European Political Parties and Party Finance Reform: Funding Democracy? 303095174X, 9783030951740

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European Political Parties and Party Finance Reform Funding Democracy? Wouter Wolfs

European Political Parties and Party Finance Reform “Drawing on original research, this book provides one of the most sophisticated and systematic analyses of the finance regime of European political parties that I have ever seen. Through an in-depth analysis of the evolving financing of the European party system, Wouter Wolfs makes a timely and outstanding contribution to the debates on EU democracy. A must-read for students of European politics!” —Nathalie Brack, Associate Professor, Université libre de Bruxelles, and Visiting Professor, College of Europe “Wouter Wolfs successfully undertakes the Herculean task of explaining the complexities surrounding party financing at the EU-level. He seamlessly weaves the empirical and analytical in a clear and engaging narrative. From the intricacies of how party funding came to pass, through to its implementation and the opportunities and consequences that it has unleashed across the political spectrum. With a Holmesian eye to detail, including the emerging subplot of the Eurosceptic and far-right forces, Wolfs covers all of the bases in this investigative tour de force. This book represents a much needed and major contribution to the Europarty literature. For anyone interested in democracy at the EU level or preparing themselves for the outcome of the Conference on the Future of Europe, and the run-up to the 2024 European parliamentary elections, this book is an absolute must.” —Stephen Day, Professor of Comparative Politics and EU Studies, University of Oita “Wouter Wolfs lifts the lid on European political parties and provides new, critical, and crucial insights into their workings. Much has changed for ‘Europarties’ over the past decade, including stricter financial and organisational regulation. Wolfs has collected vast amounts of new empirical data to map these changes and discuss their implications for EU democracy. In doing so, Wolfs also sheds light on the shady existence of some of the recently emerged (and soon disbanded) far-right Eurosceptic Europarties. This empirically rich and well-informed book advances our understanding of contemporary Europarties and the challenges of EU-level party politics in general.” —Isabelle Hertner, Senior Lecturer, King’s College London “This is a meticulously researched, thoughtfully executed and cogently written study of the funding regime of political parties at the European Union level. The

subject is central for the understanding of the EU institutions, especially in light of the hopes that generous public funding will help address their democratic deficit. The same is true of other questions that the book examines, among them the dynamic nature of the EU subsidies to the parties (which had grown by almost 800 per cent since inception in 2004) and the relations between parties at the national and European levels. Despite the importance of these issues (and the burgeoning literature on party funding in separate members of the Union), they have not received the attention they deserve from students of political finance. The book is valuable for students of political finance in other parts of the world as well. The lucid insights it offers may serve as an agenda-setting instrument in the effort to examine the connections between public party funding and democracy elsewhere. In a turbulent time, this is a timely contribution on an important subject.” —Jonathan Mendilow, Professor of Political Science and Global Studies, Rider University, and Chair IPSA RC20 Political Finance and Political Corruption

Wouter Wolfs

European Political Parties and Party Finance Reform Funding Democracy?

Wouter Wolfs KU Leuven Leuven, Belgium

ISBN 978-3-030-95174-0 ISBN 978-3-030-95175-7 (eBook) https://doi.org/10.1007/978-3-030-95175-7 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Acknowledgements

The finance of European political parties and foundations is a topic that rather accidentally crossed my path in the course of 2014, but has never ceased to spark my interest. This book is the outcome of a long period of research that started during my Ph.D. at the University of Leuven. I am grateful to Steven Van Hecke for his guidance and inspiration on EU politics and European political parties in particular, and to Bart Maddens for his expertise on political finance and party research. The grant of the Research Foundation Flanders has made a large part of this project possible. My appreciation also goes to Marleen Brans, Peter Bursens, Nathalie Brack and Stephen Day for their comments on earlier versions of this research, and to my colleagues at the KU Leuven Public Governance Institute for their encouragements and suggestions. This book has also greatly benefitted from my work with Jef Smulders on the methodological challenges of research on party finance, and my collaboration with Ludvig Norman on the normative implications of (Euro)party regulation. A special word of thanks to Jonathan Mendilow for his suggestions on the theoretical consequences of the research results. Studying party finance and budgetary politics is a sensitive affair, and financial information is often difficult to uncover and interpret. My gratitude goes to all the interviewees for their time, and for providing me with insight into this multi-faceted topic: functionaries and officials of

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ACKNOWLEDGEMENTS

the European political parties and foundations, Secretary-General Klaus Welle, Director-General Didier Klethi and administrators of the European Parliament, Members of the Parliament’s Bureau, policy advisors and MEPs of the Budgets and Constitutional Affairs Committees, representatives in the Council of Ministers, and officials of the European Commission. The analysis of this book also rests on a large number of internal documents, obtained through access-to-documents requests. A word of thanks is due to Frankie Schram for his advice, and the Transparency Units of the EU institutions for their professional handling of my (many) requests. I owe special debt to the research journalists with whom I—sometimes briefly, sometimes for several years—worked on the topic. I would like to mention in particular Rikke Albrechtsen, Stéphane Alonso, Mathias Friis, Guillaume Krempp, Dieuwertje Kuijpers, Per Mathiessen, Ole Ryborg, Robert Schmidt, Michael Teschl, Thomas Van de Putte and Lise Witteman. Their engagement has opened doors that would otherwise have remained closed. Of course, I bear full responsibility for the content of this study. I owe a lot to my friends and family for their support and welcome distractions during the process of researching and writing this book. In particular, my final word of gratitude goes to Anne and Elisabeth, for making me smile after even the hardest days of writing.

Contents

1

Introduction 1 The Sui Generis Nature of European Political Parties 2 Analytical Framework 3 Data 4 Structure References

2

An Origin Story: Establishing Public Funding for European Political Parties 1 State of the Art: The Introduction of Public Funding for (European) Political Parties 2 The Process: The Long Road to Public Funding for European Political Parties 2.1 The Road to Maastricht: The First Step 2.2 The Road to Nice: A Clear Legal Basis for Funding 2.3 The Final Stretch Towards a European Party Finance Regulation 2.4 The Content of the Finance Regime for European Political Parties 3 The Narrative: Building Party Democracy at the European Level 4 Conclusion References

1 5 8 10 12 14 19 20 23 23 26 30 34 39 41 46

vii

viii

3

4

CONTENTS

Rising Subsidies and Creative Accounting: The Income of European Political Parties and Foundations 1 Previous Research and Contribution 2 A Revenue-Maximizing Strategy 2.1 Rising Public Funding for European Political Parties and Foundations 2.2 Setting the Europarty Budget: A Collaboration Between Parliamentary Administration and Main Political Groups 2.3 The Benefits for the Four Established European Political Parties and Foundations 2.4 Motivation Behind the Growth of Funding 3 Growing Internal Budgetary Pressures 3.1 Regulatory Limitations on Public and Private Funding 3.2 Absorption Capacity and Matching Funds 3.3 Private Funding for European Political Parties and Foundations 3.4 Dubious Income Practices 4 Conclusion References Ghost Offices and Artificial Membership: Eurosceptic Involvement in the Funding Regime 1 Previous Research and Contribution 2 Euroscepticism: What’s in a Name? 3 Eurosceptic Attitude: From Principled Opposition to Strategic Pragmatism 3.1 Principled Opposition Against the Europarty (Funding) System 3.2 Strategic Pragmatism: Establishing European Political Parties 3.3 Motivation to Establish Eurosceptic European Political Parties 4 Eurosceptic Practice: Instrumentalization of European Political Parties 4.1 Budget Maximization 4.2 The Rise of Potemkin Parties

51 52 53 54

56 67 71 75 75 80 85 96 106 112 115 116 119 120 120 129 131 138 138 147

CONTENTS

5 Conclusion References 5

6

Changing the Rules of the Game: The Evolution of the Finance Regime 1 Previous Research and Contribution 2 The 2007 Reform: The Continuation of EU Democracy-Building 2.1 Political Foundations and Financial Flexibility to Foster More Versatile Europarties 2.2 The Decision-Making Process: Convincing the European Commission and Council of Ministers 3 The 2014 Reform: Legal Recognition and Stronger Control 3.1 Fostering the Institutionalization of European Political Parties and Foundations 3.2 A New Monitoring and Sanctioning Regime 3.3 Drawn-Out Negotiations to Find a Consensus 4 The 2018 Revision: Closing Loopholes or Supporting the Established Parties? 4.1 A Limited but Decisive Revision of the Funding Rules 4.2 A Swift Agreement After a Long Preparation 5 The 2019 Revision: Safeguarding the Electoral Process 6 Monitoring Compliance with Respect for the EU’s Fundamental Values: A Difficult Exercise 6.1 The Design of the Values Compliance Mechanism 6.2 The Practical Application of the Values Compliance Mechanism 7 Conclusion References The Regulatory Straitjacket: The Impact on the Functioning of European Political Parties 1 Previous Research and Contribution 2 The Expansion and Solidification of the European Party System 2.1 A Growing Number of European Political Parties and Foundations (2004–2017)

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158 170 173 174 176 177 180 184 184 187 189 195 195 197 202 205 205 215 221 231 233 234 236 236

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CONTENTS

2.2

Towards a Petrification of the European Party System? (2018–…) 3 The Organization of European Political Parties and Foundations 3.1 Relations with the Political Groups in the European Parliament 3.2 Professionalization of the Europarty Organizations 3.3 The Consolidation of European Political Parties as Umbrella Organizations of National Member Parties 4 The Limits of Transnational Campaigns 5 Conclusion References 7

Conclusions: Funding Democracy? 1 European Political Parties and Party Finance Reform 2 European Political Parties as Vehicles for EU Democracy? References

244 248 248 252

255 262 268 273 277 277 281 290

List of Interviews

293

Index

297

Acronyms

ACRE ADDE AECR AEN AENM AFCO AFE AIDE ALDE APF CF CHES CLF CMC CSP DG DPPE-EFA EAF EC ECF ECPF ECPM ECR ECRP EDD

Alliance of Conservatives and Reformists in Europe Alliance for Direct Democracy in Europe Alliance of European Conservatives and Reformists Alliance for a Europe of the Nations Alliance of European National Movements Constitutional Affairs Alternative for Europe Alliance of Independent Democrats in Europe Alliance of Liberals and Democrats for Europe Alliance for Peace and Freedom Coppieters Foundation Chapel Hill Expert Survey Coalition for Life and Family Centre Maurits Coppieters Confederation of Socialist Parties Directorate-General Democratic Party of the Peoples of Europe—European Free Alliance European Alliance for Freedom European Commission European Centre for Freedom European Christian Political Foundation European Christian Political Movement European Conservatives and Reformists European Conservatives and Reformists Party Europe of Democracies and Diversities xi

xii

ACRONYMS

EDP EFA EFD EFDD EFF EFGP EGC EGP EIT ELDR Party ELF ENF EP EPFD EPP EPP-ED ETN EU EUD FELD FELDRP FENF FEPS FINS FLDPE GEF GEI GUE/NGL IDDE IDF IDP IED IGC IND/DEM ITS MELD MENF MEP NA ND-FER OEIC OLAF

European Democratic Party European Free Alliance Europe of Freedom and Democracy Europe of Freedom and Direct Democracy European Foundation for Freedom European Federation of Green Parties European Green Coordination European Green Party European Identities and Traditions European Liberal Democrat and Reform Party European Liberal Forum Europe of Nations and Freedom European Parliament European Political Foundation for Democracy European People’s Party European People’s Party—European Democrats Europa Terra Nostra European Union Europeans United for Democracy Foundation for a Europe of Liberties and Democracy Federation of European Liberal, Democratic and Reform Parties Foundation for a Europe of Nations and Freedom Foundation for European Progressive Studies Finances Federation of Liberal and Democratic Parties in Europe Green European Foundation Green European Institute European United Left/Nordic Green Left (The Left) Institute for Direct Democracy in Europe Identity and Democracy Foundation Identity and Democracy Party Institute of European Democrats Intergovernmental Conference Independence/Democracy Identity, Tradition, Sovereignty Movement for a Europe of Liberties and Democracy Movement for a Europe of Nations and Freedom Member of European Parliament Non-Attached New Direction—Foundation for European Reform Organization for European Interstate Cooperation European Anti-Fraud Office

ACRONYMS

OSCE/ODIHR PEL PES RENEW S&D TE TEU UEN UK UKIP US WMCES

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Organization for Security and Co-operation in Europe, Office for Democratic Institutions and Human Rights Party of the European Left Party of European Socialists Renew Europe Progressive Alliance of Socialists and Democrats Transform Europe Treaty on European Union Union for a Europe of the Nations United Kingdom United Kingdom Independence Party United States Wilfried Martens Centre for European Studies

List of Graphs & Figures

Chapter 3 Graph 1 Graph 2 Graph 3 Graph 4

Graph 5

Graph 6

Graph 7

Graph 8

Graph 9 Graph 10

Evolution of the total funding sum for European political parties Evolution of the total funding sum for European political foundations Evolution of the total funding for European political parties and foundations Maximum shares for the EPP, PES, ALDE Party, EGP and other European political parties according to the distribution key (2004–2021) Grant amounts for the EPP, PES, ALDE Party, EGP and other European political parties according to the distribution key (2004–2019) Grant amounts for the WMCES, FEPS, ELF, GEF and other European political foundations according to the distribution key (2004–2019) Comparison of the total budget for Europarties, the number of eligible parties and affiliated MEPs (2004–2021) Comparison of the total budget for Eurofoundations, the number of eligible foundations and affiliated MEPs (2008–2021) Member parties of European political parties (2021) Averages of the shares of income categories in the own resources of European political parties (2004–2020)

54 55 56

68

69

70

72

74 79 85 xv

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LIST OF GRAPHS & FIGURES

Graph 11 Graph 12 Graph 13 Graph 14 Graph 15 Graph 16 Graph 17 Graph 18 Graph 19 Graph 20

Averages of the shares of income categories in the own resources of European political foundations (2008–2020) Income structure of the European People’s Party (2004–2020) Income structure of the Wilfried Martens Centre for European Studies (2008–2019) Income structure of the Party of European Socialists (2004–2020) Income structure of the Foundation for European Progressive Studies (2008–2020) Income structure of the Alliance of Liberals and Democrats for Europe Party (2004–2020) Income structure of the European Liberal Forum (2008–2020) Income structure of the European Green Party (2004–2020) Income structure of the Green European Foundation (2004–2020) Donations to European political parties and foundations (2004–2019)

87 88 89 90 91 92 93 94 95 100

Chapter 4 Graph 1 Graph 2

Affiliation of MEPs to European political parties (2005–2018) Budget amounts for non-Eurosceptic and Eurosceptic Europarties (2009–2017)

131 146

Chapter 6 Graph 1 Graph 2 Graph 3

Evolution of the number of registered Europarties and Eurofoundations (2004–2021) Personnel of the European political parties (2004–2019) Personnel of the European political foundations (2008–2019)

254

Multiple membership—Situation 1 Multiple membership—Situation 2 Cross-Party membership Multiparty membership

140 141 142 142

237 253

Chapter 4 Fig. Fig. Fig. Fig.

1 2 3 4

LIST OF GRAPHS & FIGURES

xvii

Chapter 7 Fig. 1

Position of European political parties towards the public funding regime

280

List of Tables

Chapter 1 Table 1 Table 2

European political parties (2021) European political foundations (2021)

7 8

Chapter 2 Table 1

Funding procedure for European political parties

38

Chapter 3 Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 Table 7

Consecutive stages of the adoption of the European Parliament’s budget The total sums for the funding of European political parties in the various stages of the budgetary process The total sums for the funding of European political foundations in the various stages of the budgetary process Share of EU grants in the total revenue of European political parties (2004–2019) (in percentage) Absorption capacity of European political parties (2004–2019) (in percentage) Absorption capacity of European political foundations (2008–2019) (in percentage) Proportion of the contributions in kind in the total own resources of European political parties (2004–2017)

58 60 62 81 82 84 97

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LIST OF TABLES

Table 8

Proportion of the contributions in kind in the total own resources of European political foundations (2008–2017)

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Chapter 4 Table 1 Table 2 Table 3 Table 4 Table 5

Voting behaviour of Eurosceptic and non-Eurosceptic MEPs Eurosceptic parties grouped according to their voting behaviour on the Europarty resolutions European political parties established after 2001 Affiliation of Eurosceptic national parties to European political parties Number of EU member states in which European political parties are represented (2009–2017)

123 124 130 132 144

Chapter 5 Table 1 Table 2

The reactive component of the values compliance mechanism Composition of the Committee of Independent Eminent Persons

209 212

Chapter 6 Table 1 Table 2 Table 3 Table 4 Table 5

Loss of funding of European political parties Income of European political parties (2000–2002) Number of individual members and national member parties of the registered European political parties (2019) Expenditure electoral campaigns European political parties Expenditure online campaigns European political parties (2019)

242 250 261 263 268

CHAPTER 1

Introduction

Our Union needs to take a democratic leap forward. I would like to see European political parties start campaigning for the next European elections much earlier than in the past. Too often Europe-wide elections have been reduced to nothing more than the sum of national campaigns. European democracy deserves better. Today, the Commission is proposing new rules on the financing of political parties and foundations. We should not be filling the coffers of anti-European extremists. We should be giving European parties the means to better organise themselves.1 Jean-Claude Juncker President of the European Commission (2014–2019)

It was a cold November morning in 2017 when I rang the doorbell of the party headquarters of the Coalition for Life and Family, a European political party bringing together conservative politicians from all over the continent. The party office was located in a small, four-storey apartment building in Brussels, above a hairdresser salon on the ground floor. There was no sign or banner of the political party, except for a weathered label on the post box. One of the neighbours answered the door, but had never heard of the European party, nor any person involved. © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 W. Wolfs, European Political Parties and Party Finance Reform, https://doi.org/10.1007/978-3-030-95175-7_1

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A research journalist did a similar exercise for the Alliance for Direct Democracy in Europe, a European party that had its registered headquarters in London. The result was the same: no trace could be found on its official address. Yet these Europarties had been allocated millions in EU funding. If these European political parties did not even have any tangible office infrastructure, where did the European subsidies go? As the quote of former Commission President Jean-Claude Juncker demonstrates, these Europarties are considered to make an important contribution to EU democracy, in particular in the context of the European elections. For this purpose, the European political parties have been given ‘the means to better organise themselves’, meaning direct subsidies from the EU budget. Since EU funding was introduced in 2003, all European political parties combined have received more than e550 million.2 Also for Juncker’s successor, Ursula von der Leyen, subsidizing Europarties has been part of her strategy to make ‘a new push for European democracy’.3 Consequently, the provision of financial resources has been motivated by the democratic aspirations that are attributed to these European party organizations. In other words, funding European political parties is seen as funding EU democracy. However, this Europarty funding has not been without controversies. Over the years, various financial ‘scandals’ have come to light. Several parties have funnelled European subsidies to the national level to pay for electoral campaigns or party congresses. In some cases, a European political party was nothing more than a ‘Potemkin party’: it merely existed on paper as an instrument to attract EU funding. Other Europarties awarded contracts to companies or organizations in exchange for donations, or used creative accounting to maximize their amounts of public funding. The European Parliament attempted to reclaim the subsidies, with varying success. In several cases, the European Anti-Fraud Agency (OLAF) initiated investigations into these practices. These cases of financial misconduct follow from the finance regime that is inherently linked to the provision of Europarty funding. I use the term ‘finance regime’ to refer to the entire set of rules and conditions that European political parties and foundations must adhere to: treaty provisions, EU Regulations (including the Financial Regulation), implementing measures such as the Decisions of the Bureau of the European Parliament, instructions from monitoring entities, and Court rulings. As in most EU member states, this regulatory framework comprises many

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INTRODUCTION

3

aspects. It includes—among others—the eligibility criteria that stipulate which Europarties qualify for public funding, rules on how the money can be spent, and far-reaching regulations that deal with party organization and activities. Since the start of EU party funding, these rules have been substantially altered several times. The main aim of this book is to understand and explain this changing finance regime for European political parties. Why have these European political parties been supported with such substantial amounts of public money? Has Europarty funding mainly been an instrument to support pro-European forces, considering the words of Jean-Claude Juncker that ‘filling the coffers of anti-European extremists’ should be avoided? How can the changes to the regulatory framework be explained? Why has the finance regime been plagued by numerous cases of financial misconduct? How has the financing influenced the European party system, and has it indeed resulted in a ‘democratic leap forward’ for the EU? These questions lie at the heart of the book. By answering these questions, this book provides an important theoretical and empirical contribution to the existing scholarly work on party democracy at European level. Previous research has shed light on some aspects of the finance regime. Several authors dedicated attention to the process leading up to the establishment of European subsidies in 2004 and the main actors involved (Christiansen 2002; Gray and Stubb 2001; Jansen and Van Hecke 2011; Johansson and Raunio 2005; Roa Bastos 2012). Others have examined the content of these first rules and the potential impact on the European political parties and the Europarty system (Day and Shaw 2006; von Arnim and Schurig 2004; Lightfoot 2006). More recently, some studies have concentrated on specific elements of the regulatory framework, such as the use of donations (Katsaitis 2020) and the mechanism that deals with monitoring the compliance of Europarties with EU values (Grasso and Perrone 2019; Morijn 2019). Although these contributions are extremely useful, this is the first book-length study that focuses on the constant interaction of the (changing) funding rules and the strategic behaviour of the European political parties. It provides an extensive analysis of how the actions of the Europarties have influenced the development of the regulatory framework and— vice versa—how the rules have shaped their organization and activities.

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As such, this book builds on the research on the finance of national political parties, and expands it to the European level. There is indeed a long-established scholarly tradition focusing on the effect of finance regimes—and in particular public subsidies—on political parties (see for example Ferdinand 2003; Koss 2008; Pierre et al. 2000; Mendilow 1992; Nassmacher 1989; Pinto-Duschinsky 2002, 2011; Pujas and Rhodes 1999; Weekers et al. 2009). However, an in-depth study on the finance regime for European political parties has not been conducted. More recently, a growing number of scholars have focused on the strategies of political parties that drive regulatory change in political finance (Hooghe et al. 2006; La Raja 2008; Nwokora 2014; Scarrow 2004, 2006; van Biezen and Kopecky 2014). This book contributes to this ongoing debate on the driving factors of regulatory change concerning party finance. It will bridge the literature on (national) party finance and the scholarly work on European party politics, by showing how the strategic dynamics of national parties can also be identified at the European level. When it comes to finance, European political parties act similarly to their national counterparts. Previous research has also shown how the availability of funding plays a role regarding collaboration at the European level. Scholars have identified how material benefits—such as financial resources, personnel and speaking time—provide an important incentive for national parties to form and join a political group in the European Parliament (Bressanelli 2012, 741–742; McDonnell and Werner 2018, 750, 755). In particular with regard to Eurosceptic parties, Usherwood (2017, 20) has argued that funding—more than ideology—provides an important opportunity structure for transnational cooperation of Eurosceptic parties. Although other authors have implicitly followed this ‘resource-driven logic’ of Eurosceptic collaboration (Corbett et al. 2016, 148; Gomez-Reino 2018, 170–172; McGowan 2014, 672–674), it has not been systemically examined empirically with regard to European political parties. This book provides the first comprehensive analysis of the role of EU funding as a driving factor for Eurosceptic cooperation in (extra-parliamentary) European political parties. I will show how the Eurosceptic parties have changed their attitude from principled opposition to strategic pragmatism towards Europarty funding, and how some—in breach of the funding rules—have instrumentalized European party organization to the financial benefit of the national member parties.

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INTRODUCTION

5

1 The Sui Generis Nature of European Political Parties So what exactly are these European political parties that constitute the main actors of this book? They are not political parties, at least not in the traditional sense of the word. The main characteristic that distinguishes political parties from interest groups or other civil society organizations is the fact that they participate in elections. Parties select candidates, compose electoral lists, run election campaigns and coordinate their delegates in the legislative assembly. This electoral connection is indirect (at best) with European political parties. Consequently, for these European party organizations, the term ‘party’ is not universally accepted (Wolfs and Smulders 2018; Day 2005, 2014; Van Hecke 2010; Day and Shaw 2006). Furthermore, European political parties have been given different labels, not seldom linked to certain normative assumptions. In the European regulatory framework, the rather neutral terms ‘political parties at a European level’ or ‘European political parties’ are used. Names such as ‘transnational European parties’ or ‘pan-European parties’ imply a certain supranational perspective and aspiration that these European parties should (grow to) be party organizations that are similar to their national counterparts. This also entails a view of the EU as a fully-fledged supranational political system characterized by (Euro)party politics (Hix and Hoyland 2011, 17–18). Similarly, some national parties have used the term ‘Europarties’ to emphasize their pro-European character (Van Hecke 2010, 397). On the other hand, names such as ‘European party federations’ imply a more intergovernmental perspective according to which these European parties mainly act as umbrella organizations of their national member parties. Consequently, the political centre of gravity remains with the national parties and the European party only acts as a network facilitator to enable an exchange of views and to coordinate the political positions among its members. Some of the more recently established European parties have even totally avoided the term ‘party’ and used the labels ‘alliance’, ‘movement’ or ‘coalition’. In this book, the terms ‘European political parties’ and ‘Europarties’ will be used, but without implying a certain normative preference. In addition to these different labels, the exact object of the term European political party is not always clear. An important difference

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between political parties at the national level and at the European level is the relation between the extra-parliamentary party organization and the corresponding political group in parliament. At the European level, this connection is much weaker compared to national political parties. In addition, the relation between these two components can be asymmetric at the EU level. Some political groups in the European Parliament bring together national parties that are affiliated to different European political parties, and conversely, the MEPs linked to some Europarties are part of different EP groups. Consequently, there can be some confusion about the exact delineation of the term. Some authors used it to discuss the collective of the extra-parliamentary party organization, the political group in the European Parliament and the national member parties (Calossi 2011), whereas others used the label solely for the extra-parliamentary organization (whether or not together with the affiliated political foundation) (see for example Bardi et al. 2010; Lightfoot 2006; Johansson and Raunio 2005). Sometimes the term encompassed both the political group and the extra-parliamentary party (Bressanelli 2014). Hix (2002) even mainly referred to the European Parliament group when he described ‘European party discipline’. In this book, I will use the term ‘European political party’ or ‘Europarty’ to indicate the extra-parliamentary party organizations. The focus thus lies on the finances of these organizations, and is not directly concerned with the funding for political groups in the European Parliament or the allowances of individual Members of European Parliament (MEPs).4 The first of these European political parties were already established in the 1970s in the run-up to the first direct elections of the European Parliament in 1979. The Confederation of Socialist Parties—later renamed to Party of European Socialists—was already founded in 1974. The European People’s Party and the Federation of Liberal and Democratic Parties in the European Community—since 2012 the Alliance of Liberals and Democrats in Europe Party—were established in 1976. Over time, the number of Europarties and their affiliated foundations has increased. Since direct European subsidies were introduced in 2004, twenty European political parties have applied for EU funding.

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Table 1

INTRODUCTION

7

European political parties (2021)

Name European political party

Abbreviation

First year EU funding

European People’s Party Party of European Socialists Alliance of Liberals and Democrats for Europe Party5 European Green Party European Democratic Party Party of the European Left European Free Alliance European Conservatives and Reformists Party6 European Christian Political Movement Identity and Democracy Party7

EPP PES ALDE Party

2004 2004 2004

EGP EDP PEL EFA ECRP ECPM IDP

2004 2004 2004 2004 2010 2010 2015

Anno 2021, ten Europarties receive public funding from the budget of the European Parliament (Table 1). Since 2007, all European political parties have gradually established an affiliated European political foundation. These foundations function as ideological think tanks, to the example of national party research centres or foundations, such as the German Stiftungen. Although they differ in terms of organization, activities and functions, the main role of these European political foundations is to contribute to the political and ideological debate at EU level and complement the activities of the Europarty that they are affiliated to (Gagatek and Van Hecke 2014). Since direct European subsidies for these Eurofoundations were introduced in 2008, twenty foundations applied for EU funding. Currently, there are ten European political foundations that are eligible for European subsidies (Table 2). All these European political parties and foundations differ widely in terms of ideology, size, membership and internal organization. Some of them are decades old, whereas others have only been recently established, and several have already disappeared again after a couple of years. The subsequent chapters will show how the finance regime has influenced this European party system, and, vice versa, how the actions of European political parties have led to changes of the funding rules.

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Table 2

European political foundations (2021)

Name European political foundation

Abbreviation

Affiliated Europarty

First year EU funding

Wilfried Martens Centre for European Studies Foundation for European Progressive Studies European Liberal Forum Green European Foundation8 Institute of European Democrats Transform Europe Coppieters Foundation9 New Direction–Foundation for European Reform Sallux10 Identity and Democracy Foundation11

WMCES

EPP

2008

FEPS

PES

2008

ELF

ALDE Party

2008

GEF

EGP

2008

IED

EDP

2008

TE CF

PEL EFA

2008 2008

ND-FER

ECRP

2010

Sallux IDF

ECPM IDP

2011 2015

2

Analytical Framework

The changing finance regime for European political parties will be analysed by applying the analytical framework of actor-centred institutionalism, as predominantly developed by Mayntz and Scharpf (Mayntz and Scharpf 1995; Scharpf 1997, 2000). As part of the new institutionalist school, actor-centred institutionalism aims to compile the insights of the three main new institutionalist perspectives: rational choice, sociological and historical institutionalism. Following rational choice institutionalism, it defines institutions as ‘systems of rules that structure the courses of action that a set of actors may choose’ (Scharpf 1997, 38), but examining structures without providing attention to actors is considered just as deficient as analysing actors without reference to its structures (Mayntz and Scharpf 1995, 46). However, actor-centred institutionalism does not think that all

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actor behaviour is based on a pure cost–benefit analysis, but rather on a combination of social norms, identity and (subjectively defined) self-interest. Building on sociological institutionalism, it acknowledges that ‘actors have different preferences, but they can also give variable importance to different indicators and apply different causal interpretations of the phenomena’ (Maggi 2015, 19). These perceptions, preferences and capabilities of the actors are influenced by institutions that surround them (Van Lieshout 2008, 4). Furthermore, as opposed to rational choice theory, actor-centred institutionalism acknowledges that there is also a relational dimension to actor orientations, which means that actors can also take into account the payoffs that other actors involved receive (Van Lieshout 2008, 9). Actor-centred institutionalism follows historical institutionalism in that it considers the evolution of institutions to be path-dependent: a certain outcome is heavily influenced by the prior conditions. It also implies that once certain institutions are in place, it will be difficult to change or abolish them (Scharpf 1997, 41). In short, the basic understanding of actor-centred institutionalism is that ‘social phenomena are to be explained as the outcome of interactions among intentional actors […] but that these interactions are structured, and the outcomes shaped by the characteristics of the institutional settings within which they occur’ (Scharpf 1997, 1). In other words, political interaction is the result of interactive strategies applied by purposive actors that are both enabled and constrained by their institutional settings. As an analytical framework, actor-centred institutionalism focuses on the analysis of these interactions, whereby different styles of interactions can be explained by ‘the interplay of the institutional context, the actors’ orientations and the context of the specific situation in which a decision takes place’ (Mayntz and Scharpf 1995, 48–60; as cited in Koss 2008, 285). Consequently, the changing finance regime for European political parties from an actor-centred institutionalist perspective should be seen as an interactive process. The funding rules provide a set of incentives and constraints that shape the organization and activities of the Europarties. However, these parties are not mere ‘rule-following automata’ but also try to influence the regulatory framework that applies to them.

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Data

The findings of this book build on existing scholarship and new empirical research, based on a combination of a systematic document analysis, field research, online sources and interviews. The budgetary situation of the European political parties and foundations has been examined through their annual financial accounts that are accessible on the website of the European Parliament. These reports provide valuable information on their income and expenditure patterns. All Europarties and foundations must use the same template, and the accounts are scrutinized by an external auditor and the services of the European Parliament, which ensures the comparability and reliability of the information. However, the financial reports provide an incomplete picture of the Europarties’ finances. In order to have a comprehensive overview, the analysis was complemented in two main ways. First, fieldwork was conducted to assess the Europarties’ organization and activities. These include site visits of the party headquarters and attending party conferences. Second, collaboration was sought with research journalists working on the topic. The collaboration ranged from providing background information on the regulatory framework to a joint assessment of documents and information. The main advantage of such collaborative efforts was that I was able to obtain documents that were not publicly available and could not be acquired in another way. In particular, these documents provide invaluable insight in the spending behaviour of the European political parties. The budgetary and legislative decision-making process at the EU level was analysed through a combination of public and internal documents of the European institutions. A part of the budgetary documents is publicly available and can be used to verify the evolution of the available funding for European political parties and foundations. Similarly, the databases Legislative Observatory and Eurlex provide access to the legislative documents of the EU institutions during the establishment and revisions of the regulatory framework. In order to determine the position of the political parties and individual MEPs regarding the various aspects of the Europarty funding regime, I rely on the official voting records of the European Parliament and the VoteWatch database. I use the minutes of the parliamentary debates, the oral and written explanations of votes, and the explanatory statements attached to the legislative documents to

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examine the motivation behind voting behaviour and to ascertain the dominant narrative around the funding regime. This public information was complemented with internal documents obtained through official access-to-documents requests with the EU institutions. In total, 64 applications were made requesting 261 documents. Of these, 221 documents were—in some cases partially—released by the European institutions. Some access was only granted after a complaint with the European Ombudsman. The released documents include working notes and preparatory documents of the administration of the European Parliament, letters to and from European political parties, membership lists, financial and audit reports, and documents of the trilogue negotiations. These documents contain information that was not open to the public before and provide unique insight in the internal decision-making of the EU institutions, and the internal organization and financial conduct of the European political parties and foundations. Finally, information was gathered through more than 40 interviews in two main waves. A first wave of exploratory interviews was conducted in 2015–2016 with EP officials and the financial administrators of several European political parties to improve my understanding of the background and implementation of the funding rules, and to assess the European political parties’ interpretation of the regulatory framework. A second wave of interviews was done in 2018–2021 to complement and verify the findings of the document analysis. All selected interviewees were closely involved in the political events that were analysed and much attention was dedicated to ensure a balance between respondents from the various political groups and European political parties, from the administrative and the political level, and from in- and outside the European Parliament. To gain insight in the budgetary and decision-making processes in the EU institutions, I interviewed the responsible Vice-Presidents of the European Parliament, officials from the institutions’ administrations, including the EP Secretary-General, and the responsible MEPs. The political and administrative leadership of the European political parties was interviewed to gain knowledge about the Europarties’ activities and—for the Eurosceptic parties—the motivations behind the establishment of the European party organization. The information obtained through the interviews was cross-checked and evaluated on the basis of newspaper reports, press statements and the findings of the documents analysis.

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Structure

The book proceeds as follows: the second chapter provides an overview of the origins of the funding regime for European political parties. The first part of the chapter focuses on the long process that led up to the establishment of European party subsidies in 2004. In the second part, the dominant narrative behind the funding regime will be identified. It will show how the funding for European political parties was presented as an instrument to tackle the EU’s democratic deficit: in order to become more democratic, the European level required genuine party politics, encouraged by the EU institutions themselves. This corresponds to the argument of political parties as ‘public utilities’ that has been often used at the national level to legitimize public party subsidies, but takes it to its extremes. Chapter 3 examines the finances of the European political parties and foundations, and starts with an analysis of the EU subsidies. The first part of the chapter will demonstrate how the annual funding grew almost eightfold between 2004 and 2021. This was the result of a revenue-maximizing strategy of the main political groups in the European Parliament, supported by the parliamentary administration. The second part of the chapter goes into the private revenue of the Europarties. For most of them, collecting these own resources has been challenging, and some Europarties turned to contested strategies such as creative bookkeeping to artificially inflate their own income, or set up ‘donation carrousels’ by allocating contracts in exchange for donations. The chapter concludes that the European political parties can be considered as ‘semistate agents’: organizations that depend almost entirely on public funding for their existence, and whose financial embeddedness in society remains rather weak. The fourth chapter specifically concentrates on the attitude of the Eurosceptic parties towards the Europarty funding system. The first part of the chapter will describe how most of them changed their attitude from principled opposition to strategic pragmatism. While most Eurosceptics initially opposed the funding system, more and more Eurosceptic Europarties were established over time. However, many of these European party organizations were mainly used instrumentally: as vehicles to attract maximum EU funding. In addition, the chapter will show how in several cases, the European subsidies—against the funding rules— were used to support the national member parties by paying for party conferences, staff and electoral campaigns.

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Chapter 5 will pick up the practices described in the third and fourth chapter and explain the effects on the regulatory framework. The chapter shows how the first decade of the finance regime was focused on building a funding system that served the underlying normative goal of creating a European party system. In a second phase, from 2013 onwards, the focus shifted towards defending the funding system. The internal budgetary pressures that the Europarties experienced (Chapter 3), and the strategic behaviour of the Eurosceptic parties (Chapter 4) brought the main Europarties to push for a change of the rules. During this second phase, the strategic component of party competition became more important, and the dynamics at European level have started to resemble party finance reforms in national political systems. The sixth chapter focuses on how the finance regime has had an impact on the internal organization and activities of the European political parties. On the one hand, the rules have allowed most Europarties to reduce their dependence on their corresponding political group in the European Parliament and have enabled the (larger) Europarties to professionalize their organization. On the other hand, the rules do not include any incentives for a stronger involvement of citizens in the Europarty organization, which hampers their embeddedness in society. In addition, the latest regulatory changes have made it more difficult for Europarties to conduct transnational electoral campaigns, with negative consequences for the Europeanization of the EU elections. As a conclusion, the seventh chapter will assess how the democratic aspirations behind the funding regime have actually substantiated based on the findings of the previous chapters. More specifically, the chapter will evaluate to what extent the funding rules have affected the Europarties’ functions and external environment in ways that are (not) conducive to EU party democracy.

Notes 1. See: European Commission, President Jean-Claude Juncker’s State of the Union Address 2017, Brussels, 13 September 2017. 2. In this book, I use both the terms ‘subsidies’ and ‘grants’ to refer to the financial contributions from the general budget of the EU that are allocated to European political parties and foundations. 3. European Commission, A Union that strives for more: My agenda for Europe, Brussels, 9 October 2019, pp. 19–21.

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4. In this book, I will use the term “Member” (with a capital letter) as an abbreviation for an (unspecified) Member of European Parliament, Member of national parliament, Member of regional parliament or a Member of a regional assembly. The term “member” (without a capital letter) is used in the context of membership to a national or European political party. 5. Until 2012, the name of this European political party was ‘European Liberal Democrat and Reform Party’. 6. In 2016, the name of this European political party was changed from ‘Alliance of European Conservatives and Reformists’ to ‘Alliance of Conservatives and Reformists in Europe’. In 2019, it took on its present name. 7. Until 2019, the name of this European political party was ‘Movement for a Europe of Nations and Freedom’. 8. Until 2010, the name of this European political foundation was ‘Green European Institute’. 9. Until 2018, the name of this European political foundation was ‘Centre Maurits Coppieters’. 10. Until 2016, the name of this European political foundation was ‘Christian Political Foundation for Europe’. 11. Until 2019, the name of this European political foundation was ‘Foundation for a Europe of Nations and Freedom’.

References von Arnim, Hans Herbert, and Martin Schurig. 2004. The European Party Financing Regulation. Münster: LIT Verlag. Bardi, Luciano, Edoardo Bressanelli, Enrico Calossi, Wojciech Gagatek, Peter Mair, and Eugenio Pizzimenti. 2010. How to Create a Transnational Party System. Brussels: European Parliament. van Biezen, Ingrid, and Petr Kopecký. 2014. The Cartel Party and the State: Party–State Linkages in European Democracies. Party Politics 20 (2): 170– 182. Bressanelli, Edoardo. 2014. Europarties After Enlargement: Organization, Ideology and Competition. Basingstoke: Palgrave Macmillan. Calossi, Enrico. 2011. Organizzazione e funzioni degli Europartiti. Pisa: University of Pisa.

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Christiansen, Thomas. 2002. The Role of Supranational Actors in EU Treaty Reform. Journal of European Public Policy 9 (1): 33–53. Corbett, Richard, Francis Jacobs, and Darren Neville. 2016. The European Parliament. London: John Harper Publishing. Day, Stephen. 2005. Developing a Conceptual Understanding of Europe’s Transnational Political Parties (With a Specific Focus on the Party of European Socialists). Journal of Contemporary European Studies 13 (1): 59–77. Day, Stephen. 2014. Between “Containment” and “Transnationalization”— Where Next for the Europarties? Acta Politica 49 (1): 5–29. Day, Stephen, and Jo Shaw. 2006. Transnational Political Parties. In Making European Citizens—Civic Inclusion in a Transnational Context, ed. Richard Bellamy, Dario Castiglione, and Jo Shaw, 99–117. Hampshire: Palgrave Macmillan UK. Ferdinand, Peter. 2003. Party Funding and Political Corruption in East Asia: The Cases of Japan, South Korea and Taiwan. In Funding of Political Parties and Election Campaigns, 55–69. Stockholm: International IDEA. Gagatek, Wojciech, and Steven Van Hecke. 2014. The Development of European Political Foundations and Their Role in Strengthening Europarties. Acta Politica 49 (1): 86–104. Gómez-Reino, Margarita. 2018. Nationalisms in the European Arena: Trajectories of Transnational Party Coordination. Basingstoke: Palgrave Macmillan. Grasso, Giorgio, and Roberto Perrone. 2019. European Political Parties and the Respect for the Values on Which the European Union is Founded Between the European Legislation and the National Laws. European Public Law 25 (4): 665–688. Gray, Mark, and Alexander Stubb. 2001. Keynote Article: The Treaty of Nice— Negotiating a Poisoned Chalice? Journal of Common Market Studies 39 (1): 5–23. Van Hecke, Steven. 2010. Do Transnational Party Federations Matter? (... And Why Should We Care?). Journal of Contemporary European Research 6 (3): 395–411. Hix, Simon. 2002. Parliamentary Behavior with Two Principals: Preferences, Parties, and Voting in the European Parliament. American Journal of Political Science 46 (3): 688–698. Hix, Simon, and Bjorn Hoyland. 2011. The Political System of the European Union, 3rd ed. Basingstoke: Palgrave Macmillan. Hooghe, Marc, Bart Maddens, and Jo Noppe. 2006. Why Parties Adapt: Electoral Reform, Party Finance and Party Strategy in Belgium. Electoral Studies 25 (2): 351–368. Jansen, Thomas, and Steven Van Hecke. 2011. At Europe’s Service: The Origins and Evolution of the European People’s Party. Berlin Heidelberg: SpringerVerlag.

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Johansson, Karl Magnus, and Tapio Raunio. 2005. Regulating Europarties: Cross-Party Coalitions Capitalizing on Incomplete Contracts. Party Politics 11 (5): 515–534. Katsaitis, Alexander. 2020. Following the Money: Exploring Business Financial Contributions to the European Union’s Political Parties. JCMS: Journal of Common Market Studies 58 (5): 1342–1351. Koss, Michael. 2008. Party Goals, Institutional Veto Points and the Discourse on Political Corruption: The Evolution of the German Party Funding Regime. Journal of Elections, Public Opinion and Parties 18 (3): 283–301. La Raja, Raymond. 2008. Small Change: Money, Political Parties, and Campaign Finance Reform. Ann Arbor: University of Michigan Press. Van Lieshout, Harm. 2008. An Actor-Centered Institutionalist Approach to Flexicurity: The Example of Vocational Education and Training. Lightfoot, Simon. 2006. The Consolidation of Europarties? The ‘Party Regulation’ and the Development of Political Parties in the European Union. Representation 42 (4): 303–314. Maggi, Eva-Maria. 2015. The Will of Change: European Neighborhood Policy, Domestic Actors and Institutional Change in Morocco. Wiesbaden: Springer. Mayntz, Renate, and Fritz Scharpf. 1995. Gesellschaftliche Selbstregelung und politische Steuerung, 1st ed. Frankfurt and New York: Campus Verlag. McDonnell, Duncan, and Annika Werner. 2018. Respectable Radicals: Why Some Radical Right Parties in the European Parliament Forsake Policy Congruence. Journal of European Public Policy 25 (5): 747–763. Mcgowan, Lee. 2014. Engaging with the European Union? Exploring the Europeanization of the British National Party. Parliamentary Affairs 67 (3): 664–687. Mendilow, Jonathan. 1992. Public Party Funding and Party Transformation in Multiparty Systems. Comparative Political Studies 25 (1): 90–117. Morijn, John. 2019. Responding to ‘Populist’ Politics at EU Level: Regulation 1141/2014 and Beyond. International Journal of Constitutional Law 17 (2): 617–640. Nassmacher, Karl-Heinz. 1989. Structure and Impact of Public Subsidies to Political Parties in Europe: The Examples of Austria, Italy, Sweden and West Germany. In Comparative Political Finance in the 1980s, Advances in Political Science, ed. Herbert Alexander, 236–267. Cambridge: Cambridge University Press. Nwokora, Zim. 2014. The Distinctive Politics of Campaign Finance Reform. Party Politics 20 (6): 918–929. Pierre, Jon, Lars Svåsand, and Anders Widfeldt. 2000. State Subsidies to Political Parties: Confronting Rhetoric with Reality. West European Politics 23 (3): 1–24.

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Pinto-Duschinsky, Michael. 2002. Financing Politics: A Global View. Journal of Democracy 13 (4): 69–86. Pinto-Duschinsky, Michael. 2011. Party Finance. In International Encyclopedia of Political Science, ed. Bertrand Badie, Dirk Berg-Schlosser, and Leonardo Morlino, 1803–1806. Thousand Oaks: Sage. Pujas, Véronique, and Martin Rhodes. 1999. Party Finance and Political Scandal in Italy, Spain and France. West European Politics 22 (3): 41–63. Roa Bastos, Francisco. 2012. Sociogenèse d’une catégorie politique: l’introduction de «partis politiques au niveau européen» dans le droit communautaire. Cultures & Conflits (85–86): 99–122. Scarrow, Susan. 2004. Explaining Political Finance Reforms. Party Politics 10 (6): 653–675. Scarrow, Susan. 2006. Party Subsidies and the Freezing of Party Competition: Do Cartel Mechanisms Work? West European Politics 29 (4): 619–639. Scharpf, Fritz. 1997. Games Real Actors Play: Actor-Centered Institutionalism in Policy Research. Boulder: Westview. Scharpf, Fritz. 2000. Institutions in Comparative Policy Research. Comparative Political Studies 33 (6–7): 762–790. Usherwood, Simon. 2017. Modelling Transnational and Pan-European Euroscepticism. In Euroscepticism as a Transnational and Pan-European Phenomenon: The Emergence of a New Sphere of Opposition, ed. John FitzGibbon, Benjamin Leruth, and Nick Startin. London and New York: Routledge. Weekers, Karolien, Bart Maddens, and Jo Noppe. 2009. Explaining the Evolution of the Party Finance Regime in Belgium. Journal of Elections, Public Opinion and Parties 19 (1): 25–48. Wolfs, Wouter, and Jef Smulders. 2018. Party Finance at the Level of the European Union. Party Finance Reform to Vitalize the EU’s Protoparty System?’. In Handbook of Political Party Funding, ed. Jonathan Mendilow, Eric Phélippeau, 182–202. London: Edward Elgar.

CHAPTER 2

An Origin Story: Establishing Public Funding for European Political Parties

If I can claim political fatherhood of anything, it is the statute and funding of European political parties [...] This may seem like a Pyrrhic victory, but in fact it is an important achievement after a long march through the European institutions Wilfried Martens President of the European People’s Party (1990–2013)

Although the creation of the first European political parties dates back to the middle of the 1970s, a regulatory framework—including EU public funding—was only established three decades later in 2003. This chapter will deal with the origins of this finance regime. The main argument at the centre of this chapter is that the introduction of European subsidies is the result of strategic actions of the Europarties combined with a strong democratizing discourse: Europarty funding was presented as a measure to ‘save’ European democracy. After a discussion of the drivers behind public party funding that are highlighted in the academic literature in the first section, the remaining part of the chapter is divided into two. The second section will show how the introduction of European party subsidies was the result of a long and

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 W. Wolfs, European Political Parties and Party Finance Reform, https://doi.org/10.1007/978-3-030-95175-7_2

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arduous process, driven by key personalities in the European Parliament and in the European political parties themselves. It will also describe the main discussions on the content of the initial funding rules. The third section will go into the strong normative rationale behind the finance regime: the introduction of Europarty funding was deemed necessary in order to build up democracy at EU level.

