enriching process of shared experiences and cooperation on a topic that is vital for the present and future of our democracies.

I do not want to conclude my remarks on campaign finance without noting that this is not an exclusively Latin American phenomenon. The problem is a universal one among the world's democracies and is being wrestled with around the globe. There is much to be learned from the experiences of other countries that have attempted to deal with this issue. Clearly, the topic of campaign financing must be closely analyzed and I celebrate the fact that The Carter Center has convened this meeting.

Thank you.

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