Net assets of Estonian parties sported a deficit of €2 million last year, giving those with money to spend the chance to buy legislation and other benefits. Kaarel Tarand suggests doubling state budget support for parties to remedy the problem in Vikerraadio's daily comment.
For years, the Estonian society has been receiving a reminder on the 10th of the month following the end of a quarter that inside everyone's Estonia is another Estonia the economic and financial behavior of which cannot be compared to that of the central and local governments, the private sector and nonprofits. This exceptional sector is made up of political parties that are obligated to publish their income and expenses reports every three months.
Parties unfortunately broke several of the decade's records in 2019, with no credible data available from before. Parties spent a total of €11 million on political activity last year, including labor and maintenance costs, while they only made €9 million. Both figures constitute records for this decade after Riigikogu elections in 2015 that saw the previous records of €8.5 and €7.9 respectively, with parties spending €600,000 more than they had in 2015 as opposed to ending up €2 million in the red last year. The combined net assets of parties sport a hefty deficit, then, and the only thing that has kept them afloat is the utmost and exceptional kindheartedness of suppliers and service providers.
However, the come-down is long, and provided things will be allowed to continue in the same vein, we can expect the current deficit to at least double and parties spend the entire election cycle repaying loans by Riigikogu elections in 2023.
To illustrate, let us imagine a comparison with an ordinary Estonian household or a person making average salary who tends to spend only what they have. What would happen if they, making around €14,000 a year, would spend around €17,000 a year? While it is possible to owe money for heating, water, power and internet access for short periods, everyone who has tried it knows how quickly companies come knocking for what's theirs or simply cut you off. While credit cards and fast loans can put out the fire temporarily, it is a one-off reprieve that is soon followed by a world of pain. Living in debt is risk behavior that society tends to look down upon.
That is to say the Estonian economic system is far kinder to parties than it is to any other subject, which has given parties the luxury not to exert themselves trying to fix things. However, as mentioned previously, the downward spiral is consistent and solutions cannot be postponed indefinitely. The situation is made worse by the fact that political parties are the most powerful organizations in the country and financial risk behavior is directly tied to risk of corruption. To not beat about the bush – parties' financial troubles give those with money to spend the chance to buy from parties the only things they have to sell – legislation and advantages. We can also refer to it as commissioning policy.
And that is precisely what has been happening increasingly openly in recent years. In late 2016, eight wealthy citizens donated a total of €800,000 to four parties to thank them for amending the State Family Benefits Act. Back then, you passed legislation first and got paid second. The blessed precedent gradually started to normalize the immoral nature of this sort of horse trading and back payments of a few major sponsors have in several cases turned into down payments for parties that are more difficult not to associate with specific bills, whether we're talking about the pharmacy or pension reform.
Yes, while everything is fine formally, I do not have €150,000 to put up against Parvel Pruunsild's (owner of Bigbank, member of Isamaa – ed.) donation as a citizen who does not want the second pillar of pension dismantled. And even if I did, I would still not pay as I find any and all manifestations of clientelism in society to be wholly inappropriate.
Fortunately, the problem of parties' shortage of funds can be solved in several ways. First of all, parties could get their act together and make more efficient use of their current sources of income. It's an old story that political parties are the cheapest organizations to belong to as no one expects members to pay fees. Parties took in a total of €109,000 from membership fees in 2019, down from €154,000 the year before. Both sums are trifling when we consider that active parties have over 50,000 members between them. Only every tenth member pays their membership fee, with the average contribution coming to €2. Members do not respect their parties, and we have no reason to believe the situation will change any time soon.
Parties took in €3 million in donations last year, with €2 million coming from 100 major sponsors who likely have far more credit and influence with parties than the ordinary citizen that cannot be good for the health of the society.
Parties get the lion's share of their money from the state budget, while the total sum has remained consistent at €5.4 million for the past 10 years. Were the Riigikogu to simply double the sum, we would have peace on Earth and parties noses above the waterline after a few weeks' skirmishes in the media.
It is also possible to once again allow donations from legal persons after 15 years, while this would add to problems in terms of legislation for sale currently realized on the level of individuals. It could also lead to a spending race.
How to save parties is primarily up to parties themselves. However, efforts to amend and complement the Political Parties Act in the Riigikogu cannot begin too soon as euthanasia and assisted suicide of parties are not allowed in Estonia.
Editor: Marcus Turovski