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State of the Art: The Introduction of Public Funding for (European) Political Parties

What drives the introduction of public funding for political parties? Scholars have taken two main perspectives to answer this question. The first perspective concentrates on the normative considerations behind party finance and holds that party regulation and financing are guided by the idea that political parties fulfil important functions in democracies. The second perspective emphasizes how party subsidies are the result of strategic calculations of political parties, and particularly those in power. The normative perspective focuses on the central role that political parties play in democratic systems. Democracy without political parties seems unthinkable. However, that does not necessarily mean that they should be granted financial support from the state. The most fundamental debate on party regulation and funding is indeed characterized by the classic distinction between a ‘libertarian’ or ‘permissive’ position that considers parties as private civil society organizations, and a ‘statist’ or ‘prescriptive’ approach that regards them as (quasi-)state entities (see e.g. Janda 2005). While the former view denounces all state intervention in the finances and internal organization of political parties, proponents of the latter position believe that the regulation of parties is not only permitted, but even desirable (Smilov 2007, 6–8). Although in most democracies, the radical libertarian position enjoys little support, the tension between parties as private organizations or as extensions of the state remains a leitmotiv in the debates on political finance. When public party funding is introduced, however, a first often used argumentation is that political parties are essential institutions for democracy and thus merit public support. Parties are considered a ‘common good’ or ‘public utility’: they are assumed to fulfil functions that are

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essential to a democratic system—such as structuring elections and government, aggregating interests and linking citizens to the state— which provides a legitimation for state subsidies (van Biezen 2004). A second motivation concerns attempts to tackle threats to the democratic process. In this respect, party funding and regulation are considered a valuable tool to combat corruption. The importance of money for politicians—as the ‘fuel of party politics’—entails the risk that financial contributors literally ‘buy influence’ either by rewarding parties or candidates for implemented policies or by providing an incentive to steer future decision-making in a certain direction. The regulation of party finances— for example by capping the level of donations to parties—is an important measure to limit the role of private money in politics. Many scholars have highlighted how corruption scandals involving political parties have been one of the main reasons behind party regulation in general and restrictions on private funding in particular (van Biezen 2008; Scarrow 2004; Weekers et al. 2009). Public funding can in this respect be used to temper politicians’ inclination to look for sizable donations (Koss 2010; Pinto-Duschinsky 2002). A third important motivation for party regulation and funding relates to the issue of party competition. On the one hand, party finance can be an important instrument to ensure stability by fostering organizational continuity of the established parties (Casal Bértoa et al. 2014, 358). On the other hand, public funding can be used as a tool to guarantee equal opportunities for (new) parties by creating a level playing field in the political arena. For example, by providing new, small and less affluent parties with substantial amounts of subsidies, political competition could become more equal and fair (Wolfs and Smulders 2018, 186). Apart from these normative considerations, many scholars have highlighted the strategic dimension behind the regulation of political parties and the introduction of public funding. After all, the funding and regulation of political parties is determined by (some of) the parties themselves, which have preferences in how the regulatory framework is set up. Consequently, several scholars have questioned the democratic benefits of party subsidies, and point to the strategic considerations based on the parties’ self-interest as the main motivation behind initiatives for party regulation and funding. Katz and Mair (1995) asserted that established political parties use the introduction of state funding to guarantee their

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own organizational survival. Because of declining party membership— and consequently financial member contributions—and the growing costs of political campaigns, the parties in power introduced public party funding to compensate for the declining revenue and rising campaign expenses. Research on the introduction of public party funding at European level has mainly taken this second strategic perspective, although there are also a number of studies that focus on the legal aspects of the finance regime (see e.g. von Arnim and Schurig 2004; Morlok 2002). Several authors have focused on the attempts of the Europarties—in particular the EPP and the PES—to influence the negotiations of the treaties of Maastricht and Amsterdam to enable public funding for Europarties (Johansson 2002, 2016a, b, 2017; Lightfoot 2003). Roa Bastos (2012) specifically studied how a reference on European political parties was included in the Treaty of Maastricht by examining the motivations of the main actors involved, in particular the leaders of the main Europarties and leading figures in the European Parliament. This treaty article on European political parties is taken as a point of departure by Johansson and Raunio (2005) who combine a historical and rational-choice institutionalist perspective: they present this article as an ‘incomplete contract’ that is used by a coalition of leading Europarty personalities to strengthen their position and push for the introduction of EU subsidies. Day and Shaw (2006b) and Lightfoot (2006) have examined the decision-making process preceding the establishment of the finance regime in detail and explained the outcome by looking at the behaviour of the main political parties involved. Similarly, Gagatek (2011) analyzed the content of the funding rules as a result of the clash of national traditions and the views of political parties towards European integration. In comparison to this research on the strategic actions of Europarties, the normative perspective has received less attention, although Johansson and Raunio argued that references on transparency and democracy were used by the Europarty actors to strengthen their claims. In the remainder of this chapter, the strategic component will first be examined in the second section by investigating the main actors involved in the long process that eventually led to the establishment of the finance regime. The normative arguments that have been put forward are the focus of the third section.

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2 The Process: The Long Road to Public Funding for European Political Parties 2.1

The Road to Maastricht: The First Step

The long road to the introduction of Europarty funding in 2003 started more than a decade earlier with the Treaty of Maastricht. The inclusion of a specific reference to European political parties in the treaty text constituted the first step in this process: Article 138a stated that ‘Political parties at European level are important as a factor for integration within the Union. They contribute to forming a European awareness and to expressing the political will of the citizens of the Union’. According to Hix and Lord (1997, 190), this was the result of actions of the leaders of the European political parties themselves in a clear attempt ‘to alter the institutional environment for their own ends’. The principal role in this process was played by Wilfried Martens, who was both EPP President and prime minister of Belgium in the beginning of the 1990s, providing him with a ‘strategic location’ in the entire process (Day and Shaw 2003, 155). Martens followed a two-tier strategy. First, he sought the support of the presidents of the two other main Europarties: Guy Spitaels of the European Socialists, and Willy De Clercq of the European Liberal Democrats and Reformists, also both Belgians and old acquaintances, as they both had served as deputy prime ministers in a Belgian government led by Martens. This rapprochement between the three main Europarties had already started at the end of the 1980s, when the secretariesgeneral—all of whom were German—regularly met to discuss common problems and to exchange experiences (Jansen 1998, 15). The three party leaders also met several times in 1990 and 1991 to discuss the role of Europarties in EU decision-making and their recognition in the European Treaty (Hix and Lord 1997, 190). In December 1990, a day before the meeting of the European Council in Rome, the three party leaders gave a joint press conference and issued a press release stating that despite their ideological differences, all three European political parties ‘stress their common responsibility for the proper functioning of democracy and for the success of the European Union’.1 This was a way to put the issue of European political parties on the political agenda in the run-up to the revision of the European

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treaties. It was followed up by a joint letter in July 1991 to the presidents of the European Council, the Council of Ministers, the European Parliament and the European Commission, calling for the inclusion of a specific provision on European political parties in the European treaties (Jansen 1998, 11), with the following suggested formulation: European Parties are essential to integration within the Union. They are integral to building consensus and expressing the political will of the citizens of the Union. European parties are the federative associations of national parties with a presence in the majority of EU Member States, sharing the same aims and political direction, and forming a single group in the European Parliament. They must give a public account of where their funding comes from.

How did the European institutions respond to this call from the three European political parties? Many European Commissioners—including President Jacques Delors—looked favourably towards the initiative, but did not want to get involved as they regarded it mainly as a matter for the European political parties and the political groups (Jansen 1998, 13). The proposal was also welcomed in the European Parliament. EP President Enrique Baron Crespo took initiatives to advance the issue (Roa Bastos 2012). The responses among the representatives of the member states were less enthusiastic. Both Ruud Lubbers, Dutch prime minister and President of the European Council, and Hans van den Broek, Dutch foreign minister and President of the Council of Ministers, were hesitant to include a provision on European political parties in the draft text of the treaty. Jansen (1998, 14) stated that this was mainly because they wanted to focus on several other substantial disagreements that existed in the Intergovernmental Conference (IGC) that was preparing the Maastricht Treaty. Consequently, the Dutch presidency did not include any reference to European political parties in the draft Treaty text that was to be presented to the European Council on 9–10 December 1991. The second part of Wilfried Martens’ strategy was focused on rallying support among the government leaders of his own European party. A few days before the European Council of December 1991, the EPP party leaders and heads of government met in The Hague to prepare the summit in Maastricht (See also Johansson 2017, 295–296). With heads of government from Belgium (Wilfried Martens), Germany (Helmut Kohl), Greece (Konstantin Mitsotakis), Italy (Giulio Andreotti), the Netherlands

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(Ruud Lubbers) and Luxembourg (Jacques Santer), the EPP accounted for half of the twelve member states represented in the European Council (Johansson 2002). Jansen (1998, 14)—who was Secretary-General of the EPP at the time—described how Martens, as the chair of the meeting, asked for support from the EPP government leaders for a list of ‘essential points’ that had to be included in the treaty text, including a reference to European political parties. All participants—including Ruud Lubbers—agreed. During the following meeting of heads of state and government, Martens suggested to include a reference on European political parties in the treaty text on behalf of the six prime ministers that were affiliated to the EPP (Johansson and Raunio 2005, 521). He did not meet much resistance for his proposal (for a detailed account, see Bastos 2012). There was a short debate on the issue following a question of Portuguese Prime Minister Anibal Cavaco Silva, but none of the government leaders expressed opposition. It seems that the prime ministers of the more sceptical countries Britain and Denmark opted not to spend their political capital on the issue (Johansson and Raunio 2005, 522). Although there was an agreement on the principle of including a reference on European political parties in the treaty text, the exact formulation of the reference remained open and was left to the conference of diplomats that were entrusted with editing the decisions of the European Council (Jansen 1998, 14). The final wording of the party article was merely declaratory in nature, stating that European political parties ‘are a factor for integration within the Union’ and ‘contribute to forming a European awareness and to expressing the political will of the citizens’. In contrast to the proposal of the three party leaders, the text did not include any provisions on the organizational structure of the European political parties, their ideological coherence or link with a political group in the European Parliament. Neither did it contain any reference to the possibility of public funding from the EU budget. Consequently, the Treaty of Maastricht signified only a narrow victory: European political parties were indeed included in the text, but, in the words of Day and Shaw (2006b, 298) they ‘failed in their second objective to secure a clause in the provision which would allow for the operationalisation of the rhetorical force of promoting political parties at European level’. However, this ‘constitutional recognition’ did have an effect on the organizational development of the existing European political parties

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(Morlok 2002). In the aftermath of the agreement on the Treaty of Maastricht, they changed their names and included the label ‘party’ to resemble the aspiration of more centralized organizations, although the centre of gravity strongly remained with the national member parties (Johansson and Raunio 2005, 516). The Confederation of Socialist Parties of the European Community (CSP) that had been founded in 1974 was transformed into the Party of European Socialists (PES) in 1992, which was considered by its leadership as a ‘definitive step in the development of a real European socialist party’ (Lightfoot 2005, 1). A year later, the Federation of European Liberal, Democrat and Reform Parties (FELDRP) that had been established in 1973 turned into the European Liberal Democrat and Reform Party (ELDR Party). Also in 1993, the Green parties in Europe strengthened their cooperation, turning their loose structure of the European Green Coordination (EGC) into the European Federation of Green Parties (EFGP). Only in 2004, a more centralized European Green Party would be established. In 1995, the European Free Alliance— a cooperation of regionalist and nationalist parties—renamed itself the ‘Democratic Party of the Peoples of Europe-European Free Alliance’ (DPPE-EFA).2 The European People’s Party had already taken on the label of genuine ‘party’ at its establishment in 1976, although at that time it was more an objective than a reality, as can be illustrated by the added subtitle ‘Federation of Christian Democratic Parties of the European Community’ (Jansen and Van Hecke 2011, 40–42). Despite the ‘constitutional’ recognition of these organizations and the impetus it provided for their further development, it soon became clear that the wording of the treaty article did not provide a sufficient legal basis for the introduction of public funding (see also Bieber 1999). In order to make this possible, the article would have to be amended. Following the entry into force of the Treaty of Maastricht, the party leaders of the EPP, the PES and the ELDR again held joint meetings together with the chairmen of their political groups to assess which initiatives could be taken in order to achieve this (Jansen 1998, 16). 2.2

The Road to Nice: A Clear Legal Basis for Funding

The first attempts to amend the party article were made in the context of the 1996–1997 Intergovernmental Conference that would result in the Treaty of Amsterdam. The governments of Austria and Italy issued a joint memorandum on the subject, and the Greek government proposed to

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amend the party article in the treaty text, but could not gather sufficient support (Day and Shaw 2006b, 299). The European Parliament also issued a resolution on ‘the constitutional status of the European political parties’, drafted by Dimitris Tsatsos (PES group) in an attempt to put forward a concrete proposal for a regulatory framework for Europarty funding.3 The resolution suggested to differentiate between a regulation to grant the European political parties a legal status on the one hand, and a regulation to deal with the finances—including public funding—of these Europarties on the other. The resolution text linked the legal status to a number of conditions on how a European political party should be organized. It should voice its opinion on aspects of European policy and international policy, which was further operationalized by the requirement to have a—publicly accessible—programme. In this programme, the fundamental constitutional principles of democracy, respect for human rights and the rule of law as enshrined in the EU treaty should be respected. A Europarty should also be represented in the European Parliament or ‘be involved in the process of expressing political will at European level in some other, comparable way’, although it was not clarified how. It should also be organized in a manner ‘that is likely to reflect the political will of citizens of the Union’ and, consequently, be more than ‘a mere electioneering organization or an organization that merely supports a political group and parliamentary work’. Finally, a European political party should be represented in at least a third of the member states and be active at transnational level, to avoid that national parties would also qualify. With regard to the funding conditions, the resolution was limited to a number of principled declarations. According to the text, Europarty funding should be distributed in accordance with the principle of equality of opportunity, it should be linked to transparency requirements, and include a financial incentive to strengthen the roots of the Europarties in society and seek greater financial autonomy. No specific proposals were made, however, on how these principles would be operationalized. None of these initiatives of the Austrian, Italian and Greek governments, nor the resolution of the European Parliament had any substantial impact on the treaty negotiations. These discussions were mainly focused on the development of European foreign and security policy and preparing the Union for the future enlargements. Particularly the EP resolution had raised scepticism among a number of governments

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because of its outspoken supranational character (Day and Shaw 2003, 156; 2006b, 299). Johansson (2016a, b, 2017, 296–298) also noted that—in contrast to the run-up to the Maastricht Treaty—the EPP leaders were no longer able to push for institutional reforms due to their limited numerical strength and internal divisions caused by domestic constraints. German Chancellor Kohl, for example, encountered substantial opposition from the leaders of the German Länder against treaty changes in the direction of more supranationalism. In the end, the article on the European political parties remained unchanged. The issue was picked up again during the negotiations in the runup to the Treaty of Nice. In December 1999, a joint statement was put forward by the leaders of the EPP (President Wilfried Martens), the PES (President Rudolf Scharping), the EFGP (Secretary-General Arnold Cassola), and the DPPE-EFA (President Nelly Maes). They called for ‘further strengthening European political parties which are fundamental in promoting democratic life with the European Union and its institutions’, and called upon the European Commission to prepare—in consultation with the existing European party federations and political groups in the European Parliament—a statute for European political parties. According to their letter, the statute should define the parties in accordance with the article in the EU treaties and stipulate under which conditions their organizations and activities could receive financial support from the EU.4 In February 2000, the Secretaries-General of all existing European political parties and their corresponding political groups presented a ‘Working Document of European Political Parties’, with a rudimentary proposal for the introduction of funding and a statute for the parties.5 Their party and group leaders sent this draft proposal to Commission President Romano Prodi claiming that ‘strong European parties, complementing the European Parliament and its political groupings, can become a vital element of democratic life and political debate in the Union’.6 These were all clear attempts to keep the issue of Europarty funding on the political agenda. Around the same time, a critical report of the Court of Auditors added a sense of urgency to the process. The report examined in detail the finances of the political groups of the European Parliament and stated clearly that ‘aid for the financing of European political parties, as for other similar groupings, cannot be taken from appropriations which are intended for the activities of the groups’.7 However, this financial support

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from the political groups was vital for the functioning of the European political parties: if this source of revenue would disappear without any other financial support from the EU’s budget, their organizational survival was put in serious jeopardy. The Bureau of the European Parliament issued a decision on ‘European Parliament support for European political parties’ to impose stricter guidelines and more transparency, but also acknowledged that this could only be a temporary solution until a permanent legal framework was established, at latest by the end of 2004 (Day and Shaw 2003, 157; 2006b, 300).8 In the beginning of 2000 several MEPs took the issue to heart and pushed for an amendment of the treaty article in the run-up to the Intergovernmental Conference. In its resolution of April 2000 on the IGC, the European Parliament called for an addition to the article, stating that requirements for the recognition, statute and funding arrangements (including EU subsidies) for Europarties should be adopted ‘within twelve months of the entry into force of [the] Treaty’.9 The rapporteurs of the resolution had been Giorgos Dimitrakopoulos (EPP-ED group) and Jo Leinen (PES Group), but the specific amendment on the Europarties had been introduced by Spanish Conservative Inigo Méndez de Vigo, who was coordinating the issue on behalf of the EPP-ED group (Johansson and Raunio 2005, 524). The two MEPs that represented the European Parliament during the IGC were Elmar Brok (EPP-ED group) and Dimitris Tsatsos (PES Group), both outspoken supporters of the idea of Europarty funding. Although it is unclear how far their influence extended, the two representatives ensured that the issue was raised for discussion during the IGC negotiations (Christiansen 2002, 43; Gray and Stubb 2001, 21). At the same time, the European political parties also made efforts to bring and keep a discussion on the party article on the agenda of the ICG. During the pre-summit meetings in the EPP and the PES in Porto on the day before the Feira European Council in June 2000, an agreement was found among the government leaders of the respective Europarties to amend the article in the treaties. Consequently, in the Nice Treaty a sentence was added to the article on Europarties which made it possible to lay down ‘regulations governing political parties at European level and in particular the rules regarding their funding’ through the co-decision procedure. However, in order to appease fears among certain governments, a declaration was added to the

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Treaty stipulating that this would not constitute any transfer of competence to the European level, and that the Europarty funding could not be used to (in)directly finance national parties. In other words, the national leaders could agree on subsidies for European political parties as long as it was ensured that it would not affect politics at national level. 2.3

The Final Stretch Towards a European Party Finance Regulation

Once an agreement was found to amend the article in the Treaty of Nice, efforts concentrated on adopting an EU legal act that would introduce public funding for European political parties. The European Commission came forward with a draft Regulation already in February 2001, despite criticism from the two British Commissioners (Gagatek 2011, 19).10 The text resembled to a large extent the proposals made by the main Europarties and their corresponding groups in the past. In this regard, Johansson and Raunio (2005, 526) also noted that ‘the Commission’s proposal was strongly influenced by leading personalities in the main parliamentary groups’. However, the Treaty of Nice had not yet entered into force at that time, meaning that the European Parliament only had to be consulted and that unanimity was still required in the Council of Ministers. In this respect, the Commission proposal was considered as a mere temporary measure to bridge the period until the entry into force of the Nice Treaty: it was only limited in scope—focused on the rules and conditions for Europarty subsidies—and would expire after two years. This would give the EU institutions time to agree on a more extensive regulatory framework. The text was supported by a relatively large majority in the European Parliament among the main political groups, with some amendments focusing on financial transparency, such as banning anonymous donations and donations from companies. In June 2001, the European Commission launched a new draft Regulation, adapting the content to the majority of the Parliament’s amendments.11 Despite some concerns about the criteria for funding, the tight timetable and the limited foreseen funding compared to the start-up costs, the existing Europarties were positive about the proposal (Day and Shaw 2003, 159). In the Council of Ministers, however, the legislative proposal encountered a much stronger opposition.12 In general, Austria, Denmark, Italy,

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the United Kingdom and Sweden voiced strong scepticism, around three elements in particular. A first point revolved around the requirement for European political parties to respect the fundamental principles of the European Union and the control of this condition by the European Parliament. The British, Danish and Austrian delegations were strongly opposed to this provision,13 because they feared that a party could lose funding because of a perceived lack of respect for democratic values (Lightfoot 2006, 305). In addition, Gagatek (2011) argued that the position of the United Kingdom and Denmark can also be explained by their national practices regarding party regulation. In these countries, a strong emphasis is placed on the freedom of association of political parties, and the regulation of party finance, internal organization and activities is limited. A second point of discussion was related to the geographical threshold for funding. Such a proposal had already been put forward by the European Parliament in its 1996 resolution (cf. supra).14 The minimum representation in five (or a third of the) EU countries as proposed by the Commission and the Parliament was considered too high for most member states. The British delegation argued for a minimum representation in only two countries, while Denmark argued that Europarty funding should only be linked to establishing or joining a political group in the European Parliament without any additional representational requirements. The Austrian and Swedish delegations were also critical about the condition (Day and Shaw 2006a; 2006b, 303; Gagatek 2011).15 Eventually, the Belgian Council Presidency suggested the compromise of lowering the representational threshold to a quarter of the member states. Third, the member states were divided on whether to allow donations to European political parties, and—if allowed—what the limit should be. Whereas the German and Danish delegations were in favour of a relatively liberal regime with high donations thresholds, other countries— including France—wanted more stringent rules with low limits and bans on donations from public authorities and companies. This line of conflict can be explained by national traditions: while some countries hardly had any restrictions on donations, others had recently been plagued by party finance scandals (like Belgium and France) and/or strongly regulated donations (like France) and wanted a similar regime at European level (Gagatek 2011, 15, 32). The compromise suggested by the Presidency was to allow donations from both natural and legal persons, but only to

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a certain limit (to be decided later) (Day and Shaw 2006b, 303; Gagatek 2011, 15). Because of the unanimity requirement, it was difficult to reconcile the different positions in the Council, which would result in substantially watering down the Commission proposals. In October 2001, the leaders of the five existing European parties sent a letter to the Belgian Presidency, setting out their reservations on the substantive changes to the legislative text that were discussed.16 By the end of 2001, the negotiations were deadlocked, and it became clear that a consensus was almost impossible to achieve. Day and Shaw (2006b, 303–304) and Gagatek (2011, 15) described how the leaders of the European political parties were not entirely dissatisfied, since an agreement in the Council would have meant a considerably weakened Regulation on several points, in particular a lower representational threshold. The situation changed when the Treaty of Nice entered into force on 1 February 2003. The new treaty provisions meant that the European Parliament was now on an equal footing with the Council of Ministers, and that a qualified majority was sufficient in the Council to adopt the text. The European Commission almost instantly launched a new legislative proposal.17 The objective was to find an agreement on the text as soon as possible and preferably by the end of the Greek presidency of the Council in June 2003. Greece had traditionally been a strong supporter of transnational policy initiatives, including funding for European political parties. The Greek presidency would be followed in the second half of 2003 by Italy, which had been a lot more critical towards the file, and in the first half of 2004 by Ireland, which had taken a rather lukewarm position (Day and Shaw 2006b, 305). This left only a time frame of four to five months, which was mainly disadvantageous for the negotiating position of the European Parliament. Once the Commission had presented its new proposal, the Parliament and the Council immediately started working on the text in the form of Working Groups—facilitated by the Greek presidency and the Commission (Interview 41)—with the aim of speeding up the process, as such piloting the practice of trilogues that has now become standard practice in EU decision-making. Gagatek (2011, 25) highlighted that the Europarties also engaged in intense lobbying of their affiliated national ministers to advance their cause. Intensive consultations with MEPs and within the Council—in three months the Greek Presidency organized more than ten meetings of the Working Party on General Affairs to discuss

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the proposals—led to the unusual situation of a political agreement in the Council before the formal first reading vote in the European Parliament. The Council’s political agreement was introduced by EP rapporteur Jo Leinen as compromise amendments for the plenary vote on 19 June 2003. Because unanimity was no longer required, an agreement could be found that was close to the compromise proposed by the Greek Presidency and to the position of the European Parliament, although the latter conceded on a number of points (Day and Shaw 2006b, 305–307; cf. infra). For example, the compromise was limited to the conditions and allocation of public funding; the EP dropped its demand for a legal statute for European political parties in order to enable a swift agreement (Interview 41; Lightfoot 2006, 306). In the European Parliament, the text was approved with a large majority: 345 MEPs voted in favour, 102 against and 34 abstained. The proposal gained strong support from the four main political groups (EPP, PES, ELDR and Greens/EFA group). Most of the regionalist MEPs of the Green/EFA group, however, voted against the proposal, because they feared the representational threshold would pose an existential threat to the survival of the EFA (Day and Shaw 2006b, 309–310). The additional negative votes came from the Eurosceptic groups (UEN and EDD), the British Conservatives (EPP-ED group) and the (more sceptic) Scandinavian liberal parties (Lightfoot 2006, 307). The Council of Ministers adopted the text by qualified majority, with Denmark, Italy and Austria voting against.18 This was the only legislative proposal on which these three countries voted against between 1998 and 2004, and one of the very rare instances when there were three or more negative votes in Council, pointing to the sensitivity of the topic. Aside from the national tradition of limited party regulation (Gagatek 2011, 17), an explanation for the rejection of these three countries is that radical right parties were either part of the government (the Freedom Party in Austria and Northern League in Italy) or supported it (the Danish People’s Party). These parties did not belong to any existing European party and felt (not entirely unjustified) targeted by the conditions to respect the EU’s fundamental values and the required representation in a quarter of the member states (Lightfoot 2006, 305–306; Morijn 2019, 619). The United Kingdom had also been sceptical, but eventually abandoned its opposition against the proposal. While the official reason was that its support had been dependent on the declaration attached to the Nice Treaty (ensuring that EU funding would not interfere with

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national politics), Gagatek (2011, 17) argued based on interview data that PES President and former British Foreign Minister Robin Cook asked his successor in office and Labour colleague, Jack Straw, to support the proposal. Following the Council’s approval, ‘Regulation (EC) No 2004/2003 on the regulations governing political parties at European level and the rules regarding their funding’ was published in the Official EU Journal in November 2003, and a regulatory framework for European political parties was finally in place. 2.4

The Content of the Finance Regime for European Political Parties

So what did the first funding rules for European political parties look like? The Regulation set out the definition of a political party at European level, which could be either a political party, meaning an association of citizens which pursues political objectives and is recognized or established in accordance with the legal order of at least one member state, or an alliance of political parties, meaning a structural cooperation between at least two political parties (Article 2 of Regulation 2004/2003). Many MEPs had objected to the formulation of the second part, because they felt that an ‘alliance’ could imply a rather loose collaboration, which potentially opened the door for national parties setting up a European party organization with the mere objective of securing funding, rather than because of a shared ideological project (Day and Shaw 2006b, 307). However, the Council retained the formulation, which was eventually accepted by the European Parliament. In order to be eligible for funding, a European political party had to meet four conditions (Article 3 of Regulation 2004/2003): (1) it must have legal personality in the member state in which its seat is located, indicating that the Parliament’s longstanding objectives of establishing a European legal status for the Europarties were—at least for the time being—abandoned; (2) it must participate in the European elections or express the intention to do so; (3) it must observe in particular in its programme and in its activities, the founding principles of the EU; and (4) it must be represented in at least a quarter of the member states, either by Members of European Parliament, national parliament or regional parliament, or by obtaining at least three per cent of the votes during the last European elections.

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While the first two criteria were uncontested, the last two prompted more discussion (similar to the 2001 proposal). Respect for the fundamental principles of the European Union as a condition for funding was challenged by several (Eurosceptic) MEPs and Austria and Denmark (cf. supra). However, the majority of MEPs and member states supported this criterion, and it was included in the final compromise without much debate. The European Parliament was also given the competence to verify compliance of a European political party with these principles (Article 5 of Regulation 2004/2003). There was, however, more discussion on the fourth condition, i.e. the minimal European scale of a political party. The 2003 proposal from the Commission foresaw a higher threshold of minimal representation in at least a third of the member states or five per cent of the votes in the last European elections, but (again) encountered strong opposition. Several MEPs—in particular those that were not (yet) part of any existing European political party—voiced their disapproval because it would deny parties and politicians that focused their activities on the national level EU funding. In the Council, many member states again argued for lower thresholds. Italy, for example, demanded a threshold of only three member states (Gagatek 2011, 16). This was unacceptable to the main EP groups, because it would allow only a limited number of (radical right) parties to establish a European party organization and gain access to EU funding (von Arnim and Schurig 2004, 68–69). The eventual compromise of a minimal representation of a quarter of the member states was a concession to the Council and a gesture from the main political groups towards the smaller Europarties, such as the European Greens or the European Free Alliance, for which the threshold of a third of the member states or an electoral score of five per cent would be hard to achieve (Interview 41; see also Day and Shaw 2006b, 307). In other words, the threshold was set to allow the existing Europarties to receive EU funding, but make it difficult for new (radical right) parties to gain access to European subsidies. The Regulation also included a distribution mechanism for the Europarty grants (Article 10 of Regulation 2004/2003). Every year, a total sum for the funding of European political parties would be determined in the budget of the European Parliament, which would subsequently be distributed among the parties. A small part of this total sum—15 per cent—would be distributed in equal shares, whereas the remaining 85 per cent would be allocated in proportion to the number

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of affiliated Members of European Parliament. A similar allocation mechanism was used for the financial support of the political groups in the European Parliament. The public funding for European political parties was also accompanied by a set of rules on their income and transparency. The EU subsidies could account for a maximum of 75 per cent of the total eligible expenditure, meaning that the European political parties had to collect at least 25 per cent of their budget from other sources (Article 10 of Regulation 2004/2003). This had a technical and more substantial reason. Technically, the Europarty subsidies took the form of a ‘grant’, and the EU’s Financial Regulation stipulated that a grant ‘[could] not finance the entire costs of the action [or] the entire operating expenditure of the beneficiary body’.19 In addition, the legislators wanted to avoid the creation of ‘artificial’ parties that would totally depend on public funding. The required level of 75 per cent was a compromise: the Eurosceptics wanted a much lower maximum share of public funding, while the European political parties themselves had advocated for a share up to 85 per cent of the total budget (Day and Shaw 2006b, 308; Interview 41). How the European political parties could collect this own revenue was part of an extensive debate, in particular with regard to donations. As in 2001, some member states—such as France, Belgium, Portugal and Greece—heavily resisted this source of revenue for European political parties (Interview 41). Others, like Germany, advocated high donation limits (von Arnim and Schurig 2004, 74).20 Eventually donations were allowed, but with certain limitations (Article 6 of Regulation 2004/2003). In the compromise text, a threshold of e12,000 per donor per year was set, which was close to the limit of e15,000 as argued by the European Parliament.21 In addition, a ban was put in place on anonymous donations, donations from the political groups and from any state-controlled public bodies. The identity of the donors also had to be published, with the exception of donations below e500: this was a compromise between a limit of e1000 as suggested by the European Parliament,22 and a threshold of only e100 as included in the Commission proposal. Aside from donations, European political parties could also rely on member contributions. On the initiative of the Council of Ministers, the contributions from the member parties were also capped at 40 per cent of the annual budget of the European political party. According to rapporteur Jo Leinen, this restriction was suggested by the smaller

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member states that feared that the member parties from larger countries—in particular Germany—would otherwise dominate the Europarty organization (Interview 41). The funding rules also regulated the expenditure of European political parties. The declaration to the Treaty of Nice, stating that the public funding for European political parties should not be used to financially support—either directly or indirectly—national parties was literally taken over in the funding rules (Article 7 of Regulation 2004/2003).23 An attempt by the European Parliament to limit the ban only to direct funding of national parties was rejected by the Council.24 It was unclear, however, whether the money could be used by the European parties to finance their own electoral campaigns. The Commission proposal included a clear ban on the use of European subsidies for election campaigns. The European Parliament however argued that it was ‘the raison d’être of political parties to fight election campaigns’,25 but several member states were much more cautious of this possibility. The eventual compromise was to keep a rather vague provision in the Regulation, stating that the funding could only be used to cover expenditure ‘directly linked to the objectives set out in the political programme’, and could include ‘technical assistance, meetings, research, cross-border events, studies, information and publications’ (Article 8 of Regulation 2004/2003). In other words, the rules did not explicitly allow European political parties to finance electoral campaigns, but neither was it explicitly prohibited (Day and Shaw 2006b, 308). Finally, there were some disagreements on the management and control of the finances of the European political parties (Article 9 of Regulation 2004/2003). The European Parliament was hesitant to take on this role to avoid getting blamed if a Europarty was denied subsidies (Interview 41), and argued that the European Commission—as a ‘neutral body’—should be responsible for the distribution and control of the Europarty funding. The Commission, however, was reluctant, because it feared to be drawn into potential conflicts if certain European parties would not be granted European subsidies because they did not fulfil all conditions. Eventually, the European Parliament agreed to take on the management and control of the funding to ensure that a compromise could be reached (Lightfoot 2006, 307–308). This arrangement put the responsibility of checking the Europarties’ eligibility for public funding, the decision on the funding amounts, and the control of the financial accounts with those actors that were the closest to the (established)

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Europarties themselves: their affiliated Members of European Parliament. In addition to the European Parliament, the finances of the Europarties also had to undergo an annual independent audit and could be examined by the European Court of Auditors. Table 1 provides an overview of the entire funding procedure. In contrast to the party finance systems at national level, European political parties that fulfil the eligible conditions did not automatically receive EU funding, but needed to submit a funding application with the European Parliament each year (Article 4 of Regulation 2004/2003). This included documents proving that they satisfied the four eligibility requirements, their political programme and statutes, a list with the members of the management board, a work programme with the envisioned activities and a provisional operating budget. European parties had only limited leeway to diverge from this work programme and provisional budget. More than a decade after the Treaty of Maastricht, a finance regime for European political parties was now established at the end of 2003. However, the provisions on the application and use of European subsidies only applied after the opening session of the new European Parliament (Article 13 of Regulation 2004/2003), meaning that no funding could be used by the European political parties in the 2004 European elections. Table 1 Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 Step 8 Step 9

Funding procedure for European political parties Call for funding applications is published by the European Parliament Submission of funding applications by European political parties Decision on funding applications by the Bureau of the European Parliament and conclusion of funding agreement between Parliament and Europarty Payment of pre-financing European political parties carry out envisioned activities within provisional budget External audit Submission of financial report by the European political parties to the European Parliament Control of financial reports by Directorate-General for Finance of the European Parliament Determination of the final grant amount and approval by the Bureau of the European Parliament

Source Anglmayer (2021, 42) with own adjustments

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3 The Narrative: Building Party Democracy at the European Level While the analysis of the process leading up to the finance regime demonstrated the strategic actions of the Europarty leaders and MEPs, this third part focuses on the strong normative narrative that characterized the debates. The central argument is that Europarty funding was presented as a way to strengthen the EU and bring it closer to its citizens. This democratic motivation fit well in a period when the debate on the democratic deficit of the European level intensified. Consequently, the narrative to legitimize direct funding for Europarties corresponded to the idea of political parties as ‘public utilities’: necessary and desirable institutions for democratic politics. Interestingly, the discourse also often referred to their importance for European integration in general. This is in line with the observation of Gagatek (2011), who stated that one of the main reasons why the European party federations were created in the 1970s was the belief of the initiators that these organizations would ‘push the political integration forward’. In other words, European political parties were not only expected to contribute to democracy at EU level, but also to deepen the European integration process. This argumentation indeed runs as a clear thread through the efforts to establish a finance regime. This can already be observed in the communication of the leaders of the three main parties that were advocating a party article in the Maastricht Treaty. After one of their joint meetings in 1990, Wilfried Martens affirmed to the press the Europarties’ ‘ joint responsibility in the correct functioning of democracy and with a view to the success of the European Union’.26 As already mentioned, in their joint letter of 1991, the party leaders explicitly wanted to ‘acknowledge the role of European parties in the process of integration and of democratising the European Union’s political system’ (Jansen 1998, 11). The main inspiration for the treaty article on European political parties was drawn from the German constitution, and in particular Article 21 (Jansen 1998, 11; Johansson and Raunio 2005, 22). This article of the German Basic Law states that ‘political parties shall participate in the formation of the political will of the people’, and it also contains many details on the democratic requirements that are imposed on German parties. In this respect, it is indeed curious that while the treaty article refers to the relevance of Europarties for European integration, for raising

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political awareness and expressing the will of the citizens, no direct reference is made to their importance for EU democracy (see also Day and Shaw 2006b, 296–297). Only in the Treaty of Lisbon, the provision on European political parties would become embedded in a broader article on representative democracy in the European Union.27 Nevertheless, the important democratic role of European parties was continuously emphasized by the European Parliament and the European Commission. In its resolution of 30 October 1996 on the constitutional status of the European political parties, the Parliament argued that ‘without a functioning party system, a strong and robust democracy in which the citizen participates actively is inconceivable; this also applies to the level of the European Union’ and that ‘European political parties organized and acting on a transnational basis are necessary so that a genuine European citizenship may emerge which monitors, discusses and influences the expression of political will at European level’. In its explanatory statement of the resolution, rapporteur Dimitris Tsatsos emphasized that the development of European parties was crucial for the European integration process more broadly: European political parties would make a decisive contribution to the establishment of an ever closer union of the peoples of Europe. This would not only be a contribution to the European institutions’ greater closeness to the citizen and credibility, but also a helpful step in the efforts to overcome the present credibility crisis of the national party institutions.

Similar arguments can be recognized with the European Commission. When it came forward with its legislative proposal in 2001, the Commission argued that the text met the ‘high expectations as regard democratic participation and financial visibility’ and represented a major political progress, because it created ‘the right conditions for forging the much needed link between the institutions—the European Parliament in particular—and the citizens of the Union’.28 The link with European citizens was picked up by the EP rapporteur Ursula Schleicher, who emphasized in her explanatory statement how the development of European parties could help to turn the tide of declining turnout figures in the subsequent European elections. In its 2003 proposal, the Commission repeated the important role that European political parties could play in developing political debate at the European level, which would help to enhance the quality of democracy and improve the functioning of the institutions of

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the Union.29 In sum, the dominant narrative regarding European political parties was that they had an important role in advancing European democracy. In the debates, this important democratic role of European political parties was directly linked to the need to establish public funding for these parties. The argument was that if Europarties were to play their part in tackling the democratic deficit of the European Union, public funding was a necessary means to enhance their development. The European Parliament emphasized in 1996 in its report of rapporteur Tsatsos that in order to fulfil their objectives as described in the Maastricht Treaty, ‘[...] contributions made to European political parties from Community funds’ would be necessary. In 2003, during the debate in the European Parliament on the proposal, EC Vice-President Loyola de Palacio stated that if Europarties had to be able to fulfil their democratic function, they required EU financial support: ‘It is […] appropriate and necessary that they should be helped to carry out the tasks conferred on them by the Treaty and that they should consequently receive at least partial financing from the Community budgets’.30 This was supported by the EP rapporteur Jo Leinen, who stressed in the explanatory statement of his report that public funding was ‘necessary before a Union-level political process can be established’ and ‘in order to allow European political parties to play their role in the process of the European integration’. In other words, it was argued that only through public financial support, the Europarties could fulfil their democratic role.

4

Conclusion

When assessing the origins of the finance regime through the actorcentred institutionalist lens, it becomes clear that the European political parties have been able to alter—or even shape—the institutional framework enabling public party funding. First, the EU treaties had to be changed (twice) in order to provide a proper legal basis for Europarty subsidies. This can be seen as a process of party constitutionalization, comparable to past developments in many member states (Day and Shaw 2003, 149–150). In a second step, a Regulation had to be introduced setting the funding conditions and rules. In line with rational choice institutionalism, this is the direct result of purposive actions from the leaders of the established European political parties—the EPP, the Socialists and the Liberals—and Members of European Parliament that acted as

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policy entrepreneurs. However, whether or not their actions were effective, depended on a number of factors, both related to the opportunities and constraints provided by the institutional context (i.e. decision-making procedures) and to the nature of the Europarties themselves. Both aspects differ fundamentally from the situation in national political systems. The institutional hurdles to achieve Europarty public subsidies were more substantial than at national level: changing the treaties required the support of the government leaders of all member states, and a Regulation had to be approved by both the European Parliament and the Council. While these decision-making procedures are not deterministic, they provided a set of serious constraints for Europarties to achieve their policy goal. For example, an agreement about the Regulation was only possible when unanimity in the Council was no longer required after the entry into force of the Nice Treaty. As opposed to their national counterparts, the influence of the Europarties over the laws that govern them is limited. At the collective level, there are no governing parties that jointly adopt new party laws, possibly as an element in a broader coalition agreement. At the individual level, the link between the extra-parliamentary and parliamentary component is much weaker than in the case of national parties (see also Gagatek 2011, 2). Europarties hold little leeway over the voting behaviour of their affiliated Members of European Parliament and their affiliated ministers in the Council. The Europarties only manage to steer EU decision-making if they have the ability to act cohesively both at the collective and the individual level. With regard to the introduction of public funding, the main European political parties—EPP, Socialists and Liberals—had shared interests: establish a stable source of financing to improve their autonomy and organizational capacity. The ability for cohesive action within the Europarty families has been more limited. While the main extra-parliamentary parties could fall back on relatively stable backing from their affiliated groups in the European Parliament, support from their affiliated representatives from the member states in the (European) Council was all but evident. The latter were critical of aspects of the proposals because of strategic interests (the role of politics at national level) as well as normative considerations (substantive positions on party regulation). For example, domestic constraints on state leaders—such as German Chancellor Kohl— prevented a consensus on changing the treaty article on Europarties in the negotiations of the Amsterdam Treaty (Johansson 2017), and an

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agreement could only be found in the framework of the Nice Treaty if the member states got the guarantee that Europarty funding would not impact national politics. Similarly, while the leaders of Italy, Austria and Denmark were affiliated to the main Europarties (Silvio Berlusconi and Wolfgang Schüssel were part of the EPP, and Anders Fogh Rasmussen was a member of the liberals), the fact that their national government relied on the support of (Eurosceptic) parties without any involvement in a Europarty can partly explain their rejection of European subsidies (Gagatek 2011, 25). Also normative considerations played a role: member state delegations based their assessment of aspects of the finance regime on their national practices and traditions regarding party regulation. This can explain, for example, the Danish and British scepticism against far-reaching conditions for Europarty funding, or the French resistance against permissive rules regarding donations. Consequently, the most important compromises were not forged between but within Europarty families. Only cohesive action of the European political parties was able to overcome the institutional constraints, often with an important role for individuals pushing the agenda forward. The inclusion of the Europarty article in the Maastricht Treaty was the result of coalition-building efforts by Wilfried Martens within the EPP family and with the socialist and liberal Europarty. The expansion of the article in the Nice Treaty was the result of joint efforts of the EPP and PES leadership and the EP delegation consisting of two MEPs affiliated to these Europarties. The Regulation could eventually be achieved because of strong backing from the main EP political groups and support from the affiliated national delegations in the Council (although some compromises were required in order to bring the funding rules closer to prevalent national traditions). Johansson and Raunio (2005) also pointed to the historicalinstitutionalist dimension of the entire process. They argued that the vague wording of the article in the Maastricht Treaty constituted an ‘incomplete contract’ that was subsequently capitalized by the leaders of the Europarties to obtain public funding. The government leaders agreed to it, because of its low political salience or because they could not foresee the long-term consequences. This created an element of path-dependency in the process. Similar arguments have been put forward by Day and Shaw (2003; 2006b, 299) and Gagatek (2011, 12) regarding the importance of the Tsatsos report.

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This perspective certainly has merit, but should also be nuanced. First, the process should not be considered in a deterministic way, i.e. that it inevitably led to the establishment of a funding regime. After all, the status quo of no public funding could only be overcome by the efforts of the Europarties themselves (although this is also clearly acknowledged by Johansson and Raunio). Second, it should be noted that the ‘achievements’ of the Europarties in Maastricht, Nice and the Regulation fell short of their initial objectives. Their main aim in the run-up to Maastricht was to establish a proper legal basis for Europarty funding and their ideas about the Regulation were more elaborate than the limited provisions on Europarty funding. There is of course an important pathdependent element, in that the different steps are part of a ‘stepping stone process’ in which one achievement builds on the previous. The same can be said for the actual content of the Regulation, which was heavily based on initiatives and proposals developed in the past. The narrative used in the entire process shows an important sociological institutionalist element, in that the introduction of the treaty article and public funding for European political parties was characterized by motivations to improve democracy at the European level. Although it is possible that this discourse was merely used instrumentally by the main Europarties to advance their interests—as also implied by Johansson and Raunio (2005, 528)—it does fit the wider ideological position of these Europarties, that have pushed for institutional reforms towards a federalist EU. With regard to Europarty funding, the interests and normative beliefs are thus mutually reinforcing. The narrative of Europarties as agents of democratization corresponds more widely to the argument of parties as ‘public utilities’: because of their important democratic function, parties deserve financial support from the state. However, at the EU level, this public utilities argument was taken to its extremes. The ambition of the European funding regime was not to maintain the parties (as was the argument at national level), but to develop the Europarties; it was not a way to preserve or regulate the party system, but to establish such a system.

Notes 1. Communiqué of 12 December 1991. 2. See also Tudi Kernalegenn (2011) The Internationalism of the EFA, Brussels, p. 31.

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3. European Parliament, Resolution on the constitutional status of the European political parties, 30 October 1996. 4. Exerts from the letter were published by Bulletin Quotidien of Agence Europe, 23 December 1999. 5. The proposal contained five main aspects: the definition, organisational provisions, tasks, funding and recognition, see: European Party Statute: Working Document of European political parties, Brussels, 15 February 2000 (cited in Day and Shaw 2006b, 299–300). 6. Letter from the leaders of the four Parliamentary Groups to Commission President Romano Prodi, 21 February 2000. 7. Special Report No 13/2000 on the expenditure of the European Parliament’s political groups, together with the European Parliament’s replies. 8. Decision of the Bureau of 2 October 2000 on support from the European Parliament for European political parties (PE 293.437/BUR/end). 9. See article 8 of the European Parliament resolution containing the European Parliament’s proposals for the Intergovernmental Conference, Strasbourg, 13 April 2000. 10. European Commission, Proposal for a Council Regulation on the statute and financing of European political parties (COM(2000) 898). 11. European Commission, Amended proposal for a Council Regulation on the statute and financing of European political parties (COM(2001) 343). 12. See also the press release of the General Affairs Council meeting of 29 and 30 October 2001 (13291/01 (Presse 390)). 13. Council of Ministers, Note from the General Secretariat to the Working Party on General Affairs (11667/01), Brussels, 11 September 2011, pp. 4–5. 14. Article 3(d) of the European Parliament resolution on the constitutional status of the European political parties, 30 October 1996. 15. Council of Ministers, Note from the General Secretariat to the Working Party on General Affairs (11667/01), p. 7. 16. These reservations had to do with the funding criteria and funding levels, and the requirement for a complete (organizational) separation of the European party from their corresponding political groups within 20 days after the publication of the legal text,

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see: letter of 10 October 2001 sent to the Belgian Presidency (12738/01). 17. European Commission, Proposal for a Regulation on the statute and financing of European political parties (COM(2003)77). 18. Council of Ministers, 2526th Council meeting General Affairs, Brussels, 29 September 2003. 19. See Article 113 of the Financial Regulation. 20. von Arnim and Schurig (2004, 74) noted that the presidents of all political groups from the German Bundestag objected to low donation thresholds in a letter to the presidents of the EP groups (because they feared spill-over effects on the German rules). 21. Amendment 13 of the Leinen Report (A5-0170/2003). 22. Ibid. 23. Declaration 11 attached to the Treaty of Nice. 24. Amendment 15 of the Leinen Report (A5-0170/2003). 25. Amendment 15 of the Leinen Report (A5-0170/2003) and the explanatory statement, p. 26. 26. Quoted in Agence Europe, 19 September 1990. 27. Article 10 of the Treaty on the European Union. 28. European Commission, Press Release: Commission proposes statute for European political parties, Brussels, 25 January 2001. 29. European Commission, Proposal for a Regulation on the statute and financing of European political parties, Brussels, 19 February 2003, p. 2. 30. Debate in the European Parliament on the statute and financing of European political parties on 18 June 2003 in Brussels.

References Anglmayer, Irmgard. 2021. Statute and Funding of European Political Parties under Regulation 1141/2014: Ex Post Evaluation. Brussels: European Parliamentary Research Service. von Arnim, Hans Herbert, and Martin Schurig. 2004. The European Party Financing Regulation. Münster: LIT Verlag. Bieber, Roland. 1999. Les perspectives d’un statut pour les partis politiques européens. Revue Trimestrielle De Droit Europeen 35 (3): 349–362.

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van Biezen, Ingrid. 2004. Political Parties as Public Utilities. Party Politics 10 (6): 701–722. van Biezen, Ingrid. 2008. State Intervention in Party Politics: The Public Funding and Regulation of Political Parties. European Review 16 (3): 337–353. Casal Bértoa, Fernando, Molenaar Fernando, Daniela Fransje Piccio, and Ekaterina Rashkova. 2014. The World Upside Down: Delegitimising Political Finance Regulation. International Political Science Review 35 (3): 355–375. Christiansen, Thomas. 2002. The Role of Supranational Actors in EU Treaty Reform. Journal of European Public Policy 9 (1): 33–53. Day, Stephen, and Jo Shaw. 2003. Evolution of Europe’s Transnational Political Parties in the Era of European Citizenship—Oxford Scholarship. In The State of the European Union, 6: Law, Politics, and Society, ed. Tanja Börzel and Cichowski. Oxford: Oxford University Press. Day, Stephen, and Jo Shaw. 2006a. Transnational Political Parties. In Making European Citizens—Civic Inclusion in a Transnational Context, ed. Richard Bellamy, Dario Castiglione, and Jo Shaw, 99–117. Hampshire: Palgrave Macmillan UK. Day, Stephen, and Jo Shaw. 2006b. Developing Political Parties in the European Union: Towards a European Party Statute. In Party Funding and Campaign Financing in International Perspective, ed. K.D Ewing, and Samuel Issacharoff. Oregon: Hart Publishing. Gagatek, Wojciech. 2011. Political Financing Regulation at the EU Level: The Conflict of National Traditions and Interests. Working Paper Series on the Legal Regulation of Political Parties, No. 14. Gray, Mark, and Alexander Stubb. 2001. Keynote Article: The Treaty of Nice— Negotiating a Poisoned Chalice? Journal of Common Market Studies 39 (1): 5–23. Hix, Simon, and Christopher Lord. 1997. Political Parties in the European Union. London: Palgrave Macmillan. Janda, Kenneth. 2005. Political Parties and Democracy in Theoretical and Practical Perspectives: Adopting Party Law. Washington: The National Democratic Institute for International Affairs. Jansen, Thomas. 1998. The European People’s Party: Origins and Development. London: Palgrave Macmillan. Jansen, Thomas, and Steven Van Hecke. 2011. At Europe’s Service: The Origins and Evolution of the European People’s Party. Berlin Heidelberg: SpringerVerlag. Johansson, Karl Magnus. 2002. Another Road to Maastricht: The Christian Democrat Coalition and the Quest for European Union. Journal of Common Market Studies 40 (5): 871–894.

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Johansson, Karl Magnus. 2016a. Europarty Influence and Its Limits: The Case of the European People’s Party and the Amsterdam Treaty. Journal of European Integration 38 (1): 79–94. Johansson, Karl Magnus. 2016b. The European People’s Party and the Amsterdam Treaty. Journal of European Integration History 21 (2): 269–286. Johansson, Karl Magnus. 2017. The Role of Europarties in EU Treaty Reform: Theory and Practice. Acta Politica 52 (3): 286–305. Johansson, Karl Magnus, and Tapio Raunio. 2005. Regulating Europarties: Cross-Party Coalitions Capitalizing on Incomplete Contracts. Party Politics 11 (5): 515–534. Katz, Richard, and Peter Mair. 1995. Changing Models of Party Organization and Party Democracy: The Emergence of the Cartel Party. Party Politics 1 (1): 5–28. Koss, Michael. 2010. The Politics of Party Funding: State Funding to Political Parties and Party Competition in Western Europe. Oxford, New York: Oxford University Press. Lightfoot, Simon. 2005. Europeanizing Social Democracy?: The Rise of the Party of European Socialists. London: Routledge. Lightfoot, Simon. 2006. The Consolidation of Europarties? The ‘Party Regulation’ and the Development of Political Parties in the European Union. Representation 42 (4): 303–314. Lightfoot, Simon. 2003. The Party of European Socialists and the Treaty of Amsterdam: Really a Policy-Seeking Party? Perspectives on European Politics and Society 4 (2): 217–242. Morijn, John. 2019. Responding to ‘Populist’ Politics at EU Level: Regulation 1141/2014 and Beyond. International Journal of Constitutional Law 17 (2): 617–640. Morlok, Martin. 2002. Constitutional Framework. In European Political Parties between Cooperation and Integration, ed. Karl Magnus Johansson and Peter Zervakis. Baden-Baden: Nomos Verlagsgesellschaft. Pinto-Duschinsky, Michael. 2002. Financing Politics: A Global View. Journal of Democracy 13 (4): 69–86. Roa Bastos, Francisco. 2012. Sociogenèse d’une catégorie politique: l’introduction de “partis politiques au niveau européen” dans le droit communautaire. Cultures & Conflits 85–86: 99–122. Scarrow, Susan. 2004. Explaining Political Finance Reforms. Party Politics 10 (6): 653–675. Smilov, Daniel. 2007. Introduction: Party Funding, Campaign Finance and Corruption in Eastern Europe. In Political Finance and Corruption in Eastern Europe: The Transition Period, ed. Jurij Toplak. London and New York: Routledge.

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Weekers, Karolien, Bart Maddens, and Jo Noppe. 2009. Explaining the Evolution of the Party Finance Regime in Belgium. Journal of Elections, Public Opinion and Parties 19 (1): 25–48. Wolfs, Wouter, and Jef Smulders. 2018. Party Finance at the Level of the European Union. Party Finance Reform to Vitalize the EU’s Protoparty System?’ In Handbook of Political Party Funding, ed. Jonathan Mendilow, Eric Phélippeau, 182–202. London: Edward Elgar.

CHAPTER 3

Rising Subsidies and Creative Accounting: The Income of European Political Parties and Foundations

Raising the funding for European political parties was definitely a choice and a priority area, but of course the administration is only making the proposal. [...] If that choice would not have any political backing, it would not be able to materialize. Klaus Welle Secretary-General of the European Parliament

Where do European political parties and foundations get their money from? This is the question that will be discussed in this chapter. It revolves around two central arguments. The first argument focuses on the public party income: the grants they receive from the European budget. In this respect, I argue that the four main European political parties and their corresponding groups in the European Parliament have followed a revenue-maximizing strategy that was aimed at preserving and expanding their own level of public income. The establishment of a substantial number of new European political parties (and foundations) has played an important role in this respect. This will be discussed in the second section of this chapter. The third section goes into the second argument: the rising public funding has created internal budgetary pressures for the Europarties and

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 W. Wolfs, European Political Parties and Party Finance Reform, https://doi.org/10.1007/978-3-030-95175-7_3

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foundations with regard to their private income. It has become increasingly difficult over time to find more private sources of revenue—such as donations or membership contributions—that can keep up with the rising subsidies. This might seem contradictory at first, but is the result of the ‘matching principle’ included in the finance regime: European parties and foundations need to ‘match’ the EU subsidies they receive with a certain share of their own financial revenue.

1

Previous Research and Contribution

Previous research that has examined the financial situation of the European political parties is scarce. A number of studies have provided a descriptive analysis of the public and private funding provided to European political parties (Anglmayer 2021; Wolfs and Smulders 2016). Katsaitis (2020) focused on (a sample of) donations to European political parties and foundations to assess their links with business associations. He concluded that companies are the most important donors and that Eurosceptic and right-wing Europarties and foundations receive most of their donations. Little is known however about the budgetary process that determines Europarty funding, explanations for the changing public funding levels, or the strategies of European parties and foundations to attract private funding. Studies on national political parties can offer insights in these topics. More specifically, the first main argument of this chapter on the public income of European political parties and foundations builds on the typology of Scarrow (2004). She differentiated between ‘revenuemaximizing’ and ‘electoral-economy’ parties. The first type of party simply aims at expanding its own financial resources, regardless of the political circumstances, public opinion, or the financial situations of its political competitors. Such parties look for more funding than they would strictly need for electoral campaigns in order to build up a party organization. The primary goal of electoral economy parties on the other hand is short-term electoral success. In financial terms, they are focused on collecting sufficient funds to run an election campaign. They also take into account how the public schemes might affect public opinion and the financial situation of the other political parties. In other words, revenuemaximizing parties assess (their own) party funding in absolute terms: they

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want to maximize their own income. Electoral economy parties look at it in relative terms: they compare their own financial resources to those of their opponents and are reluctant to pursue finance regimes that also benefit their political competitors. The second central argument follows from the first, and entails that because of these rising subsidy amounts, the European political parties and foundations have increasingly experienced internal budgetary pressures. This argument reverses the dominant paradigm regarding party finance at national level, with authors arguing that an important motivation for the introduction of public funding for national parties had been the declining membership numbers, which led to decreasing revenue and volunteers (van Biezen 2004, 2008, 348; Hopkin 2004; Mendilow 2012). In other words, public funding had to compensate for decreasing private revenue. Conversely, the specific design of the Europarty finance regime entailed that rising public subsidies have also required the Europarties to attract more private financial resources. This created severe financial challenges for most European political parties and foundations.

2

A Revenue-Maximizing Strategy

The central argument at the heart of this section—the revenuemaximizing strategy conducted by the four main Europarties and their corresponding groups—is based on a number of premises, which will be shown in the remainder of this section. First, the sharp increase in the available public funding for European political parties and foundations will be presented. Second, I will verify to what extent the four main European political parties and their corresponding groups in the European Parliament (EPP, PES/S&D, ALDE, EGP/Greens) have been responsible for this increased public funding. Subsequently in the third part, I will show how the four main European political parties (EPP, PES, ALDE, EGP) benefitted from the increased public funding in absolute terms. Finally, evidence will be provided that the increase in the number of European political parties and foundations was an important driver for the raise in the total funding sums. In other words, in the wake of newcomers, the established political forces ensured that their public funding levels remained stable or even increased.

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2.1

Rising Public Funding for European Political Parties and Foundations

Since public funding for European political parties was introduced in 2004, the available subsidies have substantially increased. The solid line in Graph 1 shows the evolution of the total available funding sum for Europarties between 2004 and 2021 as included in the general budget of the European Union, controlled for inflation.1 The dashed line shows the increase (or decrease) compared to the previous financial year. Although there has not been a (substantial) increase every year, a rising trend can clearly be recognized. In 2004, the first year of public subsidies, the Europarty funding amounted to e8.8 million; a year later, the total sum had already risen to e11.1 million. During the 2009–2014 term of the European Parliament, there was also a clear increase with the amount more than doubling from e13.1 million in 2009 to e30 million in 2014. Finally, the most significant surge happened in the budget of 2019, when the funding sum increased by more than 50%. Both 2014 and 2019 were European election years, although no significant increase can be recognized in 2009, also an election year. Overall, over the entire analyzed period of 17 years, the total sum has more than quintupled. In order to provide broader

Graph 1

Evolution of the total funding sum for European political parties

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context, the dotted line shows the increase of the total budget of the European Parliament, which varies between –0.7% (in 2012) and 4.3% (in 2009). The graph clearly shows that the funding sum for European political parties rises substantially more in most years compared to the total EP budget. A similar trend can be recognized with regard to the European political foundations, albeit less pronounced (Graph 2). The total funding sum has increased over time, especially between 2008 and 2011, between 2013 and 2016, and since 2019. Between 2016 and 2019, the amount has remained relatively stable. This can also be recognized when comparing the relative increase to that of the total European Parliament budget: only in these three years, the rise in the total budget of the European Parliament is higher than the increase of the funding sum for European foundations. When the combined total sums for European political parties and foundations are examined (Graph 3), it is clear that the budget has substantially increased over time. Only in four years (2006, 2017, 2018 and 2020), the growth of the total budget of the European Parliament was higher. The total sum has risen from e8.8 million in 2004 to e69

Graph 2

Evolution of the total funding sum for European political foundations

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Graph 3 Evolution of the total funding for European political parties and foundations

million in 2021, with a peak of e72.1 million in 2019. This election year was also the first time that the budget for extra-parliamentary political funding—for Europarties and foundations—was higher than the budget for the political groups in the European Parliament, depicted in the narrow solid line on top of the graph. Since 2006, group funding has remained relatively stable around e65 million. 2.2

Setting the Europarty Budget: A Collaboration Between Parliamentary Administration and Main Political Groups

The previous part clearly established that the total sums for European political parties and foundations have substantially grown since 2004. This part will go into the budgetary process to determine the level of public funding and will identify the actors involved in setting the budget for European political parties and foundations. These actors are not bound by any legal restrictions on the maximum funding level. As opposed to countries like Germany—in which the Constitutional Court set an

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absolute limit (‘absolute Obergrenze’) for public funds—there is no formal upper limit for the public funding of political parties at EU level. 2.2.1

Procedure to Determine the Budget of the European Parliament The procedure to determine the EP’s budget is divided into two main stages (Table 1). In the first stage, the Parliament internally sets out its own budget, and in the second stage the EP’s budget is incorporated in the general budget of the European Union. However, during this second phase of the procedure, the budget of the European Parliament is not changed. Since the 1970s, a ‘Gentleman’s Agreement’ exists between the Parliament and Council to respect each other’s budgets and not put forward any amendments or modifications. Consequently, the first stage is decisive for determining the expenses of the Parliament, including the funding sums for European political parties and foundations. In this first internal stage, the parliamentary administration makes the opening move. The Secretary-General compiles all the financial wishes and priorities from the administrative services and the political groups and prepares a report for the Bureau of European Parliament with the priorities and required resources. On the basis of this report, the Bureau determines the first version of the EP budget: the ‘preliminary draft estimates’ (Corbett et al. 2016, 324), which consists of a detailed overview of the various revenue and expenditure items. These preliminary draft estimates are sent to the Budgets Committee, which prepares the draft estimates in line with the Parliament’s priority objectives. If the position of the Budgets Committee diverges from the initial decisions taken by the Bureau, a budgetary conciliation procedure is opened. This has become standard practice since 2011. The conciliation negotiations are attended by high-ranking Members: the delegation of the Budgets Committee usually consists of the chair(wo)man, the rapporteur and the shadow rapporteurs on the EP’s budget or the group coordinators; the delegation of the Bureau consists of the Vice-Presidents responsible for the budget. The Secretary-General also attends the negotiations and is deemed to be in a privileged position, because he is in possession of all the preparatory information (Interviews 13, 16, 18, 20). Before the conciliation negotiations start, the rapporteur from the Budgets Committee tries to reach a consensus on the committee priorities with (some of) the shadow rapporteurs, who each defend the main proposals from their political group (Interviews 13, 14, 17, 20, 22). The

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Table 1 budget

Consecutive stages of the adoption of the European Parliament’s

Stage 1: Budget European Parliament

Approximate timing

Actor

Action

November Year N-2

Secretary-General

December Year N-2

Directors-General

December Year N-2 February Year N-1

Secretary-General and DG Finance Secretary-General

March Year N-1

Bureau

March Year N-1

Rapporteur in Budgets Committee Bureau and Budgets Committee Budgets Committee

Note to Directors-General Preliminary Statement of DGs’ needs Hearings with Directors-General Proposal for Preliminary Draft Estimates Adoption of Preliminary Draft Estimates Draft Report on Draft Estimates Conciliation

March–April Year N-1 April Year N-1 May Year N-1 Stage 2: EU General Budget

May–June Year N-1

June Year N-1 (Deadline: 1 September)

September Year N-1 (Deadline 1 October) October Year N-1 (Deadline: 42 days after receipt Council Position)

Adoption of Draft Estimates Plenary Adoption of Estimates European Incorporation of Commission the EP’s budget in the EU Draft General Budget European Draft General Commission Budget is sent to the Council and European Parliament Council of Ministers Amend Draft General Budget European Parliament Amend Position of Council of Ministers on Draft General Budget

(continued)

3

Table 1

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59

(continued) Approximate timing

Actor

October Year N-1 (Deadline: 10 days after Parliament’s Position) October–November Year N-1 (Deadline: 21 days after rejection Council) If Conciliation fails

Council of Ministers

Action

Accept or Reject European Parliament’s Amendments European Parliament Conciliation and Council of Procedure between Ministers representatives of Parliament and Council European Submission of new Commission Draft General EU Budget

Source Partly based on Meseth (2012, 66)

usual dynamic during the conciliation procedure is that the Bureau has a more expansionary position, whereas the Budgets Committee proposes budget cuts (Interviews 18, 20, 22). When an agreement is reached, it is endorsed by the two bodies and submitted to the plenary of the European Parliament. Although it is possible in plenary stage to submit amendments to the appropriations in the EP’s budget, in practice this is usually not done or not accepted. Most political groups want to stick to the— often delicate—agreement that was reached between the Bureau and the Budgets Committee. When the plenary adopts the estimates, they are sent to the European Commission and incorporated in the draft budget of the European Union. 2.2.2

The Funding Sums for Europarties and Eurofoundations in the Internal Budget of the European Parliament So how have the funding amounts for European political parties and foundations fluctuated through the internal budgetary procedure in the European Parliament? Tables 2 and 3 provide an overview of these sums in the various stages of the process. The amounts that changed during the process are underlined. In most years, the total sum for Europarties does not change (Table 2). The amounts that were approved by the Bureau also end up in the final EU budget. There are only three exceptions. For the financial year 2010, the Europarty sum was significantly raised from e11,075,000 in

Olivier Chastel (Renew) Vladimír Manˇ ka (S&D) Paul Rübig (EPP) Richard Ashworth (ECR) Indrek Tarand (Greens/EFA) Gérard Deprez (ALDE) Salvador Garriga Polledo (EPP) Monika Hohlmeier (EPP) Derek Vaughan (S&D) José Manuel Fernandes (EPP) Helga Trüpel (Greens/EFA) Vladimir Manka (PSE) Janusz Lewandowski (EPP-ED)

2021

2009

2010

2011

2012

2013

2014

2015

2016

2017

2019 2018

2020

Rapporteur EP budget

Draft estimates e46,000,000 e42,000,000 e50,000,000 e32,447,000 e31,905,000 e31,400,000 e28,350,084 e27,794,200 e21,794,200 e18,900,000 e17,400,000 e11,075,000 e10,858,000

Preliminary draft estimates e46,000,000 e42,000,000 e50,000,000 e32,447,000 e31,905,000 e31,400,000 e28,350,084 e27,794,200 e22,294,200 e20,400,000 e17,400,000 e11,075,000 e10,858,000

e10,858,000

e11,075,000

e17,400,000

e18,900,000

e21,794,200

e27,794,200

e28,350,084

e31,400,000

e31,905,000

e50,000,000 e32,447,000

e42,000,000

e46,000,000

Estimates

e10,858,000

e14,075,000

e17,400,000

e18,900,000

e21,794,200

e27,794,200

e28,350,084

e31,400,000

e31,905,000

e50,000,000 e32,447,000

e42,000,000

e46,000,000

Final EU budget

2

29.6

23.6

8.6

15.3

27.5

2

10.8

1.6

54.1 1.7

−16

9.5

Increase (%)

The total sums for the funding of European political parties in the various stages of the budgetary process

Financial year

Table 2

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Ville Itälä (EPP-ED) Louis Grech (PSE) Valdis Dombrovskis (EPP-ED) Wilfried Kuckelkorn (PSE) Neena Gill (PSE)

2008

2004

2005

2007 2006

Rapporteur EP budget

Financial year

e10,436,000 e8,594,000 e8,400,000

e10,436,000 e8,594,000 e8,400,000 p.m

e10,645,000

e10,645,000

p.m

Draft estimates

Preliminary draft estimates

p.m

e8,400,000

e10,436,000 e8,594,000

e10,645,000

Estimates

p.m

e8,400,000

e10,436,000 e8,594,000

e10,645,000

Final EU budget

21.4 2.3

2

Increase (%)

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61

Olivier Chastel (Renew) Vladimír Manˇ ka (S&D) Paul Rübig (EPP) Richard Ashworth (ECR) Indrek Tarand (Greens/EFA) Gérard Deprez (ALDE) Salvador Garriga Polledo (EPP) Monika Hohlmeier (EPP) Derek Vaughan (S&D) José Manuel Fernandes (EPP) Helga Trüpel (Greens/EFA) Vladimir Manka (PSE) Janusz Lewandowski (EPP-ED) Ville Itälä (EPP-ED)

2021

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2019 2018

2020

Rapporteur EP budget

e21,000,000 e19,700,000 e19,323,000 e19,000,000 e18,700,000 e13,668,000 e13,400,000 e12,400,000 e12,150,000 e11,400,000 e7,140,000 e7,000,000

e21,000,000 e19,700,000 e19,323,000 e19,000,000 e18,700,000 e13,668,000 e13,400,000 e13,400,000 e13,400,000 e11,400,000 e7,140,000 e7,000,000

Not included

e23,000,000

e23,000,000

Not included

Draft estimates

Preliminary draft estimates

Not included

e7,000,000

e7,140,000

e11,400,000

e12,150,000

e12,400,000

e13,400,000

e13,668,000

e18,700,000

e19,000,000

e19,700,000 e19,323,000

e21,000,000

e23,000,000

Estimates

e5,000,000

e7,000,000

e9,140,000

e11,400,000

e12,150,000

e12,400,000

e13,400,000

e16,668,000

e18,700,000

e19,000,000

e19,700,000 e19,323,000

e21,000,000

e23,000,000

Final EU budget

40

30.6

24.7

6.6

2.1

8.1

24.4

12.2

1.6

1.9 1.7

6.6

9.5

Increase (%)

The total sums for the funding of European political foundations in the various stages of the budgetary process

Financial year

Table 3

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the estimates for the EP budget to e14,075,000 in the final budget, an additional increase of 27% or e3 million in absolute terms. This increase was included during the debate and vote on the final EU budget during the plenary sessions of the European Parliament of October 2009. In two other financial years, the budget was lowered during the conciliation procedure between the Bureau and the Budgets Committee. The total sum for 2012 was reduced from e20.4 million as included in the preliminary draft estimates to e18.9 million, a decrease of e1.5 million. Similarly, for 2013, the sum was lowered from e22,294,200 to e21,794,200 after the conciliation procedure, a decrease of e0.5 million. However, despite these changes, in both cases the new amounts still constituted a significant increase compared to the previous financial year. Even after the cuts made during the conciliation negotiations, the total sum for European political parties would increase by 8.6% in 2012 and 15.3% in 2013. In other words, the two changes did not result in a budget decrease for European political parties, but just a smaller increase than initially suggested by the Bureau. A similar trend can be recognized with regard to the total sums for the funding of European political foundations (Table 3). In four financial years the amount was changed after the Bureau had approved the preliminary draft estimates. On two occasions, the total sum was raised. Both for financial year 2010 and 2015, a significant increase can be recognized when the plenary of the European Parliament voted on the EU’s final budget: from e7,140,000 to e9,140,000 in 2010, an increase of e2 million, and from e13,668,000 to e16,668,000 in 2015, an increase of e3 million. As was also the case with European political parties, the total sum for Eurofoundations was lowered during the conciliation negotiations on financial years 2012 and 2013. For 2012, the Bureau and the Budgets Committee agreed on a reduction of e1.25 million and for 2013 on a reduction of e1 million. This did not mean however that the overall budget for European political foundations was reduced. The total sum increased compared to the previous financial year, albeit less than in the first years of public funding for Eurofoundations: 6.6% in 2012 and 2.1% in 2013. The overview of the total sums for European political parties and foundations shows that the first phase of the internal budgetary procedure of the European Parliament is very important. In most cases, the amounts are not altered after the preliminary draft estimates were approved by the Bureau.

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Actors Influencing the Total Funding Sums for European Political Parties and Foundations So, which actors have been involved in setting and changing the sums for European political parties and foundations, and does this correspond to the argument that the four main political families (EPP, PES/S&D, ALDE, EGP/Greens) are responsible for the rising budgets? In order to answer this question, I analyzed the minutes of the Bureau meetings and—because the discussions on the administrative level or in the context of the conciliation negotiations are not documented—conducted a series of semi-structured interviews with the main actors involved: the Secretary-General and civil servants from the European parliamentary administration, a Vice-President responsible for the budget, MEPs from all political groups that have acted as rapporteur or shadow rapporteur for the EP budget or have been group coordinator for the Budgets Committee, group and personal policy advisors, and representatives from European political parties. The data indicates the important role that the administrative level has played in raising the funding sums. The Secretary-General and the parliamentary administration have an important agenda-setting power: they hold the monopoly over the budgetary proposals. The interviewees from the parliamentary administration affirmed that they have taken the initiative to increase the party subsidies over time. Didier Klethi, the Director-General of DG FINS, explained that they have built up these budget lines in order to reach ‘cruising speed’ (Interview 27). Also Secretary-General Klaus Welle confirmed that gradually raising the total funding sums for Europarties and foundations was a deliberate choice and priority area for the parliamentary administration to allow the development and viability of these European political parties. It was seen as beneficial for the European Parliament as an institution, because stronger European political parties were considered valuable for EU democracy (Interview 35). The next question then is whether the administration acted on its own behalf or in response to pressure from the (four main) European political parties and political groups? There is only mixed evidence to support the latter possibility. Although some interviewees claimed that there are close contacts between the main European political parties and the secretariat in order to determine the funding amounts (Interviews 14, 17), this is contradicted by other Members of Parliament (Interviews 13, 18), civil servants from DG FINS (Interview 27), and Europarty representatives

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(Interviews 29, 32, 37). They all claim that European political parties have no role in setting the total funding sums. In any case, the parliamentary administration seems to anticipate the preferences of the political level. Secretary-General Klaus Welle confirmed that ‘if [more Europarty funding] would not have any political backing, it would not be able to materialize’ (Interview 35). It is exactly this political backing that is provided by the four main political groups, and in particular the EPP and the S&D groups, both in the Bureau and in the Budgets Committee. In the Bureau, the funding for European political parties has been discussed in the contexts of the budgets for 2013, 2014 and 2019. In all cases, a substantial increase of the funding for Europarties was proposed compared to the previous year. Almost all members of the Bureau voiced their approval. For the budget of 2013, Secretary-General Klaus Welle noted that he included ‘additional funds for the European political parties in order to increase their ability to campaign’. The raised subsidies were explicitly backed by the Vice-President responsible for the Budget, Gianni Pittella (S&D), and all other Vice-Presidents present—part of either the EPP, S&D, ALDE or Greens/EFA group—supported the proposal.2 For 2014, Secretary-General Klaus Welle had included an increase of e4 million (or 18.4%) for European political parties and an increase of e1 million (or 8.1%) for European political foundations. Again the two Vice-Presidents responsible for the budget, Gianni Pittella (S&D) and Alejo Vidal-Quadras (EPP) supported the proposal, and even suggested to raise the budget for European political parties with an additional e2 million (so a total increase of e6 million or 27.5% compared to 2013). During the discussion on the proposals, the other members of the Bureau again voiced their support.3 Finally, in the budget of 2019 Secretary-General Klaus Welle foresaw an additional e17 million for European political parties. The increase was explicitly supported by David-Maria Sassoli (S&D), the Vice-President with the primary responsibility for budgetary matters, and Vice-Presidents Evelyne Gebhardt (S&D), Sylvie Guillaume (ALDE), Pavel Telicka (ALDE) and Heidi Hautala (Greens/EFA). Only Vice-President Fabio Massimo Castaldo (EFDD) noted that he was opposed to any budget increase for European political parties.4 Consequently, there has been overwhelming support in the Bureau for raising the funds of European political parties and foundations. The objection of Vice-President Castaldo was the only time a member of the Bureau ever questioned the increase of the funding sum for European

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political parties. Never did a Bureau member propose a reduction of the funding amounts. The Bureau, however, is not a perfect representation of the entire parliament: it is composed of the President and the 14 VicePresidents of the institution, positions that have traditionally been taken by the main political groups, and in particular the EPP and the S&D, which together account for two-thirds of the members of the Bureau. Except for a few exceptions, the additional members come from ALDE and Greens/EFA groups. The Committee on the Budgets is also an important actor in the internal budgetary procedure and, as such, can have an impact on the total sums for European political parties and foundations. The interview respondents confirm how the two largest political groups—the EPP and S&D—dominated the budgetary discussions and supported both a rise of the overall parliamentary budget and the subsidies for Europarties and foundations. These two groups have been supported by the ALDE and the Greens/EFA groups, who also defended the increased Europarty and -foundation funding sums (Interviews 12, 13, 14, 15, 17, 18, 19, 20, 22). Conversely, according to the interviewees, the EFDD and the ENF groups have advocated lowering or even eliminating Europarty financing (Interviews 11, 12, 14, 15, 16, 17, 18, 20, 22). The ECR group did not go that far, but has been in favour of (significantly) cutting the budget (Interviews 14, 15, 17, 19). The GUE/NGL group has also always opposed raising the subsidies for European political parties and foundations (Interview 16). This pattern is largely confirmed by the analysis of the amendments submitted to the parliamentary budget. Members of the EPP, S&D and Greens/EFA group only submitted amendments that were either neutral towards the level of Europarty funding, that supported an increase of subsidies, or that changed or deleted negative statements about Europarty and Eurofoundation funding or that called for a decrease of Europarty funding. ALDE MEPs on the other hand submitted only one amendment (together with colleagues from the GUE/NGL and ECR groups) that wanted to limit the increase of subsidies for 2012 to the inflation rate. The four other groups—GUE/NGL, ECR, EFD(D) and ENF—almost exclusively tabled amendments that criticized Europarty funding, or called for a decrease or even elimination of the public subsidies for European political parties and foundations. However, despite the apparent clear support among the main political groups, the overview in Tables 2 and 3 showed that the total sums

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for Europarties and foundations were lowered in both the 2012 and 2013 budgets during the conciliation negotiations. However, closer analysis shows that these savings were part of the broader exercise to reduce expenditure,5 and whereas the increase of the total budget amounted to 2.3% for 2012, this was 8.6% for European political parties and 6.6% for European political foundations. Similarly for 2013, the raise of the total sum for Europarties was still substantial (15.3%), while the increase of the funding sum for Eurofoundations (2.1%) was closer to the percentage increase of the total budget (1.9%). In other words, although the total funding sums for Europarties and foundations were lowered, they still constituted a substantial increase compared to the total EP budget and to the previous financial year. On two occasions, the subsidy amounts were even raised late in the process. For the 2010 budget, the sum for foundations was increased by an additional e2 million (from e7.1 million to e91 million) and the sum for Europarties by an additional e3 million (from e11.1 to e14.1 million) during the plenary session in October 2009. This had been an initiative of the coordinators from the main political groups in the Budgets Committee.6 For budget year 2015, the budget for European political foundations was raised with an additional e3 million (from e13.7 to e16.7 million). The increase was proposed by the Rapporteur Monika Hohlmeier (EPP) and the Greens/EFA group, and subsequently approved by the plenary.7 The total body of evidence shows that the EPP group and the S&D group defended the increased subsidy amounts for European political parties and foundations, in the Bureau, the Budgets Committee as well as the plenary. These groups were supported by the Greens/EFA group and—to a lesser extent—the ALDE group. The latter was occasionally more critical to raising the total funding. The GUE/NGL and ECR groups have consistently argued to keep the funding at the same level or decrease it. Finally, the EFD(D) and the ENF groups wanted to abolish subsidies for European political parties and foundations. 2.3

The Benefits for the Four Established European Political Parties and Foundations

It is clear that the total funding sums for European political parties and foundations have substantially increased over time, and that this was mainly the result of actions of the parliamentary administration and the

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four main political groups (EPP, S&D, ALDE and Greens/EFA). Have the main European political parties and foundations benefitted from this increase? The distribution key allocates the largest share of the total funding sum (85% until 2019) in proportion to the number of affiliated MEPs and the rest (15% until 2019) in equal shares among all eligible Europarties. This mechanism thus benefits the larger Europarties, in particular the EPP and the PES. Graph 4 shows the shares of the total funding sum earmarked for the EPP, PES, ALDE Party, EGP and the other European political parties. In relative terms, the four main European political parties have lost ground between 2004 and 2017: their share dropped from more than 80% to around 65%. This can be explained by a loss of seats in the European Parliament and an increase in the number of Europarties, which meant that their sums from both the proportional part and equal shares declined. In 2018–2019 their shares increased again because the number of registered Europarties substantially dropped, and the distribution key of the subsidies was changed to the benefit of the larger Europarties: only 10%—instead of 15%—was allocated in equal shares. However, from

Graph 4 Maximum shares for the EPP, PES, ALDE Party, EGP and other European political parties according to the distribution key (2004–2021)

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2020 onwards the EPP and PES received less funding in relative terms following their loss of seats in the 2019 European elections. Conversely, the seat gains of the green and liberal EP groups resulted in a (little) larger funding share for their affiliated Europarties. Overall, however, the relative share of the four main European parties declined in 2020 and 2021. The evolution for Eurofoundations (not depicted in the graph) is similar, since their distribution key is identical and their proportional share is linked to the number of affiliated MEPs of their Europarty. The evolution of the grant amounts in absolute terms shows a different picture. Graph 5 gives an overview of the subsidy amounts according to the distribution key for the EPP, PES, ALDE Party and EGP, and for all other parties combined (controlled for inflation). It shows how the four established European political parties during the period of their declining funding share have in absolute terms indeed benefitted from the increased funding. For all four main Europarties, a substantial increase can be recognized, in particular from 2009 onwards: the EPP’s grant rose from e3 million in 2004 to e16.4 million in 2019, the PES’ from e2.6 million to e13.5 million, the ALDE Party’s from e0.9 million to e4.7 million and the EGP’s from e0.6 million to e3.7 million. Despite the overall increase,

Graph 5 Grant amounts for the EPP, PES, ALDE Party, EGP and other European political parties according to the distribution key (2004–2019)

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there was a slight fall of the funding for the EPP, ALDE party and EGP in 2015. This can be explained by the fact that the three parties had lost seats in the 2014 European elections. However, by 2018 the three parties had again more or less reached the level of funding of 2014, meaning that their grant sums continued to grow even with fewer affiliated Members of European Parliament. A similar evolution can be recognized with the grant sums for European political foundations (Graph 6). The amount allocated to the WMCES grew from e1.9 million in 2008 to e6.5 million in 2019 and the FEPS’ sum from e1.7 million to e5.3 million. The grant amount for ELF increased from e0.6 million to e1.9 million and the GEF’s amount from e0.4 million to e1.5 million. Both graphs show a clear increase of the funding for the four main European political parties and their affiliated foundations. This is a direct consequence of the rising total funding sums for Europarties and foundations. Not only did the total number of parties and foundations increase from 2004 to 2017, the four Europarties also lost seats during the 2014 European elections. Despite these two factors, they were still entitled to a growing grant amount.

Graph 6 Grant amounts for the WMCES, FEPS, ELF, GEF and other European political foundations according to the distribution key (2004–2019)

3

2.4

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Motivation Behind the Growth of Funding

Which arguments have been used to substantially raise the funding sums for European political parties and foundations? A first motivation has been the elections for the European Parliament, which can be recognized in the parliamentary documents concerning the 2013, 2014 and 2019 budgets. As mentioned above, Secretary-General Klaus Welle included a subsidy rise in his 2013 proposal to increase the Europarties’ ability to campaign. The budget increase of 2014 would allow Europarties to prepare themselves for the European elections by putting forward ‘lead candidates’ or ‘Spitzenkandidaten’. Similarly, the raise in 2019 with an additional e17 million was aimed at enabling them to implement Europe-wide campaigns around the Spitzenkandidaten process.8 This electoral motivation was confirmed by Didier Klethi, Director-General of DG Finance of the European Parliament, and Secretary-General Klaus Welle in their interviews (Interviews 27, 35). This additional funding for campaigns thus came on top of the regular subsidies aimed at developing the European party organizations. A second important driver has been the rise of the number of European political parties and foundations eligible for EU funding. Didier Klethi confirmed that the fact that there were more and more applicants for funding has been an important factor for determining the total sum, since the number of parties influences the subsidy amount that each party is entitled to. Over time, they have adapted the size of the available appropriations to the number of parties and affiliated MEPs. The idea was that a growing number of eligible Europarties or foundations should be compensated by a higher total sum, in order to provide some stability for the existing parties (Interview 27). This argument is further strengthened if we consider the timing of the budget increases. For 2006, the total sum for European political parties was raised when the number of Europarties that had applied for funding was (unexpectedly) higher than the year before. The sum of e1,637,658 was taken from the reserves of the parliamentary budget ‘in order to enable two new European political parties to be financed without any reduction in the funding earmarked for existing parties’.9 These two newcomers were the Alliance of Independent Democrats in Europe (AIDE) and Europeans United for Democracy (EUD). For 2016, Marco Zanni (EFDD/ENF) stated that the total budget for European political parties and foundations was raised, because the

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number of parties and foundations had increased: more specifically, the ENF group got its own European political party and foundation (MENF and FENF, later renamed to IDP and IDF) (Interview 20). Gerard Deprez (ALDE)—who was the rapporteur of the EP budget of 2016— also acknowledged that the creation of the new European political party and foundation linked to the ENF group was the motivation for the financial increase. He stated that the total sum was raised in order to avoid that the subsidies for the other political parties would diminish (Interview 19). For the entire analyzed period, Graph 7 shows the evolution of the total funding sum for European political parties controlled for inflation (solid line), the number of affiliated MEPs (dotted line) and the number of Europarties eligible for funding (horizontal axis on top of the graph). In general, the total sum rises when the number of eligible parties and/or number of affiliated MEPs increases. Conversely, the sum remains constant when the number of eligible parties and affiliated MEPs stays the same or decreases: this is the case between 2007 and 2009 and between 2016 and 2018. The number of parties did increase from 15 to 16 in 2017, but it concerned only a very small Europarty (the Coalition for Life and Family). Several financial years deviate from this pattern. For 2006, both the number of parties and the number of affiliated MEPs increased, while the

Graph 7 Comparison of the total budget for Europarties, the number of eligible parties and affiliated MEPs (2004–2021)

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total funding sums in the planned budget remained stable. However, as described above, the total sum for European political parties was eventually increased using financial reserves. Taking this into consideration, financial year 2006 also fits the general pattern. For 2010, the number of affiliated MEPs decreased, while the total sum was raised substantially. However, this decline of affiliated Members is largely due to the fact that the total number of MEPs decreased from 785 to 736 after the 2009 elections, while the share of Members that was affiliated even slightly increased (from 85.6% of MEPs for financial year 2009 to 88.3% for 2010). Furthermore, in 2010 the European party ECRP applied for funding for the first time. Since it could count on many MEPs from the affiliated ECR group, the Europarty was entitled to a substantial share of the total sum, which could explain why the total Europarty budget was raised (in analogy with what happened in 2016 with the ENF group and the IDP Europarty). In addition, when the number of registered Europarties substantially declined from 16 to 10 in 2018, the total funding sum has remained constant, and even had its most substantial increase in 2019. While the number of affiliated MEPs decreased in 2021 (mainly following the exit of the British MEPs when the United Kingdom left the EU), the available budget for Europarties was again raised. The pattern is less pronounced regarding the budget for European political foundations (Graph 8). The total sum increased from 2008 to 2010, while the number of affiliated MEPs and eligible foundations slightly decreased. Subsequently, the total sum remained relatively stable from 2011 to 2013 while the number of affiliated MEPs and eligible foundations rose. Since 2019, a rising trend can again be recognized, despite declining numbers of eligible Eurofoundations and affiliated MEPs. Considering all the presented data, a revenue-maximizing strategy can clearly be recognized. The total funding for European political parties and foundations has increased almost eightfold during a period of seventeen years. The motivation behind this growth was the aspiration to further develop the party organizations, enabling them to conduct campaigns in the European elections and, most importantly, to ensure that the individual grants of the existing Europarties and foundations would not shrink due to new applicants. This goes against the finance mechanism that was put in place: i.e. every year a total funding sum is determined, which constitutes the maximum the European Parliament wants to spend on the support of Europarties and foundations regardless of how many

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Graph 8 Comparison of the total budget for Eurofoundations, the number of eligible foundations and affiliated MEPs (2008–2021)

organizations apply for funding. An alternative mechanism—with a fixed sum based on the number of votes and/or seats in parliament—would ensure stability in public funding. The fact that the growing funds for the four main European political parties also led to more financial resources for their political competitors has not been an objection to proceed with this course of action. The role of the (extra-parliamentary) European political parties and foundations in this process has however been limited. The parliamentary administration has played an important role in increasing the total available funding, supported by the MEPs in key positions from the four main political groups. It should be noted that this development was only possible because the management of distributing the funding for Europarties and foundations was entrusted to the European Parliament. If this responsibility had been given to the European Commission—as was advocated by a majority in the European Parliament when the finance regime was established (cf. Chapter 2)—such a substantial increase would probably not have taken place.

3

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Growing Internal Budgetary Pressures

Despite—or, better, because of—the growing public funding that has been made available to the European political parties and foundations, they have been confronted with increased budgetary pressures. This claim might seem counterintuitive at first sight. Indeed, the substantial growth of public funding has provided European political parties and foundations with extensive financial means. However, as already described in the previous chapter, these subsidies are not unconditionally transferred. One of these conditions is the so-called ‘co-financing principle’ or ‘matching principle’: Europarties and foundations have to collect a certain share of own financial resources to ‘match’ the grant amount they receive from the European Parliament. As the subsidies have increased year after year, so have the needs for the parties and foundations to find additional own ‘private’ sources of revenue. This growing demand has led some Europarties and foundations to seek refuge in dubious strategies trying to find sufficient private income. In the remainder of this chapter, I will first provide an overview of the rules governing the various sources of revenue. Second, the proportion of the grants from the European Parliament in the total income of the Europarties and foundations will be discussed, as well as their (in)capacity to receive the entire subsidy amount. In the third part, I will examine the various types of own resources that the European parties and foundations have relied on to match their public funding. The fourth part will dedicate specific attention to contested tactics that some European political parties and foundations have applied in attempts to secure sufficient own income. 3.1

Regulatory Limitations on Public and Private Funding

European political parties should not solely depend on the public funding they receive from the EU. That was the viewpoint that was shared among the decision-makers when the finance regime was established. In its 1996 resolution, the European Parliament already emphasized that Europarties should be given ‘a financial incentive to strengthen their roots in society and seek greater financial autonomy’.10 When the European Commission launched the legislative proposal to introduce public funding, it explicitly stated that ‘[t]his financing is not intended to replace the autonomous financing of the European parties’.11 Although the introduction of public funding was aimed at stimulating the advancement of European political

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parties and the Europarty system, it was thus also considered important that these parties retained—or developed—substantial financial ties to European society. This objective was operationalized by including a matching principle in the rules: European political parties must collect a certain amount of own financial resources to match their EU grant. When the finance regime was introduced in 2004, the ceiling for the subsidies was set at 75%: the public funding can cover maximum three quarters of the total eligible expenditure (Article 10(2) of Regulation 2004/2003). In order to pay for the remaining 25% of the expenses, a Europarty needs to collect revenue from other sources, such as membership contributions or donations. If a party does not succeed in getting sufficient own income, the subsidy is lowered (until it constitutes maximum 75%). This aspect of the Europarty finance regime mirrors the regulation of party finance in Germany. In 1992, the German Constitutional Court not only set a limit on the total amount of public funding for political parties (the ‘absolute upper limit’), but also reaffirmed the principle that maximum half of the total income of a party can be derived from state subsidies (the ‘relative upper limit’) (BVerfGE 85, 264). In other words, a German political party cannot receive more financial support from the state than it can collect from private sources, such as donations or member contributions. The motivation of the Court was that public funding must be tied to parties’ ability to generate private sources of revenue to ensure that they remain responsive to demands from citizens (Vanberg 2004, 163). In comparison to the German case, the ceiling of 75% for European political parties was still quite high, but can be explained by the fact that public funding was explicitly established to boost the European parties and the Europarty system. When European subsidies were also introduced for foundations in 2007, a similar matching principle was included in their finance regime. However, the 2007 Regulation also raised the subsidy ceiling for European political parties to 85% of the total eligible expenditure, and set the same level for the Eurofoundations. In 2018, the ceilings were again raised to 90 and 95% for the Europarties and Eurofoundations, respectively, applicable from 2019 onwards. Consequently, the demand to collect own financial resources has weakened over time. As also mentioned in the previous chapter, from the beginning of the finance regime, these own sources of revenue—in particular the membership contributions and donations—have been subjected to certain

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limitations (for a recent overview of the rules, see Anglmayer 2021, 11– 13). European political parties and foundations cannot accept anonymous donations, donations from political groups in the European Parliament, donations from public authorities or companies in which a public authority has a dominant influence (Article 6 of Regulation 2004/2003). In 2007, the ban was expanded to donations from public authorities from third countries. European political parties and foundations can accept donations from natural persons as well as legal persons, which means that also companies can donate. An additional restriction was added in 2014: natural or legal persons from outside of the EU were no longer allowed to make donations, except for individuals eligible to vote in the European elections. The ceiling for donations was initially set at e12,000 per donor per year, and was raised to e18,000 per donor per year from 2018 onwards (Article 20 of Regulation 1141/2014). This cap of e18,000 is also set for contributions from individual members, with the exception of elected members of parliament that are also individual party members. Neither does the ceiling apply for contributions from member parties or organizations. There is, however, a collective upper ceiling: the total contributions from all members may constitute a maximum of 40% of the annual budget of a Europarty or foundation (Article 6 of Regulation 2004/2003). Eurofoundations may accept contributions from their affiliated Europarty, as long as they do not derive from the European subsidies that the party received. Since 2018, European political parties have been confronted with additional constraints on their income. First, that year the Authority made clear that the fees of members with ‘auxiliary or ancillary forms of affiliation [that] do not enjoy a full range of rights and obligations compared to other entities within the same European political party or foundations’ were not accepted as member contributions, but were considered to be donations and, thus, had to remain below the maximum ceiling for donations. Consequently, this meant that only full member parties could contribute more than e18,000 per year, as opposed to all other member party types (observer, associate, affiliate members). Second, they were no longer allowed to accept contributions from non-EU member parties. Such a ban was never explicitly included in the funding rules, but was a consequence of a restrictive interpretation of the European Parliament. In 2017, it refuted a member party contribution to the ECRP. The Europarty had received a membership fee of e133,044 from the Prosperous Armenian Party (PAP). According to the

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Parliament, the PAP was not a ‘political party’ in the meaning of Article 2(1) of Regulation 2004/2003, which defined it as ‘an association of citizens which is either recognized by, or established in accordance with, the legal order of at least one Member State [own emphasis]’. Consequently, the PAP—coming from outside the EU—could not be considered as a member party of ECRP, and its contribution had to regarded as a donation and, as such, was bound by the ceiling of e12,000 that was applicable at that time. The Parliament compelled ECRP to repay the difference. The Europarty fought the Parliament’s decision, but the European Court of Justice dismissed the complaint.12 The interpretation by the Parliament was surprising, since all European political parties have had non-EU member parties since their origins (see e.g. von dem Berge and Poguntke 2013; Bressanelli 2014; Chryssogelos 2017, 2021) and these have consistently paid a membership contribution. Before ECRP’s case, the European Parliament had never questioned or renounced this practice. However, while in most cases these are rather modest contributions—since most non-EU member parties are small and/or have limited financial means—Parliament’s approach in case of ECRP seems to be motivated by the size of the Armenian party’s contribution: it constituted more than 55% of all member contributions and a third of ECRP’s total own resources. Such shares could not be recognized among the contributions from non-EU member parties in other Europarties. Nevertheless, this new approach of the Parliament and the confirming ruling of the European Court of Justice had far-reaching consequences for all European political parties. According to this interpretation, all member contributions to Europarties from parties outside the European Union would be considered as (foreign) donations under Regulation 2004/2003 and were subject to the maximum ceiling of e12,000. Moreover, foreign donations were entirely banned in the new funding rules of Regulation 1141/2014 from 2018 onwards, meaning that Europarties could no longer accept any financial contributions from non-EU member parties.13 This had both an important financial and organizational impact. Anno 2021, all European political parties counted a substantial number of nonEU parties among their members (Graph 9). As the United Kingdom officially left the EU in January 2020, this also means that all British parties were considered non-EU members. The Europarties thus miss out on a substantial part of their own resources. Especially the contributions

3

Graph 9

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Member parties of European political parties (2021)

of the British parties had been an important source of revenue for several Europarties: the Scottish National Party is for example one of the larger members of EFA, and Labour is an important member party of PES. The Europarties tried to accommodate this loss of income by collecting ‘participation fees’ from non-EU member parties if they participated in the Europarties’ activities, but this could not fully compensate the loss of revenue. In addition, from an organizational perspective, the interpretation downgraded the non-EU parties to second-tier members as opposed to (EU) members that did pay their contributions, and potentially imposed an additional burden on the latter, as they had to contribute more to compensate for the loss of income. Consequently, the practice could jeopardize the relations between the European party organization and its non-EU member parties. In its resolution evaluating the 2019 European elections, the European Parliament therefore stressed that membership fees from parties from Council of Europe countries could be allowed with a view to fostering pan-European political bonds, provided that this takes place within a framework of enhanced transparency.14 In sum, the finance regime sets limitations on the various sources of revenue of European political parties and foundations, although the

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specific parameters have evolved over time. In theory, such a regulatory framework could ensure a balanced income structure and avoid that Europarties and foundations would rely too heavily on one type of revenue. In practice, their dependence on public funding for their organization and functioning is very high. The limitations on donations and contributions also make it more difficult to collect sufficient own resources to match the European subsidies, creating substantial internal budgetary pressures. 3.2

Absorption Capacity and Matching Funds

Table 4 provides an overview of the share of the EU grant in the total income of the European political parties. Two main observations can be made. First, the share gradually rises over time. This is the case for almost all Europarties. Second, with only a few exceptions, European subsidies consistently account for more than 75% of the total income. For most parties, this number is even higher, going up to 90% or more in several years. Although not included in the table, the situation of the European political foundations is similar. Yet, the fact that public funding is the most important source of income for European political parties and foundations does not necessarily mean that they suffer from internal budgetary pressures. A potential indicator of these financial constraints is the share of subsidies they have received. If they have not received their entire grant amount, this could indicate that they face difficulties in collecting sufficient own resources.15 In other words, if their final subsidy is (significantly) lower than their theoretical maximum grant amount, this provides support for the central argument. The difference between the theoretical maximum sum and the final sum I call the ‘absorption capacity’, expressed in the share of their maximum grant that Europarties and foundations received. Table 5 shows the absorption capacity of European political parties from 2004 until 2019. In general, around half of the parties has been able to receive most of their grant amount. The four main parties—EPP, PES, ALDE Party and EGP—had an absorption capacity of more than 90% in most financial years, not considering the first year of EU subsidies. Nevertheless, the EPP also had a lower absorption capacity in several years, in particular 2016 when it received less than 80% of its maximum grant. The final grant of the PES was also close to 80% in 2014 and 2015, and as

EPP PES ALDE EGP PEL EDP EFA ECRP ECPM IDP EUD EAF MELD AENM ADDE APF

Table 4

71.0 71.0 76.0 68.8 66.6 74.8 75.0

2004

72.1

69.5 74.6 71.5 74.9 75.0

2005

72.5 73.4 72.1 70.8 71.7 88.1 75.0

2006

81.0

74.9 76.2 72.5

75.3

2008 72.5 77.9 73.0 70.4 75.0 83.3 74.6

73.3 74.3 72.7

2007

58.5

66.8 77.7 75.6 53.2 75.6 81.6 74.0

2009

85.0

77.8 78.8 80.4 74.3 77.9 81.3 81.4 84.4 79.1

2010

89.0 84.0

80.6 81.4 82.0 74.5 77.9 83.5 82.7 84.9 83.2

2011

83.0 84.5 85.0 85.0

81.5 81.6 81.6 77.1 75.6 82.0 80.8 84.0 84.7

2012

80.2 84.9 84.8 86.6

81.8 79.5 81.2 77.2 77.9 82.7 82.5 82.1 83.3

2013

82.1 84.9 84.6 76.2

81.4 83.0 78.8 76.9 81.2 82.1 80.6 84.0 84.1

2014 80.7 82.4 78.9 77.6 80.0 79.1 83.3 83.2 84.2 76.4 81.7 84.0 67.8 84.6 83.3

2015

80.1 73.9 84.2

80.0 83.6 79.3 78.2 82.7 82.8 83.1 84.3 83.4 80.6 81.5 85.2

2016

77.1

83.8 83.8 78.1 65.0 81.9 83.4 83.5 83.2 82.4 80.9

2017

87.1 84.5 79.6 80.9 84.9 83.3 86.0 87.3 84.9 89.8

2018

89.9 90.8 84.3 86.7 86.7 89.8 86.9 87.9 86.8 95.5

78.1 79.9 77.8 73.8 77.8 82.3 79.6 84.5 83.6 84.7 79.7 84.6 80.6 81.6 78.6 84.2

2019 Average

Share of EU grants in the total revenue of European political parties (2004–2019) (in percentage)

3 RISING SUBSIDIES AND CREATIVE ACCOUNTING …

81

83.8 100 91.6 100 86.4 55.3 100

23.6

22.3

2005

47.1 56.3 67.3 38.8 41.5 19.5 96.6

2004

31.0 62.8

96.0

24.4

27.4 43.6

96.5 99.9 90.2 100 99.6 29.0 96.7

2007

89.2 90.6 87.1 92.8 77.0 30.9 99.1

2006

34.9 72.9

67.8

99.7 100 100 99.6 100 82.1 99.8

2008

63.8

88.5

97.7 99.5 100 100 97.8 50.6 97.9

2009

83.4

98.5 100 98.8 99.7 100 83.8 99.8 32.0 90.8

2010

64.2 98.8

99.4 99.4 97.5 100 100 62.0 99.2 55.5 100

2011

73.7

80.8 99.1 64.4

100 100 100 100 100 65.9 99.5 88.6 100

2012

73.0

70.7 99.7 90.9

86.4 99.9 100 100 100 76.2 100 100 100

2013

60.1

77.3 100 79.9

98.4 82.7 99.5 99.6 99.7 86.2 94.8 99.3 100

2014

10.3b

99.5 83.8 100 97.8 90.9 67.8 89.6 80.7 100 34.2 75.0 99.6 82.4 66.1

2015

Absorption capacity of European political parties (2004–2019) (in percentage)

79.3 94.7 100 96.0 99.8 66.3 99.6 90.5 90.1 49.1 55.3 99.7 58.3 0b 70.0

2016 89.7 90.2 99.2 100 82.6 64.8 99.8 58.3 100 30.8 0a 0a 81.7 0a 6.4 0a

2017

98.8 74.8 100 97 84.5 68.0 100 77.3 100 55.8

2018

98.9 87.3 100 98.7 80 81 97.9 96.4 99.3 25.4

2019

b (Part of) the grant was recovered, because some expenditure was recategorized as ineligible (non-exhaustive)

the year, which caused solvency issues

a European parties applied for EU party funding but did not receive a grant, mainly because they did not receive pre-financing in the beginning of

EPP PES ALDE EGP PEL EDP EFA ECRP ECPM IDP EUD EAF AENM ADDE APF CLF AEN AIDE MELD

Table 5

82 W. WOLFS

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low as 75% in 2018. The ALDE Party and EGP had a high absorption capacity over the entire period. A number of other European political parties have had more difficulties in receiving their entire grant. The EDP received more than 80% of its maximum grant in only four financial years since 2004. The European United for Democracy (EUD) and the Alliance of European National Movements (AENM) are characterized by a more fluctuating pattern, with absorption capacities up to 90% or more alternated with rates close to 50%. Size does not seem to be a decisive factor, since larger Europarties like ECRP or IDP struggle to receive their maximum grant amount, while smaller parties like the EFA or the ECPM show a high absorption capacity. The absorption capacity of European political foundations is similar to that of the European political parties, although they seem to have more difficulties in receiving their entire grant amount (Table 6). Considering the four main political foundations—WMCES, FEPS, ELF, GEF—there is a difference between the liberal foundation and its affiliated party: whereas ALDE had an absorption capacity of more than 90% almost during the entire period, the ELF has several years in which it received less than 80 and even less than 70% of its maximum grant. Other European foundations show a pattern that is similar to that of their affiliated party: both the foundations of the EDP and the EUD— the IED and the OEIC—had difficulties in receiving their entire grant amount. This has also been the case for FELD, EIT and the more recently established IDF. How strong is the absorption capacity as an indicator of budgetary constraints? Is it not possible that European parties and foundations request a grant amount in their application that is substantially lower than their theoretical maximum amount, while they would have sufficient own resources to receive a higher grant? Since both the total funding and the number of parties and foundations (can) change from year to year, it is plausible that a Europarty or foundation requests a grant that is lower than the sum it is entitled to according to the distribution key. In practice, this is unlikely. All parties and foundations are informed by the services of the European Parliament in the final weeks before the grant application deadline on the height of the total funding sums, on how many parties and foundations will apply and on the number of affiliated MEPs, meaning that the applicants have a good indication of their maximum grant amount (Interview 27). It is possible, however, that the final grant

EPP PES ALDE EGP PEL EDP EFA ECRP ECPM IDP EUD EAF AENM ADDE APF CLF AEN AIDE MELD

98.9 96.9 80.1 97.6 97.8 35.2 98.2

96.9

0

65.4

84.0 61.7

2009

85.1 85.0 32.9 89.5 58.3 43.3 100

2008

80.0

89.0 96.1 63.4 95.9 99.9 57.3 66.0 59.5

2010

63.7 96.5

94.8 99.8 65.9 100 98.9 48.7 96.5 75.7 67.7

2011

47.0

79.2 96.0

88.6 99.7 78.3 99.2 100 65.0 77.0 80.7 100

2012

60.5

77.8 95.8 80.8

93.6 97.3 87.2 99.0 99.8 67.1 90.8 80.9 97.9

2013

53.2

79.1 97.3 79.4

92.0 100 69.1 98.5 99.6 84.0 80.9 96.9 100

2014

37.4

99.3 94.1 71.5 91.3 88.3 71.6 57.7 95.9 98.4 36.1 57.6 91.9 81.3 92.2

2015 94.0 98.5 80.9 97.9 94.7 58.5 68.5 99.8 100 57.7 49.4 97.2 79.1 0b 54.1

2016

Absorption capacity of European political foundations (2008–2019) (in percentage)

0a 81.0 0a 15.8 0a

94.1 92.0 78.3 96.7 94.5 52.6 76.3 94.9 100 43.4

2017

100 98.6 93.7 74.2 100 46.5 67.7 79.4 99.9 29.5

2018

95.7 100 100 97.4 100 100 100 93.9 100 45.7

2019

b (Part of) the grant was recovered, because some expenditure was recategorized as ineligible (non-exhaustive)

of the year, which caused solvency issues

a European foundations applied for EU party funding but did not receive a grant, mainly because they did not receive pre-financing in the beginning

WMCES FEPS ELF GEF TE IED CF ND-FER Sallux IDF OEIC EFF EIT IDDE ETN Pegasus Europa EPFD FELD

Table 6

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is lowered because the party or foundation had spent part of its subsidies at odds with the rules, as a consequence of which the grant sum is lowered. Yet in 2017, the Director-General for Finances of the European Parliament explained that practically all European parties and foundations had encountered difficulties to collect sufficient own resources.16 3.3

Private Funding for European Political Parties and Foundations

There are substantial differences regarding the various sources of private revenue that the European political parties and foundations have relied on to match their subsidies. Graph 10 shows the average percentages of the five income categories—membership contributions, donations, contributions in kind, other income and reserves—in the total collected own resources of European political parties for the period between 2004 and 2020 (or the years when the parties received EU funding).17 The dominant source of revenue for most parties has been membership contributions: for 11 out of 16 parties, membership fees constituted at least two-thirds of their total own resources. Most of them relied on contributions from member parties. Even for the ALDE Party—which has developed a sizable individual member base—contributions from these individuals have accounted for only 1–7% of the total membership fees since 2013.

Graph 10 Averages of the shares of income categories in the own resources of European political parties (2004–2020)

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There were also significant differences among European political parties in how they determined their membership fees: proportional, fixed or ad hoc. In the larger Europarties—the EPP, PES, ALDE, EGP—the membership fees have been proportional, based on the size of the party (in terms of parliamentary seats and/or votes in the last elections) or voting rights in the Europarty’s representative assembly. In other words, the larger member parties paid a higher membership contribution. The EFA also differentiated between three levels of fees (a high, medium, or low sum) for its member parties, depending on the size and wealth of the region that the party was coming from. Other parties used fixed membership contributions: the Alliance for European National Movements for example charged a fee of e1000 for MEPs that were individual members and e3600 for national member parties.18 European political parties that were mainly focused on coorganizing activities with the national member parties relied on project contributions instead of membership contributions. In the European Alliance for Freedom (EAF), members could suggest events or projects that were organized together with the European party, but needed to contribute at least 15% of the total costs. Consequently, the expenditure was covered by 15% of ‘own resources’ as required by the rules. The IDP had a similar approach: member parties could propose activities and pay a contribution; the remainder of the expenses was financed by the European party. Some European political parties have heavily relied on donations: the EUD, ECPM, EAF and AENM and to a lesser extent the ECRP. The donors of EUD mainly consisted of Eurosceptic movements and organizations and—to a lesser extent—private companies. The ECPM relied on individuals and religious groups and organizations for its donations. The donors of EAF were mainly companies and the AENM got its donations almost exclusively from individuals. The Alliance for Peace and Freedom (APF) is the only European political party that relied on other own resources for more than half of its own revenue. These consisted, among others, of participation fees and book sales. Compared to the income of European political parties, the own resources collected by the European political foundations show a rather different picture (Graph 11). First, the dependency on membership contributions has been lower. Nevertheless, for some foundations the financial support of members was still the most important own resource: this was the case for the WMCES, FEPS, ELF, TE, IED, FELD and IDF.

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Graph 11 Averages of the shares of income categories in the own resources of European political foundations (2008–2020)

However, compared to the situation of the European political parties, the membership contributions were less structural and more ad hoc: foundations relied more on voluntary contributions from members or project contributions. A second difference is that contributions in kind constituted a more important source of income for European foundations than was the case for European political parties. In particular for the ETN and to a lesser extent for the GEF and the CF, contributions in kind formed a large share of revenue. Concerning donations, there are similarities: the European political parties that received a high share of donations—EUD, ECRP, ECPM, EAF and AENM—have an affiliated foundation that also relied heavily on donations, respectively, the OEIC, ND-FER, Sallux, EFF and EIT. The share of donations in the total own resources was even higher for these foundations than for their affiliated Europarties. For two other foundations, donations were also an important source of income: the IDDE and ETN. The latter however—like its affiliated Europarty APF— had ‘other own resources’ as its most important income category, mostly book sales and participation fees. Now we turn to the private income structure of the four main European political parties, whose political groups have secured the vast growth in public subsidies. There are clear indications that the EPP, PES, ALDE Party and EGP have struggled with collecting sufficient private funding.

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The following paragraphs provide an overview of the income structure of their own resources from 2004 until 2020. As already mentioned, the required own resources decreased from 25% in 2004 to 15% in 2008 and 10% (and even 5% for Eurofoundations) in 2019, which has eased the internal budgetary pressures to collect private funding. Nevertheless, many of the four main Europarties and affiliated foundations have encountered difficulties in matching their rising EU subsidy amount. The income structure of the EPP is depicted in Graph 12. The horizontal axis on top of the graph indicates the EPP’s absorption capacity; the column graphs show the shares of the various income categories in the total own resources of the party and the line graph indicates the evolution of the membership contributions. In the graph can be recognized that membership contributions have been the most important source of revenue for the EPP: these have accounted for more than two-thirds—and in most years even more than 95%—of the party’s total own resources. However, despite the growing grant amount, the party has not been able to equally increase its membership contributions: while the maximum grant for the EPP has almost tripled between 2005 and 2018, the membership fees remained relatively constant—with some fluctuations— during the same period. Only in 2019 these contributions substantially increased, but even with this raise the EPP had an absorption capacity of only 70%.

Graph 12

Income structure of the European People’s Party (2004–2020)

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Deputy Secretary-General Luc Vandeputte acknowledged that it has not been possible to let the membership contributions rise in accordance with the European subsidies (Interview 38). He stated that collecting sufficient own resources was difficult for the party, in particular because they had made the deliberate choice not to use donations. Instead, the EPP has only been able to match the EP grant by using its financial reserves: from 2014 to 2017, the reserves accounted for 20–35% of the total own resources. But even this strategy has not always been enough to attract the entire grant: in 2016, the Europarty only received 79% of its maximum grant. Furthermore, using reserves as own resources cannot be maintained indefinitely: while the reserves amounted to e1.1 million in 2013, they had decreased to less than e60,000 in 2017 (not controlled for inflation). The maximum grant of the affiliated political foundation WMCES has also increased over time from e1.9 million in 2008 to e6.1 million in 2018. This means that the total own resources required for the foundation to receive the entire grant also rose from e335,000 to almost e1.1 million in the same period. As is the case with its affiliated Europarty, membership contributions accounted for the largest share of the own resources of WMCES (Graph 13). As opposed to the EPP however, the foundation has been able to receive more contribution fees over time: the

Graph 13 Income structure of the Wilfried Martens Centre for European Studies (2008–2019)

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amount rose from less than e225,000 in 2008 to more than e960,000 in 2017. The substantial decline in member fees in 2019 can be explained by the change of the co-financing obligation: from this year onwards, the EU funding needed to be matched only by 5%—instead of 15%—of own resources, meaning less member contributions sufficed to receive the entire grant amount. Another difference with the affiliated Europarty is that the WMCES has made use of donations and contributions in kind. The importance of donations even increased in the last years, with a share of more than 25% of the total own resources in 2019. Contributions in kind were mainly used during the first years of the foundation and their share has decreased over time. In sum, the budgetary pressure on the WMCES to gather sufficient own resources has increased, but the foundation has been able to gather sufficient own revenue to receive the largest share of its European grant. The maximum subsidy for the Party of European Socialists increased from e2.6 million in 2004 to e13.5 million in 2019, meaning that the required own resources to match this grant have also risen from approximately e850,000 to more than e1.5 million over the same period. Membership fees have also been the most important source of own resources; since 2009, the share of membership contributions has not dropped below 86% (Graph 14). In absolute terms, these member

Graph 14

Income structure of the Party of European Socialists (2004–2020)

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contributions increased from e840,000 to almost e1,415,000 (or 68%) between 2005 and 2017. In this respect, Deputy Secretary-General Marije Laffeber confirmed that it had become more difficult to gather sufficient own resources to receive the entire grant amount. The Europarty was very dependent on the contributions from the national member parties and their financial situation had also become more difficult due to declining membership numbers and a number of electoral setbacks (Interview 32). The increases in membership fees in 2013, 2016 and 2017 can be explained by extraordinary additional contributions from the national member parties. For example, the German SPD made an extra contribution of e200,000 in these years, which helped significantly in gathering enough own resources to match the grant. In 2014–2015 and 2018– 2019, when no such voluntary contribution was made, the absorption capacity was distinctly lower. With its rising maximum grant from e1.7 million in 2008 to e5.2 million in 2018, the Foundation for European Progressive Studies’ needed own resources also increased from less than e300,000 to more than e900,000 in that same period. The foundation relied heavily on member contributions (Graph 15): since 2011, they have accounted for more than 70% of the total own resources. Initially, FEPS succeeded in receiving more membership contributions, but the amount declined

Graph 15 Income structure of the Foundation for European Progressive Studies (2008–2020)

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sharply after 2017. The easing of the co-financing obligation from 2019 onwards can provide an explanation for this downward trend in the last analyzed years. Contributions in kind have also been an important source of revenue for the foundation, although the share has decreased over time. As can be noticed on the horizontal axis on top of Graph 16, the ALDE Party has been able to receive its maximum grant in most of the years, although its maximum grant has increased more than fivefold from 2005 to 2020. As was the case with the EPP and the PES, membership contributions have been the most important source of own revenue for the ALDE Party. In absolute terms, the membership fees increased substantially in 2005, and have moderately fluctuated since. At the same time, the share of membership contributions in the total own resources went down from more than 90% in 2005 to 50% in 2018. Jacob Moroza-Rasmussen (Secretary-General ALDE Party) and Sabine Dechamps (Head of Administration ALDE Party) stated that they had diversified the revenue structure of the Europarty in order to be able to match the rising grant with sufficient own resources. For some national member parties, it would have been difficult to pay additional membership fees, especially parties that did not get state subsidies or other

Graph 16 Income structure of the Alliance of Liberals and Democrats for Europe Party (2004–2020)

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important sources of funding. Therefore, they focused on getting contributions from individual members and securing corporate sponsorship agreements (Interview 37). The share of individual member fees in the total membership contributions indeed increased, but only from 0% in 2012 to 7% in 2018, so it remained a modest source of revenue. The share of donations in the total own resources on the other hand grew from 0% in 2007 to almost 40% in 2018 and as such became an important source of revenue to complement the membership contributions, but it decreased again substantially in 2019 after a strategic choice to seek fewer donations (cf. infra). The Europarty also used its financial reserves in 2014 and 2019 to cope with the rising EU funding in these two election years. The maximum grant for the European Liberal Forum has also been characterized by a steep increase: from e635,000 in 2008 to more than e2.8 million in 2020, leading to a growing need for own resources. Most of the Eurofoundation’s own revenue came from membership contributions: they have accounted for more than 85% of the total own resources (Graph 17). Donations constituted an additional 5–10% of the own revenue since 2011. In general, however, the foundation has not been able to gather sufficient own resources to receive the entire grant amount. Only after 2018, the ELF has obtained a grant that is more than 90% of its maximum subsidy amount.

Graph 17

Income structure of the European Liberal Forum (2008–2020)

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The maximum grant for the European Green Party has risen between 2005 and 2020 from less than e750,000 to more than e4 million, more than a fivefold increase. Nevertheless, the Europarty has received consistently close to its maximum grant amount. The most important source of own revenue has been the membership fees with a share of 75–85% until 2016 (Graph 18). In the first years, these member contributions substantially increased, but remained relatively stable between 2010 and 2019. The EGP also used contributions in kind—although the share gradually decreased over time—and other own resources, which mainly consisted of participation fees of Europarty activities. Armin Traute (Head of office EGP) confirmed that it had become more difficult to gather sufficient own resources to match the EU grant, since it was not possible to consistently increase the membership fees. In order to prepare for the substantially higher total sum in 2019, the EGP had built up a ‘campaign fund’: financial reserves that could be used as an own resource in order to match the grant (Interview 29). These reserves have indeed been an important source of own revenue from 2017 to 2019 and have significantly helped to match the EU public funding. Evidently, the use of reserves is not a permanent solution, especially when the need for own resources continues to grow. Looking at the income structure of the GEF (Graph 19), it differs significantly from the other foundations. Aside from other income, the

Graph 18

Income structure of the European Green Party (2004–2020)

3

Graph 19

RISING SUBSIDIES AND CREATIVE ACCOUNTING …

95

Income structure of the Green European Foundation (2004–2020)

green foundation has been heavily dependent on contributions in kind, which accounted for almost half of the total own resources until 2018. The line graph indicates the evolution of contributions in kind in absolute terms, which shows a gradual rise over the years from less than e50,000 in 2008 to more than e100,000 in 2017. However, as contributions in kind were no longer permitted in 2018, this has further increased the pressure to find other own resources to match the grant. That year, the foundation only received 74% of its maximum subsidy amount. Because of the lowered co-financing obligation (of only 5% for foundations) from 2019 onwards, the GEF’s absorption capacity increased again. This detailed analysis of the own resources structure of the four main Europarties and foundations makes clear that they experienced budgetary pressures, albeit not all in the same way or to the same degree. The people responsible for financial matters all confirmed that it had become more difficult to collect sufficient own resources to match the grant. However, this was not because of decreasing membership fees, an argument that is often made with regard to national parties and public funding. For all these four Europarties and foundations, the membership contributions remained stable or even increased. Despite this stable source of revenue, the four parties and affiliated foundations still experienced difficulties in collecting sufficient own resources to match the rising EU grants.

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A similar situation can be recognized with the other European political parties and foundations, which have all dealt with these budgetary pressures in different ways, with some turning to more dubious income practices. 3.4

Dubious Income Practices

Several European political parties and foundations have relied on rather questionable actions to collect own resources to match the European grant. A first potentially questionable practice is the use of bank loans. In 2017, the Director-General for Finance declared in the European Parliament that more and more Europarties and foundations were taking out loans in order to find the necessary financial resources. In the long-term, this practice could jeopardize their financial situation and even lead to insolvency and threaten their survival.19 The European Court of Auditors has also criticized this practice, warning it could allow Europarties to circumvent the rules on donations and contributions through loans at advantageous conditions.20 In addition, some parties have engaged in an (excessive) use of contributions in kind or even set up ‘donation carrousels’. 3.4.1 Contributions In Kind: Inflated Income? One of the income categories European political parties and foundations have used to cover their expenses is ‘contributions in kind’. These are goods and services that are provided by a third party free of charge, but that are given a cash value in the financial accounts and are considered as own resources. In practice, these contributions can take many forms: volunteers who work for the Europarty or foundation, meeting rooms that can be used or catering that is provided, or a speaker giving a presentation during an event. Contributions in kind can be a problematic source of revenue for a number of reasons. First, it can be difficult to estimate the exact value of a certain contribution. For example, when a company provides a venue free of charge but does not normally sell such services, it can make the valuation of the service questionable. And how much should a lecture of a certain speaker be valued? Or the supply of labour for specific purposes or for a period of time? Second, it is not always easy to prove that a contribution has been genuine. How to prove the work of volunteers for example? There have been several occasions when there were no invoices of the

3

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products or services that were delivered to Europarties and foundations, making it difficult to verify. Third, in some cases it is not clear whether the contribution in kind not only benefits the receiving Europarty or foundation, but also the provider of the service or good. For example, in case an event or activity is co-organized between a European party and a national party and the latter provides a contribution in kind for this event, it is also in its own interest. Consequently, it can be problematic to consider such contributions as services provided to the European party. At worst, contributions in kind can be used to artificially inflate a Europarty’s or Eurofoundation’s own resources. This is why this type of income has encountered much criticism. Initially, contributions in kind were limited to 7.5% of the total budget for parties and foundations, which means that they could constitute up to half of a Europarty’s or Eurofoundation’s own resources. Gradually, the European Parliament tightened the rules on this type of income and eventually decided to stop allowing it as an own resource in 2017. Three main European political foundations—the WMCES, FEPS and GEF—then sent a letter on 10 November 2017 to voice their concern about the possible consequences for their future activities.21 Indeed, some European political parties and foundations relied heavily on contributions in kind as an own resource to fulfil their co-financing obligation. Table 7 shows the proportions of contributions in kind in the total of own resources for European political parties. Overall, their Table 7 Proportion of the contributions in kind in the total own resources of European political parties (2004–2017) 2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

EPP

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

PES

0.1%

13.8%

16.7%

4.4%

0%

0%

0%

0%

0%

0%

0%

13.7%

5.5%

0.5%

ALDE

0%

0%

0%

0%

0%

0%

0%

0%

6.8%

6.1%

8.2%

5.3%

1.4%

0.9%

EGP

0%

8.11%

7.88%

0%

6.4%

8.2%

8.6%

7.3%

10.3%

10.9%

4.6%

4.1%

5.4%

PEL

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

EDP

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

EFA

24.5%

0%

0%

0%

0%

0%

0%

8.9%

6.6%

4.2%

11.9%

12.6%

11.0%

0%

24.9%

0.0%

14.5%

EUD

6.9%

2017

58.2%

0%

12.0%

12.4%

8.4%

12.8%

ECRP

0%

0%

0%

0%

0%

0%

0%

0%

ECPM

28.3%

7.2%

3.7%

16.4%

7.6%

2.3%

3.2%

2.3%

0%

0%

0%

0%

0%

0%

MELD

EAF

0%

0%

0%

0%

AENM

0%

0%

0.3%

0%

0%

0%

IDP

0%

0%

0%

ADDE

0%

0.1%

APF

0%

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Table 8 Proportion of the contributions in kind in the total own resources of European political foundations (2008–2017) 2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

WMCES

28.4%

4.4%

17.0%

15.2%

10.0%

4.1%

0%

2.8%

3.1%

1.9%

FEPS

36.3%

66.3%

40.3%

23.2%

17.9%

26.1%

9.7%

11.0%

5.4%

7.9%

ELF

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

GEF

83.5%

65.5%

38.2%

33.3%

40.7%

48.9%

43.8%

48.8%

47.0%

47.2% 35.0%

TE

0%

0%

0%

0%

12.5%

11.6%

13.6%

29.8%

36.6%

IED

0%

0%

0%

0%

0%

0%

0%

25.5%

0%

0%

CF

59.6%

27.4%

0%

13.6%

47.3%

40.1%

43.0%

33.8%

37.2%

28.3%

0%

0%

0%

10.1%

15.1%

10.3%

17.8%

0%

0%

0%

0%

0%

0%

0%

0%

Sallux

10.1%

0%

0%

0%

0%

0%

0%

EFF

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

OEIC ND-FER

FELD ITE

0%

0%

0%

IDF

0%

0%

0%

IDDE

0%

17.6%

ETN

0%

0%

reliance on this type of revenue is rather limited. Only EUD has a number of years in which contributions in kind were a significant share of the total own resources. European political foundations on the other hand show a different pattern (Table 8). Several foundations relied heavily on contributions in kind. They account for up to half of the total own resources of the GEF and the CF. Also in case of FEPS and TE—and to a lesser extent WCMES and OEIC—several years can be recognized in which contributions in kind were an important share of the total own resources of the foundation. As such, it is clear that several European political parties and in particular European political foundations encountered major difficulties to fulfil their co-financing obligation without contributions in kind, as has been acknowledged by the European Parliament on several occasions.22 3.4.2 Donations to Buy Influence? Donations to European political parties have been allowed since the beginning of the finance regime in 2003, and many Europarties and foundations have also made use of this type of revenue. While donations can indeed be a tool for Europarties to strengthen their financial ties in society

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and avoid that they become totally dependent on the state, they can also be a controversial issue. Donors might hope to steer a party’s positions and actions—and thus the outcome of political decision-making—closer to their preferences. Consequently, allowing donations leaves the door open for policy capture by private or foreign interests. It is therefore not surprising that this topic has attracted the attention of civil society and academia. Research journalists and transparency organizations have warned for the potential undue influence of big companies and foreign entities on European political parties and foundations through donations.23 Katsaitis (2020) examined the donations to European political parties and foundations between 2008 and 2015, with a particular focus on private companies. Concerning the donor profile, he observed that business organizations donate more—both in terms of the number and size of donations—than the other categories of donors (civil society, trade unions, political organizations, members of parliament and individual citizens). He also concluded that the ideology had an impact on donor behaviour, with right-wing and Eurosceptic Europarties and foundations receiving the bulk of the business donations. According to Katsaitis, companies donating to right-wing parties follow a ‘selective donation strategy’, which implies that business donates to those parties that are closer to their ideological position and support market liberalization. The donations to Eurosceptic parties and foundations represent—according to him—an attempt of business associations to avoid that these parties ‘disrupt the policy process vis-à-vis their interests’ and to steer them away from their anti-integrationist agenda towards support for the single market (Katsaitis 2020, 6–7). On the one hand, donations indeed entail a risk of undue influence of European political parties and foundations. Although donations are capped at e18,000—and before 2018 at e12,000—per year per donor and the identity of (substantial) donors is made public, the co-financing obligation increases their value for Europarties and foundations. Since each donation is worth at least eight times its value in public funding, this makes it a potentially important source of revenue. Graph 20 indeed shows that both the number of registered donations and the total donation amount (controlled for inflation) have substantially increased over time. The highest number of donations can be observed in 2016 (180 donations), while the largest amount (more than e1 million) was donated in 2018, the year the donation ceilings were raised.

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Graph 20 2019)24

Donations to European political parties and foundations (2004–

On the other hand, this increase—and the implicit risk—needs to be qualified. The number of donations has been artificially inflated due to technical reasons. The interpretation of what constitutes a donation—and consequently what should be registered as such—differs from Europarty to Europarty and even changes from year to year. Similarly, the instructions from the supervising bodies have also shifted over time. For example, in December 2018 the Europarties learned that all ‘auxiliary’ members—for example observer, associate or affiliate members—would no longer be considered as full members, meaning that their contributions should be categorized as donations.25 The result was that many officially registered donations were in fact contributions from member parties, member organizations or affiliated Members of Parliament. In the case of European foundations, many registered donations were participation fees or project contributions, i.e. the share of partner organizations paid for joint projects. Consequently, the actual number of genuine donations has been considerably lower in practice. In addition, the use of donations as a source of revenue substantially differs among Europarties and foundations (cf. Graphs 10 and 11). Rather than ideology as argued by Katsaitis, ad-hoc factors seem more

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suitable to explain these differences. Some Europarties and foundations have awarded contracts in exchange for donations (cf. infra). Others— like the EPP, PES, EGP, PEL, IDP—have made the deliberate choice to avoid all donations. For example, because of his background in Belgian politics which was plagued by political finance scandals in the 1990s, EPP President Wilfried Martens decided from the start of the finance regime to refuse donations (Interview 38). Only a few Europarties and foundations have heavily relied on donations. In several years, ECRP and its affiliated foundation New Direction accounted for almost half of the total amount of donations. A lot of these donors originated from the network of the UK Conservative Party, one of the most prominent member parties of the ECRP. The ECPM and its foundation Sallux can fall back on a large pool of supporters and affiliated (religious) organizations that donate—on average—lower amounts. The WMCES and FEPS only started to accept donations in 2018. As already mentioned, the ALDE Party has turned to donations from multinational companies in an attempt to diversify their income. This strategy, however, had political repercussions in the run-up to the 2019 European elections. The potential alliance of the liberals with Macron’s En Marche was jeopardized when Marine Le Pen publicly criticized the ALDE Party’s policy to accept donations from Bayer Monsanto. Macron’s party subsequently declared that they would not join the liberal group in the European Parliament if this practice was continued. The ALDE Party responded by putting an end to the sponsorships of large companies.26 Nevertheless, despite these qualifications, a potential risk of interference from foreign and private interests does remain in place. An analysis of the donations from 2014 to 2017 by research journalists showed that almost 20% originated from outside the European Union.27 Since 2018 however, such donations are banned. This does not entirely rule out foreign donations, since EU entities can be used as a go-between. In 2014 for example, ECRP received a donation from the Bendukidze foundation in the Netherlands, which potentially acted as an instrument of Georgian oligarch Kakha Bendukidze.28 Similarly, donations from private companies constitute up to a quarter of the total. Some firms are particularly active: the company AT&T donated more than e281,000 from 2012 to 2019 to ECRP and its affiliated foundation New Direction, the WMCES, FEPS and ELF. Many of the registered donations of the ALDE Party are in fact participation fees: companies and organizations pay a contribution to set up

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a stand at the party congress, to provide training or to participate in an expert panel. For example, at the 2018 ALDE Party Congress, the Politics & Government Outreach Manager of Facebook and the Brand & Communications Manager of ‘Grow with Google’ provided the training ‘Running for Office’; representatives of Facebook, Google and Microsoft participated in a panel on fake news; and representatives of Uber and Stuart in a roundtable on the future of work.29 These practices do not mean that the ALDE Party defended these companies’ positions in exchange for financial contributions, but at least they constitute a form of ‘buying access’ to liberal Members of Parliament, European Commissioners and government ministers. Especially considering organizations with fewer financial resources do not have similar access, this can be problematic. In 2020, the ALDE Party adopted a Code of Conduct to avoid that delegates would be ‘actively lobbied’ during the party congress.30 In addition, the finance regime contains a number of loopholes which expose the Europarty system to undue interference. First, donations are capped at e18,000 per donor per year, but this does not prevent large companies or organizations to split their donations over several entities. In 2014 for example, two sub-entities of Bayer both donated the maximum amount to the ALDE Party. Second, while the identity of most donors needs to be made public, this is not the case for contributions from individual members. As such, individual membership can be used to circumvent the transparency requirements. Third, for many European political parties, the contributions from member parties constitute the largest share of their own resources, but it is not always clear where these national parties got their money from. There are still a number of member states in which party finance (including foreign donations) is hardly regulated. Consequently, national parties could be used as intermediaries to funnel money to the European party organizations. However, as long as European political parties play a modest role in the EU’s political system—including their ability to steer the decision-making of their affiliated MEPs, ministers and Commissioners—the incentives to influence these organizations remain limited. 3.4.3 Contracts in Exchange for Donations: Quid Pro Quo? The limited risk of interference linked to the use of donations does not mean that this type of revenue is without its problems. More specifically, the motivation of donors is not always clear. Why would some small local

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companies or individuals donate substantial amounts to European political parties or foundations? Some of the European political parties and foundations seem to have applied a ‘quid pro quo policy’ in order to collect their own resources to match the EU grant: companies and organizations made a donation in exchange for contracts from the Europarty or foundation. In the cases of the Alliance for Direct Democracy in Europe (ADDE) and the Institute for Direct Democracy in Europe (IDDE), the SecretaryGeneral of the European Parliament stated in 2018 that ‘multiple companies and individuals donated money to a European foundation (IDDE) while at the same time these companies or companies with close links to the individual donors were awarded contracts, whose values exceeded the donated amounts’.31 Through an examination of the ADDE’s and IDDE’s financial accounts, several of these companies could be identified. Divi Cosmetics bvba, a perfume wholesale company donated e12,000 in 2015, while it only had a profit that year of e98. Another company of the Director of Divi Cosmetics, Nomokratos vzw, received a service contract of e20,000. A Dutch software company, Buildnet Webservices BV, donated e5000 to IDDE in 2015. The Director of the company explained that his sister had asked him to make a donation to IDDE and in exchange, she would get a contract from the foundation to perform a study on health care. Indeed, her research institute was given a contract of e35,000 from IDDE. The Swedish organization Health Consumer Powerhouse received a contract of e20,000 after it had made a donation of e12,000 to IDDE. Chairman Arne Björnberg explained that he was asked to make a donation and that the organization would receive a higher amount in exchange later. The Icelander Jonas Sigureirson donated e10,000 to IDDE in 2015 on behalf of his company BF UTGAFA and received several contracts (for that company and his other company Research Center for Innovation and Economic Growth). Filip Chojnacki from Poland donated e2090; his partner Angelika Zapasnik received e14,000 from IDDE to organize a convention, but it remains unclear whether the convention has taken place. An event company from the Netherlands, Stacy’s Productions, organized an event for GeenPeil, an organization linked to ADDE and IDDE, and was asked to donate the remaining budget of e6000 to IDDE. The European Parliament has referred the matter to OLAF, which conducted an investigation into the donations.32

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Similar practices could be recognized with ECRP and its affiliated foundation New Direction. From (at least) 2014 to 2018, New Direction commissioned several reports and activities from the Hayek Institute and the Austrian Economics Centre, two organizations headed by Barbara Kolm, Vice-President of the General Council of Austria’s Central Bank with ties to the Freedom Party of Austria. For example, in 2017–2018, both the Hayek Institute and the Austrian Economics Centre received e59,500 for the organization of the Free Market Roadshow. During the same period, substantial donations were made to both ECRP and its foundation by Barbara Kolm and her entourage. In 2014, she donated the maximum amount of e12,000. Triple A Analytics—another company headed by Barbara Kolm—has almost annually donated the maximum amount of e12,000 or e18,000 from 2010 to 2018 to either ECRP or New Direction. In 2017 and 2018, several people with family or business ties to Barbara Kolm donated the maximum amount to the Europarty, with some of them admitting they were only used as a façade to make the donation.33 The foundation also awarded several service provision contracts to Libera!, a Belgian think tank, between 2011 and 2014. During the same period, it received several donations from this think tank or people involved: almost e40,000 was donated to New Direction by Members of the Board of Libera! or their organizations.34 Based on the annual activity report of New Direction of 2014, the only report that includes a list of all studies that were commissioned to organizations and think tanks, a similar pattern could be recognized with regard to the Institute for Research in Economic and Fiscal Issues, the Health Consumer Power House in Sweden and individual researchers.35 The Dutch organization (and later political party) ‘Forum for Democracy’ received e25,000 from ECRP in 2015 and donated e2100 to the Europarty. It is not entirely clear whether the e2100 constituted a donation or a project contribution, but the involvement of the European party has been questioned.36 ECRP also received many donations from Poland, several from Polish companies that provided services to either the Law and Justice Party, a member party of ECRP, or directly to the Europarty. For example, the PA Marketing Group, a media company that worked for the Law and Justice Party donated e6000 in 2015, the transport company Gerwazy, which provided transport for the Law and Justice candidates during several elections, donated e10,000 in 2015 and e4708

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in 2016, and Justpoint, a company that organized the Law and Justice party convention in 2015, donated e12,000.37 The European Alliance for Freedom (EAF) and the European Foundation for Freedom (EFF) received several questionable donations from individuals and companies from Malta. Research journalists from the Daphne Project have traced most donations back to Ryan Schembri and Etienne Cassar, based on the research done by Daphne Caruana Galizia, the Maltese journalist who was murdered in 2017. Ryan Schembri was accused of several crimes (including fraud and money laundering), and the journalists believe that the donations were linked to his money-laundering practices.38 In 2014, Ryan Schembri fled the country. In three years (from 2011 to 2013) Schembri and Cassar and their companies donated a total of e86,700 to the EFF: Ryan Schembri and Etienne Cassar donated individually e10,000 and e6000; e19,200 was donated by their company Food World Ltd, e5000 by their company More Supermarkets and e20,500 by Cassar and Schembri Limited. Another e10,000 was donated by Interaa Holdings Ltd, which is owned by Etienne Cassar and Ryan Schembri. Uscorn Ltd donated e6000; this company is owned by an associate of Ryan Schembri, the Croatian Igor Ulic (who also owns the Croatian sister company of Foodworld). In 2013, e10,000 was donated by Ocean and Sky Logistics Ltd, which was majority-owned by Alex Polidano, who also was a business associate of Ryan Schembri.39 The link between the EFF and Ryan Schembri is the Secretary-General of the foundation, Sharon Ellul Bonici, who was, according to the research journalists, a close friend of Schembri. It is clear that these cases differ in terms of substance and magnitude. Some of these practices fall within the rules: a person or organization that cooperates with a Europarty or foundation is not prohibited from making a donation. Other cases are more problematic: if contracts were explicitly commissioned in exchange for donations, if the service or product was paid above the average market price or if it is unclear whether an actual service was delivered. The EAF and EFF experiences also show that the origin of some donations is questionable. These practices are a direct consequence of the need for own resources that are required to unlock the subsidies of the European Parliament, and demonstrate the need for proper financial scrutiny of the European political parties and foundations.

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4

Conclusion

The findings of this chapter on the income of European political parties and foundations show how modalities of the finance regime provide a set of incentives and constraints that enable, impede and steer the actions of the Europarties, their foundations and the other actors involved. Two regulatory aspects are of particular importance. First, the way the public funding for Europarties is determined and distributed has led to a revenue-maximizing strategy. Second, the co-financing obligation— in combination with the limitations in place on private income—has created internal budgetary pressures for the European political parties and foundations. The management of the public funding is under the control of the European Parliament. This is the (coincidental) consequence of the Commission’s refusal to take up this role when the finance regime was created in 2003 (cf. Chapter 2). This path-dependent element generated few constraints to substantially raise the EU public funding for European political parties and foundations. In contrast to some national finance regimes in which the subsidy sums are defined by (party) law—such as a fixed amount per vote or parliamentary seat—the total funding sums for Europarties and foundations need to be (re)determined every year, and altering the funding level does not require legislative change. In addition, because the sums are part of the general budget of the European Parliament, it allows the dominant parliamentary actors to make changes without interference from the Council of Ministers. If the funding sums were managed by the Commission (as was considered at the origins of the finance regime), the Council would be on an equal footing and the substantial increase of funding would have been less likely. The pattern of public Europarty funding very much resembles a revenue-maximizing strategy as described by Scarrow, with the established parties primarily focused on expanding their own financial resources in absolute terms. However, as opposed to the national level, this process was (at least in part) driven by the parliamentary administration that has agenda-setting powers in the internal budgetary procedure of the European Parliament, and was defended and advocated by the main political groups. Their actions are characterized by a proactive element: the financial increase was motivated by the aspiration that it would stimulate the

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development of the European political parties and foundations and allow them to play their role for EU democracy, in particular in the framework of the European elections (with the Spitzenkandidaten system). In addition, a reactive element linked to the distribution mechanism included in the rules was also important. The system of a total funding sum that is subsequently distributed among the applicants means that a rise in the number of eligible parties results in a lower subsidy sum for each of them. The total funding sum was thus raised to ensure that the existing Europarties and foundations would not see their grants lowered when new parties gained access to EU funding. Also in line with the theory of a revenuemaximizing strategy, the fact that this strong increase also resulted in more resources for their political competitors did not directly concern the main political forces. The second aspect of the regulatory regime with a clear effect on the finances of the European political parties and foundations has been the co-financing obligation. The analysis in the chapter demonstrates how almost all parties experienced budgetary pressures to find sufficient private income to match their EU grant. In combination with the rising total funding sums, this obligation has made it more difficult for the Europarties and foundations to receive their entire grant amount. However, they have coped with this pressure in different ways: by diversifying their income structure, insisting on more membership fees, using their financial reserves, or resorting to questionable practices such as the extensive use of contributions in kind or setting up donation carrousels. Overall, the analysis of the income structure of the various European political parties and foundations has shown their strong dependence on state subsidies. At least in financial terms, they can be described as ‘semi-state agents’: party organizations that predominantly rely on state support. This is especially the case if you consider that a large share of the member party contributions—the dominant source of own resources of many Europarties—also originates from state funding at national level. Nevertheless, we should also acknowledge that the regulation of political parties is a sensitive issue, and striking the right balance between private and public funding to prevent both an overreliance on the state and undue interference from private and foreign interests remains a continuous exercise.

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Notes 1. In order to control for inflation, the Harmonised Index of Consumer Prices (HICP) was used, which is the indicator for consumer price inflation for the euro area used by the European Central Bank and Eurostat: https://ec.europa.eu/eurostat/web/ hicp/data/database. All funding amounts are presented in prices of June 2021. 2. Minutes of the EP Bureau Meeting of 13 February 2012 (PE 479.814/BUR), p. 11. 3. Minutes of the EP Bureau Meeting of 26 February 2013 (PE 504.875/BUR/rev), pp. 14–17. 4. Minutes of the EP Bureau Meeting of 5 February 2018 (PE 615.786/BUR/rev), pp. 13–19. 5. See: Gérard Deprez, Working Document: The Evolution of the European Parliament’s budget since the entry in force of the Treaty of Lisbon—First orientations for the establishment of the 2016 budget, Brussels, 6 March 2015, p. 12. 6. Amendment 0778 in the Annex to texts adopted at the sitting of Thursday 22 October 2009—Amendments and proposed modifications to the draft general budget of the European Union for the financial year 2010. 7. See: Annex to texts adopted at the sitting of Wednesday 22 October 2014—Amendments to the draft general budget of the European Union for the financial year 2015, pp. 254–255, and Article 92 of the European Parliament resolution of 22 October 2014 on the Council position on the draft general budget of the European Union for the financial year 2015, Strasbourg, 22 October 2014. 8. See: Minutes of the EP Bureau Meeting of 13 February 2012 (PE 479.814/BUR), p. 11; Minutes of the EP Bureau Meeting of 26 February 2013 (PE 504.875/BUR/rev), p. 14; Minutes of the EP Bureau Meeting of 5 February 2018 (PE 615.786/BUR/rev), pp. 13–14. 9. Minutes of the EP Bureau Meeting of 1 February 2006 (PE 368.625/BUR), p. 10. 10. Article 7(e) of the European Parliament resolution on the constitutional status of the European political parties, 30 October 1996.

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11. European Commission, Proposal for a Regulation on the Statute and Financing of European Political parties (COM(2003) 77 final), Brussels, 19 February 2009, p. 3. 12. Case T-107/19 ACRE v EP, Judgement of the General Court (Third Chamber), 25 November 2020. 13. Didier Klethi (Director-General DG Finance), Letter to all European political parties on payments from parties established outside the European Union, 19 December 2018. 14. Article 29 of the European Parliament resolution on stocktaking of European elections, 26 November 2020. 15. There are two main other possibilities: the Europarty or foundations has made expenses which were not eligible, potentially causing the grant to be lowered, or the total eligible expenditure is lower than expected, which also results in a lower grant. 16. Explanation by Didier Klethi (Director-General DG Finance) in the AFCO meeting of 12 July 2017. 17. All own resources were allocated to one of these five categories, which does not necessarily follow the categorisation used by the European party or foundation itself. For example, registered donations from member parties were categorized as member contributions and not as donations. 18. Audit Report on the financial statements of Alliance Européenne des Mouvements Nationaux ASBL for the year ended 31 December 2013, p. 20. 19. Explanation by Didier Klethi (Director-General DG Finance) in the AFCO meeting of 12 July 2017; for more information, see Anglmayer (2021, 39–40). 20. European Court of Auditors, Opinion 1/2013, Article 10 and Opinion 5/2017, Article 8. 21. Minutes of the EP Bureau Meeting of 13 December 2017 (PE612.756/BUR/rev), p. 26. 22. EP Secretary-General, Note on the 2014 final reports of political parties and foundations at European level, 31 August 2015, Brussels, p. 9; EP Secretary-General, Note on the 2016 final reports of political parties and foundations at European level, 22 September 2017, p. 8. 23. See for example: European Democracy Consulting, Visualising donations and contributions, 30 March 2021: https://eudemo cracy.eu/visualising-donations-contributions; Follow The Money,

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Tracking The Cashflow of European Political Parties, 30 April 2019: https://www.ftm.nl/eu-party-finances; Transparency International EU, Fraud and boats: funding European political parties, 9 November 2017: https://transparency.eu/boatfraud/. 24. This graph is based on the officially registered donations in the financial reports, and the lists of donations of the Authority for European political parties and European political foundations. It does not include ‘minor donations’ (all donations below e500 until 2018, and donations from natural persons below e1500 from 2018 onwards) and in case of differences between the donor list of the Europarty or foundation and the one of the Authority, the data from the latter is used. 25. Authority for European Political Parties and European Political Foundations, Letter APPF (2018/0100), Brussels, 17 December 2018. 26. Reuters, Macron’s party rules out joining EU centrist group after Le Pen accusations, 12 March 2019; ALDE Party, ALDE Party to end all corporate sponsorship, 12 March 2019: https://www.ald eparty.eu/alde_party_to_end_all_corporate_sponsorship. 27. Follow The Money, Van Amerikaanse pro-lifers tot IJslandse walvisvaarders: hoe buitenlandse donateurs Europese partijen spekken, 25 April 2019. 28. Ibid. 29. Ibid.; Le Monde, Oui, des multinationales financent bien des partis politiques européens, 10 March 2019. 30. ALDE Party, ALDE Party code of conduct on receiving corporate sponsorship, as adopted by the ALDE Party Council on 24 October 2020. 31. EP Secretary-General, Note on Financing of European political parties and European political foundations—Irregularities discovered and remedies applied, reinforced risk reduction, Brussels 28 March 2018, p. 4. 32. Thomas Vandeputte, De fondsen van UKIP: parfum uit Izegem en hostessen uit Amsterdam, Apache, 22 november 2016; Thomas Vandeputte, Nieuwe onthullingen over dubieuze financiering eurocritici, Apache, 24 november 2016; Stéphane Alonso and Wilmer Heck, Stichting gelieerd aan VNL ronselde donateurs om EUsubsidie te krijgen, NRC, 24 november 2016; Stéphane Alonso and Wilmer Heck, EU-partij waar VNL uitstapte verliest subsidie

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na ronselen donateurs, NRC, 7 December 2016; Jennifer Rankin, Ukip group fails in bid to restore EU funding amid fraud inquiry, The Guardian, 9 February 2018; OLAF, The OLAF report 2019, Luxembourg, 2020, p. 23. 33. According to the lists of donors published by the European Parliament, Peter Takacs, who was an employee of Triple A, donated e18,000 in 2018, although he claimed that he never gave any money to ECRP but he was asked by Barbara Kolm to be listed as a donor. Eva Maria Berger and Ursula Schaeff, two auditors of the Austrian Economics Centre, donated the maximum amounts in 2017 and/or 2018. Ingrid Schier, Barbara Kolm’s mother, donated e18,000 to the Europarty in 2018. Hans Mustafa and Johannes Oberrauch, both Board members of the Austrian Economics Centre, each donated e12,000 in 2017. See: Thomas Seifert, 88.000 Euro und viele Fragen, Wiener Zeitung, 21 March 2019; Thomas Seifert, Barbara Kolms ParteispendenProblem, Wiener Zeitung, 9 May 2019; Thomas Seifert, Parteispenden aus Kolms Umfeld werden von EU-Parlament untersucht, Wiener Zeitung, 10 May 2019; Marine Strauss and Boris Groendahl, Austrian Group at Heart of EU Nationalist Funding Draws Scrutiny, Bloomberg, 8 June 2019. 34. New Direction received e3752 in 2011 from the company of Vincent De Roeck, who was Board member of Libera!, and e6000 from him personally in 2012; another Board member of Libera!, Manuel Dierickx Visschers, donated e6000 to New Direction in 2012; e12,000 was donated in 2013 and 2014 by the organization Vrij en Verantwoordelijk of Marc Cools, who was also Board Member of Libera, see: Thomas Van de Putte, Politieke vrienden van Dedecker melkten Europese subsidies, Apache, 13 March 2017. 35. New Direction, New Direction—Foundation for European Reform, 2015, pp. 36–41; The Institute for Research in Economic and Fiscal Issues (IREF) made a donation of e2000 in 2012 and produced eight reports for New Direction in 2014. Health Consumer Power House was commissioned to produce a report in 2014 and 2015, and made a donation of e1237 in 2015. Piotr Bajda also prepared a report for New Direction in 2012 and made a donation of e1250 in 2015.

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36. ECRP also received a donation of e3000 of Pepijn van Houwelingen and e1000 of Paul Cliteur ‘in support of the project of the Forum voor Democratie’: Stéphane Alonso, Omstreden EUsubsidie voor Baudet, NRC, 12 maart 2017. The money from ECRP was used to pay for an EU Winter School and a ‘Referendumdag’ of the Forum for Democracy, but the European party is not mentioned in any of the announcements or videos of the event. 37. Agata Kondzinska ´ and Tomasz Bielecki, Wstydliwi darczyncy ´ rodziny PiS, Wyborcza.pl, 14 March 2017; Agata Kondzinska, Tomasz Bielecki, Bartosz Chyz and Aleksander Derylo, Europejska sie´c darczynców ´ Prawa i Sprawiedliwo´sci, Wyborcza.pl, 14 March 2017. 38. Daphne Caruana Galizia’s Notebook, UPDATED 3: European Foundation for Freedom obtains Eur47,700 donations in ‘criminal money’ through Sharon Ellul Bonici, 12 October 2014; Daphne Caruana Galizia’s Notebook, Ryan Schembri’s ‘criminal money’ donations to European Foundation for Freedom in 2013, 13 October 2014. 39. Together, Alex Polidano and Ryan Schembri own the company Ipco Ltd.

References Anglmayer, Irmgard. 2021. Statute and Funding of European Political Parties Under Regulation 1141/2014: Ex Post Evaluation. Brussels: European Parliamentary Research Service. von dem Berge, Benjamin, and Thomas Poguntke. 2013. The Influence of Europarties on Central and Eastern European Partner Parties: A Theoretical and Analytical Model. European Political Science Review 5 (2): 311–334. van Biezen, Ingrid. 2004. Political Parties as Public Utilities. Party Politics 10 (6): 701–722. van Biezen, Ingrid. 2008. State Intervention in Party Politics: The Public Funding and Regulation of Political Parties. European Review 16 (3): 337–353. Bressanelli, Edoardo. 2014. Europarties After Enlargement: Organization, Ideology and Competition. Basingstoke: Palgrave Macmillan.

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Chryssogelos, Angelos. 2021. Europarties in the Neighbourhood: How Transnational Party Politics Bind Eastern Europe and the Western Balkans to the EU. Comparative European Politics 19 (1): 77–93. Chryssogelos, Angelos. 2017. Transnational European Party Federations as EU Foreign Policy Actors: The Activities of Europarties in Eastern Partnership States. Journal of Common Market Studies 55 (2): 257–274. Corbett, Richard, Francis Jacobs and Darren Neville. 2016. The European Parliament. 9th ed. New York: John Harper Publishing. Hopkin, Jonathan. 2004. The Problem with Party Finance: Theoretical Perspectives on the Funding of Party Politics. Party Politics 10 (6): 627–651. Katsaitis, Alexander. 2020. Following the Money: Exploring Business Financial Contributions to the European Union’s Political Parties. Journal of Common Market Studies 58 (5): 1342–1351. Mendilow, Jonathan. 2012. Introduction: Political Finance, Corruption, and the Future of Democracy. In Money, Corruption, and Political Competition in Established and Emerging Democracies, ed. Jonathan Mendilow. Lanham: Lexington Books. Meseth, Christian. 2012. Inside the European Parliament: A Guide to Its Parliamentary and Administrative Structures. Brussels: Office for Promotion of Parliamentary Democracy. Scarrow, Susan. 2004. Explaining Political Finance Reforms. Party Politics 10 (6): 653–675. Vanberg, Georg. 2004. The Politics of Constitutional Review in Germany. Cambridge University Press. Wolfs, Wouter, and Jef Smulders. 2016. Le financement des familles politiques européennes (2001–2015). CRISP Courrier hebdomadaire n° 2322. Wolfs, Wouter, and Jef Smulders. 2018. Party Finance at the Level of the European Union. Party Finance Reform to Vitalize the EU’s Protoparty System? In Handbook of Political Party Funding, ed. Jonathan Mendilow and Eric Phélippeau, 182–202. London: Edward Elgar.

CHAPTER 4

Ghost Offices and Artificial Membership: Eurosceptic Involvement in the Funding Regime

It is a dilemma, because you talk about an arms race that is going on, so it is in that way very cleverly constructed that if you’re in principle against the money, you have a disadvantage and if you take the money, then you’re a hypocrite. Anders Vistisen Member of the European Parliament for the Danish People’s Party (2014–2019)

The behaviour of national Eurosceptic parties towards the Europarty funding regime lies at the core of this chapter. The main argument is that (some) Eurosceptic parties have ‘instrumentalized’ European political party organizations: despite ideological reservations, they set up European parties that were merely instruments to attract a maximum amount of EU funding. This argument builds on previous research on transnational cooperation of Eurosceptic parties, which will be discussed in the first section of this chapter. This analysis contributes to this literature by systematically assessing the role of funding for Eurosceptic collaboration at the EU level. The second section of this chapter will set out the operationalization of Euroscepticism and the selection of Eurosceptic parties. The instrumentalization of European political parties by Eurosceptic forces rests on a number of premises that will be empirically checked in

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the remainder of the chapter. The argument implies that there has been no ideological aspiration among Eurosceptic parties to establish these party organizations, and—considering the normative rationale behind the regulatory framework described in the second chapter—that they even opposed public funding for European political parties. However, despite this ideological declination, Eurosceptic parties decided to establish their own European party organizations as a consequence of the growing financial resources available. This pragmatic attitude will be discussed in the third section of this chapter. The fourth section focuses on the aspect of instrumentalization by showing how party structures were set up that formally fulfilled the required recognition criteria, but in practice were mere vehicles to attract European subsidies. This funding was not used to build up a welldeveloped party organization at the EU level. On the contrary, some of these Europarties were barely more than paper structures. The European subsidies were applied in a way that—contrary to the funding rules—mainly benefitted the national member parties instead of the European party organization. The findings nonetheless will show differences between the Eurosceptic parties: the practice of instrumentalization has been commonly used by Eurosceptic parties at the (radical) right end of the political spectrum, while there is no similar evidence for radical left parties.

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Previous Research and Contribution

The role of funding in Eurosceptic transnational cooperation has been theoretically assumed and occasionally described by several authors, but has not been systematically examined. With respect to Eurosceptic cooperation in the European Parliament, Brack (2012, 161–166; 2013, 90–101) argued that Eurosceptic MEPs are confronted with the dilemma between on the one hand challenging the legitimacy of the EP by not participating in European elections or staying away from the European Parliament, and on the other hand taking part in the parliamentary work, which contributes to the politicization of Europe and the legitimacy of the institution they oppose. She also stated that European political parties were founded by Eurosceptics on the basis of ‘a technical agreement to take advantage of available resources’ (Brack 2012, 92). This

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statement seems to be based on research conducted by Hanley (2008, 188), who mentioned that officials from the Eurosceptic EDD group in the EP (2004–2009) declared that they had reluctantly founded a European party. In his conceptualization of transnational Euroscepticism, Usherwood (2017) argued that Euroscepticism as an ideology is not a push factor for transnational cooperation, because it is a negative construction and non-ideology. Since not many national political parties define themselves primarily through their Euroscepticism, the ideological mobilization for transnational cooperation is limited (Usherwood 2017, 17–18). Formal institutions on the other hand, do provide an interesting opportunity structure. The EU institutions provide access, legitimacy and funding. On this last point, Usherwood explicitly referred to the significant funding which is available to European political parties and foundations. He stated that a ‘key structuring effect of political institutions [is] that activity will follow funding opportunities’ (Usherwood 2017, 20). In this respect, he mentioned how exigency tends to override ideology or principle when a number of national parties from the EFDD and ENF groups established a European political party, without elaborating on it (Usherwood 2017, 20). Focusing specifically on the British National Party (BNP), McGowan’s (2014) empirical findings are in line with Usherwood’s theoretical assumptions. He pointed to the paradox for Eurosceptic far-right parties that on the one hand they (ideologically) denounce European integration, but on the other hand the EU level provides a strategic opportunity for these parties (Mcgowan 2014, 667), such as boosting their finances (Mcgowan 2014, 664). Considering the involvement of the BNP in the European Parliament, McGowan argued that their engagement at EU level was a strategic decision because it allowed them to enhance their profile through increased media attention, build links with other like-minded parties and secure financial resources (Mcgowan 2014, 672–674). Gómez-Reino (2018, 170–172) stated that several Eurosceptic European political parties were established following a ‘resource-driven logic’, but only specified this claim with statements made by an MEP of UKIP on the establishment of the Alliance for Direct Democracy in Europe (ADDE). Furthermore, she described the practice of individual Members

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of the same national party belonging to different Europarties, but only gave the (ambiguous) example of the Belgian party Flemish Interest,1 and did not elaborate on the consequences of this practice. Corbett et al. (2016, 148) asserted that the proliferation of small right-wing Europarties was due to a loophole in the rules and that this also resulted in misuse of EU funding by at least one of these Europarties. However, they did not elaborate on how European subsidies were misspent, which loophole was used by the European political parties and whether (and how) this had an impact on the nature and genuineness of the Europarties that were mentioned. Furthermore, it is unclear on which sources their statements are based. In her research on the individual membership rights of European political parties, Isabelle Hertner (2018, 6) also raised questions about the genuineness of several of the newly established Europarties, more specifically the Alliance for Peace and Freedom (APF), the Movement for a Europe of Nations and Freedom (MENF—later renamed Identity and Democracy Party), the Alliance of European National Movements (AENM) and the Alliance for Direct Democracy in Europe (ADDE). She stated that it is ‘fair to say that these new Europarties are paper entities without permanent structures and without grassroots members’ (Hertner 2018, 6). Hertner came to this conclusion based on the limited information that was made available by these parties and the fact that one of the Europarties (ADDE) was under investigation for misusing EU funds. In sum, these authors indicated that Eurosceptic national parties are ideologically not inclined to set up European political parties, but that the availability of financial resources has been an important incentive for the establishment of such party structures. Several authors also doubted the modalities of the establishment of these Europarties or claimed that their activities and organizational structures were very limited. However, it is not always clear which European political parties were concerned, which sources were used or which empirical material could support the claims that were made. The findings of this chapter will contribute to this line of research by providing a comprehensive overview of the attitude and practice of Eurosceptic parties with regard to the Europarty funding regime.

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Euroscepticism: What’s in a Name?

Euroscepticism is a complex and multifaceted phenomenon, and both its conceptualization and operationalization have been the subject of intense debate among scholars (Flood 2002; Kopecký and Mudde 2002; Mudde 2012; Szczerbiak and Taggart 2008; Taggart and Szczerbiak 2008; Vasilopoulou 2009, 2017). Concerning the measurement of Euroscepticism, a wide variety of data has been used to assess a party’s position towards the EU: party programmes, voting behaviour, parliamentary questions, speeches and political discourse, political group affiliation, expert surveys, etc. For the purpose of this study, the Chapel Hill Expert Survey (CHES) is used to determine whether or not a party is Eurosceptic. This data consists of surveys with country experts that assess the parties’ position towards European integration (among others). More specifically, scholars are asked to position the overall orientation of party leadership towards European integration on a seven point scale ranging from strongly opposed (1) to strongly in favour (7).2 As such, they approach Euroscepticism not as categories, but as a continuum (Ray 2007, 157). Although this categorization is not without criticism (see for example Mudde 2012), the reliability and validity of the approach have been widely acknowledged (Hooghe 2007; Marks et al. 2007; McDonnell and Werner 2019, 45–18; Ray 1999, 186–187). A political party is considered to be Eurosceptic when it has a value below 4 on the seven point scale, a cut-off point that has been suggested by the North Carolina scholars themselves (Ray 2007, 157) and corresponds to the widely used categories of soft and hard Euroscepticism of Taggart and Szczerbiak (Ray 2007, 159–161). This cut-off point allows to be sufficiently inclusive, since it also includes those parties that are at best lukewarm towards European integration. Since the surveys were conducted on several occasions—1999, 2002, 2006, 2010, 2014 and 2019—it also enables me to adjust a categorization of a political party when its value changes over time. However, not all national political parties that have seats in the European Parliament are included in the CHES surveys. Most of these are small parties or splinter parties that broke away from larger political parties and are represented by only one MEP. In order to categorize these parties, I have relied on existing academic studies and party documents or statements. Furthermore, there are a number of independent

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Members represented in the European Parliament, not linked to any national political party. In order to categorize these members, public statements and policy positions—usually from the Member’s personal website—were used. In case the position of the independent Members on the EU was unclear, they were not categorized as Eurosceptic. In total, 94 political parties and independents were categorized as Eurosceptic, including seven parties that were not assessed in the CHES surveys and 12 independent MEPs.

3

Eurosceptic Attitude: From Principled Opposition to Strategic Pragmatism

This section will show how the attitude of most Eurosceptic parties changed over the years from a principled opposition towards European political parties to a position of strategic pragmatism, which entailed participating in the European party system. The first part of this section provides an overview of the attitude of Eurosceptic parties towards (public funding for) Europarties. The second part describes the growing Eurosceptic involvement in the Europarty system. Finally, in the third part the focus lies on the role that the growing available financial resources have played in the establishment of European parties by Eurosceptics. 3.1

Principled Opposition Against the Europarty (Funding) System

Initially, the attitude of most Eurosceptic parties was characterized by principled opposition, both against the concept of European political parties and against the introduction of public subsidies for these party organizations. Consequently, these Eurosceptics were not interested in setting up their own European party organizations. This opposition is not necessarily surprising, considering the strong normative rationale in which the finance regime was embedded. As described in the second chapter, the party article in the Treaty of Maastricht envisioned European political parties as ‘an important factor for European integration’. This integrationist narrative has been a consistent part of the subsequent debates on the topic. However, it should also be noted that despite this pro-European sentiment, access to Europarty subsidies has been open to all political forces, including Eurosceptics. Support for further European integration has not been a condition to gain access to public funding from the EU.

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This attitude of principled opposition can be demonstrated by three main types of data: cases brought before the EU Court of Justice attempting to annul the introduction of European subsidies for Europarties, the voting behaviour of the Eurosceptic parties on the EP resolutions about European political parties, and the statements made in the parliamentary debates. 3.1.1 Fighting Europarty Funding in Court Almost immediately after the public funding of European political parties was introduced, the rules were challenged before the EU Court of Justice. In total, three separate cases were brought before the Court in January 2004, all seeking the annulment of the Regulation.3 The applicants of the first case were all Members of Eurosceptic parties: the Freedom Party (Austria), June Movement (Denmark), People’s Movement Against the EU (Denmark), Socialist People’s Party (Denmark), Hunting, Fishing, Nature and Traditions (France), Movement for France (France), Rally for France (France), Environmental Party (Sweden), Left Party (Sweden), Conservative Party (UK), and United Kingdom Independence Party (UK). The second case was filed by Members of the Flemish Interest (Belgium), the National Rally (France) and the Northern League (Italy). Finally, a separate case was brought before the court by the pro-European List Emma Bonino from Italy, mainly because they objected to the fact that national parties that were not a member of a Europarty would not be entitled to funding.4 All three cases were deemed inadmissible by the EU Court of Justice. The National Rally, Flemish Interest and the Northern League submitted an appeal, but this was also dismissed.5 Although two separate cases were filed, the argumentation of the Eurosceptic parties was similar. Aside from more technical arguments, they rejected that the recognition and public financing of European political parties could contribute to the formation of European awareness and the expression of the political will of the European citizens as is prescribed in the treaty text. Instead, they considered the introduction of such public funding as a (prohibited) transfer of powers to the EU. Furthermore, they opposed the fact that only European alliances were entitled to EU subsidies, whereas individual national political parties would be deprived of this possibility. Moreover, they considered the introduction of EU party funding to be a manoeuvre against Eurosceptic parties. They criticized that European political parties were required to endorse certain European principles and political ideals to be eligible for funding.

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In addition, Daniel Hannan of the British Conservative Party motivated his action to go to court: ‘non-federalist parties are more likely to see themselves in national terms. They are therefore unlikely to want to merge themselves into pan-European movements. More immediately, though, they would be debarred by the requirement that they accept the values of the EU’s Charter of Fundamental Rights and Freedoms’. Similarly, Jens-Peter Bonde motivated the court case by stating that the Regulation would only be used to fund pro-European parties, while parties that were not ‘European enough’ would be deprived of the funding.6 In other words, Hannan and Bonde argued that Eurosceptic parties were not inclined to form a European political party, and even if they would, they would not be entitled to European subsidies, because the requirement to respect the EU’s fundamental values would prevent financial support to parties with Eurosceptic attitudes. As will be shown later, the interpretation that pro-European attitudes are a prerequisite to attract Europarty funding does not hold in practice. However, these arguments demonstrate that these Eurosceptic parties were opposed to the Europarty funding system and were not planning to set up a transnational party organization. 3.1.2 Voting Against Europarty Funding The voting behaviour of the Eurosceptics also provides a good indication of their position with regard to the funding of European political parties. This approach relies on the ‘spatial model of voting’, which implies that MEPs will vote for the choice that is the closest to their preferred policy position (Hix et al. 2007, 165). In this case, this means that Members that are opposed to European political parties vote against resolutions that are aimed to strengthen these organizations, while Members that support Europarties vote in favour. Four texts on four points in time (2003, 2007, 2011 and 2014) are used to determine the party attitude.7 These texts contain a clear position on the funding of European political parties. The first voted text is the legislative resolution of 2003 on the proposal to introduce the rules for Europarty funding. The second text is the legislative resolution of 2007 to revise the party finance rules and introduce separate subsidies for European political foundations. Third, the parliamentary resolution of 2011 consists of an assessment of the existing rules and called for the establishment of a uniform EU status for European political parties to strengthen their development. The final text is the legislative resolution of 2014 for a

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Voting behaviour of Eurosceptic and non-Eurosceptic MEPs Eurosceptic

Resolution 2003 Resolution 2007 Resolution 2011 Resolution 2014

In favour 7 (7.9%) 39 (35.8%) 31 (23.5%) 30 (23.3%)

Non-Eurosceptic Abstentions 12 (13.5%) 3 (2.8%) 13 (9.9%) 11 (8.5%)

Against In favour 70 345 (78.7%) (86.9%) 67 503 (61.5%) (97.1%) 88 529 (66.7%) (97.2%) 88 508 (68.2%) (95.3%)

Abstentions 22 (5.5%) 7 (1.4%) 10 (1.8%) 9 (1.7%)

Against 30 (7.6%) 8 (1.5%) 5 (0.9%) 16 (3.0%)

new regulation, which introduced a single European statute for all European political parties. All four texts thus signify strong support for the public funding of European political parties. The positions of the Eurosceptic and the non-Eurosceptic MEPs on the four texts on the aggregate level are presented in Table 1. The results show substantial opposition among the Eurosceptic MEPs against the funding for European political parties: around two-third of the Eurosceptics voted against the resolutions. In 2003, when subsidies for Europarties were introduced, almost 80% of them opposed the text. This stands in stark contrast with the strong support for the resolutions that existed among the non-Eurosceptic MEPs, as close to 90% or more voted in favour of the texts. These aggregate numbers also show that there are substantial differences among the Eurosceptic MEPs, which also becomes clear when examining the voting behaviour at the level of the national parties.8 Table 2 gives an overview of the Eurosceptic national parties that have consistently voted against the resolutions (‘consistent opposition’), the parties that have supported all resolutions (‘consistent support’), and the parties that voted in favour of some of the resolutions while rejecting the others (‘mixed record’). The table shows that there have been Eurosceptic parties that have consistently voted in favour of the resolutions on Europarty funding. Most of these parties belong to the radical left GUE/NGL group, although also the Popular Orthodox Rally (IND/DEM and EFD) and the Party of Great Romania (NA) show a pattern of continuous support. The second category of parties with a mixed voting record comprises

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Table 2 Eurosceptic parties grouped according to their voting behaviour on the Europarty resolutions Consistent support

Mixed record

Consistent opposition

Communist Party of Bohemia and Moravia (Czech Republic) Left Party (Germany) Communist Party (France) Popular Orthodox Rally (Greece) Green Party (Ireland) Left Bloc (Portugal) Party of Great Romania (Romania)

Christian Democrats (Finland) Movement for a Better Hungary (Hungary) Communist Refoundation (Italy) Northern League (Italy) Communist Party (Italy) Christian Union (Netherlands) Law and Justice (Poland) Unitarian Democratic Coalition (Portugal) Environmental Party the Greens (Sweden) Slovak National Party (Slovakia) Democratic Unionist Party (UK) Green Party of England and Wales (UK)

Freedom Party (Austria) Hans-Peter Martin’s List (Austria) Flemish Interest (Belgium) List Dedecker (Belgium) Attack (Bulgaria) Civic Democratic Party (Czech Republic) Socialist People’s Party (Denmark) Danish People’s Party (Denmark) June Movement (Denmark) People’s Movement Against the EU (Denmark) National Rally (France) Movement for France (France) Rally for France (France) Hunting, Fishing, Nature and Traditions (France) Communist Party (Greece) Socialist Party (Ireland) Reformed Political Party (Netherlands) Socialist Party (Netherlands) Freedom Party (Netherlands) Left Party (Sweden) Conservative Party (UK) United Kingdom Independence Party (UK) British National Party (UK) Sinn Fein (UK) Ulster Unionist Party (UK)

Note The underlined parties submitted the court cases to annul the funding Regulation

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Eurosceptic parties from almost the entire political spectrum, including the Green Party of England and Wales from the Greens/EFA group and the Finnish Christian Democrats from the EPP group. The last category shows the national parties that demonstrated the strongest opposition against the parliamentary resolutions. Most of these parties were part of the Eurosceptic and radical right EP political groups—the EDD, IND/DEM, EFD, ENF—or belonged to the Non-Attached. However, this category also contains a contingent of parties from the GUE/NGL group, such as the Greek Communist Party or the Socialist Parties from the Netherlands and Ireland. 3.1.3 Speaking Against Europarty Funding This pattern also becomes clear when analyzing the statements of the MEPs in the parliamentary debates that preceded the votes, and the oral and written explanations of votes. These provide additional insight in the motivation behind their voting behaviour. In the debate on the 2003 resolution,9 all Members of the socialist group and the Greens/EFA that intervened were positive about the text. The pro-European EPP-ED Members also supported the report. Daniel Hannan of the British Conservatives on the other hand called the introduction of Europarty funding an attempt ‘to synthesize an artificial sense of European identity’ and emphasized that the proposal discriminated against parties that see themselves solely in national terms and are reluctant to form trans-European blocs. There were differences of opinion in the GUE/NGL group: whereas the more pro-European MEPs supported the report, the Members from the Eurosceptic parties were critical. Pernille Frahm of the Danish Socialist People’s Party stated that European political parties could only develop bottom-up and should not be decided top-down by the EU institutions. Erik Meijer of the Dutch Socialist party called Europarties artificial and denounced the centralist tendency to accelerate the development of these organizations. The EDD group unanimously spoke out against the proposal. JensPeter Bonde from the Danish June Movement said that the ‘supranational political parties are artificial products that are in no position to collect voluntary contributions from ordinary people’ and condemned the fact that national parties—even if they engage in cross-border activities—would be refrained from subsidies. Graham Booth of the United Kingdom Independence Party said that only national parties play a central role in democracy, while European political parties only exist ‘in the

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minds of enthusiastic integrationists’. Concerning the Non-Attached, the only Eurosceptic Member that made a statement, Georges Berthu of the Movement for France, said that ‘instead of creating an artificial democracy from scratch’, political parties at European level should solely be financed by national parties or citizens. He also claimed that the proposed Regulation was not in line with the Treaties, since the European activities of national parties could not be financed. Similarly, the analysis of the plenary debate and explanations of votes of the 2007 resolution demonstrates strong support for the resolution among the Members of the EPP, socialist and liberal groups.10 The Members of the GUE/NGL group were divided. Roberto Musacchio of the Italian Communist Refoundation spoke out in favour of the resolution, while Pedro Guerreiro of the Portuguese Unitarian Democratic Coalition was opposed to what he called the ‘artificial creation of a socalled “European public opinion”’. Similarly, the two Members of the Dutch Socialist Party questioned how there can be European parties when there is no European people. All members of the IND/DEM group that intervened were opposed to the resolution. Jens-Peter Bonde of the Danish June Movement emphasized that there was no such thing as a European people and a European democracy. He added that an increase of Europarty public funding would distort equal competition between the larger and smaller European political parties. Hélène Goudin and Nils Lundgren of the Swedish June List called Europarties ‘pure paper interventions of Brussels’ and criticized how the ‘political and technocratic establishment’ tried to set up these European political parties top-down. Among the Non-Attached Members, all three Belgian MEPs of the Flemish Interest denounced the resolution, stating that it is an operation of financial self-service for the pro-European parties, since it discriminated against Eurosceptic groups which did not feel the need to organize themselves at EU level. Conservative Roger Helmer—who was expelled from the EPP-ED group in 2005 because of offensive behaviour towards the group and consequently became part of the Non-Attached (Fontaine et al. 2010, 339)—called ‘democracy at European level […] a fraud and a delusion’. However, not all Non-Attached Members were critical. Andreas Mölzer of the Austrian Freedom Party said that European political parties and foundations improve the debate at European level and communication with citizens.

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An analysis of the Members’ statements during the plenary debate and the explanations of votes on the 2011 resolution again shows a similar pattern with all MEPs of the EPP, S&D, ALDE and Greens/EFA groups speaking out in favour of the text.11 The Members of the ECR on the other hand were critical. Daniel Hannan of the British Conservatives—speaking on behalf of his group—stated that ‘the ECR opposes this legislation, we oppose the concept of having transnational parties’. ECR Member Jacek Olgierd Kurski of the Polish Law and Justice Party criticized the increased public spending on European political parties and argued that public financial support should only benefit national parties and not ‘international ones’. The remaining groups were internally divided on the issue. In the EFD group, the UKIP MEPs stated that they were ‘opposed in principle to European political parties’, because only national political parties can represent the opinions and views of citizens in an authentic way. Similarly, Philippe de Villiers of the Movement for France emphasized in his written statement that ‘[p]olitical parties at European level are nonsense. A political space at EU level, which many defend, does not exist’. However, some EFD members supported the resolution. Nikolaos Salavrakos of the Greek Popular Orthodox Rally said that the development of European political parties was crucial in galvanizing public opinion in the Union and raising the interest of citizens in participating in joint parties. Similarly, Jaroslav Paska of the Slovak National Party was moderately positive about the proposal. A similar difference of opinion could be recognized among the Eurosceptic parties in the GUE/NGL group. Helmut Scholz of the German Left Party emphasized the need of stronger Europarties for the democratization of EU decision-making. The Members of the Portuguese Left Bloc were also in favour of the report and stated that ‘there will not be true European democracy without European political parties’. Some of their group members however were less enthusiastic: Søren Søndergaard of the Danish People’s Movement against the EU was very sceptical towards the idea that European political parties needed to be approved by the EU and supported by payments from it. He emphasized however that he did not have anything against European political parties. Nikolaos Chountis of the Greek Coalition of the Radical Left acknowledged that European political parties could be helpful in seeking benefits for European citizens, but feared that certain proposals in the resolution could jeopardize the free and independent organization of European political

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parties. Georgios Toussas of the Communist Party of Greece was very critical and called European political parties ‘ideological and political tools of the European Union to manipulate the working and grassroots movements’. Similarly, Ilda Figueiredo of the Unitarian Democratic Coalition from Portugal explicitly stated that her party was opposed to the creation of Europe-wide political parties. Most Non-Attached Members that intervened in the debate were opposed to the resolution. Independent Nicole Sinclaire stated that increased funding for European political parties was a further step on the road to a European super state. Daniel van der Stoep of the Dutch Freedom Party was against European political parties, because it only fitted in a logic of a European political union, which he and his party opposed. Democratic Unionist MEP Diane Dodds questioned whether the gap between citizens and the EU could be filled by European political parties and argued that this would only lead to ‘more Europe’, which the European citizens opposed. Slavi Binev of the Bulgarian party Attack rejected the resolution because it would be in conflict with national political parties and Bruno Gollnisch of the French National Front believed that the main aim of the proposed measures was ‘to create, artificially and dogmatically, a twenty-eighth political space that is only virtual’. Only George Becali of the Greater Romania Party supported the resolution. Finally, for the 2014 resolution, no plenary debate was held because of the urgency of the vote—the resolution was considered during the last plenary session before the 2014 elections. The analysis of the explanations of votes shows strong support for the report among the Members of EPP, S&D and the Greens/EFA groups.12 In the GUE/NGL group, only Jean-Luc Mélenchon of the French Left Front submitted an explanation of vote. He was in general rather positive about the proposal, but abstained because the representational threshold was tightened. In the ECR group, the Eurosceptic MEPs were critical of the report. Kay Swinburne of the UK Conservatives explicitly denounced central funding for European political parties and Ruza Tomasic of the Croatian Party of Rights called the proposal a step backwards for the democratization of the EU, because it contained ‘a number of provisions calling for the deepening of the Union’s federalization’. The two Eurosceptic Members of the EFD group that submitted an explanation of votes held different opinions. Mara Bizzotto of the Northern League from Italy was positive about the report, while William (Earl of) Dartmouth again stated

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that his party UKIP was opposed to the existence of European political parties and any funding for them. In sum, the declarations of the MEPs on the four resolutions are broadly in line with their voting behaviour. While the Eurosceptic radical left parties are divided, most (radical) right Eurosceptic parties have fiercely spoken out against European political parties and their public funding. The exceptions are the MEPs of the Austrian Freedom Party in 2007, of the Popular Orthodox Rally, the Slovak National Party and the Greater Romania Party in 2011, and the Northern League in 2014, who were (moderately) positive about the proposals. Consequently, this body of evidence shows strong opposition against the Europarty funding system among most Eurosceptic parties, and would imply that they refrain from establishing European political parties of their own. 3.2

Strategic Pragmatism: Establishing European Political Parties

After the introduction of EU party subsidies, Eurosceptic parties that opposed (funding for) Europarties were confronted with a dilemma. On the one hand, the creation of their own European political parties would be in conflict with their ideological position. It would indeed signify an (implicit) acknowledgement of the normative rationale behind European political parties and even provide a legitimation for a European democracy and the development of a European party system. On the other hand, remaining true to their ideological position would burden them with a strategic disadvantage, since their more pro-European political opponents could count on an additional source of funding that they missed out on. Many Eurosceptic parties took a pragmatic stance and did establish a European political party of their own. Whereas most of the transnational party federations of the pro-European parties were established more than 20 years before the establishment of European subsidies, all of the Eurosceptic Europarties were only established after the first proposals for Europarty funding were launched in 2001. Moreover, of the sixteen European political parties that were founded coinciding or after (the debates on) the introduction of Europarty funding, only one was a partnership of pro-European parties: the European Democratic party (Table 3). The other fifteen were mainly composed of Eurosceptic parties.13 This shows that many national Eurosceptic parties abandoned their principled opposition against European political parties and decided to set up a European partnership of their own. In most cases, the term ‘party’ was

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Table 3

European political parties established after 2001

Name European political party Alliance for a Europe of the Nations European Democratic Party Party of the European Left European Christian Political Movement Europeans United for Democracy Alliance of Independent Democrats in Europe The Libertas Partya European Conservatives and Reformists Party Alliance of European National Movements European Alliance for Freedom Movement for a Europe of Liberties and Democracy Alliance for Direct Democracy in Europe Identity and Democracy Party Alliance for Peace and Freedom Alternative for Europeb Coalition for Life and Family

Year of establishment 2002 2004 2004 2005 2005 2005 2008 2009 2009 2010 2011 2014 2014 2015 2015 2016

a The Libertas Party applied for EU funding for 2009, but did not fulfil all conditions, see: Minutes

of the EP Bureau Meeting of 18 February 2009, pp. 9–10 b The Alternative for Europe applied for funding for 2016, but did not fulfil the elibility conditions

(cf. infra)

avoided and the terms ‘alliance’ or ‘movement’ were used to name the European organization. Over the years, more and more Eurosceptics became involved in the Europarty system. Individual Members of European Parliament can affiliate themselves with European political parties. This affiliated membership is a token of support and is important for both the recognition and the funding of these Europarties. Graph 1 shows the evolution of affiliated membership of MEPs to European political parties from 2004 to 2018. Whereas the affiliation of non-Eurosceptic MEPs remains constant around 95–98% during the entire period, the figures of the Eurosceptic MEPs demonstrate a clear increase over time. While in 2005—the second year European political parties received European subsidies—the share of affiliated Eurosceptic MEPs was just over 20%, this increased to almost 80% in 2016, before decreasing again in the last analyzed years. If we consider the Eurosceptic national parties in this period, we see that of the 82 Eurosceptic parties and independent Members that were represented in the European Parliament in the period from 2004 to 2018,

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Affiliation of MEPs to European political parties (2005–2018)

69 were members of a European political party at some point, while only 13 were never affiliated. Table 4 categorizes the Eurosceptic parties in the European Parliament according to their voting behaviour on the parliamentary resolutions and according to membership of a European political party. The table shows that even Members of those Eurosceptic parties that most fiercely voiced their opposition to the introduction of Europarty funding became affiliated to a Europarty. Of the Eurosceptic parties that have consistently voted against all proposals of Europarty funding, only the MEPs of the Hans Peter Martin’s List from Austria, the Greek Communist Party, the Irish Socialist Party and the Dutch Freedom Party have never been part of any European political party. 3.3

Motivation to Establish Eurosceptic European Political Parties

The previous findings make it clear that most Eurosceptic parties took a pragmatic stance over the years and decided to establish European political parties of their own. How important was the availability of European subsidies in this process? Based on interview material, public statements and previous research, it can be concluded that the EU funding was indeed pivotal for the establishment of most Eurosceptic parties.

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Table 4

Affiliation of Eurosceptic national parties to European political parties

Affiliated to a Europarty

Strong support

Mixed record

Strong opposition

Communist Party of Bohemia and Moravia (Czech Republic) Left Party (Germany) Communist Party (France) Popular Orthodox Rally (Greece) Green Party (Ireland) Left Bloc (Portugal)

Christian Democrats (Finland) Movement for a Better Hungary (Hungary) Communist Refoundation (Italy) Northern League (Italy) Christian Union (Netherlands) Law and Justice (Poland) Environmental Party the Greens (Sweden) Slovak National Party (Slovakia) Democratic Unionist Party (UK) Green Party of England and Wales (UK)

Freedom Party (Austria) Flemish Interest (Belgium) List Dedecker (Belgium) Attack (Bulgaria) Civic Democratic Party (Czech Republic) Socialist People’s Party (Denmark) Danish People’s Party (Denmark) June Movement (Denmark) People’s Movement Against the EU (Denmark) National Rally (France) Movement for France (France) Rally for France (France) Political Reformed Party (Netherlands) Socialist Party (Netherlands) Left Party (Sweden) Conservative Party (UK) United Kingdom Independence Party (UK) British National Party (UK) Sinn Fein (UK) Ulster Unionist Party (UK)

(continued)

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(continued)

Not Affiliated to a Europarty

Strong support

Mixed record

Strong opposition

Party of Great Romania (Romania)

Communist Party (Italy) Unitarian Democratic Coalition (Portugal)

Hans-Peter Martin’s List (Austria) Communist Party (Greece) Socialist Party (Ireland) Freedom Party (Netherlands)

Concerning the Eurosceptic Europarties of the ‘first generation’—i.e. established in the period of the introduction of European subsidies—the availability of funding was an important explanatory factor for the creation of Alliance for Europe of the Nations (AEN), the EU Democrats and the Alliance of Independent Democrats in Europe (AIDE), but not for the European Christian Political Movement (ECPM) and the Party of the European Left (PEL). The AEN—bringing together conservative parties of the eponymous Union for Europe of the Nations group in the European Parliament—was already set up in 2002, but this was done following declarations of Commission President Romano Prodi that a proposal on separate public funding for European political parties would be launched (Benedetto 2008, 138–139). Hanley described how even the Eurosceptic parties that were most stridently opposed to Europarty funding overcame their scruples and established two Europarties of their own—the EU Democrats and the AIDE— in order to ‘compete on a newly levelled playing field’ (Hanley 2008, 187–188). Based on interviews with members of the EU Democrats, he concluded that they had been reluctant to establish a European party, but eventually opted for a ‘skeletal’ European party organization of which the European funds could be used for negative campaigning in the member states. Similarly, based on his interviews, he categorized the AIDE as ‘a very loose grouping of strongly nationalist and conservative Eurosceptics […] [to] be understood as a minimal response to a new opportunity, in the shape of the party Regulation’ (Hanley 2008, 188–191). The availability of funding as an explanatory factor played a lesser role in the establishment of the European Christian Political Movement. This Europarty that includes outspoken Christian parties and politicians was

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established as a network in 2002 and as an association under Dutch law in 2005 (Foret and Riva 2010, 802–803; Hanley 2008, 100–101). It is only since 2010, when the ECPM had parliamentary representation in seven EU member states, that the Europarty receives EU funding. In other words, a European party organization was already set up long before it was eligible for European subsidies. The same holds for the Party of the European Left. Although it was only established in 2004—after the introduction of EU funding—several attempts had already been made in the second half of the 1990s to set up a European party organization. This initiative was mainly advocated by the national parties from Italy (Party of Italian Communists) and in particular Germany (Party of Democratic Socialism), but encountered resistance from other radical left parties (Dunphy and March 2013, 522–524; Hanley 2008, 145–146). Eventually enough support could be found in March 2004 to establish a European political party. The national parties that have voiced the strongest opposition—such as the Greek and the Portuguese Communist Party—did not participate. Although some authors argue that the provision of EU subsidies was a catalyst factor in the foundation of the PEL (Dunphy and March 2013, 524), it does not seem the main explanation for collaboration of the radical left parties in a European party organization. The availability of funding does seem to have been a driving factor in the establishment of the ‘second wave’ of Eurosceptic Europarties: the European Alliance for Freedom (EAF), the Movement for a Europe of Liberties and Democracy (MELD), the European Conservatives and Reformists Party (ECRP), the Alliance of European National Movements (AENM), the Alliance for Direct Democracy in Europe (ADDE), the Alliance for Peace and Freedom (APF), and the Identity and Democracy Party (IDP). With regard to the establishment of the European Alliance for Freedom in 2010, Philip Claeys of the Flemish Interest (Belgium) acknowledged that there was a lot of hesitation and discussion among the radical right parties from the Non-Attached in the European Parliament to establish a European political party of their own. The most important reason not to do it, according to Claeys, was that this would mean that they would implicitly support the federal logic that such pan-European party organizations signified. However, in the end it was decided to set up such a ‘structure’, because of the substantial financial resources that were available. This was an important factor for the parties involved, since

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many of them did not have a lot of financial resources at national level and they did not have a political group in the European Parliament at the time, so they also missed out on those benefits (Interview 33). However, the EAF was set up primarily as a cooperation between individual politicians instead of political parties. Claeys explained that the national parties remained hesitant to get involved in a European party structure, because it was considered as a justification of the federalist ideas. Nevertheless, these national parties were indirectly involved in the Europarty through the individual members (Interview 33). One of the core members of the Movement for a Europe of Liberties and Democracy was the Danish People’s Party. The Europarty was founded in 2011, but only after some hesitation. Anders Vistisen of the Danish People’s Party acknowledged that there was a debate within the party whether or not to establish a European political party. According to him, the funding mechanism was an important incentive for them to set up a Europarty of their own. The main question was whether the principled position to stay out of the Europarty system was a good idea, since this would leave all the available resources to those parties with a federalist vision for Europe: ‘It is a dilemma, because you talk about an arms race that is going on, so it is in that way very cleverly constructed that if you’re in principle against the money, you have a disadvantage and if you take the money, then you’re a hypocrite. So that is a difficult situation’ (Interview 14). The main argument in favour of establishing a Europarty was that at least a part of the money could be used to promote a different version of Europe. Vistisen argued that his party would certainly not have gotten involved if the Europarties would get a fixed amount per MEP, instead of a relative share of a total sum (Interview 14). In 2011, two years after the establishment of the European Conservatives and Reformists Party and its affiliated foundation New Direction, the President of the foundation, Geoffrey Van Orden (UK Conservative Party) stated during a debate in the European Parliament: ‘To my mind, it is unacceptable that the costs of political foundations should be increasing at a rate of over 30% year on year. […] Some might say that if you object to this, why does your Foundation accept funding? Well, the answer to that is quite simply that any funds we do not accept are distributed among the foundations of the other political groups; we would be funding the activities of our political opponents. We need to find a way of returning money to our national exchequers’. In other words, applying for EU funding by New Direction (and the ECRP)

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was motivated by the increasing funds that would otherwise go to their political competitors. Concerning the establishment of the Alliance of European National Movements, an article was published in the Voice of Freedom in 2012, the party magazine of the British National Party, one of the initiators of the Europarty. The article explained that the European funding that the AENM would get was part of an ‘EU-wide pot’ which was distributed among the various Europarties and foundations. It was emphasized that the other British parties also worked together with their European allies to benefit from this scheme. Nick Griffin justified the party’s decision to engage in the Europarty system as a countermove against the European ‘federalists’: ‘My personal opinion is that ALL [sic] such funding should be stopped. Taxpayers get screwed hard enough without being forced to fund parties they don’t support. But while the present system stays in place, we will naturally seize every possible opportunity to level the playing field a bit’.14 One of the core initiators of the Alliance for Direct Democracy in Europe in 2014, was the United Kingdom Independence Party, which had always fiercely opposed the principle of European political parties. Within UKIP, there was a strong difference of opinion whether or not the party should become active in a pan-European party. In 2011, UKIP MEPs already considered establishing a European political party as a pragmatic way to diminish funding for pro-European Europarties: ‘We in UKIP are opposed in principle to European political parties. Nonetheless, it would be wrong if only the parties of the European superstate were eligible to benefit from taxpayers’ money, if that is what is on offer. That is why UKIP reserves the right to participate in a European political party’.15 However, the party held an internal referendum on the issue and a large majority of the members rejected any involvement in a European political party (Gómez-Reino 2018, 178). Nevertheless, in 2014, several UKIP MEPs decided to help set up the pan-European ADDE party. One of the most vocal supporters of this approach was Roger Helmer. He argued that UKIP should be more pragmatic towards EU funding and stated that setting up a Europarty of their own was a way of ‘liberating’ the money: ‘If we don’t take the money, it will not go back to the member state of the taxpayer. It will simply go to those other foundations committed to further European integration. […] We think that if there are resources available, we want to get them. So

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the question for any UKIP supporter who has a reasonable issue here is would you rather this money, which is British taxpayers’ money […] was given to one of the German or other foundations which promote further European integration, or would you rather some of the money goes to us to oppose European integration?’.16 The availability of funding was also an important motivation for the establishment of the Alliance for Peace and Freedom. Roberto Fiore of the Italian New Force was one of the main initiators of the European party. He acknowledged that funding was important, because it was one of the main benefits of setting up a European political party, but also emphasized that there was already a cooperation between the parties before the foundation of the APF. However, these forms of cooperation were much more fragmented and informal, while a European party allowed them to professionalize and provide a legitimization for the national parties, not the least for third parties outside Europe. Fiore also pointed to the normative pan-European rationale behind the Europarty funding rules, but stated that they have used the system to fit their approach, as a way to promote their model of a ‘Europe of the fatherlands’ (Interview 24). Gerolf Annemans—who was the first President of the Identity and Democracy Foundation and subsequently the President of the Identity and Democracy Party—stated that IDP was established when the opportunity arose. Before, most Members of the IDP were part of EAF, but they left because of concerns about the general Europarty management. In general, their impression was that the bigger European political parties—EPP, the socialists and the liberals—immersed themselves in a lot of money, but that they had to embed them in rules that could not prevent the Eurosceptic parties to make use of these financial resources as well (Interview 39). Gerolf Annemans acknowledged that they decided to apply for the money—despite the federalist rationale that is behind the funding—to spread their own propaganda and use it pragmatically (Interview 39). In sum, there are strong indications for most Eurosceptic Europarties that their establishment was motivated by the substantial amount of financial resources that was available. In addition, the fact that it would go to the pro-European parties in case they would not use it was an important additional incentive.

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4

Eurosceptic Practice: Instrumentalization of European Political Parties

The availability of subsidies was not only an important driver for the establishment of most Eurosceptic Europarties; obtaining a maximum amount of EU funding became an important goal for several Eurosceptics, as will be explained in the first part of this section. The European party organizations became a mere instrument to attract European subsidies. The second part will show how many of these Eurosceptic Europarties were barely more than paper structures: the funding was not used to build up a well-developed European party organization. Instead, it was applied in a way to directly benefit the national member parties. 4.1

Budget Maximization

Eurosceptic parties were able to maximize their share of the EU subsidies through the creation of a plethora of European party organizations that— in some cases—only barely fulfilled the minimum requirements. First will be explained why Members of Parliament are important for the funding that Europarties receive. Secondly, I will describe how a single Member of Parliament or Members from the same national party can be affiliated to multiple Europarties, and thirdly, what effect this has had on the amount of subsidies for the Eurosceptic Europarties. 4.1.1

The Importance of Members of Parliament for European Political Parties The finance rules make Members of Parliament very valuable for European political parties, both because they are important to gain formal recognition (and thus access to EU funding) and because they determine the amount of their subsidies. One of the conditions to be officially registered as a European political party with the European Parliament (and thus be eligible for EU funding), is a sufficient ‘European’ representation: only Europarties that are represented in a quarter of the EU member states—either by affiliated Members of Parliament or by affiliated parties with an electoral score of at least 3% in the last European elections—qualify for EU funding (cf. Chapter 2).17 The rules provide a wide definition in this respect: Members of European Parliament, Members of national parliaments, or

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Members of regional parliaments or assemblies can all ‘represent’ a European political party. This includes Members of upper chambers that are not directly elected—such as the UK House of Lords or the Dutch Senate—and Members of most assemblies above the municipal level. In practice, this means that potentially thousands of Members can act as representatives for Europarties. In other words, there is a large ‘pool’ of potential representatives that can be ‘recruited’ by the European political parties. Aside from the recognition criteria, Members are also important for the level of party subsidies. However, only Members of European Parliament matter for the calculation of the grant amount (Members of any other assembly are not taken into consideration). The subsidy distribution key foresees that the largest part of the total funding is allocated to the parties in proportion to their number of affiliated MEPs.18 In other words, the support of an MEP is ‘worth’ a certain grant amount for the parties and foundations. Since Members of the national and the regional level are not relevant for the calculation of the grant, the ‘recruitment pool’ for this purpose is thus much smaller. In practice, getting Members to represent your party has been an exercise in collecting signatures. The burden of proof for membership (both with regard to the recognition criteria and the grant distribution) lies with the European political parties: every year, they need to demonstrate how many Members are affiliated to them by means of signed membership forms. There is for example no automatic link between membership of a political group in the European Parliament and affiliation to a European political party. Two additional remarks must be made. First, the European Parliament differentiates between ‘direct’ and ‘indirect’ membership. Direct membership refers to Members that are affiliated to a European political party in a personal capacity, without any involvement of their national party. In case of indirect membership, lawmakers are counted as Europarty representatives because their national party is itself a member organization. Individual signatures are only required for Members that are directly affiliated to the Europarty; in case of indirect membership, the signature of the national party president is sufficient. In practice, this entails that all the Members of that particular party are automatically affiliated to the Europarty in question. Second, with regard to Members of European Parliament, it is important to note that the registration of a Europarty

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(and thus the assessment of the representational criterion) and the calculation of the subsidy amount are two separate procedures. The affiliation of an MEP that is submitted in the context of the Europarty registration procedure is not automatically taken into account for the grant calculations. 4.1.2 Types of Irregular Party Membership By creatively using these provisions on Member affiliation, some Eurosceptic parties have conducted a strategy of budget maximization. This was mainly achieved by ‘artificially’ inflating the number of European political parties that fulfil the recognition criteria, since more Europarties means more funding. This can be done by splitting the membership of national parties—or even individual Members—over several European political parties. There are three different types of this irregular membership with regard to the recognition and funding of European political parties. The first type is multiple membership, which means that a single Member is affiliated to more than one European political party. This can occur in two ways. First, in the registration process, a Member signs for more than one Europarty (to help it reach the representational threshold of seven member states) (Fig. 1). In 2012 however, the European Parliament put an end to this possibility for Members of European Parliament by stipulating that a MEP could only be a member of one European political party. However, these provisions were only applicable to Members of

Fig. 1 Multiple membership—Situation 1

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Fig. 2 Multiple membership—Situation 2

European Parliament, and not to the Members of national or regional parliament. A second way is when a Member signs for one Europarty in the framework of the registration process and signs for another Europarty with regard to the distribution of funding (Fig. 2). This can only occur in case of Members of European Parliament, since only they are taken into account to determine the grant sum. In both types of multiple membership, the national party to which the Member belongs, is not affiliated to any European political party. The second type of irregular party membership is cross-party membership. This is a situation when a discrepancy exists between a Member’s indirect and direct affiliation. In other words, Members are affiliated to a different Europarty than their national party belongs to (Fig. 3). The national party is affiliated to Europarty B, so consequently the Member is indirectly affiliated to that European party. In this case, it is not the individual Member that signs a declaration of membership, but the leader of his or her national party. However, the Member also signs a declaration to confirm his direct affiliation to a different Europarty A. From 2013 onwards, the European Parliament tried to tackle this issue by stipulating that MEPs could only be members of the European political party that their national party belonged to. In practice, this meant that an MEP could only be affiliated to the Europarty of its national party. For example, in 2020 Corina Cretu (S&D) wanted to be ‘counted’ as an MEP for the PES—the Europarty that she had since long been an individual member of—but because her national party PRO Romania was affiliated to the

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Fig. 3 Cross-Party membership

EDP, the Parliament refused it and counted her as a Member for the EDP.19 However, due to a loophole in the rules, cross-membership was still possible for Members of national parliaments, regional parliaments and regional assemblies. A third situation of irregular membership occurs when two Members of the same national party belong to different European political parties, called multi-party membership. In this case, the national party is not affiliated to any Europarty, and consequently, the members can join—through direct affiliation—a European political party of their choice (Fig. 4). Indeed, if a national political party is affiliated to a Europarty, its MEPs cannot belong to another one. However, if the national party is unaffiliated, the rules allowed for individual Members to join different European

Fig. 4 Multiparty membership

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political parties. This can occur both in the context of the registration and the determination of the funding of European political parties. Many cases of multi-party membership were the consequence of the EP measure to prohibit cross-party membership in 2013. The restriction that MEPs and their national parties could not be affiliated to different Europarties, could be circumvented by national parties discontinuing their (indirect) membership of Europarties. And that is precisely what happened in several cases. 4.1.3 The Practice of Irregular Party Membership Did these forms of irregular party membership occur only sporadically, or were they more widely used? Based on the membership lists of the Europarties that the European Parliament collects every year, I have compiled a comprehensive overview of affiliations. Through accessto-documents requests with the European Parliament, these lists were obtained for the period between 2013 and 2017; access to the lists of the other years was denied by the European Parliament. For this five year period, 55 cases of irregular party membership involving 24 national political parties can be distinguished. Three of these 24 parties were non-Eurosceptic: Christian Democratic and Flemish from Belgium, Harmony from Latvia, and the National Liberal Party from Romania. The other 21 were Eurosceptic, mainly radical right parties, such as the Austrian Freedom Party, Flemish Interest from Belgium, the Alternative for Germany, the Greek Golden Dawn party, and the Sweden Democrats. In some cases, the Members of the national party were even spread over three different European political parties or more, as was the case with the French National Rally and Order and Justice from Lithuania in 2017, or the Bulgarian Patriotic Front in 2016 and 2017. Overall, irregular party membership appears to be a practice that mostly occurs with Eurosceptic parties. Moreover, it has been crucial for both the recognition of some Eurosceptic Europarties and conducive for maximizing the amount of European subsidies. Irregular party membership has indeed helped some Eurosceptic Europarties to reach the representational threshold of seven member states and, consequently, to be eligible for EU Funding. Table 5 provides an overview of the number of member states that the European political parties are represented in from 2009 to 2017. The cells range from dark grey if the Europarty has representation in less than seven member states—thus not reaching the representational threshold of a quarter of

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Table 5 Number of EU member states in which European political parties are represented (2009–2017)

Sums in each cell: Number of MEPs + Numbers of MPs + Number of MRPs/MRAs

the member states—to light grey when it is represented in more than ten member states. Each cell also consists of a sum of three numbers: the first signifies the number of countries in which the party is represented by Members of European Parliament, the second number points to the number of countries with affiliated Members of national parliament and the third to Members of regional parliaments or assemblies. In 2009 and 2010, a difference is only made between countries with affiliated Members of European Parliament on the one hand, and Members of national or regional parliaments or assemblies on the other hand. The table demonstrates that the four largest pro-European political parties—the EPP, PES, ALDE and EGP—have had affiliated Members in a large number of member states and have thus been well above the representational threshold. In addition, they could rely entirely on Members of European Parliament in this respect. The two other proEuropean parties—the EDP and the EFA—have been a bit closer to the threshold, but have nevertheless always succeeded in obtaining sufficient representation to be eligible for funding. The picture is different with the

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Eurosceptic parties. Some of them had affiliated Members in a sizeable number of member states, such as the PEL. Others were much closer to the representational threshold: only in one year did the AENM for example have affiliated Members in more than the seven required member states. A similar picture can be recognized in case of the EAF or the APF. Additionally, most Eurosceptic parties—except for the PEL and ECRP— relied heavily on Members from national and regional parliaments to reach the representational requirement of seven EU countries. In some extreme cases—like the EUD in 2010 and the CLF—the Europarty had no affiliated Members of European Parliament. The table also shows which Europarties were only able to reach the representational threshold of seven member states by relying on irregular membership. The years in which a European political party would not have been able to reach the threshold of seven member states, are in bold and underlined. Since I only have data on irregular party membership from 2013 to 2017, this could only be determined for these five years. In total, 18 cases can be identified in which a European political party would not have been eligible for EU funding if cross- or multi-party membership would have been prohibited. In all cases, it concerns Eurosceptic European political parties. Some of them—such as the AENM or the APF—would potentially never have been able to be eligible for EU funding without irregular party membership. Since there are many Europarties that were very close to the representational threshold before 2013, it is very likely that there have been even more of these cases. In 2007 for example, the Eurosceptic AIDE lost its Member in its seventh member state Cyprus, and was only barely able to claim EU subsidies, because it had found a Member from another Member state one day before the application deadline. In 2012, the AENM and the EAF just fulfilled the requirement of representation in seven member states. The same goes for the AEN in 2009, ECRP in 2010, etc. In internal documents of the European Parliament from before 2013, cases of irregular membership are indeed mentioned on several occasions. For example, in 2012, Members of the National Rally had become affiliated to both the EAF and the AENM.20 Consequently, it is clear that also before 2013 irregular membership has helped several Eurosceptic Europarties to gain access to EU funding. Of course, this does not mean that all these Europarties would have missed out on EU funding. It is conceivable that some national parties would have limited their representation to one Europarty instead of

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several. However, it is clear that the number of Eurosceptic Europarties would not have been as high without the practice of irregular party membership. The fact that a substantial number of Eurosceptic Europarties have relied on irregular party membership to reach the representational threshold of seven member states has also had an effect on the distribution of funding between Eurosceptic and non-Eurosceptic Europarties. Graph 2 shows the total amounts from 2009 to 2017 that could be allocated to non-Eurosceptic and Eurosceptic Europarties. These amounts constitute the maximum grant sums for the two groups. The graph shows that the non-Eurosceptic political parties are entitled to the largest share of the funding sum during the entire period. However, the share for the Eurosceptic parties increases over time: while their grants accounted for less than 15% of the total sum in 2009, their share rose to almost 30% in 2017. There are several reasons for this evolution. First, the total number of MEPs from Eurosceptic parties in the European Parliament increased over time. Second, more of these Eurosceptic MEPs became affiliated to European political parties, as described earlier in this chapter. Thirdly, there

Graph 2 Budget amounts for non-Eurosceptic and Eurosceptic Europarties (2009–2017) (Source Based on Wolfs [2017])

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is also an effect of irregular membership. This practice has ensured that more Eurosceptic European political parties were entitled to EU funding, thus raising their share of the total sum. The dashed line in the graph indicates the amounts that were allocated to Eurosceptic Europarties that relied on irregular membership (for the years that data is available). In relative terms, these numbers vary from 16.4% of the total funding for Eurosceptic parties in 2014 to more than 45% in 2015 and 2017. So, in these two years, almost half of the subsidies earmarked for Eurosceptic Europarties were for Europarties that were eligible for funding because of irregular membership. Consequently, it is clear that the practice of irregular membership has had an advantageous effect on the finances of Eurosceptic Europarties. 4.2

The Rise of Potemkin Parties

One of the main aims behind the introduction of public funding was to strengthen the European political parties, as described in the second chapter. It would allow these Europarties to develop into professional organizations that can act as a link between government at the EU level and European citizens. As described above, most Eurosceptics do not have an ideological incentive to set up and maintain such a structural organization at European level. Their main focus lies on the national political arena. This becomes evident when examining the central organization and the main activities of these Eurosceptic European political parties. 4.2.1 Ghost Offices of European Political Parties and Foundations A professional and independent European party organization requires a structural headquarters staffed with a secretariat that can support the Europarty’s activities. However, when considering the various European political parties and foundations, significant differences exist. Most parties have office space—ranging from an entire building to (part of) a floor— that acts as a party headquarters and that accommodates Europarty staff (cf. Chapter 6). Some European political parties however do not appear to have a fixed party headquarters. All of them are Eurosceptic Europarties and foundations. Both the Movement for a Europe of Liberties and Democracy (MELD) and its affiliated Foundation for a Europe of Liberties and Democracy (FELD) had their headquarters on the same address in Paris. The office was located in a residential apartment block, at the private

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address of Laurent Legrip de la Rozière, who was the Treasurer of the Movement for France, one of the member parties of MELD.21 It is unclear whether the Europarty and Foundation had any other office space (there are no other addresses shown on the websites or in the legal documents). The headquarters of the Identity and Democracy Party (IDP) and the Identity and Democracy Foundation (IDF) was initially located in Paris on an address of the company ‘Access Centre d’Affaires’, which sells addresses on a monthly basis.22 The company has confirmed that it has sold an address to IDP, with the option of renting a meeting room for a short term. There was no permanent office located there.23 In 2017, the Europarty changed its location to another address in Paris.24 The European party also has a ‘representation at the EU’ in Brussels, but its secretariat remains in Paris (Interview 39). It is unclear how substantial the office in Brussels is. The headquarters of the Alliance of European National Movements (AENM) was located in Matzenheim,25 a small municipality with less than 2000 inhabitants just south of Strasbourg. The address was actually the house of a former regional councillor of the National Rally, Christian Cotelle.26 In an interview with the French newspaper Le Monde, Christian Cotelle acknowledged that Bruno Gollnisch, the president of AENM and a Member of European Parliament for the National Rally, had asked him to use his address as a letter box for the European political party. Christian Cotelle stated that there has never been a meeting at his house, but that he just receives the mail and sends it to other Members of Parliament.27 Following the article in Le Monde in 2017, the headquarters was transferred to an address in Strasbourg.28 It is unclear whether the Europarty had any additional offices; there are no additional addresses listed on the Europarty’s website or in the party accounts and statutes. In addition, the AENM did not have any permanent staff: the SecretaryGeneral, Valerio Cignetti, was employed as an parliamentary assistant to MEP Bela Kovács (Jobbik, Non-Attached), the President of the AENM. Kovacs also for a time combined the positions of President and Treasurer. These are also indications of a minimal central party organization.29 The headquarters of AENM’s affiliated foundation European Identities and Traditions (EIT) was located on the same address as one of the AENM’s member parties, the Belgian party National Democracy (former National Front) until 2016.30 The address was a small house in the Belgian town of Virginal. In December 2015, the foundation changed

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its address to a house in Jumet, the same address as an accounting firm.31 Similar to its affiliated Europarty, EIT had no permanent staff. Initially in 2014, the seats of both the Alliance for Direct Democracy in Europe (ADDE) and the Institute for Direct Democracy in Europe (IDDE) were located at the home address of the foundation’s VicePresident, Yasmine Dehaene.32 After a couple of months, the seats of both the Europarty and the foundation were moved to the home office of a member of the People’s Party, a Belgian member party of ADDE.33 A couple of months later, the seat of ADDE and IDDE was again moved to an office in Brussels, and two additional offices were opened for the foundation in London.34 All three addresses were owned by REGUS, a company that offers temporary office space. However, research from journalists in 2016 showed that the offices of the foundation did not exist: IDDE was only registered with the company REGUS to make use of its office lounges, but did not have a registered office.35 Initially, the headquarters of the Alliance for Peace and Freedom (APF) was situated in Brussels, on the same address as Hervé Van Laethem, one of the Members of the Board of the European political party and leader of the Belgian radical right movement Nation.36 In 2016, the party changed its address to an office on another location in Brussels. By the end of 2017 however, the office had already disappeared again.37 The headquarters of the affiliated Foundation, Europa Terra Nosta (ETN), was situated in Berlin at the address of the National Democratic Party (one of the member parties of APF).38 The foundation also had an address with the company REGUS like ADDE and IDDE.39 The party headquarters of the Coalition for Life and Family (CLF) and of its affiliated foundation Pegasus were located at the same address: an apartment in a residential street in Brussels. When I checked the address, the post-box contained several names, including the CLF and Pegasus.40 Since it was a building with residential apartments, it is very unlikely that there is any office space in this building. Two neighbours from the same building were not aware of any Europarty headquarters in the building. In sum, since there does not seem to be a structural central headquarters, this indicates that these twelve European political parties and foundations—MELD, FELD, IDP, IDF, AENM, EIT, ADDE, IDDE, APF, ETN, CLF and Pegasus—have only a minimum organization at the European level. This also raises questions on how the expenses on accommodation, office equipment and staff have been used in practice, since most of these Europarties and foundations included substantial expenses

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for rent in their annual accounts.41 This is not the case—or could not be verified—for the other Eurosceptic Europarties and their affiliated Eurofoundations.42 All non-Eurosceptic Europarties have had a substantial party office infrastructure. 4.2.2 Support to National Member Parties An analysis of the expenditure of the European political parties also demonstrates how the EU funding was used by some Eurosceptic parties to support their national party organizations. Yet an important principle in the funding rules is that the European party subsidies cannot be used—either directly or indirectly—to support national political parties, in particular in the context of electoral or referendum campaigns. In other words, there should be a clear division between party finance at national level and at European level. Yet maintaining this strict division between the two levels in practice is more difficult. The ban on direct funding seems quite straightforward: a Europarty or -foundation cannot simply transfer (part of) its EU funding to a national party. Indirect funding is more complicated, because European political parties and foundations are allowed to co-organize events or activities with national parties or foundations. Some activities are clear violations of the rules—when the genuine involvement of the European party is very limited—while others can be in a legal grey area with different possible assessments. I have analyzed the expenditure of all European political parties and foundations, based on the following available data and information: the party and foundation websites, the financial reports, court cases, internal reports of the European Parliament, internal party documents and media articles. In a number of cases, expenses were identified that constituted direct or indirect support of national political parties. Almost all of the cases found concerned Eurosceptic Europarties. MELD and FELD The most extensive case of (indirect) support of the national member parties has been the Movement for a Europe of Liberties and Democracy (MELD) and its affiliated Foundation for a Europe of Liberties and Democracy (FELD). The case was triggered by Rikke Karlsson, a MEP for the Danish People’s Party, who left the party in 2015 after internal disputes on the finances of the European party.43 Further investigation showed that the EU funding of MELD and FELD was used to the benefit of its member parties in Denmark, Poland and Lithuania. The following

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overview will demonstrate that this happened regularly and concerned a substantial amount of subsidies. In Denmark, funds from MELD and FELD were used to pay for national party activities of the Danish People’s Party. In 2013, MELD and FELD co-financed a boat trip of the Danish People’s Party presented as a ‘joint information campaign presenting the EU with a Eurosceptic vantage point’.44 On the basis of the press coverage of the event and internal party documents, the European Parliament concluded that the trip was in fact a campaign activity for the Danish local elections.45 The Europarty also listed the conference on ‘the Danish welfare state from the Eurosceptic perspective’ as one of its EU-related activities, but according to the key notes speakers it was in fact a national party event without any reference to MELD.46 In 2014, MELD financed a media training provided solely to politicians of the Danish People’s Party.47 Both in the summer of 2014 and 2015, summer camps were organized by MELD. Although these were presented as ‘EU activities in connection with the parliamentary group’s summer group meeting’, only members of the Danish People’s Party were present.48 In 2015, MELD subsidies were used to pay for a video for the Danish referendum of 3 December 2015 on the opt-out for Justice and Home Affairs, urging voters to vote No in the referendum. Also in 2015, MELD and FELD paid for an advertisement campaign against social dumping in the European Union, but the advertisements predominantly featured politicians from the Danish People’s Party, including the party leader Kristian Thulesen Dahl. Consequently, it was interpreted by the Parliament as a campaign activity in the context of the Danish national elections of June 2015.49 In Poland, European subsidies from MELD and FELD were used to pay for national party activities of United Poland (‘Solidarna Polska’), which was established only in 2012 by a number of MEPs who had been expelled from the Law and Justice Party the year before. In both 2012 and 2013, the national party convention was financed by MELD. Although the event was presented as a European climate conference in the Europarty’s financial report, no reference to MELD was made at the event.50 In addition, in 2013–2014 MELD paid several Polish companies that all had close ties to high-level members of the national party for a variety of services. In most cases, the amounts paid were significantly above the average market price or it was unclear which service was exactly provided.51 After the allocation of the contracts, the companies or the

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owners made a donation to United Poland. Although it could not be confirmed that the companies made donations because of the contracts they had received, there clearly is a pattern of contracts being awarded to companies that subsequently donated to United Poland. In Lithuania, EU funding of MELD was used to indirectly support the member party Order and Justice. According to the Europarty’s financial report, it held several events in Vilnius on the euro and the Eurozone from 15 to 17 February 2014. However, no trace could be found of these meetings and none of the two organizers, Rolandas Paksas and Juozas Imbrasas could remember anything about the events.52 However, also on 15 February, the Order and Justice party held its party congress in Vilnius, which was also attended by Rolandas Paksas and Juozas Imbrasas and substantially documented on the national party’s website,53 which indicates a practice similar to that of the member parties from Denmark and Poland. In 2015, the situation of MELD and its affiliated foundation became precarious. The EP administration had already rejected several expenses from 2014, including a ‘golden handshake’ of approximately e170,000 to a party consultant.54 The Parliament intended to recover these amounts, which would mean serious financial difficulties for the Europarty. At the same time Rikke Karlsson, one of the MEPs of the Danish People’s Party, started to ask questions and request information from both the Europarty leadership and the administrative services of the European Parliament. Consequently, MELD did not request another grant for 2016, and by the end of 2015 the Europarty and foundation had de facto seized to exist. At this time, most of the Members had already left the party: only the MEPs from the Danish People’s Party remained.55 Instead, a new European political party was established with the aim of requesting EU funding for 2016: the Alternative for Europe (AFE) and an affiliated foundation European Centre for Freedom (ECF). These resembled MELD and FELD to a great extent. First, two of the three founding members of AFE were also member of MELD: Morten Messerschmidt and Anders Vistisen, who were at the time of the establishment of AFE in September 2015 still respectively MELD President and Treasurer.56 In addition, these two MEPs were also included in the grant application for 2016 of the ECRP,57 meaning that they were in practice affiliated to two European political parties. Second, aside from these two Danish MEPs, five additional Members of Parliament that were affiliated to MELD for 2015, were now affiliated to AFE for 2016.58 Third,

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the registered office address of AFE was the same as the registered office address of MELD.59 In sum, it seems that because of the financial difficulties that MELD was faced with, the Members decided to dissolve the Europarty and establish a new one, which would be unaffected by the financial situation of MELD. The European Parliament, however, rejected the grant application of the new Europarty, because of the uncertainties and ambiguities of the membership situation.60 Because most of the Members that were affiliated to MELD had left the Europarty, the European Parliament decided to terminate the grant for 2015 and start the termination procedure against both MELD and its affiliated foundation FELD, since they no longer fulfilled the eligibility conditions for EU funding.61 In 2016, the Parliament decided to recover at least e400,000 from MELD and FELD.62 However, at that time they were in a process of liquidation,63 and did not have sufficient funds to reimburse the European Parliament. The case was also referred to the European Anti-Fraud Agency (OLAF), which concluded in 2019 that the Europarty and foundation had misused e580,000 of European subsidies and recommended the Parliament to recover the money from the leaders of MELD and FELD directly, since the organizations had gone in liquidation.64 OLAF also passed the investigation to national authorities. In August 2021, Morten Messerschmidt was convicted for fraud for his involvement in the case by a Danish court, but the judgement was ruled invalid in December 2021.65 ADDE and IDDE Several cases of indirect support of ADDE and IDDE to national member parties from the United Kingdom, the Netherlands and Belgium from 2015 to 2017 have been identified. In the United Kingdom, ADDE and IDDE financed several national opinion polls and a report evaluating the results of these polls. Most of the opinion polls were carried out in the framework of the UK general elections in 2015 and polled the voting intentions for UKIP in several constituencies, including the district of South Thanet where UKIP party leader Nigel Farage stood for election.66 A poll held in seven European countries on citizens’ preferences for staying in or leaving the EU was also deemed ineligible by the Parliament, but this decision was partly dismissed by the EU Court of Justice.67 Other polls were conducted in the run-up to the planned Brexit referendum in June 2016 to examine support for the Leave-campaign,

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and in the run-up to the Scottish and Welsh elections in 2016.68 In addition, three consultants were paid by the Europarty to conduct the polling, while they were in practice acting as campaigners for UKIP.69 In the Netherlands, IDDE financed an advertisement in the Dutch newspaper De Telegraaf for a petition to collect signatures to organize a referendum on the Association Agreement between the EU and Ukraine. One of the member parties of ADDE, ForNetherlands, supported the call for a referendum. Louis Bontes, a Member of the Dutch parliament for the party, was also the Treasurer of IDDE.70 The advertisement was published a few days before the deadline to collect 300,000 signatures needed to hold the referendum. Shortly after the advertisement was published, the number of signatures increased from 255,000 to more than 440,000 in only two days.71 In Belgium, ADDE was closely intertwined with the People’s Party (‘Parti Populaire’): Mischaël Modrikamen—the party leader of the People’s Party—was also one of the Vice-Presidents of ADDE. His wife, Yasmine Dehaene, was both executive director of ADDE and SecretaryGeneral of the People’s Party. Furthermore, the Treasurer of ADDE and the People’s Party were the same: Willem Toutenhoofd.72 ADDE paid for the distribution costs of the newspaper Le Peuple, which was linked to the People’s Party, and for advertisements and videos on the Facebook page of the party and the newspaper. The company that distributed the newspaper was owned by the leader of the People’s Party, Mischaël Modrikamen. ADDE also financed the national congress of the People’s Party.73 In total, ADDE and IDDE had to repay over e500,000 in EU grants for breaking the rules.74 Because of the observed irregularities and violations of the rules, the European Parliament decided that the pre-financing payment for 2017 for ADDE and IDDE was reduced from 80 to 33% and that a bank guarantee was required.75 This forced the European political party and foundation to cease their activities because of insufficient financial resources by the summer of 2017. ADDE and IDDE contested the decision of the European Parliament before the EU General Court of Justice, but lost the case (see also Morijn 2019).76 The European Parliament also informed OLAF, which concluded that more than e1.9 million of EU funding was misused by indirectly financing national member parties and private companies causing a conflict of interest. OLAF again considered that the persons within the Europarty and foundation that approved the expenses were personally responsible.77 The

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British Electoral Commission also conducted an investigation, but did not find sufficient evidence to conclude that British election law was breached.78 In 2017, a new organization was established by several leaders of ADDE and IDDE (Mischaël Modrikamen, Yasmine Dehaene and former Executive Director of IDDE Laure Ferrari) as a private foundation under Belgian law. This foundation was called ‘The Movement—Le Mouvement’ and aimed to promote national sovereignty, direct democracy, the fight against radical Islam, a non-dogmatic approach to climate change and the defence of Israel as a sovereign state. It wanted to be a link between ‘the movement initiated by President Trump in the United States, and citizens and political movements active in other countries, including those involved in the Brexit campaign’.79 The Movement did not secure any EU funding, but attracted media attention in 2018 when Donald Trump’s chief strategist Steve Bannon announced he wanted to use the foundation to coordinate and unite European right-wing populist parties in the run-up to the 2019 elections.80 This attempt proved unsuccessful. In 2020, when ADDE’s former member party Popular Party was dissolved, all its belongings were transferred to the Movement.81 ECRP Several expenses of the European Conservatives and Reformists Party have been identified as indirect support of national political parties, in particular to the benefit of its Polish and British member parties. During 2015 and 2016, ECRP spent around e617,000 of its European subsidies on activities of its national member parties. In total, it concerned four national party events: two organized by the Polish Law and Justice Party, and two organized by the British Conservative Party.82 In 2015, ECRP paid for two political congresses in Poland that were presented as European events, but were in practice national congresses of the Law and Justice Party. In April 2015, ECRP financed the ‘Poland— the Great Project’ event, an annual congress that Polish right-wing parties had been organizing since 2011.83 In July 2015, the three-day national convention of the Law and Justice Party in the run-up to the Polish elections that year was financially supported by ECRP.84 Regarding the events in the United Kingdom, the European Parliament stated that two events of the Conservative Party were covered by ECRP in 2015–2016, but it is unclear which activities it concerned.85

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In 2018, the European Parliament reclaimed an additional e535,609 of the Europarty’s 2017 expenditure, and another e187,245 was blocked pending ongoing investigations. The expenses constituted indirect support of a national party or lacked a clear European dimension, and mainly involved the British Conservative Party. In the run-up to the 2017 UK general elections, ECRP had paid for opinion polls of British black and Asian voters. The Europarty also financed a conference about ‘UK Trade Partnerships’ in March 2017, which was considered as indirect support of the Conservative Party.86 In addition, ECRP spent e250,000 on a summit in Miami (US) in May 2017,87 but according to the European Parliament the event had almost an exclusive American audience and barely any EU issues were discussed. In July 2017, ECRP paid for a similar event in Kampala (Uganda), but the ECRP delegation consisted largely of UK politicians who met with African delegates to discuss post-Brexit trade.88 Both events were presented as activities of the Conservatives International and the Initiative of Free Trade, while the organizations never paid for the events.89 The ECRP contested these classifications, however, but the Court of Justice only followed the Europarty’s claims with regard to the event in Kampala.90 AENM More than half of the service contracts that were commissioned by the Alliance of European National Movements (AENM) and its affiliated foundation European Identities and Traditions (EIT) were executed by four Hungarian companies and think tanks linked to Jobbik, a member party of the AENM. Among others, the contracts included opinion polling. Several of the polls assessed the perception of Jobbik by Hungarians or the influence of George Soros on Hungarian domestic politics. When one of the analysts who conducted the polls was asked about the polls by a journalist, he stated that he had never heard of the AENM, and that the work was commissioned by Jobbik.91 This indicates that EU funding of the AENM and EIT was used for the benefit of one of the national member parties. IDP In 2015, the Identity and Democracy Party (IDP) held a poster campaign in Belgium and France concerning immigration in the Schengen Area for a sum of almost e64,000.92 The posters featured both the logos of

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the European Party and its member parties from these two countries— Flemish Interest and National Rally—but the two national parties had not contributed to the campaign. The European Parliament considered that the actions were clearly in the interest of the national parties and—since it constituted indirect support of the two parties—recovered this part of the public funding. The IDP contested the Parliament’s decision, but its claims were dismissed by the EU Court of Justice.93 EUD In 2009, the EU Democrats conducted a campaign against the Lisbon Treaty for approximately e64,000 which was categorized as ineligible expenditure by the European Parliament,94 but it is unclear in which member state(s) the campaign was held. In 2012, the EU Democrats paid for campaign material and polling for one of the Europarty’s national member organizations in Ireland—People’s Movement—in the run-up to the European Fiscal Compact referendum in May 2012.95 ALDE In the spring of 2017, The Alliance of Liberals and Democrats conducted a series of opinion polls in several member states, among others in Germany. Because of the fact that the German national elections took place in September 2017, the European Parliament considered the poll to be indirect support to the German national member party Free Democratic Party (Interview 37). In total, seven European political parties were identified that have used EU funding in support of national political parties. Most of the cases of support for national parties involve Eurosceptic Europarties: MELD/FELD, ADDE/IDDE, ECRP, AENM/EIT, IDP and EUD. Only non-Eurosceptic ALDE had paid for a poll that was used by one of its member parties. The fact that no evidence was found for the other European political parties, does not mean that they have not used EU funding to (in)directly support their national member parties. The findings are only based on the documents and information that could be obtained. Nevertheless, they are the result of a systematic analysis of the expenditure of all European political parties and foundations, and it is unlikely that there have been many other major cases of indirect support of the member parties.

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5

Conclusion

The findings in this chapter demonstrate how funding opportunities have been the most important driving force for Eurosceptic parties to collaborate at European level. Initially, the attitude of most Eurosceptic parties was characterized by principled opposition against the concept of European political parties and their funding. In other words, ideologically they renounced to participate in the European party system. This was not the case for all Eurosceptics, however: a number of (mainly) radical left parties have continuously backed the European funding regime. The level of support was substantially lower among the conservative and radical right Eurosceptic parties. Yet the growing availability of Europarty funding created a dilemma: setting up their own European political parties would be in conflict with their own ideological position, as it would provide an implicit legitimation for the development of a European party system. On the other hand, remaining true to their principled opposition would burden them with a strategic disadvantage, since they would miss out on the growing Europarty subsidies. Consequently, they made a cost–benefit analysis weighing their political identity against their rational self-interest. Their orientations also had a clear relational dimension: not participating in the Europarty system would mainly benefit their political opponents, since the pro-European parties could take advantage of the growing available funding. Most Eurosceptic parties therefore changed their attitude to strategic pragmatism by establishing Europarties of their own. Some—like the Danish People’s Party or the Swedish June Movement—already acted immediately after the introduction of the Europarty funding regime, while others—such as the French National Rally or UKIP—only became involved at a later stage. Over time, almost all Eurosceptic parties and up to 80% of all Eurosceptic MEPs became affiliated to a European political party. Only the Dutch Freedom Party, the Greater Romania Party, and a number of radical left parties refrained from any formal membership to a European political party. Irregular party membership was used to inflate the number of Eurosceptic Europarties, resulting in a growing share of the EU funding. However, these financial resources were only rarely used to build up a structural party organization: several of these Europarties were barely

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more than paper constructions to attract subsidies. In a number of cases— such as MELD or ADDE—it also became clear that the subsidies were channelled to the national member parties. As such, the EU funding could be used in a way that was more in line with their ideological position, although it concerned actions that were barely within—and even in breach of—the funding rules. Consequently, the constraints posed by the finance regime did not withhold the Eurosceptic parties to pursue their preferences: using the resources at national level. These practices have had a number of consequences. First, because of cross- and multi-party membership, even some of the most radical and extreme right parties—such as the National Democratic Party (Germany), Golden Dawn (Greece) and Jobbik-Movement for a Better Hungary— were able to benefit from European subsidies. Second, the vulnerabilities of the rules were exposed, as some of the dubious practices could not be prevented without altering the regulatory framework. Third, the growing use of EU funding by the Eurosceptic parties—including the many cases of misuse that came to light—caught the attention of the leadership of the European Parliament. Ultimately, these elements would give rise to pressure from the main political groups in the European Parliament to change the funding rules.

Notes 1. Gómez-Reino described how Frank Vanhecke of the Flemish Interest belonged to the Identity and Democracy Party (IDP), while Philip Claeys (also Flemish Interest) joined the European Alliance for Freedom (EAF). However, Frank Vanhecke had already left his national party by the time he joined IDP, see: Frank Vanhecke stapt uit Vlaams Belang, Deredactie.be, 11 July 2011. 2. The exact question is: ‘How would you describe the general position on European integration that the party leadership took over the course of [year of survey]?’ (Bakker et al. 2015, 144). 3. Case T-13/04: Bonde and Others v EP and Council, Case T17/04: Front National and Others v EP and Council, Case T-40/04: Bonino and Others v EP and Council. For more details, see Morijn (2019, 266–267). 4. See the statements of MEP Gianfranco Dell’Alba on behalf of the party: European Parliament, Debate on the statute and financing of European political parties (OJ edition), Brussels, 18 June 2003.

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5. Case C-338/05 P: Front national and Others v EP and Council. 6. Daniel Hannan, Why I am Going to the European Court, 19 February 2004; Jens-Peter Bonde, EU plan to fund political parties is undemocratic, 13 February 2004. 7. The four analyzed texts are the Proposal for a Regulation on the statute and funding of European political parties of 19 June 2003, the Proposal for a Regulation amending Regulation No. 2004/2003 of 29 November 2007, the Resolution on the Application of Regulation No. 2004/2003 on the regulations governing European political parties and the rules regarding their funding of 6 April 2011, and the Proposal for a Regulation on the statute and funding of European political parties and European political foundations of 16 April 2014. 8. In order to determine a political party’s position, an aggregate is made of the voting behaviour of the MEPs of that party. I will consider the party line as the voting position that is taken by a plurality of its MEPs, not counting Members that did not vote. I will also take the corrections of votes into consideration. 9. European Parliament, Debate on the statute and financing of European political parties (OJ edition), Brussels, 18 June 2003. 10. European Parliament, Debate on the Regulations governing political parties at European level and the rules regarding their funding (OJ edition), Strasbourg, 13 November 2007. 11. European Parliament, Debate on political parties at European level and rules regarding their funding, Strasbourg, 5 April 2011; Oral explanations of votes; Written explanations of votes. 12. European Parliament, Explanations of votes on the Statute and funding of European political parties and European political foundations, Strasbourg, 16 April 2014. 13. In order to determine whether a European political party can be considered as Eurosceptic or not, the CHES values of the national member parties were used. If a majority of the member parties had a CHES value of 4 or less (excluding any parties which were not categorized in Sect. 2 of this chapter), the Europarty was labelled as Eurosceptic. 14. See: Alliance of European Nationalist Movements makes euro funding breakthrough, Voice of Freedom No. 127, 2012, p. 4. 15. European Parliament, Written explanations of votes of the Marietta Giannakou report (A7-0062/2011), Strasbourg, 6 April 2011.

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16. Jake Morris and Nick Hopkins, UKIP secures control of £1.5 m EU cash, Newsnight learns, BBC, 15 December 2014. 17. Article 3(1)(b) of Regulation 2004/2003 and Regulation 1141/2014. 18. Article 10(1) of Regulation 2004/2003 and Article 19 of Regulation 1141/2014. Before the 2017–2018 revision of the rules, the share of the total sum that was allocated proportionally was 85%; since the revision the share has increased to 90%. 19. See: European Democracy Consulting, Failure of the European Parliament to properly distribute funding to European political parties in accordance with Regulation 1141/2014, 17 September 2021. 20. EP Secretary-General, Note on the funding of political parties and political foundations at European level—grant award decision for the financial year 2012, Brussels, 24 January 2012, pp. 3–4. 21. For the address of MELD and FELD, see: MELD, Grant Application Form for 2012, 28 September 2011, p. 4. For the address of Laurent Legrip de la Rozière, see: Pour La France, Numéro Special – 15 ans de combats précurseurs pour un projet d’avenir, August–September 2008, p. 11. 22. The address was Rue de Téhéran 3, 75008 Paris; see the audit reports of Ernst and Young for financial years 2015 and 2016. 23. Field research of research journalist Guillaume Krempp, see: Guillaume Krempp, Email: European Party Offices—our investigation, 23 October 2018; Guillaume Krempp, Email: European Party Offices—our investigation, 23 January 2019. 24. The new address is 75 Boulevard Haussmann, 75008 Paris; see the audit reports of Ernst and Young for financial years 2017. 25. In all the audit reports from 2012 until 2016, the address of the AENM is stated as ‘2 rue de Boofzheim, 67150 Matzenheim’; see the audit reports of Ernst and Young for financial year 2016. 26. Guillaume Kremp, Robert Schmidt and Céline Schoen, Comment un parti domicilié à Matzenheim a financé des identitaires européens, Rue89 Strasbourg, 6 December 2018. 27. Olivier Faye and Jean-Baptise Chastand, Le Parlement européen, tiroir-caisse de l’extrême droite, Le Monde, 22 March 2017; Guillaume Kremp, Robert Schmidt and Céline Schoen, Comment un parti domicilié à Matzenheim a financé des identitaires européens, Rue89 Strasbourg, 6 December 2018.

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28. See the audit report of Ernst and Young for financial year 2018. 29. EP Secretary-General, Note to the Members of the Bureau on the funding of political parties and political foundations at European level: Grant award decision for the financial year 2015, Brussels, 3 December 2014, p. 5. 30. The address of the foundation included in the audit reports is Rue Emile Vandervelde 6, 1460 Virginal, which is the same address as the Belgian party National Democracy (‘Démocratie Nationale’); Démocratie Nationale, Assemblée générale du 08 septembre 2013 – Changement d’adresse, as filed with the Commerical Court of Charleroi on 17 September 2013. 31. The new address in the documents was Rue de la Station 106, 6040 Jumet, see: Identités & Traditions Européennes, Proces verbal de l’assemblee generale extraordinaire de l’asbl identites & traditions europeennes: Changement Siege Social – Modification des Administrateurs, as filed with the Commercial Court of Charleroi on 25 January 2016. The company “Account & Associates” is located on the same address. 32. The addresses of the seats of ADDE and IDDE in the statutes is the same as the address of Yasmine Dehaene, also included in the statutes: ADDE, Constitution, Brussels, 26 September 2014, p. 1; IDDE, Constitution, Brussels, 26 September 2014, p. 1. 33. The addresses of ADDE and IDDE were identical to the address of Jérôme Munier as included in a list of candidates for the 2010 elections: ADDE, Extrait du PV de l’Assemblée Générale du 2 décembre 2014, p. 1; IDEE, Extrait du PV de l’Assemblée Générale du 2 décembre 2014, p. 1; Provinciaal Centraal Bureau, Verkiezing van de Kamer van Volksvertegenwoordigers van 13 juni 2010, Brussel, p. 15. 34. ADDE, Extrait du PV de l’Assemblée Générale du 28 janvier 2015, p. 1; IDDE, Extrait du PV de l’Assemblée Générale du 28 janvier 2015, p. 1; IDDE, 1. Assemblée Générale du 28/01/2015 2. Assemblée Générale du 08/07/2015, p. 1. 35. Thomas Van de Putte, Verborgen camera: de onbestaande kantoren van eurocritici, Apache, 24 November 2016. 36. The address was Rogierlaan 199, 1030 Brussels, see the APF’s bylaws: APF, Statuten van de ‘Alliantie voor vrede en vrijheid’, as filed with the Commercial Court of Brussels on 15 September 2015.

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37. The address was changed to De Meeussquare 22, 1050 Brussels, see the APF’s bylaws. The address was checked on 21 December 2017, but the office that was previously occupied by APF was empty. 38. The address was Seelenbinderstrasse, 42 DE12555 Berlin, which is stated as the official address of ETN in the documents of the European Parliament. This is the same address as the National Democratic Party, see: Der Bundeswahlleiter, Verzeichnis der Parteien und politischen Vereinigungen, die gemass §6 Absatz 3 Parteiengesetz beim Bundeswahlleiter Parteiunterlagen hinterlegt haben, 2 November 2018. 39. The address of the foundation as stipulated in its accounts was Kurfürstendamm 195, 10707 Berlin, which is the address of the company Regus in Berlin. 40. Both had their address in the Wielemans Ceuppenslaan 56, 1190 Brussels according to their statutes. 41. MELD and FELD spent almost e15,000 on “rent, charges and maintenance costs” in 2012 and 2013, and almost e30,000 in 2014 and 2015. The rent expenses of IDP and IDF were more than e32,000 in 2015 and almost e38,000 in 2016. In 2017, the total expenses for rent were even higher: more than e85,000. Before 2015, the AENM did not have any rent costs, but did spend almost e15,000 in 2012, more than e73,000 in 2013 and more than e8500 in 2014 on office supplies, office equipment and movable and immovable property. In 2015, almost e10,000 was spent on office rent and an additional e23,000 on office supplies and equipment; in 2016, the rent expenses were more than e17,000 and another e27,500 was spent on office supplies and equipment. Before 2016, the EIT did not have any rent expenses, but spent almost e40,000 on office supplies and equipment in three years. In 2016 and 2017, the foundation spent almost e27,000 on rent and an additional e12,500 on office supplies and equipment. In 2015 and 2016, ADDE and IDDE spent almost e125,000 on rent and more than e80,000 on office supplies and equipment. The APF and ETN spent almost e40,000 on rent in 2016 and 2017, and almost e30,000 on office supplies and equipment. The accounts of both the CLF and Pegasus were not available on the website of the European Parliament so it is unclear how much the rent and office expenses were.

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42. In the cases of AEN and AIDE, this could not be verified, because these European political parties had already been dissolved when the research was conducted. 43. Rikke Karlsson left the Danish People’s Party in October 2015 because—according to her—she was named without her consent as a board member to the board of MELD, because Morten Messerschmidt had signed several documents on her behalf, and because she was denied access to the 2014 accounts of the Europarty when she requested them, see: Harry Cooper, Organizations linked to Danish Euroskeptic MEP investigated for fraud, Politico, 14 September 2016. 44. EP Secretary-General, Note on the press allegations against MELD and FELD and legal situation of MELD and FELD in 2015, Brussels, 12 November 2015, p. 2. 45. The report published on the website of the Danish People’s Party (videos and articles), press articles sent out by Morten Messerschmidt (MEP for the Danish People’s Party and Member of MELD) mentioned the boat trip as a campaign activity of the national party only; no European aspect, nor the names of MELD and FELD were mentioned. In other videos and pictures of the event, neither the logos of MELD and FELD were visible. 46. Per Matthiessen, Ny afsløring: Opfandt EU-konference i København, Ekstra Bladet, 19 October 2016. 47. Sophie Stenner Frahm, Anti-EU champions caught misspending EU funds, The Murmur, 2 October 2016. 48. Harry Cooper, Organizations linked to Danish Euroskeptic MEP investigated for fraud, Politico, 14 September 2016. 49. EP Secretary-General, Note for the Members of the Bureau on the Financing of European political parties and European political foundations—Irregularities discovered and remedies applied, reinforced risk reduction (PE 620.042/BUR), Brussels, 28 March 2018, p. 3; EP Secretary-General, Note on the press allegations against MELD and FELD and legal situation of MELD and FELD in 2015, Brussels, 12 November 2015, p. 3. 50. On the videos of the conference a red banner at the entrance of the building can be seen with the text ‘New State, New Constitution’, together with party banners from United Poland: Wojciech Ciesla, Partyjny kongres, który udaje konferencj˛e o klimacie – za pieni˛adze europarlamentu, Newsweek, 13 November 2016; Furthermore, on

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the schedule of the event, there is no Speaker listed to speak about the climate. The pictures that were put on the MELD website, only show activities of United Poland, see: Wojciech Ciesla, A good climate for money, Newsweek, 13 November 2016; Wojciech Ciesla, EU fraud case sheds light on Danish and Polish politics, EU Observer, 7 December 2016; Harry Cooper, Polish Minister faces call to quit over party funding, Politico, 18 November 2016. 51. For example, Studio 639 sent invoices for a total amount of almost e46,000. This is a one-man company owned by Jerzy Kurzatkowski, who is also a regular service provider for United Poland and a friend of the party’s treasurer Jacek Wlosowicz, but he could not explain which service was actually provided. In 2014, he donated e10,000 to United Poland. Another Polish company, WER Studio, received two payments from MELD in 2014: e53,000 for an order of 60,000 pens and another payment of e39,000. The company owner is Waclaw Rosicki, who attended university together with former MELD president and treasurer of United Poland Jacek Wlosowicz. Several journalists asked to see an example of the pens, but the Europarty could not provide one, see: Wojciech Ciesla, A good climate for money, Newsweek, 13 November 2016; Per Mathiessen, Jonas Sahl, James Kristoffer Miles, Peter Jeppesen, Kristian B. Larsen, Wojciech Ciesla, Michal Krzymowski and Sarunas Cerniauskas, Misuse of EU-funds: Messerschmidt’s foundations investigated for fraud, European Press Prize. 52. Rolandas Paksas, former Vice-President of MELD, could not provide an agenda, list of participants or any documentation on the conference, nor could any trace be found on the websites of MELD or the Law and Order Party, see: Per Mathiessen, Jonas Sahl, James Kristoffer Miles, Peter Jeppesen, Kristian B. Larsen, Wojciech Ciesla, Michal Krzymowski and Sarunas Cerniauskas, Misuse of EU-funds: Messerschmidt’s foundations investigated for fraud, European Press Prize. ˇ 53. Šar¯unas Cerniauskas, Tarptautinis skandalas ˛isuko „tvarkieˇciu“ ˛ elit˛a: gali b¯uti išgrobstyti dideli pinigai, 21 November 2016. 54. MELD, Letter on MELD 2014 Financial Report—Contract Termination/Ghersinich, 12 July 2015; EP Secretary-General, Note on the final reports of political parties and foundations at European level, Brussels, 31 August 2015, pp. 10–11.

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55. MELD, List of Members for 2014, p. 1; MELD, List of Members for 2015, p. 1. 56. AFE, Extrait de l’Acte de Constitution du 15 Juillet 2015, as filed with the Commercial Court of Brussels at 23 September 2015; EP Secretary-General, Letter on MELD party (Mouvement pour l’Europe des libertés et de la démocratie), Brussels, 22 October 2015. 57. AECR, List of Members for 2016, p. 1. 58. MELD, List of Members for 2015, p. 1; AFE, List of Members— Situation September 30, 2015, p. 1. 59. EP Secretary-General, Letter on MELD party (Mouvement pour l’Europe des libertés et de la démocratie), Brussels, 22 October 2015. 60. The grant application of AFE of 25 September 2015 was signed by MEP Angel Dzhambazki in the alleged capacity of President, but the attached statutes indicated that Morten Messerschmidt was still the President. Morten Messerschmidt confirmed that he resigned from his position as President on 1 October 2015, and Angel Dzhambazki confirmed that he only took on the position of President on 10 November 2015. Consequently, the European Parliament considered that the grant application was signed by an unauthorized person. On 19 November 2015, Angel Dzhambazki informed the European Parliament that he also resigned as AFE President. Consequently, the European Parliament judged that the grant application of AFE was null and void, see: EP SecretaryGeneral, Note on the funding of political parties and political foundations at European level—Grant award decision for the financial year 2016, 4 December 2015, pp. 5–6; Minutes of the EP Bureau Meeting of 14 December 2015 (PE571.218/BUR/rev), Strasbourg, pp. 18–19. 61. Minutes of the EP Bureau Meeting of 23 November 2015 (PE 571.120/BUR), Strasbourg, pp. 11–14; See also Articles II.9.2. and II.9.3. of the Grant Award Decision. 62. e296,679 for MELD and e105,802 for FELD, See: European Parliament, EU Political party and foundation MELD and FELD to reimburse over 400,000 euros, 9 May 2016. 63. Since MELD and FELD were established as French organizations, this was the competence of the French Tribunal de Grande Instance de Paris, which closed the liquidation procedure on

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7 December 2017, see: Didier Klethi and Ville-Veikko Timber, Letter D 101279 to Morten Messerschmidt, Luxembourg, 27 February 2018. 64. For more information, see European Anti-Fraud Agency, The OLAF report 2019, Luxembourg, 2020, p. 23. 65. However, Morten Messerschmidt has appealed the verdict, see: Danish eurosceptic lawmaker gets prison sentence for misusing EU funds, Reuters, 13 August 2021. 66. Thomas Vandeputte, Nota secretaris-generaal Europees Parlement legt bom onder financiering eurokritische partijen, Apache, 17 November 2016; Jennifer Rankin, EU set to ask EUKIP group to repay almost £150,000 in ‘misspent funds’, The Guardian, 17 November 2016. 67. See the Judgement of the General Court of 7 November 2019 in Case T-48/17 ADDE vs EP, paragraphs 63–80. 68. See: EP Secretary-General, Note for the Members of the Bureau on the Financing of European political parties and European political foundations—Irregularities discovered and remedies applied, reinforced risk reduction (PE 620.042/BUR), Brussels, 28 March 2018, p. 2; Jennifer Rankin, EU set to ask EUKIP group to repay almost £150,000 in ‘misspent funds’, The Guardian, 17 November 2016. 69. Christopher Lowe, Sam Gould and Daryll Pitcher were doing consultancy work for ADDE, while working as respectively UKIP’s campaign director, campaign manager for the Welsh elections and a parliamentary candidate. 70. Stéphane Alonso and Wilmer Heck, EU-partij waar VNL uitstapte verliest subsidie na ronselen donateurs, NRC, 7 December 2016. 71. Thomas Vandeputte, EU neemt financiering Nederlands referendum onder de loep, Apache, 3 March 2016. 72. See: Parti Populaire, Bureau Politique: https://partipopulaire.be/ bureaupolitique/, and the audit report of Ernst and Young for financial year 2016. 73. See EP Secretary-General, Note for the Members of the Bureau on the Financing of European political parties and European political foundations—Irregularities discovered and remedies applied, reinforced risk reduction (PE 620.042/BUR), Brussels, 28 March 2018, p. 3; Thomas Vandeputte, De Parti Populaire en het gegoochel met Europese subsidies, Apache, 17 November 2016.

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74. European Parliament, ADDE political party misspent e500,000 and will need to reimburse, 12 December 2016. 75. See: EP Secretary-General, Note for the Members of the Bureau on the Financing of European political parties and European political foundations—Irregularities discovered and remedies applied, reinforced risk reduction (PE 620.042/BUR), Brussels, 28 March 2018, pp. 4–5; EP Secretary-General, Note on Grants awarded for 2015—Suspension of the final payment to European political foundation IDDE (Institute for Direct Democracy in Europe), Brussels, 5 December 2016, pp. 3–4. 76. UKIP-linked think tank loses funding case, EU Observer, 9 February 2018; See also the Judgement of the General Court of 7 November 2019 in Case T-48/17, ADDE vs EP, paragraphs 81– 129; and the Judgement of the General Court of 8 February 2018 in Case T-118/17, IDDE vs EP, paragraphs 81–129. 77. See: EP Secretary-General, Note for the Members of the Bureau on the Financing of European political parties and European political foundations—Irregularities discovered and remedies applied, reinforced risk reduction (PE 620.042/BUR), Brussels, 28 March 2018, p. 5; European Anti-Fraud Agency, The OLAF report 2019, Luxembourg, 2020, p. 23. 78. Electoral Commission, Electoral Commission statement on UKIP investigation, 18 September 2018. 79. The Movement-Le Mouvement, Constitution, as deposited on 9 January 2017. 80. See e.g. Maia de la Baume and Laurens Cerulus, Europe’s far right doesn’t bear hug Steve Bannon back, Politico.eu, 23 July 2018. 81. The Movement-Le Mouvement, Approbation des comptes annuels – Acceptation de l’apport de l’intégralité du patrimoine de l’asbl “Financement Public du PP” et de la fondation “Fondation Populaire”, as deposited on 27 May 2020. 82. EP Secretary-General, Note on the 2016 final reports of political parties and foundations at European level, Brussels, 22 September 2017, p. 9; EU parliament to claw back e617,000 from Eurosceptic group, EU Observer, 28 September 2017; Thomas Van de Putte, “Europese Conservatieven misbruikten subsidiegeld om nationale partijen te financieren”, Apache, 27 September 2017. 83. Thomas Van de Putte, EU geld doorgesluisd naar antiEuropese Poolse regeringspartij, Apache, 14 March 2017; Bartosz

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Wielinski and Agata Kondzinska, Unijne pieni˛adze finansowały konwencj˛e PiS. Kontrolerzy Parlamentu Europejskiego nakładaj˛a kary, Wyborcza.pl, 27 September 2017; Agata Kondzinska and Tomasz Bielecki, Konwencja PiS za unijne pieni˛adze. Audytorzy z europarlamentu sprawdzaj˛a, na co poszło 100 tys. Euro, Wyborcza.pl, 14 March 2017. 84. Almost none of the videos, pictures or documents of the event show a trace of the genuine involvement of ECRP. Only the event brochure included the ECRP logo, but consisted of the political programme of the Law and Justice Party. 85. EP Secretary-General, Note on Financing of European political parties and European political foundations—Irregularities discovered and remedies applied, reinforced risk reduction (PE 620.042/BUR), Brussels, 28 March 2018, p. 3. 86. Jennifer Rankin, Daniel Hannan’s MEP group told to repay e535,000 in EU funds, The Guardian, 13 December 2018. 87. ACRE, ACRE launches Conservatives International in Miami, 26 May 2017. 88. Daniel Hannan, Uganda shows the power of the free market in action, Conservative Home, 20 July 2017; Jennifer Rankin, Daniel Hannan’s MEP group told to repay e535,000 in EU funds, The Guardian, 13 December 2018. 89. The President of the Initiative of Free Trade was Daniel Hannan, who was also Secretary-General of ECRP at the time, see: Initiative for Free Trade, “Events”: http://www.ifreetrade.org/events. 90. Case T-107/19 ACRE v EP, Judgement of the General Court (Third Chamber), 25 November 2020. 91. Guillaume Kremp, Robert Schmidt and Céline Schoen, Comment un parti domicilié à Matzenheim a financé des identitaires européens, Rue89 Strasbourg, 6 December 2018. 92. Tara Palmeri and Nicholas Vinocur, Far-right groups ordered to pay European Parliament e800,000, Politico, 14 September 2016; Paul Chaulet, Le Parlement européen réclame 500,000 euros au mouvement de Marine Le Pen, L’express, 14 September 2016. 93. EP Secretary-General, Note for the Members of the Bureau on the Financing of European political parties and European political foundations—Irregularities discovered and remedies applied, reinforced risk reduction (PE 620.042/BUR), Brussels, 28 March 2018, p. 3; see also the Judgement of the General Court of 27

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November 2018 in Case T-829/16, MENL v EP; and Order of the Court of 25 September 2019 in Case C-60/19 P, MENL v EP. 94. EU Democrats, Annual Accounts of 2009, Brussels, 18 May 2010, p. 4. 95. Peter Lacey, The ‘People’s Movement’ ‘EU Critical Action & Irish Social Activism’, PhD on Anthropology and Development, October 2013, pp. 279–280; EU Democrats, What is this bail-out fund?, People’s News, May 2012.

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Hanley, David. 2008. Beyond the Nation State—Parties in the Era of European Integration. Basingstoke: Palgrave Macmillan. Hertner, Isabelle. 2018. United in Diversity? Europarties and Their Individual Members’ Rights. Journal of European Integration 41 (4): 1–19. Hix, Simon, Abdul Noury, and Gérard Roland. 2007. Democratic Politics in the European Parliament. Cambridge: Cambridge University Press. Hooghe, Liesbet. 2007. What Drives Euroskepticism? Party-Public Cueing, Ideology and Strategic Opportunity. European Union Politics 8 (1): 5–12. Kopecký, Petr, and Cas Mudde. 2002. The Two Sides of Euroscepticism: Party Positions on European Integration in East Central Europe. European Union Politics 3 (3): 297–326. Marks, Gary, Liesbet Hooghe, Marco Steenbergen, and Ray Bakker. 2007. Crossvalidating Data on Party Positioning on European Integration. Electoral Studies 26 (1): 23–38. McDonnell, Duncan, and Annika Werner. 2019. International Populism: The Radical Right in the European Parliament. London: Hurst. McGowan, Lee. 2014. Engaging with the European Union? Exploring the Europeanization of the British National Party. Parliamentary Affairs 67 (3): 664–687. Morijn, John. 2019. Formation and Funding of European Parliament Political Groups, Political Parties and Political Foundations v. EU-Level Political Rights. In The Charter and the Court of Justice of the European Union, Fundamental Rights Protection in Europe, ed. Aniel Pahladsingh and Ramona Grimbergen, 257–272. Tilburg: Wolf Legal Publishers. Mudde, Cas. 2012. The Comparative Study of Party-Based Euroscepticism: The Sussex versus the North Carolina School. East European Politics 28 (2): 193– 202. Ray, Leonard. 1999. Measuring Party Orientations Towards European Integration: Results from an Expert Survey. European Journal of Political Research 36 (2): 283–306. Ray, Leonard. 2007. Mainstream Euroskepticism: Trend or Oxymoron? Acta Politica 42 (2–3): 153–172. Szczerbiak, Aleks, and Paul Taggart (eds.). 2008. Opposing Europe? The Comparative Party Politics of Euroscepticism: Volume 2: Comparative and Theoretical Perspectives. Oxford: Oxford University Press. Taggart, Paul, and Aleks Szczerbiak (eds.). 2008. Opposing Europe? The Comparative Party Politics of Euroscepticism: Volume 1: Case Studies and Country Surveys. Oxford: Oxford University Press. Usherwood, Simon. 2017. Modelling Transnational and Pan-European Euroscepticism. In Euroscepticism as a Transnational and Pan-European Phenomenon: The Emergence of a New Sphere of Opposition, ed. John

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CHAPTER 5

Changing the Rules of the Game: The Evolution of the Finance Regime

Parties that oppose the existence of the EU and that repeatedly violate EU principles with xenophobic, racist and hateful statements should not be funded with European taxpayers’ money. Hannes Swoboda President of the S&D group in the European Parliament (2012–2014)

Since the introduction of the finance regime for European political parties in 2003, the rules have been repeatedly revised. This chapter will explain how and why the regulatory regime has changed over time. Two main arguments form the leitmotiv of this explanation. First, the dominant narrative behind the rules gradually shifted from a developing to a protective logic. Initially, the focus lay on building the party system: developing a regulatory framework that served the underlying normative goal of creating a European party democracy. From 2013 onwards, the centre of attention shifted towards defending the funding system: reforms were carried out aimed at closing the ‘loopholes’ in the rules and at protecting the system against misuse. The funding of extreme right parties and the strategic behaviour of the Eurosceptic parties—as described in the fourth chapter—have played an important role in this respect. The second argument of this chapter is that the regulatory framework was altered in such a way that it safeguarded the interests of the established European political parties and their affiliated groups in the European Parliament. Although the European political parties could not © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 W. Wolfs, European Political Parties and Party Finance Reform, https://doi.org/10.1007/978-3-030-95175-7_5

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secure their interests on all aspects during the negotiations on the revision of the funding rules, they have been able to secure a number of essential changes to the rules. As such, the outcome of the various reforms is the result of the constant interplay between normative and strategic considerations. After an overview of the research on drivers of finance reforms in the first section, the subsequent modifications of the regulatory framework are discussed: the revision of 2007 in the second section, the new Regulation of 2014 in the third section and the changes made to it in 2018 and 2019 in the respective fourth and fifth section. The sixth section goes into a specific aspect of the finance regime that has been important in the discussions: the mechanism to verify whether Europarties and foundations respect the fundamental values of the European Union. The fact that extreme-right parties and politicians have been able to secure funding, has indeed been an important driver behind changes of the funding rules. The central argument discussed in this section is that despite the importance that is attached to this topic, the mechanism to monitor and enforce compliance of Europarties with respect for the EU’s fundamental values substantially lacks effectiveness.

1

Previous Research and Contribution

In correspondence to the studies on the introduction of public party funding, scholars have emphasized both strategic and normative considerations as important drivers of regulatory change. Taking a strategic perspective, regulatory reforms can be considered as the consequence of a competition for resources between and within political parties (La Raja 2008). In this respect, Koss (2010) concluded that the regulatory regime for parties is changed only when there is a consensus among the relevant parties on party finance. Applying the cartel party thesis of Katz and Mair (1995), Van Biezen and Kopecký (2014) argued that the established political parties instrumentalize party regulatory reforms to consolidate the status quo and make it more difficult for new parties to enter the party system. In his theoretical explanation for political finance reforms, Nwokora (2014) also acknowledged that parties are steered by different—sometimes conflicting—incentives. The basic driver that influences parties is their desire to stay in power, which results in regulatory changes

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that improve their (financial) position. In addition, established parties have incentives to develop a regulatory framework that protects them by discriminating against ‘outsiders’. However, Nwokora also adds a normative dimension. He states that lawmakers also want to change the regulatory framework in line with their normative goals. In others words, parties also want to implement ‘good’ rules. Koss (2010) applied a similar approach and argued that party finance reforms are determined by institutional, strategic and ‘discursive’ factors (i.e. how the regulatory revision would be perceived in public discourse, for example, with regard to combatting corruption). These observations also fit the general motives that are described in the literature on the introduction of public party funding and party regulations: the aim to combat corruption and influence buying, the desire to create a level-playing field for party competition or the empowerment of voters (Mendilow 2012; van Biezen 2008; Petak and Matakovic 2015). This interplay between normative convictions and strategic considerations will be examined in the context of the changing finance regime for European political parties and foundations. While the introduction of Europarty funding in 2003 has attracted ample scholarly attention, work on the evolution of the regulatory framework is more scarce. Dakowska (2009, 2011) examined the 2007 revision with a particular focus on the introduction of public funding for European political foundations. Based on interview material, she described the strategies employed by the actors involved and pointed to the importance of ‘political entrepreneurship’ of a number of key MEPs to convince the European Commission to come forward with a particular legislative proposal. While the decision-making process in the run-up to the 2014 revision has not been thoroughly analyzed from a strategic perspective, the normative considerations underpinning this reform have been highlighted by Saitto (2017), who conducted a formal-legal analysis of the new rules and the possible consequences for democracy at European level. Norman (2021) analyzed the dominant narrative in parliamentary debates and negotiations of the 2014 revision to examine the response of the mainstream political forces towards the rise of anti-system parties. He noted a shift in their attitude from a democratizing logic characterized by a pluralist understanding of democracy and a tolerance towards illiberal forces to a protective logic focused on taking action against parties and politicians that challenge the core values of the EU. This latter topic

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was also discussed by Morijn (2019), who has specifically examined the mechanism in the finance regime to assess Europarties’ and foundations’ compliance with respect to the fundamental values of the EU. He evaluated the effectiveness of the instruments in avoiding that illiberal parties can receive EU funding. Similarly, Grasso and Perrone (2019) focused on the role and powers of the new Authority (introduced during the 2014 revision of the funding rules) in verifying whether European political parties and foundations respect the EU’s core values. In the following sections, I will build on the insights from these studies by examining both the normative and strategic motivations behind the subsequent reforms. For the normative dimension, the focus will lie on the dominant narrative and arguments regarding the functioning of (party) democracy at the European level. I will build on the shift from a democratizing logic to a protective logic among the main political actors as observed by Norman (2021) but expand the scope of the argument. While Norman focused in particular on the attitude towards illiberal parties, I will assess the narrative on the functioning of the finance regime as a whole and its relation to EU democracy. With regard to the strategic dimension, I will examine the interests of the main political actors involved based on their actions in the decision-making process and the positions they have taken with regard to the conditions and distribution of EU public funding and the regulation of the finances of the European political parties and foundations.

2

The 2007 Reform: The Continuation of EU Democracy-Building

The finance regime was substantially altered for the first time in 2007 and entailed two main revisions: the introduction of separate EU funding for European political foundations, and more financial flexibility for European political parties. The specific content will be set out in the first part of this section, together with the main arguments that were put forward to motivate the changes. The second part will go into the decision-making process. The 2007 revision was the result of initiatives taken by the main European political parties and a number of affiliated MEPs, which were able to secure separate funding for European political foundations notwithstanding substantial reservations in the Council of Ministers.

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Political Foundations and Financial Flexibility to Foster More Versatile Europarties

The most important innovation of the 2007 revision was the introduction of separate subsidies for European political foundations. The new rules also imposed provisions regarding their relation with the European political parties, characterized by a certain ambivalence. On the one hand, the regulatory framework laid down a certain degree of dependence of a Eurofoundation on its Europarty for both access to and the height of their European subsidies. In order to get EU funding, a foundation has to be affiliated to a European political party (and can also only apply for funding through its Europarty). Consequently, it automatically loses its funding if its affiliated Europarty seizes to exist or no longer fulfils the eligibility conditions. The grant amount of a European foundation also directly depends on the number of Europarty MEPs. On the other hand, the rules require that a foundation maintains a certain degree of autonomy from its party. This must be achieved through a separate legal status and ‘an appropriate degree of separation between the daily management as well as the governing structures’ (Article 3 of Regulation 2004/2003 as amended by Regulation 1524/2007). Consequently, the rules recognize the political-ideological connection between Europarty and Eurofoundation, but ensure a high degree of autonomy in their functioning. This fits the objective embedded in the finance regime that the activities of the foundations should complement the existing work of the European political parties. They have two main aspired functions: (1) operate as partisan think tanks to vitalize the ideological competition of ideas at European level and (2) act as civic education organizations aimed at democracy-building (see also Dakowska 2009; Gagatek and Van Hecke 2014). As partisan actors, they should ‘contribute to the debate on European public policy issues and on European integration, including by acting as catalysts for new ideas, analysis and policy options’.1 In other words, while Europarties are focused on the short-term, day-to-day politics, Eurofoundations should develop a more long-term ideological vision on the future of the EU. As civic actors, they should also engage in democratic education of citizens; an explicit task is that they must ‘develop cooperation with entities of the same kind in order to promote democracy’ (Article 2(4)). Consequently, inspiration was clearly drawn from

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existing practices in the EU member states, and in particular the German party foundations or Stiftungen (Dakowska 2009). These functions attributed to European political foundations were explicitly seen as an instrument to further develop democracy at the European level. By putting forward different policy alternatives and politicizing the debate, the foundations would help to tackle the democratic deficit. In its resolution on the topic, the European Parliament stressed that the European foundations would ‘become active proponents of European policy options’.2 Similarly, the European Commission stated that European foundations would ‘promote greater understanding, debate, and new thinking, as well as constitute a channel through which a greater number of citizens can actively participate in European democracy’.3 A similar argument was made by responsible European Commissioner Margot Wallström: ‘The activities of European political parties, together with the creation of European political foundations, is part and parcel of building this real European public sphere, where different opinions can challenge each other and the citizens can better understand the challenges at stake and make informed choices. Political debate and political controversy are part of democracy and we hope that this will also help to increase the turnout for the European Parliament elections’.4 In other words: democratization through politicization. In her statements, Wallström pointed to the creation of European political foundations. Indeed, at the time that these new rules were discussed, not a single Eurofoundation existed. All foundations were established between the summer and the autumn of 2007 during the final stages of the negotiations on the revision (Jansen and Van Hecke 2011, 212). The introduction of separate subsidies for the—to be established—European political foundations thus clearly reflected the ambition of further building up EU democracy. The second main change of the 2007 revision was more financial flexibility for European political parties by providing more freedom in the management of their EU funding (Article 109 of Regulation 1605/2002 as amended by Regulation 1525/2007 and Article 10 of Regulation 2004/2003 as amended by Regulation 1524/2007). First, Europarties were now allowed to make a budget surplus at the end of the year. Before, because of the non-profit rule that governs EU grants, any surplus at the end of the year had to be returned to the European Parliament. This resulted in increased expenditure at the end of the year solely to avoid a lower grant. Second, a maximum surplus of 25% of the total annual

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income could be transferred to the first quarter of the next financial year, giving the parties more leeway in spending their grants. Third, the European political parties were now allowed to build up financial reserves up to 100% of their average annual income. Fourth, the co-financing obligation—the share of own resources that the parties had to collect to match the subsidy sum—was alleviated from 25 to 15% of the budget. In other words, Europarties had to collect less own revenue in order to receive their entire grant amount. Fifth, the parties gained more flexibility in how they could spend their subsidies. Before, they could only deviate to a limited extent from their financial plan that they submitted in the beginning of the year, but now they were allowed to shift between the different types of expenses. Finally—and most importantly from a political perspective—the rules now explicitly stipulated that the European political parties could use their EU funding to conduct transnational campaigns in the context of the European elections. This was rather logical, since one of the conditions for Europarties to be eligible for funding was participation—or at least the intention to participate—in the elections to the European Parliament. The argumentation behind this increased financial flexibility corresponded to the motivation behind the introduction of EU funding for European foundations. In the legislative proposal, the Commission stressed that the changes would contribute to ‘strengthening and optimizing the democratic infrastructure of the Union’.5 Similarly, the European Parliament argued that more financial flexibility was necessary ‘to achieve the aim of reinforcing European political parties as factors in European democracy’.6 The EP rapporteur of the proposal, Jo Leinen (Socialist group), stated that the ‘revision of the Regulation [was] designed to inject some flexibility into these democratic structures and expand them at the same time’. He also emphasized the important role that these European political parties should play in the European elections, and that they were capable of mobilizing the electorate. His words were echoed by his colleague Ingo Friedrich (EPP-ED group), who asserted that the proposal turned European parties into ‘effective tools to increase participation by Europe’s citizens and boost Europe’s democratic legitimacy’. He also hailed the direct reference to their involvement in the European elections: ‘only if Europe’s parties can be actively involved in elections to the European Parliament will they become genuine players of the European polis and contribute to the formation of a European consciousness, thereby helping to overcome the democratic deficit which

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exists’.7 Consequently, the discourse on the 2007 revision clearly resembles the developmental logic: the changes were aspired to strengthen party democracy at European level. 2.2

The Decision-Making Process: Convincing the European Commission and Council of Ministers

Although the initial regulation included a planned revision after a number of years, the exact substance of the changes was up for debate. An analysis of the decision-making process shows that the content of the revision can be explained by a concurrence of the strategic interests of the European political parties on the one hand and the normative considerations of the European Commission and the European Parliament on the other hand. The Council of Ministers was overall more sceptical due to diverging national interests and traditions, but the national delegations could be convinced by the leaders of their respective European political parties. In order to set the agenda, the European political parties sent a joint letter in June 2005 with their proposals for revision: a simplification of the application procedure for funding, the introduction of more financial stability and flexibility and an increase in the overall budget for European political parties. Interestingly, the letter was co-signed by the presidents of all eight existing Europarties at that time.8 The Secretaries-General had held regular meetings to discuss the effects of the funding rules and find a common ground on possible revisions (Interview 41). In the European Parliament, Secretary-General Julian Priestley took over the proposals from the European political parties in his evaluation report of the Regulation of March 2006, as well as similar suggestions from the administrative services responsible for managing Europarty funding.9 The report was thus heavily focused on increasing the Europarties’ financial flexibility. In this initial stage, neither the European political parties nor the European Parliament made concrete suggestions about public funding for European political foundations. In its evaluation report, the Parliament only stated that it should be discussed ‘in what way European political foundations [could] be supported in order to assist in European political parties’ work of political information and education’, and called on the Commission to come forward with proposals in this respect. In the years before, however, the European Commission had been rather reluctant to recognize (and finance) the networks of national political foundations (Dakowska 2009, 201–209).

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The fact that separate funding for European political foundations eventually became a substantial part of the Commission’s legislative proposal can be explained by a combination of political entrepreneurship by MEPs from the four main political groups, the European political parties and several national political foundations. In 2006, the four main political groups managed to include a ‘pilot project’ for European political foundations in the EU budget for the following year. MEPs from the EPP-ED group, the Socialist group, the ALDE group and the Greens/EFA group submitted proposals, ranging from e1 million to e5 million.10 After initially being rejected by the Council of Ministers, a pilot project of e1 million was reintroduced by the European Parliament in the second reading and successfully adopted in the 2007 budget. This pilot project constituted an important stepping stone towards structural EU funding for European political foundations. In its legislative proposal to revise the finance regime, the European Commission indeed included the introduction of such structural funding for Eurofoundations. This was rather unconventional, as normally the results of a pilot project had to be evaluated before permanent action could be taken (Jansen and Van Hecke 2011, 212). This was the result of intense lobbying: the leaders of the main European political parties and the Directors of the main German Foundations (Konrad Adenauer Stiftung, Friedrich Ebert Stiftung, Friedrich Naumann Stiftung and the Heinrich Böll Stiftung) strongly advocated the establishment of direct funding in their meetings with MEPs (Dakowska 2009, 210). The representatives of the European Parliament in turn defended the issue during their meetings with the Commission in preparation of the legislative proposal. In particular, Jo Leinen—who was the chairman of the EP’s Constitutional Affairs Committee and had been the rapporteur of the 2003 report and EP resolution—was in a constant dialogue with the cabinet of Commissioner Wallström and the EC’s General-Secretariat. Leinen was a strong proponent of subsidies for European foundations (Dakowska 2009, 209–210; Interview 41). While the European Commission had been sceptical towards subsidies for (national) foundations, it became much more receptive towards the idea of public funding for European political foundations. The initiative nicely fit the Plan D for Democracy, Dialogue and Debate of Commissioner Wallström, which was aimed at strengthening the political dialogue between the European level and its citizens in the aftermath of the failed referendums on the EU’s Constitutional Treaty. European parties and

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foundations could play an important role in developing a European public sphere by generating cross-border public debates across Europe, and— potentially—increase participation in the European elections.11 Similar arguments had also been put forward by the European Parliament when motivating the introduction of the pilot project for Eurofoundations: ‘given the current crisis of confidence in the EU, it needs to reach out to its citizens through all possible channels. In cooperation with national political foundations, European Political Foundations can play an active role in re-building the confidence of citizens in the European project’.12 Funding to establish European political foundations thus gave substance to the narrative of the EU institutions on generating public debate to meet the democratic and participatory aspirations of the European citizens. After the European Commission launched its legislative proposal on 27 June 2007, an agreement was found relatively quick: less than six months later, on 27 December 2007, the amending Regulation was published in the EU’s Official Journal. Despite this record short decision-making time, the negotiations did not pass without any difficulties. Support in the European Parliament for the revision was high, with all political groups— except for the IND/DEM and ITS groups—voicing their approval. This was also the result of clear signals from the Secretaries-General of the main Europarties to their affiliated MEPs (Interview 41). The proposal was approved with a large majority: 538 MEPs voted in favour, 74 against and 10 abstained. In the Council of Ministers, on the other hand, the Commission proposal encountered more resistance, mainly prompted by national interests and traditions. With regard to subsidies for European political foundations, there was particular scepticism among the governments from the new member states from Central and Eastern Europe. This can be explained by the fact that many of them were not familiar with the concept of political foundations, as these did not exist in their countries (Jansen and Van Hecke 2011, 211). Germany on the other hand— with its strong tradition of political foundations—favoured the proposal (Interview 41). On more specific issues, the Council—in particular the German delegation—argued for a clear legal separation between European political parties and their affiliated foundations, and insisted that the activities of the two were complementary and not overlapping.13 The representatives of the smaller member states feared that the Eurofoundation would be

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dominated by the larger countries, which resulted in the requirement to have governing bodies with a geographically balanced composition. The governments from the new member states—in particular those from Central Europe—advocated the promotion of European values in third countries, especially those bordering the EU. As a consequence, the functions of the European foundations—that were predominantly focused on contributing to the debate on European policy issues in the initial Commission proposal—were complemented with the task to ‘[develop] cooperation with entities of the same kind in order to promote democracy’, which thus could include such entities in third countries (Jansen and Van Hecke 2011, 208–211). In addition, while the Council could agree on the funds used by the European parties for transnational campaigns, the member states rejected this possibility for European foundations. To some extent, this went against the aspiration behind the Commission’s proposal, which emphasized the need for creating a European public sphere and increasing the participation in the European elections. The member states were however persistent in preserving national control over elections by (re)emphasizing that—while Europarties could conduct transnational campaigns—the EU funding could not be used to support national parties or candidates, or referendum campaigns, and that the elections were still governed by national provisions.14 Finally, the Council also had reservations about the proposed financial flexibility, and in particular that the exceptions that were granted to European political parties constituted a derogation from the Financial Regulation and—according to its Legal Service—lacked the required legal basis.15 This was criticized by the delegations from Austria, Denmark, Germany, the Netherlands and the United Kingdom; Finland, Sweden and Latvia also raised concerns (Dakowska 2009, 212). Eventually, the finance rules for European political parties and foundations were split into two Regulations, to the disappointment of the European Commission and Parliament. Regulation 1525/2007 modified the Financial Regulation with specific provisions on the Europarties and foundations, and Regulation 1524/2007 made the main adjustments to the original Europarty finance rules (Regulation 2004/2003). The eventual compromise was supported by a large majority in the Council: all member states voted in favour.16 The fact that a compromise could eventually be reached in such a short amount of time (less than six months), was the result of a number

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of factors. First, the fact that the European Parliament pushed hard to gain results in the negotiations, including strong support of the EP President Hans-Gert Pöttering. In this respect, it focused on a number of specific points—funding for Eurofoundations and more flexibility—and abandoned other demands such as a European legal status for Europarties and foundations because of profound scepticism in the Council about this (Interview 41). The second factor was the willingness of the Portuguese presidency of the Council to come to a compromise. According to Jansen and Van Hecke (2011, 210–211), an important aspect in this regard is the fact that the Presidency allocated the proposal to the Council Working Group for General Affairs and not the Working Group for Budget, which was much less accommodating to the proposals. Finally, the leaders of the four main Europarties—the EPP, PES, ELDR and EGP—strongly advocated the reform among their affiliated MEPs, national member parties and delegations in the Council (Dakowska 2009, 211). Because of these factors, the revision was formally agreed just before the end of 2007, meaning it could enter into force in the following year.

3 The 2014 Reform: Legal Recognition and Stronger Control The revision of the regulatory regime in 2014 constituted a substantial overhaul of the existing rules. While the initial regulation was limited in scope—as it only included the conditions and rules on the financing of European political parties—the 2014 revision was much more ambitious and aspired to regulate also the status and internal organization of the Europarties and foundations. It also partially signified a juncture from the rationale of building European party democracy to defending it. To this end, the revision included both elements aimed at the institutionalization of the European political parties and improving their financial flexibility, and a more independent monitoring system and rigorous sanctions in case of non-compliance with the rules. 3.1

Fostering the Institutionalization of European Political Parties and Foundations

Some aspects of the 2014 revision resembled the past aspiration of further strengthening the European political parties. First, a European

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legal personality for all registered European political parties and foundations was introduced to ensure ‘legal recognition and capacity in all member states’ (Articles 12 and 13 of Regulation 1141/2014). Such a uniform legal status had been a demand from the main actors in Parliament since the early debates in the 1990s. Before the revision, the legal status depended on the member state in which the Europarty or foundation had its seat, which resulted in a wide variety in terms of legal status and national legal obligations. The introduction of a European legal personality aimed to put an end to this incongruity. The second main change—partly as a result of the new European legal status—was a new procedure to gain access to European subsidies. In the past, a European political party (or foundation) had to submit an application for EU funding every year, with detailed documentation to prove that it fulfilled all the conditions. The 2014 revision introduced a twostep procedure, (in theory) decoupling registration and funding. First, a European political party or foundation could obtain official recognition if it fulfilled all the required registration conditions. Once it was included in the official register, the Europarty or foundation could apply for EU funding. The conditions to become registered were almost identical to those that gave the parties and foundations access to EU funding in the past: a registered address in one of the EU countries, respect for the EU fundamental values, representation in (in case of a Europarty) or board members from (in case of a European foundation) at least a quarter of the member states, and participation in the European elections (for European political parties). In line with existing practices, a European foundation remained adjuvant to its affiliated European political party: if the party no longer fulfilled the recognition criteria, the foundation was also automatically removed from the register (and lost its access to EU funding). Formally, the registration and funding of European political parties and foundations thus became decoupled, as it was possible for a party to gain registration (and EU legal status) but not funding. In practice, however, these two steps remained to a large degree intertwined. The only additional criterion to be eligible for EU funding was a minimum representation in the European Parliament of at least one MEP. Consequently, once a European party was able to gain official recognition, it almost automatically had access to EU funding. It is therefore not surprising that all European parties and foundations included in the register have also received European subsidies.

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The third main change that was aimed at strengthening European political parties was introducing more financial flexibility. The Europarties no longer had to submit an annual work programme, which resulted in more freedom on the expenditure of their subsidies. They got also more time to spend any unused EU funds, and they received their entire subsidy amount at the beginning of the year (instead of only after the approval of their financial report).17 In addition, the maximum threshold for donations was raised from e12,000 to e18,000 per donor per year (Article 20(1)). The initial Commission proposal had even suggested a ceiling of e25,000, but it was lowered following demands from the Council. Contributions from individual members were now also capped at e18,000, except for affiliated members of parliament who were allowed to make a larger contribution (Article 20(9)). The identity of all donors was made public, except for natural persons that donated less than e1500—or less than e3000 if the donor did not consent to disclosure (Article 20(2)). However, it was no longer possible to receive donations from individuals or private entities from third countries, except if they were eligible to vote in the European elections (Article 20(4)). The other rules regarding the income of political parties and foundations remained unchanged. They were still not allowed to accept anonymous donations, donations from the EP political groups or from public authorities. Similarly, contributions from members remained capped at 40% of the annual budget (Articles 20(7)). The allocation mechanism for the subsidies—a total sum partly distributed in equal shares (15%) and partly in proportion to the number of MEPs (85%)—and the threshold for EU public funding of 85% of the total budget of the parties and foundations were also preserved (Articles 17(4) and 19). This was also the case for the rules on expenditure: Europarties were not allowed to financially support—either directly or indirectly—national political parties or candidates, or to finance referendum campaigns (Article 22). They could, however, use their EU subsidies to conduct campaigns in the run-up to the European elections (Article 21). These changes to the finance regime were seen as a way to further strengthen European political parties and foundations as instruments for the development of EU democracy. An important element in the discourse had been the aspiration to bring more uniformity in the Europarty system. In its 2011 resolution, the European Parliament had advocated ‘to bring about the organisational convergence of political parties and their foundations at European level [which] can be achieved

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only by establishing a common political, legal and fiscal status for the European political parties’, which was seen as ‘a clear and substantial step towards enhancing democracy in the Union’ because it would allow them to act as representative agents of the European public interest.18 In the explanatory memorandum of the legislative proposal, the Commission also emphasized the important role of European political parties to reinforce and foster EU representative democracy and bridge the gap between citizens and EU institutions. According to the Commission, the new Regulation aimed ‘to encourage and assist the European political parties and their affiliated political foundations by creating conditions that allow them to grow and pursue their endeavour to reach out to European citizens, to represent and express their views and opinions, and to provide a stronger link between European civil society and the European institutions, in particular the European Parliament’. The Commission also argued that the new legal financial and regulatory framework that was put forward was specifically adapted to their needs.19 A similar motivation was used by the rapporteur in the European Parliament, Marietta Giannakou (EPP).20 During the debates and the explanations of vote, many MEPs of the four main political groups voiced their strong approval for the new statute. For example, Diogo Feio (EPP) stated that the creation of the new legal status for Europarties would ‘allow them to abandon their nature as unidentified political objects’ and would lead to a more dense organization. Sylvie Guillaume (S&D) supported the creation of a legal status because it would ‘enable them to contribute better to the formation of a democratic European political conscience and to the expression of the will of the citizens of the Union’.21 3.2

A New Monitoring and Sanctioning Regime

A second important part of the 2014 revision was aimed at improving the control of the Europarties’ and foundations’ finances and their compliance with the rules. The first—and most substantial—change in this respect was the establishment of a new independent entity responsible for the registration and control: the Authority for European political parties and European political foundations (the ‘Authority’). This is an independent EU body with its own legal personality, but is physically located in the European Parliament. In order to guarantee its independence, the Director of the Authority is jointly appointed by the three main

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institutions—Parliament, Council and Commission—for a non-renewable period of five years, and cannot hold any electoral mandate or be a (former) employee of a European political party or foundation (Article 6). Some scholars (Grasso and Perrone 2019, 672 and 675), however, have criticized the lack of transparency of the appointment procedure. The first Director, Michael Adam—a lawyer formerly working for DG Competition of the European Commission—was appointed for the period between 1 September 2016 and 31 August 2021.22 Since 1 September 2021, Pascal Schonard, previously employed in the cabinet of the Secretary-General of the European Parliament, has been leading the Authority.23 One of the core tasks of the new Authority was deciding on the registration of Europarties and foundations by verifying whether they fulfil the registration conditions and the governance provisions of the funding rules. It would also monitor the parties’ and the foundations’ continued compliance with the funding rules, including respect for the fundamental values of the EU (see Sect. 6 of this chapter). However, the funding applications and the assessment of the financial reports remained the competence of the European Parliament, dividing the monitoring of the Europarties’ and foundations’ finances over multiple entities in practice. Secondly, the 2014 revision also introduced an elaborate sanctioning system (Article 27). Under the initial finance regime, the European Parliament could only reclaim any subsidies that were misused by the Europarties or foundations. The changes of 2014 allowed the Authority to impose a financial penalty up to 10% of the annual budget if the party or foundation had not complied with the rules regarding donations, if they had used the EU funds to support a national party or candidate, or if they had financed referendum campaigns.24 A penalty of up to 5%— or even as high as 20% in case of repeated infringement—of the annual budget could be issued if the party or foundation had failed to submit the required documents (statutes, financial accounts, list of donations, etc.), or if the statutes no longer contained the required governance provisions. Finally, a European political party or foundation could be removed from the register (and lose its public funding) if it no longer complied with the registration criteria or had failed to meet its obligations under national law. Similarly, it could be de-registered if a court had ruled that it had engaged in illegal activities such as fraud, corruption, money laundering or involvement in a criminal organization. In the latter case, the Europarty or foundation could also be excluded from future EU funding for up to five years or up to ten years in case of a repeated infringement.25

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The establishment of the Authority and the sanctioning mechanism had not been part of the proposal of the Commission, but was gradually added and strengthened during the trilogue negotiations between the European Parliament and Council. During the debates in the Committee on Constitutional Affairs in 2012 and 2013, many MEPs stressed the need to couple the recognition of a European political party or foundation to respect for the EU’s fundamental values (Norman 2021, 729–730), and the possibility to exclude parties from funding in case of noncompliance. While Eurosceptic MEPs were overall more critical, there was a consensus among the Members from the main political groups that the finance regime should be protected against anti-democratic parties. Similar comments were made by the MEPs when the final text was voted in the European Parliament. Salvador Sedó i Alabart (EPP) stated that these corrective measures were necessary to avoid misuse of EU funds, considering that the respect for European values will be an essential requirement if parties want to access European subsidies. Similarly, Sandra Petrovic Jakovina (S&D) hailed that the revision ensured that only parties that respected democracy would be able to gain registration. More bluntly, David Martin (S&D) declared that the new rules would ‘prevent fascist groups like the BNP from receiving EU funding, whilst keeping the system transparent and democratic’.26 While respect for the EU’s fundamental values as a condition for funding was welcomed by many MEPs, the operationalization of this requirement had been the object of lengthy negotiations between the Parliament and the Council. 3.3

Drawn-Out Negotiations to Find a Consensus

In comparison to the decision-making procedure in 2007, the process in 2014 differed on two main points. First, the European political parties were less involved. In contrast to the previous negotiations, their efforts to set the agenda and influence the negotiations were more limited. The representatives of the main political parties indeed regretted the final outcome of the negotiations, as it would substantially complicate their functioning and activities (cf. Chapter 6) (Interviews 32, 37, 38). Second, the negotiations turned out to be difficult, due to pronounced differences of opinion between the European Parliament and the Council, on the one hand, and a lack of consensus on a number of key issues between the member states in the Council, on the other hand.

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The first steps were taken by the European Parliament, which issued a resolution with proposals for reform in April 2011, partly based on a report of the Secretary-General on the subject.27 These proposals were heavily focused on strengthening the European party organizations, with suggestions to diminish the administrative workload, lowering the cofinancing obligation, providing more financial flexibility and giving them the ability to finance referendum campaigns. The resolution also included the aspiration for ‘organisational convergence’ by establishing a common EU legal status for the European political parties and foundations, and by requiring a high level of internal party democracy (among others, for the selection of candidates and party leaders). Aside from a short paragraph on the possibility to introduce sanctions—in response to relaxing the funding arrangements—no elements that point to a more defensive approach towards the finance regime could be recognized. The legislative proposal presented by the European Commission in September 2012 to a large extent followed these suggestions,28 with the most important innovation the introduction of a European legal status for the European political parties and foundations. The registration and funding were also decoupled and democratic requirements were imposed regarding internal decision-making. However, in the Commission proposal, the registration, management and control of the finances were still entirely entrusted to the European Parliament. Hence, also this text was very much embedded in the democracy-building logic that had characterized the funding system since its early days. It is around this time that several Members of the European Parliament learned that a number of radical right parties were also eligible for EU funding. The EAF received funding for the first time in 2011, and the AENM in 2012. This gave rise to a more defensive logic dominating the discussions on the content of the revision, as well as concrete attempts to take away the funding from these European parties (cf. Sect. 6 of this chapter). The condition that European political parties and foundations could only receive EU funding if they respected the fundamental values of the EU also became an important point of attention for many MEPs. The negotiations between the European Parliament and the Council that started in Spring 2013 proved long and difficult, due to conflicting interests, different national traditions and diverging normative considerations on party regulation. In general, four main points of discussion could be recognized: two issues related to the developmental logic and two remaining issues that fit the defensive logic.29

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First, while a European legal status was considered important by the main political groups and the European Commission for the development of the European political parties, the proposal encountered strong scepticism in the Council. Several national delegations feared that it would affect their national legal systems. They had particular concerns about the phrasing in the Commission proposal that European parties and foundations would have ‘full legal recognition and capacity in all Member States’, and doubted the added value of a European legal status. For the European Commission and the Parliament on the other hand, the EU legal personality was a deal-breaker; this element had been part of the Parliament’s demands for a long time. The Parliament also rejected a ‘double legal personality’, which would entail that the European legal status would merely complement a pre-existing legal personality under national law.30 Eventually, the EU legal personality was maintained in the proposal, and as a compromise a number of explicit references that Europarties should respect national rules were introduced, including the possibility to deregister a Europarty of foundation in case it had seriously failed to fulfil its obligations under national law. The second point of discussion was the financial flexibility granted to European political parties and foundations. The Council had reservations about the fact that they could deviate from the Financial Regulation (for example, by carrying-over a surplus or by building up reserves). With regard to the Europarty expenditure, the Parliament pushed for the permission to finance referendum campaigns on EU issues and to expand their possibilities in campaigning in the European elections. The Council however wanted to preserve the status quo: maintain the ban on (in)direct support of national parties and candidates, and on funding referendum campaigns. In other words, the member states wanted to shield their national political systems from any potential interference from European political parties. While the Council eventually agreed on allowing financial flexibility for Europarties, it resisted any concessions on Europarty funding of referendum campaigns or national parties and candidates. The third controversial topic was related to the defensive logic: to what extent respect for the EU’s fundamental values could be considered as a necessary condition to be registered as a European party and to be eligible for EU funding, and consequently, whether a Europarty should be de-registered and defunded (which comes to down to a de facto party ban) if it was found breaching these values. In the European Parliament, most political groups—except for the ECR, EFD and

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Non-attached—were strongly in favour of this criterion. In the Council of Ministers, several representations were more hesitant, in particular the delegations from countries that did not have a tradition in extensive party regulation—such as the Nordic countries—but also the French, German, Portuguese and Dutch delegations expressed their scepticism (Norman 2021, 731). The Council’s position was that ‘an appropriate balance between respect for standards of governance and transparency […] and the freedom of association’ should be sought.31 During the negotiations, some of the rule of law requirements were loosened to gain the approval of the hesitant member states. First, deregistration was only made possible in case of manifest and serious violations of the EU founding values (Morijn 2019, 628). Second, the explicit stipulation that also the members of a Europarty or foundation should respect the European values was erased from the eligibility conditions. Finally, the possibility for a natural or legal person to request an assessment of respect of the fundamental values was eliminated. Following these alterations, most delegations dropped their resistance. Norman (2021, 731) also notes that the perceived threat of growing support for farright populist and extremist parties in Europe made the values-condition acceptable to most member states. Only the Netherlands maintained its opposition, and eventually voted against the Regulation, stating that ‘it is up to the voters and secondarily to the judiciary to assess the programme and activities of political parties’ and that such an assessment should not be part of the process of registration and verification of European political parties.32 The final and most controversial issue was a disagreement between the Parliament and the Council on the management of the funding system. The core of the conflict revolved around who should be responsible for registering and monitoring the European political parties and foundations and impose sanctions in case of misconduct. This was particularly linked to the values-condition: while most actors could agree on the principle that respect for the EU’s fundamental values should be a requirement for registration and funding, there was an intense debate on how such a requirement should be monitored and enforced. The existing arrangement, in which the European Parliament administered the funding applications and supervised compliance with the rules—unchanged by the Commission in its legislative proposal—met fierce opposition in the Council of Ministers. Based on the critical opinion of its legal service, the Council pushed for a more neutral design of the

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system. This opposition was based on a more formal-legal assessment— i.e. that usually the Commission is responsible for the implementation of legislation, and not the European Parliament—and on more political considerations: several member states feared that the allocation of public subsidies could become the object of party competition and would cause a conflict of interest for the main political groups. The Parliament—supported by the Commission—wanted to retain the competence of managing and controlling the Europarty finance regime. Several potential compromises were explored. A first suggestion from the Council was to assign the management of the system to the European Commission in line with its responsibilities in the EU institutional set-up. The latter refused, however, to prevent being put in a position where it would have a possible impact on Parliament’s political composition. A second possible scenario was to reinforce the existing Committee of Independent Eminent Persons (whose only task was to provide an opinion on a possible breach of EU fundamental values, cf. section 6) and put it in charge of the registration process. In order to avoid that the Committee would have to make ‘political’ decisions, a ‘quasi-automatic’ registration system was envisioned, meaning that the registration of a Europarty or foundation would only be based on formal—and not substantial— criteria, with the possibility for an appeal with the EU Court of Justice. To this end, any far-reaching requirements on the internal organization of the European political parties—such as internal democracy or gender balance—should be abandoned; such requirements were also rejected for more principled reasons by member states with a tradition of limited (internal) party regulation, such as the Netherlands (Interview 40). However, verifying the compliance with respect for the EU’s fundamental values was considered too important to abandon, but was difficult to achieve in such a ‘quasi-automatic’ manner. Therefore, it could be agreed that a mere signed declaration of the Europarty or foundation that it respects the EU’s fundamental values would suffice. In this scenario, it would however still be possible to verify the value compliance after registration; this would remain the competence of the European Parliament, although the option of involving the other main EU institutions was left open. The reinforced Committee would thus mainly function as a support structure for the Parliament, with the latter holding the final say. This possibility was preferred by the European Parliament and the European Commission.

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A third possibility was to set up a new ‘small independent entity’ with its own legal personality that would be entrusted with running the funding system. The body would be more than a mere advisory body and have the ability to take decisions on registration, verification and sanctions, although also in this scenario a ‘quasi-automatic’ registration process was foreseen. While this new body would monitor and carry out assessments on an alleged compliance breach regarding respect with the fundamental values, its decision to de-register a European party would have to be ‘approved’ by the co-legislators. The role of this independent agency would thus go beyond providing mere support or advice. This option was preferred by the Council, which argued that it would help to ‘depoliticize’ the process. The Parliament and the Commission on the other hand were fiercely opposed to the creation of such a new ‘unnecessary and costly’ body. In the end, it was this third option that prevailed: the legal services of the three institutions elaborated in detail the creation of the Authority for European political parties and foundations. Despite some remaining reservations among several member states on the close link between the new Authority and the European Parliament (France) and concerns about a lack of checks and balances in the de-registration procedure (Italy, Portugal and Slovakia), a majority for the proposal could be found in the Council (Norman 2021, 731). The European Parliament eventually also conceded in order to ensure a political agreement before the 2014 European elections. The compromise was approved in the European Parliament in April 2014 with a large majority (539 in favour, 103 against and 20 abstentions): the ECR group, EFD group and Non-Attached were mostly opposed but also a number of MEPs from the main political groups voted against. There was particular opposition among the Dutch MEPs. In the Council, the proposal also gained strong support. Aside from the UK (which was against the introduction of a European legal status) and the Netherlands (that rejected respect for European values as a registration and funding condition), also Belgium abstained because it feared the Regulation would interfere with its national rules on election expenses.33 The new Regulation was published in the Official Journal on 4 November 2014, almost 26 months after the Commission had presented its proposal. However, the new provisions would only enter into force on 1 January 2017.

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4 The 2018 Revision: Closing Loopholes or Supporting the Established Parties? The reform in 2018 was more narrow in scope, but nevertheless concerned a number of fundamental points. In contrast to the 2014 revision, this process was heavily driven by the European political parties and was characterized by a strong defensive narrative on protecting the finance regime against misuse and improving transparency. At the same time, a number of changes to the rules clearly benefitted the larger established parties. Consequently, the 2018 revision constituted the main regulatory answer to the strategic behaviour of the Eurosceptic parties (as described in the fourth chapter) and the internal budgetary pressures that the Europarties were increasingly suffering from (as set out in the third chapter). 4.1

A Limited but Decisive Revision of the Funding Rules

Despite its narrow scope, the 2018 revision altered the finance regime on a number of fundamental aspects. The first set of changes was aimed at strengthening compliance and enforcement of the rules. First, one of the eligibility criteria was changed: in order to prove its representation in a quarter of the member states, a European political party could no longer rely on individual Members of Parliament, but only on member parties. In other words, only if a Europarty had national member parties represented in parliaments in at least seven EU countries, it fulfilled the representational criterion. This was the first time that one of the eligibility conditions was substantially changed. In addition, it was highlighted that national parties could only be a member of one European political party, which would prevent cases of irregular Europarty membership. Second, in the rules was clarified that the Authority could effectively de-register a European political party or foundation if it had supplied incorrect or misleading information. Third, natural persons that were part of the administrative, management or supervisory body of a Europarty or foundation and that had been found responsible for any inaccuracies or any illegal activities, could be held personally liable by the European Parliament. In other words, if a person in charge was found responsible for any misuse of EU funding, the European Parliament or Authority could now recover (part of) the subsidies or (part of) the financial sanctions from that person. Finally, an explicit reference was added stating that the European

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Public Prosecutor’s Office had the task of investigating alleged criminal offenses related to the funding of Europarties and foundations. These revisions were presented as important measures to close loopholes that were still present in the regulatory framework. In the explanatory statement of its legislative proposal, the European Commission emphasized that the existing rules were prone to abuse, referring to the practice of establishing European political parties that ‘are composed mainly of individual politicians and/or strongly dominated by one or two national political parties’. Several options were considered to tackle this issue, but allowing only national parties to represent European parties was seen as the most effective measure, as well as simple to enforce. In addition, making it easier to de-register parties and foundations and to recover unduly paid amounts were seen as measures to protect the ‘EU financial interest and the Union’s reputation’.34 With regard to the personal liability, the Council argued that this change was aimed at better protecting the EU’s financial interest in case of fraud: while the Parliament had not been able to recover funds from Europarties and foundations that had gone bankrupt, the revision would allow for the recovery of funds from persons that were responsible.35 A similar position was taken in the European Parliament. Mercedes Bresso—one of the two co-rapporteurs— argued that they wanted to make it easier to act against abuses, to check how funds had been used and to recover them if necessary.36 The second part of the revision altered the allocation and distribution of public funding. First, the co-financing obligation was adjusted: EU funding could now cover up to 90% of the total eligible expenditure of Europarties and up to 95% of the total eligible expenditure of Eurofoundations. This thus meant that they had to collect fewer own resources in order to receive their entire grant. Second, the distribution key for the subsidies was changed: 90%—instead of 85%—of the total funding sum was distributed among the European political parties and foundations in proportion to the number of affiliated MEPs, while 10%—instead of 15%—was distributed in equal shares. This was also the first time that the pay-out principle of the funding regime of European political parties was altered, to the benefit of the larger Europarties (that have a more numerous representation in the European Parliament). Interestingly, the change of the distribution mechanism was also motivated as a measure to counter abuse, more specifically to ‘prevent the misuse of public funding via “one-main parties”’. The argument entailed that a smaller part distributed equally among the Europarties would

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diminish the incentives to set up a party organization with minimal EP representation simply to obtain public funding.37 In addition, the Commission contended that the current distribution key led to an unbalanced reflection of the electoral representation in Parliament and that the change would improve the ‘proportionality of EU funding’. Easing the co-financing obligation was a direct response to the difficulties that European political parties and foundations experienced to collect sufficient own resources, which had led to ‘dubious practices in this respect’. According to the Commission, a lower obligation would reduce incentives for questionable practices.38 A similar argument was used by the Council.39 In other words, instead of tackling the potential misuse regarding own resources directly, lowering the co-financing obligation was seen as an easier solution. Finally, the 2018 revision also obligated the national member parties to publish the logo and political programme of their European political party on their website. This became an additional condition for Europarties to receive EU funding. It was seen as a measure to increase transparency in the European elections: ‘citizens should be offered clear and relevant information upfront, including with regard to party affiliations, in order to understand the impact of their votes at the European party level’.40 Similarly, the European Parliament and the Council also hailed this as a measure to increase transparency.41 4.2

A Swift Agreement After a Long Preparation

In contrast to 2007 and 2014, the 2018 process was not the result of the scheduled revision clause in the rules. Moreover, the previous modification of the regulatory framework in 2014 had not even entered into force when the first calls for a new reform were raised. The revision in 2018 was the direct result of unrelenting pressure from the EP leadership and the main European political parties. They were able to convince an initially reluctant European Commission to come forward with a proposal to change the rules. The debates on a possible revision started during the meetings of the Bureau of the European Parliament in 2015. In particular, the two Vice-Presidents responsible for European political parties, Ulrike Lunacek (Greens/EFA) and Rainer Wieland (EPP) regularly asked for a revision of the rules. Their calls were mainly motivated by the practice of Europarty instrumentalization by Eurosceptic national parties. They stated their

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willingness to deal with this ‘misuse’ and wanted to close certain ‘loopholes’ in the current rules. Ulrike Lunacek described in this regard how Members of Parliament formed or joined ‘political parties of convenience’, which only barely complied with the minimum requirements.42 EP President Martin Schulz agreed to raise the matter with the European Commission ‘in order to prevent any case of abuse’, and sent a letter to Commission President Juncker on 20 November 2015 to denounce the practice of MEPs of the same national party joining different Europarties and to request a ‘rectification’ of the regulatory framework.43 In the course of 2016, the debate on the revision of the regulation exceeded the realm of the Bureau when the Swedish anti-racism magazine Expo reported that the far-right European political party APF would organize an event in Sweden with its EU subsidies. Several MEPs demanded that EU funding for this European political party should be stopped.44 The issue was discussed in the Conference of Presidents on 4 May 2016, in which President Schulz explained that the European Parliament could initiate the verification procedure to assess whether the APF respects the Union’s values (cf. infra). He linked the issue to a possible revision of the funding rules which could raise the minimum thresholds to create a European political party in order to address possible abuse of the rules, which gained the support of the main group leaders.45 Around the same time, there were extensive contacts between the Presidents and the (Deputy) Secretary-Generals of the EPP, PES and ALDE Party on the new Regulation that had been agreed in 2014. The EGP was also invited but was not interested in cooperating on the topic at that time (Interviews 32, 38). These contacts culminated in a joint letter of the three party presidents—Joseph Daul (EPP), Sergei Stanishev (PES) and Hans van Baalen (ALDE Party)—requesting EC President Jean-Claude Juncker and First Vice-President Frans Timmermans to launch a legislative proposal to review the regulatory framework.46 Aside a call to ban cross-party membership, they suggested to raise the minimum representation of European political parties in the European Parliament from one to at least three MEPs and asked for a reduction of the 15% co-financing obligation. Interviewees from the three Europarties acknowledged that the most important revision they were aiming for was lowering the co-financing rate (Interviews 32, 37, 38). In this respect, the European elections of 2019 were important: the European political parties had been informed that there would be a substantial increase in the total sum in 2019, but

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they would only be able to ‘absorb’ higher grants if the co-financing obligation would be lowered. Although it was not included in the joint letter, altering the distribution key was at this point also part of the discussions (Interview 37). The fact that a substantial share of the total funding sum was distributed in equal amounts for all European political parties was seen as a reason why certain party organizations were established and why certain national parties split up over several Europarties (Interview 38). In July 2016, the Secretary-General of the European Parliament prepared a report on the topic, taking over the suggestions from the main European political parties: lowering the co-financing obligation from 15 to 5%, raising the minimum threshold to gain access to funding from 1 to 7 or possibly even 22 MEPs, and banning the possibility of cross-party membership. In addition, the report also suggested to allow European political parties to conduct campaigns in the run-up to national referendums on EU issues.47 The EP leadership again voiced strong support for a revision of the rules: EP President Schulz again prompted EC President Juncker to come forward with a legislative proposal.48 Representatives of the EPP, PES and ALDE Party also met with Commission officials and MEPs of their corresponding groups to convince them about the urgency of the revision. Although the political level in the European Commission was favourable towards their demands, the administrative services wanted to wait until the 2014 revision had entered into force in the beginning of 2017 (Interviews 25, 26, 32, 37, 38). In the first half of 2017, the European Parliament kept the issue on the political agenda. In January, Danuta Hübner (EPP), Chair of the Constitutional Affairs Committee, submitted an oral question—supported by the EPP, S&D and ALDE groups—to the European Commission to come up with a legislative proposal.49 On 14 March 2017, the day before the debate on the oral question, EPP group leader Manfred Weber mentioned during a press conference that he had made a similar request directly to EC President Jean-Claude Juncker.50 During the debate on the oral question on the following day, the call for a regulatory revision was most strongly supported by the EPP and the S&D groups. All MEPs of these groups that took the floor emphasized the need to change the rules and put forward the same priorities as were formulated in the letter of the three party presidents. The positions of the ALDE, ECR and Greens/EFA groups were more diverse, depending on MEPs’ Europarty affiliation: Members that were part of the ALDE Party, ECRP and EGP were in favour of a revision, while Members affiliated to the

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smaller Europarties EDP, EFA and ECPM were more critical. The other political groups—GUE/NGL, EFDD and ENF—were against a revision of the regulation. At this point, European Commissioner Julian King was rather reluctant to confirm the Commission’s willingness to engage in a quick revision of the rules.51 The Commission only changed its position following continuous pressure from the European Parliament. The EP Vice-Presidents Lunacek and Wieland met with EC Vice-President Frans Timmermans to convince him of the urgency of the situation. In particular, they argued for a change of cross-party membership, for possibilities to de-register parties and to reduce the part of the total sum that was distributed in equal shares in order to discourage the creation of parties just to receive money from the lump sum (Interviews 26, 34, 36). On 15 June 2017, the European Parliament issued a new resolution to encourage the Commission to propose a revision of the regulatory framework as soon as possible.52 It was submitted jointly by the EPP, S&D, ALDE and Greens/EFA groups and included two ‘shortcomings’ that had to be addressed: the possibility of multi-membership of Members of the European Parliament and the required level of co-financing. These were the only two issues on which the four groups could easily agree; there was no agreement on any other concrete proposals (Interview 25). While these four main groups almost unanimously voted in favour of the resolution, most MEPs of the ECR, GUE/NGL and EFDD groups as well as the Non-Attached voted against it. On 13 September 2017, the day of the State of the Union of Jean-Claude Juncker, the European Commission eventually launched its proposal.53 The institutions succeeded in finding an agreement in a short period of time, so the revisions could enter into force before the 2019 elections. Three main factors were crucial to achieve this. First, the legislative proposal from the Commission was relatively limited, mainly taking over the main issues that had been put forward by the European Parliament.54 Before the launch of the proposals, there had been exchanges between Commission officials and representatives from the member states in the Council to prepare the ground, and more controversial elements— such as allowing Europarties to finance EU referendum campaigns—were deliberately kept out of the proposal (Interviews 21, 26). Second, the two co-rapporteurs in the European Parliament— Mercedes Bresso (S&D) and Rainer Wieland (EPP) —and the chair of the AFCO Committee Danuta Hübner continuously emphasized the ‘sense

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of urgency’ of the file and set short deadlines for the subsequent procedural steps to be taken. They urged their colleagues to keep amendments to an absolute minimum to enable a quick agreement within Parliament and with the Council.55 During the negotiations in the Parliament, there was also a strong coordination between the EPP, S&D and ALDE groups and their respective European political parties (Interviews 32, 37, 38). The proposal from the Commission was only changed on a limited number of points. The most important change was the distribution key: while the Commission had proposed to distribute only 5% of the total funding sum in equal shares among the Europarties and the Eurofoundations, this was raised to 10% as a compromise between the two big groups (EPP and S&D) and the middle-sized groups. Again, controversial elements—like funding referendum campaigns or introducing additional controls on respect for the EU’s fundamental values—were kept out of the text. Third, the EPP, PES and ALDE Party representatives put a lot of efforts in convincing their affiliated ministers in the Council of the need for a quick revision (Interviews 32, 37, 38). These attempts turned out to be successful: an agreement could be found after only one trilogue meeting. Even those proposals that had been more controversial in the past—such as lowering the co-financing obligation—were not rejected by the Council. The only main provision on which there was a debate, was the obligation for national member parties to publish the programme and logo of their affiliated European party on their website as well as information on gender representation among its candidates at the last European elections and among its Members of the European Parliament (Interview 23). It was agreed that the information on the gender representation would be encouraged, but not made compulsory, and the publishing obligation for national parties was attenuated.56 Both the Council and the Parliament endorsed the final text in April 2018. In the European Parliament, the EPP, S&D, ALDE and Greens/EFA groups and a majority of the ECR group voted in favour, while the EFDD group voted against. The GUE/NGL group was split, with some of its MEPs voting in favour and most of the others voting against. Most MEPs of the ENF group abstained. In the Council, all member states endorsed the agreement. This allowed for the new rules to be in force before the 2019 elections of the European Parliament.

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5

The 2019 Revision: Safeguarding the Electoral Process

On 27 March 2019, barely two months before the elections to the European Parliament that year, the regulatory framework was altered again. Contrary to the previous revisions, this change was a clear initiative of the European Commission. It was a direct consequence of the revelations on the Facebook/Cambridge Analytica scandal in the Spring of 2018, which exposed that the company had collected data from millions of Facebook users that were subsequently used for political advertising in the presidential campaign of Donald Trump in 2016 and allegedly also in support of the Brexit campaign during the UK independence referendum. The 2019 revision was focused on safeguarding the electoral campaigns and comprised two main issues. First, a new procedure was introduced to detect, verify and sanction Europarties or foundations in case they deliberately (attempt to) influence the outcome of the European elections by misusing personal data.57 The modalities of this new instrument mirrored the existing values compliance mechanism (cf. Sect. 6 of this chapter). When notified by a national supervisory body of a breach of personal data with a possible link to a European political party or foundation, the Authority initiates the verification procedure to assess whether infringed personal data had been used to influence the European elections. After the Committee of Independent Eminent Persons has provided its opinion on the case, the Authority can decide to impose financial sanctions up to 5% of the annual budget of the European party or foundation concerned.58 It should be noted that these new rules do not directly address violations of the data protection rules; these are penalized by the data protection supervisory bodies on the basis of the General Data Protection Regulation. Since sanctions cannot be imposed twice for the same offence, this revision focuses on a specific misuse that follows from the data infringement: it gives the Authority the instrument to sanction European political parties or foundations that have taken advantage of this data to attempt to influence the European elections. In other words, it does not necessarily has to be the Europarty or foundation itself that has engaged in the infringement of personal data—data can be collected by a third party—but it tackles misuse of such collected data by the European party or foundation in its political campaign activities. However, the wording in the EU Regulation is concerned with Europarties’ activities in the context

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of the European elections; any misuse of personal data outside of the electoral campaign period seems to fall outside of the scope. In addition, the funding rules do not provide concrete benchmarks to assess what constitutes (attempts to) influence the elections: such an evaluation is left to the discretion of the Committee of Independent Eminent Persons and, ultimately, the Authority. The second issue of the revision focused on the operational capabilities of the Authority of European political parties and foundations. It was now given the ability to hire staff directly, as opposed to the existing practice in which the Authority was staffed by the European Parliament and the European Commission. This measure was expected to expand the personnel of the Authority, and at the same improve its autonomy by diminishing its reliance on the willingness of the other EU institutions to make staff members available. However, the Authority’s budget remained part of the general budget of the European Parliament, meaning that its resources are subject to the intra-parliamentary budgetary procedure (see Chapter 3). The arguments that have been put forward to motivate the 2019 revisions are characterized by a narrative of protection. As a response to the Cambridge Analytica scandal, the European Commission launched a ‘security package’ as a contribution to the discussion of the EU state leaders on 19–20 September 2018 on ‘the resilience of the Union’s democratic systems (especially in the context of the upcoming European Parliament elections)’.59 As part of this package, the Commission proposed the changes to the finance regime of European political parties, in addition to measures to boost data protection rules in the electoral process and to enhance cooperation between national and EU authorities to safeguard online transparency and the fight against disinformation.60 In the explanation of the legislative proposal, the Commission stated that the revision was necessary because the existing rules ‘[did] not allow to effectively dissuade and sanction abuses of data protection rules which may affect the democratic debate and free elections’. Consequently, the revisions were deemed necessary in order to protect the integrity of the European democratic process by deterring Europarties and foundations from influencing the European elections misusing personal data.61 In addition, the revisions were required to ensure a ‘level playing field’ by preventing situations in which one party could benefit from illegal practices violating data protection rules. In this respect, the Commission also called upon the member states to make efforts against similar violations by national political parties.62

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The defensive logic is also apparent in the discussions in the European Parliament. Rapporteur Mercedes Bresso (S&D) emphasized during the committee debate that these changes had to ensure that what happened in other countries—the misuse of voter profiling for electoral purposes— could be avoided in the run-up to the European elections. Similarly, Jasenko Selimovic (ALDE) stated that ‘the case of Cambridge Analytica was unprecedented and obliged [the EU institutions] to create a better protection for the European elections’.63 Changing the staff conditions of the Authority for European political parties and foundations was also framed as a protective measure. The motivation of the European Commission of this revision was that a more stable and permanent staffing arrangement would provide the Authority with sufficient operational capacity to effectively and independently fulfill its tasks. It also pledged to supply 6 additional staff members to the Authority to safeguard its monitoring capability in the framework of the European elections.64 During the debate in the European Parliament, the representative of the European Commission, Enrico Forti, emphasized that the revisions aimed at strengthening the Authority’s capacity, because the limited number of staff members posed a risk to the management of Europarty funding and the implementation of the Regulation. In other words, by granting the Authority the ability to directly hire staff, it was expected that its personnel could expand, which would lead to a better monitoring of the funding rules. Following these discussions, the size of the Authority has indeed substantially increased. At the end of 2017—the first year of its existence—the Authority was staffed with the Director and two additional members of personnel. As a direct consequence of the calls for increased capacity, its workforce had expanded to a total of nine staffers by 2019.65 This stands in contrast with the Authority as a ‘small entity’ that was envisioned during the negotiations of the 2014 revision. The overall decision-making process of this revision was very short, also aided by the limited scope of the proposal and the objective to have the changes in place before the campaign period of the 2019 European elections. The discussions during the negotiations mainly focused on clarifications of the Commission’s text, in particular regarding the verification procedure. The Parliament highlighted that the Committee of Independent Eminent Persons is the advisory body and the decision whether or not to impose sanctions should lie with the Authority, while the original Commission proposal was more ambiguous on the division

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of competences. Neither in the European Parliament nor the Council, the revisions proved controversial. In Parliament the text was approved with an overwhelming majority—with 586 votes in favour (88.1%), 55 against (8.3%) and 24 abstentions (3.6%)—with only most of the EFDD and ENF groups rejecting the text. In the Council, only Hungary made critical remarks on a lack of compliance with the subsidiarity principle and insufficient guarantees regarding legal certainty, but eventually all member states—including Hungary—approved the revision.66

6 Monitoring Compliance with Respect for the EU’s Fundamental Values: A Difficult Exercise Respect for the fundamental values of the European Union has been a core element of the finance regime since the beginning, and was one of the dominant themes in the 2014 and—to a lesser extent—2018 reforms. The central argument discussed in this section is that despite the importance that is attached to this topic, the mechanism developed in the funding rules to monitor and enforce compliance of Europarties with respect for the EU’s fundamental values lacks effectiveness. The limitations of this ‘values compliance mechanism’ are twofold. First, the design of the mechanism is too complex: a number of procedural hurdles and the involvement of too many actors create a high threshold to come to an assessment and (possible) sanctioning of non-compliance. These are to a large extent the result of the objections raised by a number of member states during the negotiations of the subsequent revisions. Second, the strict separation between national and European politics in the finance regime makes it difficult to enforce respect for the EU’s fundamental principles in a multi-level political system. I will demonstrate these limitations by first examining the formal design of the mechanism, and secondly how it has been used in practice. 6.1

The Design of the Values Compliance Mechanism

The principle that European political parties and foundations can only receive European subsidies if they respect the EU’s fundamental values has been an important part of the debates on the finance regime and has not been uncontested. The requirement was already part of the

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Parliament’s proposals of the 1990s, and subsequently included in the 2001 legislative proposal of the European Commission, which motivated the provision stating that ‘it would not be acceptable for a party that preaches restrictions on rights, intolerance or xenophobia, whether it is for or against European integration, to enjoy public financial support’.67 Despite criticism from the UK, Denmark and Austria (cf. Chapter 2), the requirement was included in the first funding rules, which stipulated that Europarties had to respect in their programme and activities ‘the principles on which the European Union is founded, namely the principles of liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law’ (Article 3(c) of Regulation 2004/2003). This criterion was also extended to European political foundations when separate subsidies for them were introduced in 2007. The provision again became the topic of intense debate during the 2012–2014 negotiations, with several member states questioning it. At the same time, the funding of far-right parties received increasing attention in the European Parliament and many MEPs considered the requirement to respect the EU’s fundamental values as a conditio sine qua non. In the second half of the negotiations, the discourse became specifically concentrated on defending the finance regime against illiberal forces (cf. supra). Eventually, the revision of the regulatory regime in 2014 also maintained the condition and even made explicit reference to Article 2 TEU in which the founding values of the Union are mentioned: human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities (Articles 3(1)(c) and 3(2)(c) of Regulation 1141/2014).68 In the subsequent reforms, the requirement remained unchanged. So which parties are targeted by this provision? The criterion is specifically focused on extreme right (or left) political forces, i.e. parties that are considered illiberal or anti-democratic. Many Eurosceptic MEPs, however, claimed that the main objective of the condition was to deprive parties that are critical towards the EU from European subsidies (cf. Chapter 4). However, such a stipulation has never been part of the funding criteria. Moreover, since the 2014 reform, respect for political pluralism—including Eurosceptic parties—has even become explicitly incorporated in the funding rules (Articles 6(2) and 11(3) of Regulation 1141/2014). Yet several principal actors have voiced clear preferences to take away subsidies from—what scholars have labelled as ‘hard Eurosceptic’—parties

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that want to abolish the EU. Inspiration might have been drawn from Article 21 of the German Constitution, which states that ‘parties which […] endanger the existence of the Federal Republic of Germany shall be unconstitutional’. For example, in the context of the negotiations of the 2014 reform, socialist group leader Hannes Swoboda argued that ‘parties that oppose the existence of the EU […] should not be funded with European taxpayers’ money’. In 2017, EPP group leader Manfred Weber defended a similar position: ‘one principle is clear for us: we can’t have the European Union continuing to put money into the hands of those who are anti-European Union’. Weber also explicitly referred to the German example. When Jean-Claude Juncker put forward the proposal to revise the Europarty funding rules in his 2017 State of the Union, he also stated that ‘we should not be filling the coffers of anti-European extremists’.69 Yet these proposals never materialized: support for the EU or European integration never became part of the eligibility conditions for funding. Nevertheless, these quotes might provide some insight in the motivations of these actors to revise the funding rules. The principle that European political parties and foundations must respect the EU’s fundamental values seems relatively straightforward, but the way it is operationalized in a mechanism to monitor and enforce compliance suffers from substantial limitations. Broadly speaking, this mechanism consists of an ex-ante (or proactive) and an ex-post (or reactive) component, both of which have been altered throughout the subsequent revisions of the finance regime in an attempt to make it more effective. The ex-ante component consists of the requirement for parties and foundations to demonstrate that they indeed respect the EU core values before they can gain access to European subsidies. As established in the initial finance regime in 2003, this component entailed a verification whether—considering the phrasing in the rules—the programme and activities of the European party or foundation were in line with the EU’s founding principles. In practice, this mainly came down to a limited formal assessment of the statutes and the political manifesto of the party; a thorough evaluation of the party’s or foundation’s activities fell outside of the scope, since the European Parliament did not want to engage in ‘what could appear to be a “licensing” procedure’.70 Moreover, applicants were encouraged to include a specific reference to the EU’s principles in their statutory documents or political programme.71 In several cases, European parties reduced their manifestos to an absolute minimum, or indeed

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almost literally copied the provision from the rules in their statutes (cf. infra). The 2014-revision weakened this proactive verification even further: a European political party or foundation was deemed to respect the fundamental values if one of its leaders signed a standard formal declaration—supplied in the annex of the Regulation—setting out this commitment (Article 9(3) of Regulation 1141/2014). In other words, the proactive verification came down to nothing more than a process of ‘self-certification’ (Morijn 2019, 629). An additional assessment of, for example, the political platform was no longer foreseen in the rules. This ‘quasi-automatic’ verification was a deliberate choice of the legislators during the 2012–2014 negotiations. Especially the European Parliament wanted to avoid that the newly established Authority would conduct a substantive assessment of compliance; the main political groups wanted to keep this competence with the Parliament. In addition to this proactive element, the values compliance mechanism also includes an ex-post component: a procedure to verify whether a Europarty or foundation has indeed respected the EU’s fundamental values after it has received EU funding. In the initial finance regime of 2003, this reactive component was almost entirely concentrated within the European Parliament (Table 1). The procedure could be initiated by a quarter of the MEPs, representing at least three different political groups (Article 5 of Regulation 2004/2003). The case would subsequently be referred to the responsible parliamentary committee—i.e. the Committee on Constitutional Affairs—which had to organize a hearing with the representatives of the Europarty concerned, and request a (nonbinding) opinion from a Committee of Independent Eminent Persons. Based on this opinion, the Committee on Constitutional Affairs would submit a proposal for a decision to the plenary of the European Parliament, which could decide by a majority of the votes cast (Rule 210 of the EP Rules of Procedure). This Committee of Independent Eminent Persons was a group of three people—with the Commission, Parliament and Council each nominating one—with the sole function of making an assessment of the compliance of the Europarty or foundation with the EU’s fundamental values. Day and Shaw (2006, 309) stated that inspiration for this committee was drawn from the informal procedure that was used in 1999 against Austria. Fourteen EU member states had called for sanctions against the country,

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Table 1 The reactive component of the values compliance mechanism (see also Morijn 2019, 630) Regulation No. 2004/2003

Regulation No. 1141/2014

INITIATION

• Request by a quarter of the Members of the European Parliament, representing at least three political groups

DELIBERATION

• Hearing with representatives of the European political party concerned • Opinion of the Committee of Independent Eminent Persons • Vote by the European Parliament (majority of the votes cast)

• Request by the European Parliament, the European Commission or the Council of Ministers (possibly following information received from the Authority) • Opinion of the Committee of Independent Eminent Persons

DECISION

SANCTION

• Loss of access to EU funding

VETO

None

• Decision by the Authority of European political parties and European political Foundations • De-registration (which causes a loss of access to EU funding) • Objection of the European Parliament or Council of Ministers within three months after the Authority’s decision of de-registration

because the Austrian People’s Party had entered in a coalition with the far-right Freedom Party. Three ‘wise men’ (Martti Ahtisaari, former President of Finland, Jochen Frowein, eminent international lawyer, and Marcelino Oreja, former Spanish Foreign Minister, European Commissioner and Secretary-General of the Council of Europe) were given the task to verify whether the Austrian government respected the common European values. Despite the important role for this Committee, the initial verification procedure left the final decision up to a political body, the European Parliament. This meant that MEPs could rule on the (financial) fate of their political adversaries. To some extent, this was mitigated by the fact that the threshold to initiate the procedure was relatively high, as it required the support of one-quarter of the MEPs from three political

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groups. However, this also entailed an important weakness of the mechanism: the high threshold meant that an in-depth assessment of a case was not easily initiated. The reactive component of the compliance mechanism was substantially altered in 2014: the final decision on whether a European party or foundation respects the fundamental values was taken away from the European Parliament and placed with the newly established independent Authority. The procedure can, however, only be initiated by the European Parliament, the European Commission or the Council of Ministers (or the Member State in which the Europarty or foundation has its seat if it concerns an obligation under national law). One of these institutions may lodge a request with the Authority to verify compliance with the fundamental values. The Authority can also inform them if it ‘becomes aware of facts which may give rise to doubts concerning compliance’, after which the EU institutions have to indicate within two months after receiving that information whether they will start the procedure (Article 10(3) of Regulation 1141/2014). Consequently, the Authority is not able to initiate the procedure on its own, but depends on the action of one of these three other institutions to potentially enforce respect for the fundamental principles. In the European Parliament, such a request can be triggered by a quarter of the MEPs representing at least three political groups (in analogy to the past procedure), after which the entire Parliament votes on the matter.72 In other words, a majority of the MEPs have to agree to even request the Authority to verify compliance. This means in practice that such an action is only likely against Europarties or foundations affiliated to the smaller EP groups. Similarly, Morijn (2019, 636–637) argued that a request from the Council of Ministers or the European Commission regarding any of the larger European political parties is politically just as unlikely considering the affiliation of the ministers in the Council and the European Commissioners to one of the main Europarties. The internal procedures in the Council and Commission to initiate a request are unclear. In analogy to the old procedure, the Authority must also ask the opinion of the Committee of Independent Eminent Persons—which have to provide one within two months—and subsequently make a decision whether or not the European party or foundation indeed fails to respect the EU’s core values and is de-registered (and thus loses its access to EU funding). This Committee thus retains its important position, since the

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content of its opinion will have an important influence on the decision of the Authority. The rules stipulate in this regard that in its opinion, the Committee must ‘give full consideration to the fundamental right of freedom of association and to the need to ensure pluralism of political parties in Europe’ (Article 11(3) of Regulation 1141/2014), which could either be seen as a broad interpretational context or as an instruction that interference with European political parties can only be a matter of last resort (Morijn 2019, 638). Despite the Committee’s crucial function in assessing compliance with respect for the EU’s fundamental values, its neutrality can be questioned. The Committee was only fully constituted for the first time in the autumn of 2016, in the last months of the finance regime of Regulation 2004/2003. It was composed of the then EP President Martin Schulz, European Commissioner Carlos Moedas and Ivan Korˇcok, who was the ambassador in charge of the Slovak Council Presidency in 2016 (Table 2). In other words, the three EU institutions nominated three members from their own ranks—all with links to European or national party politics—to act as the ‘independent’ Committee. The 2014 revision signified an improvement of this situation. It expanded the Committee from three to six members (with the three main institutions each appointing two) that need to be appointed for a non-renewable mandate within six months after the European elections. In addition, the Committee members can no longer be Members of the European Parliament, the Council or the Commission, nor hold any electoral mandate, or be current or former employees of a European political party or foundation (Article 11 of Regulation 1141/2014). This does not mean, however, that the composition of the committee is politically neutral in practice. When considering the 2017 and 2019 members of the Committee, it is clear that both the European Parliament and the European Commission have appointed (former) politicians (Table 2). This of course potentially jeopardizes a neutral and objective assessment of the Committee, especially if the (former) European party of some of the members is evaluated. Attempts by the Greens/EFA group during the 2019 revision to introduce stronger guarantees on the committee’s independence by excluding members of national or regional parties and also former Members of the European Parliament, the European Commission or the Council were thwarted by the other main political groups.73 Consequently, the 2014 revision has substantially changed the values compliance mechanism, with some positive points. The procedure has

Martin Schulz

Ivan Korˇcok

Council of Ministers

2016

Slovakia

Germany

Government Ambassador for the Slovak Presidency of the Council (2017)

President of the European Parliament (2012–2017) Member of European Parliament, S&D group (1994–2017)

Denmark

Spain

Maria Emilia Casas

Rebecca Adler-Nissen

Italy

Carlo Casini

2017–2019

Christine Verger

Lorenzo Cesa

2019–2024

Professor of Political Algis Science, University of Krupavicius Copenhagen

Chair of the Committee on Constitutional Affairs, European Parliament (2009–2014) Member of European Parliament, EPP group (1984–1999; 2006–2014) Former President of the Spanish Constitutional Court

Composition of the Committee of Independent Eminent Persons

European Parliament

Table 2

Lithuania

France

Italy

Secretary-General, Socialist Group European Parliament (1999–2004); Director Commission Representation in France (1994–1996) Professor of Political Science, Vytautas Magnus University

Member of European Parliament, EPP group (2004–2006; 2014–2019)

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European Commission

Carlos Moedas

2016

Portugal

European Commissioner for Research, Science and Innovation (2014–2019), affiliated to Portuguese Social Democratic Party (EPP) Bulgaria

Portugal

Meglena Kuneva

Antonio Vitorino

Not appointed (anno 2021)

Not appointed (anno 2021)

Christian Waldhoff

Professor of Law, Humboldt-University Berlin European Commissioner for Consumer Protection (2007–2010) Minister in Bulgarian government (2002–2006; 2014–2017), affiliated to Bulgaria for Citizens (EPP) European Commissioner for Justice and Home Affairs (1999–2004), affiliated to Portuguese Socialist Party (PES)

Christoph Möllers

Germany

2019–2024

2017–2019 Germany

Professor of Law, Humboldt-University Berlin

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been depoliticized, since the final decision no longer lies with the European Parliament but with the independent Authority. However, as mentioned, this has not prevented a potential politicization of the Committee of Independent Eminent Persons. However, the verification procedure (as changed in 2014) suffers from a number of additional thresholds and limitations that hamper its effectiveness. First, the procedure may not be initiated within two months before the European elections, although this electoral period could be crucial in assessing whether the EU’s fundamental values are respected. Second, the Authority can only take a decision to de-register a Europarty or foundation in case of a ‘manifest and serious breach’ of compliance, constituting a high threshold (see also Grasso and Perrone 2019, 678; Morijn 2019, 634). This had been a concession during the 2012–2014 negotiations towards a number of member states that were critical of farreaching party regulation. Consequently, the Authority has no instrument to intervene against breaches that are not ‘manifest and serious’. Similarly, the only sanction that can be applied is de-registration (and loss of public funding). This is a rather blunt tool; there are no procedures included in the rules that would allow a European political party or foundation to rectify any non-compliance. As such, de-registration constitutes a ‘nuclear option’ that the Authority might be very reluctant to use in practice. Third, the European Parliament and the Council hold a veto over the Authority’s decision to de-register: if they object within a period of three months, the European party or foundation remains registered (Articles 10(3) and 10(4) of Regulation 1141/2014). There is however some disagreement on whether the Council and the Parliament each hold a veto, or whether the decision can only be overruled if both institutions object (Grasso and Perrone 2019, 678; Morijn 2019, 629). This provision was also a deliberate decision taken during the 2012–2014 negotiations to ensure that the political level maintains the final say on the matter. The idea is that the decision of the Authority is subjected to political scrutiny by the Council and the Parliament and that a Europarty’s de-registration ultimately becomes a political decision. This politicization of the procedure has been fiercely criticized (Grasso and Perrone 2019, 678–679). Yet it should be noted that whereas under the initial procedure a political majority (in the Parliament) had to be found to decide that a Europarty breached the EU’s fundamental values, now a majority must be found to overrule such a decision. In other words, while in the

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past political groups had to collectively act against an opponent, a political force that is deemed breaching the EU’s fundamental values now has to find support among its political opponents to avoid de-registration. Fourth, the safeguards of legal review favour the status quo. The Court of Justice was given the competence to review any decision of the Authority to de-register a European political party or foundation. Conversely, however, any inaction of the EU institutions to initiate the verification procedure after they were informed by the Authority of a possible breach cannot be challenged before the Court. Similarly, challenging a veto of the Parliament and/or Council to overrule a deregistration before the Court also seems implausible (Grasso and Perrone 2019, 678–679). Consequently, the entire procedure is relatively complex, with many actors involved. This considerably diminishes the practical usefulness and effectiveness of the procedure, as practical experiences have also shown. 6.2

The Practical Application of the Values Compliance Mechanism

The values compliance mechanism has been initiated multiple times over the years: two times under the finance regime of Regulation 2004/2003, in which the process was heavily concentrated in the European Parliament. These procedures were focused on collaborations of far-right parties. In 2018–2019—under the rules of Regulation 1141/2014— there were again attempts to initiate the verification procedure, this time concentrated on illiberal parties within the main European political parties. These experiences demonstrate the limited effectiveness of the values compliance mechanism, since in none of these cases an indepth assessment—let alone decision—on the compliance of a European political party with the EU’s fundamental values was undertaken. 6.2.1

Verifying Compliance of Far-Right European Political Parties and Foundations In 2013, the values compliance mechanism was initiated for the first time, aimed at the European Alliance for Freedom (EAF) and the Alliance of European National Movements (AENM). The EAF brought together mainly individual politicians from (among others) the Austrian Freedom Party, Flemish Interest (Belgium), the Swedish Democrats and the National Rally from France. The AENM included among others the British National Party, Tricolour Flame from Italy and Jobbik from

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Hungary. The EAF and the AENM received EU funding for the first time in 2011 and 2012, respectively. In January 2013, more than 200 MEPs from four political groups sent a letter to EP President Martin Schulz, requesting to initiate the verification procedure for the two parties concerned. After the endorsement of the Conference of Presidents, the letter was sent to the Committee on Constitutional Affairs. Interestingly, the group coordinators concluded not to engage with the issue for two main reasons. First, they lacked the proper documentation to make a proper assessment: no particular reasons on why these parties did not respect the fundamental rules had been put forward, and the documents submitted by these two European political parties to the European Parliament were not made available to the Committee.74 Second, the procedure coincided with the trilogue meetings on the revision of the regulatory framework in 2013–2014, and the coordinators feared it would interfere with the ongoing negotiations. Consequently, a proper evaluation of the respect of the EU’s fundamental values by these two parties was never conducted. In 2016, the mechanism was again triggered, this time focusing on the Alliance for Peace and Freedom (APF), a collaboration of a variety of far-right—in some cases openly neo-fascist or neo-Nazi—political parties and politicians, including the National Democratic Party of Germany, New Force from Italy, the Greek Golden Dawn Party and members linked to the former Party of the Swedes. That year, the APF and its affiliated foundation Europa Terra Nostra secured EU funding of up to e600,000 for the first time.75 The publication of this news by Swedish magazine Expo drew the attention of MEP Marita Ulvskog (Swedish Social Democrats)76 and quickly caused consternation among MEPs from several other political groups.77 Particular attention was dedicated in this respect to ‘Manhemsdagen’, an event that was organized in May 2016 by Europa Terra Nostra, bringing together nationalist, extreme right and even neo-fascist politicians, parties and organizations from all over Europe. A formal request to initiate the verification procedure was made by the chairpersons of the EPP group (Manfred Weber), the S&D Group (Gianni Pittella), the ALDE Group (Guy Verhofstadt) and the GUE/NGL group (Gabriele Zimmer) in a letter of 11 May 2016 to EP President Martin Schulz. The request was supported by more than 280 additional MEPs,78 reaching the required support of a quarter of the MEPs from at least three political groups. After a discussion in the

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Conference of Presidents, the political group leaders decided to start the procedure and forwarded the request to the Committee on Constitutional Affairs.79 The Committee—in line with the procedure—requested an opinion of the Committee of Independent Eminent Persons on the case, and on 9 February 2017 also organized a hearing with the APF representatives: Secretary-General Stefan Jacobsson and Party President Roberto Fiore, accompanied by their lawyer Peter Richter. However, the European Parliament never managed to finalize the verification procedure, due to both technical and more substantive reasons. According to the rules, the Parliament’s plenary could only vote on a decision to suspend funding after the Committee of Independent Eminent Persons had delivered an opinion. The first Committee was only established in the autumn of 2016 (cf. supra) but did not adopt an opinion before the end of the year (because it never met). On 1 January 2017, the new Regulation entered into force, meaning that the procedure that had started under the previous Regulation lapsed.80 A substantive analysis of the case against the APF illustrates the difficulties in verifying whether a Europarty or foundation respects the fundamental EU values. As mentioned, the proactive evaluation of the funding application is limited to an assessment of the programme and planned activities of the European party. In case of the APF and its affiliated foundation Europa Terra Nostra, they had—almost to the letter—included the clause on respect for the EU’s fundamental values from the funding rules in their founding documents. In the political programme of the APF was stated that it ‘observes respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities [and] […] is committed to providing equal opportunity for individuals of both sexes within its organisation on the grounds of merit and rejects all forms of discrimination, particularly discrimination based on gender’.81 A similar wording was used with regard to the planned activities of the European party, and by its affiliated Foundation. Consequently, a formal assessment solely based on these documents could reach no other conclusion than that APF and Europa Terra Nostra fulfilled the condition of respect for the EU’s fundamental values. The proactive evaluation did not comprise a more in-depth assessment. As can be read in the report of the Secretary-General on the funding applications for 2016, the evaluation included only ‘a limited

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analysis of their activities’, while it was ‘outside the scope of the evaluation if members [emphasis added] of the European organisations (national parties or natural persons: Members of European Parliament, Members of Parliaments, etc.) respect the [EU’s fundamental] principles’ (see also Grasso and Perrone 2019, 681).82 The hearing with representatives of the APF in the Committee of Constitutional Affairs showed that the reactive assessment of the values compliance mechanism was confronted with similar limitations. The arguments put forward by the MEPs to demonstrate that the Europarty did not comply with the values criterion were mostly related to actions and declarations of APF Board Members from before the European party was established, or focused on the behaviour of some of the member parties. These assertions were promptly dismissed by the APF’s lawyer, who argued that these declarations and actions had nothing to do with the European party organization.83 Eventually the APF did lose its access to funding, but not as a consequence of the values compliance mechanism, but due to a combination of burdensome administrative procedures and technical changes made to the finance regime. The APF and its foundation Europa Terra Nostra again applied for funding for financial year 2017 (while the verification procedure was thus still pending in Parliament). However, the European Parliament took a number of ‘risk mitigation measures’: only 33%— instead of the usual 80%—of the subsidy sum for the APF and Europa Terra Nostra would be paid, and only on the condition of a ‘pre-financing guarantee’. This meant that the Europarty and foundation had to secure a guarantee from a bank with a favourable credit rating that was valid for 2 years and was unconditional.84 The Europarty was unable to provide such a guarantee, and it did not receive any pre-financing. This measure was also applied to several other (radical right) Europarties, which all eventually dissolved because of financial difficulties (cf. Chapter 6). The APF again applied for EU funding for 2018, the first year that the new Regulation 1141/2014 was fully in force. This meant that the Europarty first had to be registered with the Authority before it could request European subsidies. The APF filed its application for registration in September 2017, but the processing of the application by the Authority dragged well into 2018. As a consequence, the Europarty was not registered on the deadline for funding applications,85 and missed out on its 2018 subsidies. The APF finally gained its registration in February 2018. Again, a mere formal declaration from the Europarty that it respected

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the EU’s fundamental values was considered sufficient for the Authority to fulfil this requirement. However, the Europarty was relatively quickly removed again from the register in September 2018, but not on the grounds of non-compliance with respect for European values: the APF could not provide sufficient documentation to prove that it was represented in a quarter of the member states. Following the 2018 revision, a Europarty could only rely on member parties and no longer on individual Members of Parliament. In case of the APF, member parties from only two EU countries (People’s Party Our Slovakia and National Democratic Party of Germany) submitted the required documents.86 The Europarty submitted a new application for registration in 2020, but again fell short of the required representation in a quarter of the member states.87 The AENM—another contested Europarty—was in a similar situation: in April 2018, the Europarty was officially registered with the Authority (a formal declaration stating respect for the EU’s fundamental values was again deemed sufficient). In August 2018, also the AENM was removed because of a lack of representation.88 In sum, both the APF and the AENM lost their access to EU funding as a direct consequence of the 2018 revision of the rules. 6.2.2

Verifying Compliance of Mainstream European Political Parties and Foundations Since 2018, the debate has focused on possible non-compliance within the mainstream European political parties. The 2018 revision made a small, but potentially important, alteration to the values compliance mechanism. In addition to the three main institutions, the verification procedure could now also be initiated by a group of citizens that submit a reasoned request to the European Parliament. In other words, also European citizens now had the formal possibility to contribute to the monitoring of the Europarties’ and Eurofoundations’ compliance with the EU’s fundamental values. Not long after the revision entered into force (in May 2018), this new provision was used for the first time. In September 2018, two law professors Alberto Alemanno and Laurent Pech submitted a reasoned request to verify compliance of the EPP and the ECRP. With regard to the EPP, they argued that the Europarty failed to comply with the condition, because it had refused to take deliberate action against its member party Fidesz, while the European Parliament had repeatedly signalled that the EU values as stipulated in Article 2 TEU were undermined by this party

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in the Hungarian government. Similarly, with regard to the ECRP, they stated that the Europarty had failed to act against its Polish member party Law and Justice, especially since the activation of the Article 7 procedure by the European Commission against Poland in 2016.89 Again, the core argument concerned the behaviour of the member parties, and not of the European political party directly. This request was initially denied by the European Parliament, because it had not yet adapted its internal rules of procedure to this new provision. The rules were eventually altered in January 2019, with the provisions stating that a reasoned request could be submitted by a group of at least 50 citizens— Members of European Parliament could not sign the request—and that it should include ‘substantial factual evidence showing that the European political party or European political foundation in question does not comply with the conditions’.90 The President of the European Parliament was made responsible for assessing the admissibility of the requests. Following the change of the rules of procedure, Alemanno and Pech submitted a new reasoned request with regard to the EPP and the ECRP, but it was deemed inadmissible due to technical reasons (a lack of signatures). In sum, despite the fact that respect for the EU fundamental values has been a heavily discussed topic in the revisions of finance regime, and despite several requests to verify compliance of a Europarty, there has not yet been a substantive assessment of this criterion. The verification procedure has been initiated—or attempted to initiate—for five different Europarties, but in none of these cases, the process was finalized. These practical examples demonstrate the complexity of value compliance in the EU system of multi-level party politics: to what extent can a European political party be held responsible for the behaviour of its members when these actions or declarations have taken place without any link to an activity of the respective Europarty? The regulatory framework indeed makes a clear distinction between European political parties and its national member parties, and it is difficult to hold a European party accountable for deviant conduct of its members if the European party is not directly involved. Some European parties even explicitly underline in their statutes that their members act independently on the national level. The APF, for example, included in its founding document that it ‘was not bound by the actions or opinions of the parties that join or become members of the association’. Similarly, can a European party be sanctioned for non-compliant behaviour of its Board Members if these

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actions were done in a personal capacity without any direct link to the respective Europarty? Since the verification procedure for the APF was never finalized, it remains difficult to answer these questions. In this respect, Morijn (2019, 620, 634–635) argued that ‘the mechanism appears tailored to single out only a subset of problematic illiberals, namely those united in a single European political party’, while it has remained ineffective against illiberal national parties that are part of the mainstream European political parties and might even provide an incentive for illiberal parties to ‘seek refuge’ in a mainstream Europarty. It should be noted that the initial Commission proposal in 2012 stated that a European party had to observe the founding EU principles ‘in particular in its programme and activities, and through those of its members [emphasis added]’.91 Such a formulation would indeed have clarified the responsibility of the European party organization, but this particular phrase was not included in the final text of the 2014 Regulation, resulting in a much more ambiguous condition.

7

Conclusion

The findings of this chapter demonstrate that the changing finance regime is characterized by an interactive process that is guided by the interests, values and traditions of the main actors involved. These actors have attempted to actively alter the regulatory framework: the content of the subsequent reforms has been pushed by the European Commission (in 2019), the main European political parties (in 2018) and engaged Members of the European Parliament (in 2007 and 2018). These substantive proposals for change were often influenced by the existing effects and consequences of the funding rules that were in place. For example, the call for lower co-financing obligations resulted from the increased budgetary pressures that the European political parties and foundations were experiencing. The practices of Europarty instrumentalization and the availability of financial resources for far-right parties was an important incentive to raise the thresholds for EU funding. In line with sociological institutionalism, normative considerations also played an important role. The first revision of 2007 was heavily embedded in the aspirations to strengthen European political parties as an instrument to develop EU democracy, and financial support for European parties was seen as a measure to facilitate this. This aim can also be recognized in the proposals to allow more financial flexibility for European

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political parties (in 2007 and 2014) and the introduction of a European legal status (in 2014). Gradually, this developmental motivation was replaced with a more defensive rationale aimed at ‘protecting’ the finance regime against the involvement of anti-democratic parties (2014 revision), perceived ‘abuse’ of European subsidies (2018 revision) or possible foreign interference in the European elections (2019 revision). In most cases, these normative aspirations were in line with the strategic interests of the main European political parties and their affiliated groups. Although the link between the extra- and intra-parliamentary component of political parties at European level is not as strong as in most member states, the findings show that the main European political parties have been able to influence the decision-making process. They were successful if they conducted actions to set the agenda and influence the debate, and if they found allies in the European Parliament and Council (or were able to convince their affiliated MEPs and ministers of the need for the proposed reforms). This could be recognized during the 2007 and 2018 revisions, during which the Europarties were able to put their mark on the content of the reform. In 2014, on the other hand, their involvement was more limited and the process resulted in changes that were not aspired by the main European political parties. Achieving a reform of the funding rules also means overcoming the constraints of the decision-making procedure, and in particular gaining the approval of the Council. Several member states indeed resisted many of the proposals that had been put forward. One important reason of this sceptical attitude has been the perception of some national governments that some revisions could jeopardize their control over politics at national level. This can explain their opposition against the use of EU funding for national referendum campaigns, or easing the ban on indirect support of national parties. National traditions on party finance and regulation also played an important role. Countries without a history of party foundations or study centres were more hesitant to support funding for European political foundations. Similarly, stringent conditions for party funding or far-reaching requirements concerning party organization and activities were criticized by governments with a more permissive tradition of party regulation. Especially this last point has also compromised the values compliance mechanism in the regulatory framework. Partly because of the scepticism of some national delegations (such as the Netherlands) for demanding conditions with regard to the EU’s fundamental values, the

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mechanism—that already suffered from severe limitations—was weakened further. The use of the mechanism in practice has demonstrated its limited effectiveness, mainly because of the complexity of the procedure which creates high thresholds to overcome, and the strict formal separation between politics at national and European level which hampers an effective enforcement of the EU’s fundamental principles in a multi-level political system.

Notes 1. See the explanatory statement of: European Commission, Proposal for a Regulation amending Regulation (EC) No. 2004/2003 on the regulations governing political parties at European level and the rules regarding their funding (COM(2007) 364 final), Brussels, 27 June 2007, p. 4. 2. Article 2 of the EP resolution on European political parties, Brussels, 23 March 2006. 3. This was stated in: European Commission, Call for proposals DG EAC/29/2007: European political foundations pilot projects, p. 3. 4. Debate in the European Parliament on the Regulations governing political parties at European level and the rules regarding their funding on 13 November 2007 in Strasbourg. 5. European Commission, Proposal for a Regulation amending Regulation (EC) No. 2004/2003 on the regulations governing political parties at European level and the rules regarding their funding (COM(2007) 364 final), Brussels, 27 June 2007, p. 2. 6. Article 13(i) of the EP resolution on European political parties, Brussels, 23 March 2006. 7. For similar remarks, see the debate in the European Parliament on the Regulations governing political parties at European level and the rules regarding their funding on 13 November 2007 in Strasbourg. 8. Letter of 1 June 2005 from Werner Hoyer, chairman of ELDR, Poul Nyrup Rasmussen, chairman of the PSE, Wilfried Martens, chairman of the PPE, Grazia Francescato, chairman of the EGP, Nelly Maes, chairman of the EFA-ALE, Fausto Bertinotti, chairman of the PGE, M. Kaminski, chairman of the PUEN, François Bayrou, chairman of the PDE and Francesco Rutelli,

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chairman of the PDE, to Josep Borrell Fontelles, President of the European Parliament on the report by the Secretary-General of the European Parliament on the funding of European political parties. 9. EP Secretary-General, Report on the implementation of funding arrangements for political parties at European level, Brussels, 11 October 2005. 10. A pilot project of e5 million was proposed jointly by Catherine Guy-Quint (Socialist Group) and Helga Trüpel, (Greens/EFA) (Amendment 0554), and by Catherine Guy-Quint (Socialist Group) (Amendment 4664); a pilot project of e1 million was proposed by Salvador Garriga Polledo and Ingeborg Gräßle (EPPED Group) (Amendment 0770), and by Andrew Duff (ALDE group) (Amendment 4757). 11. European Commission, Proposal of a Regulation amending Regulation (EC) No. 2004/2003 on the regulations governing political parties at European level and the rules regarding their funding (COM(2007)364 final), Brussels, 27 June 2007, p. 2. 12. Justification of the European Parliament for the reintroduction of the pilot project during the second reading of the 2007 EU budget. 13. See for example: Council of the EU, Contribution by the German delegation (13924/07), Brussels, 15 October 2007. 14. The detailed amendments of the Council can be found in: Council of the European Union, Compromise Text of the Presidency (11559/07 PE 228 INT 90 CODEC 770), Brussels, 26 October 2007. 15. See: Council of the EU, Opinion of the Legal Service (13780/07), Brussels, 11 October 2007. 16. Council of Ministers, Voting Results (16643/07), Brussels, 17 December 2007. 17. This was achieved by creating the specific instrument ‘contributions to European political parties’ in the Financial Regulation, see Regulation No. 1142/2014 amending Regulation (EU, Euratom) No. 966/2012 as regards the financing of European political parties. The financial conditions for European political foundations however, remained unchanged. 18. EP resolution of 6 April 2011 on the application of Regulation (EC) No. 2004/2003 on the regulations governing political

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parties at European level and the rules regarding their funding (2010/2201(INI)). 19. European Commission, Proposal for a Regulation of the European Parliament and of the Council on the statute and funding of European political parties and European political foundations, Brussels, 12 September 2012, p. 3. 20. Draft report on the proposal for a regulation on the statute and funding of European political parties and European political foundations (PE498.012v02-00), 7 December 2012. 21. See the explanations of votes of 16 April 2014. 22. Decision 2016/1432 of 19 August 2016. 23. Decision 2021/1271 of 26 July 2021. 24. The exact amount of the financial sanction depends on how high the irregular sum was that the European political party or foundation received. 25. Any decision or sanction imposed by the Authority can be challenged before the European Court of Justice. 26. See the explanations of votes of 16 April 2014. 27. See: EP Resolution on the application of Regulation (EC) No. 2004/2003 on the regulations governing political parties at European level and the rules regarding their funding, 6 April 2011. 28. European Commission, Proposal for a Regulation of the European Parliament and of the Council on the statute and funding of European political parties and European political foundations, Brussels, 12 September 2012. 29. This analysis is mainly based on the documents of the trilogue negotiations: Council of Ministers, 1st informal trilogue at political level, Strasbourg, 16 April 2013; Secretariat of the Committee on Constitutional Affairs, First informal trilogue held in Strasbourg, Brussels, 24 April 2013; Council of Ministers, 1st technical trilogue, Brussels, 25 April 2013; Council of Ministers, 2nd technical trilogue, Brussels, 13 May 2013; Council of Ministers, 2nd informal trilogue at political level, Brussels, 15 May 2013; Secretariat of the Committee on Constitutional Affairs, State of play after the second trilogue with Council, Irish Minister for European Affairs Creighton, and Commission Vice-President Sefcovic, on 15 May 2013, Brussels, 16 May 2013.

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30. See the Justification of amendment 26 of the AFCO Report on the statute and funding of European political parties and European political foundations (A7-0140/2013), Brussels, 23 April 2013. 31. Council Document 8106/13, 5 April 2013, as cited by Morijn (2019, 628). 32. Council of the EU, Statement of the Government of The Netherlands, 19 September 2014. 33. See the statements attached to the vote in the Council on 29 September 2014. 34. European Commission, Proposal for a Regulation amending Regulation (EU, Euratom) No. 1141/2014 of the European Parliament and the Council of 22 October 2014 on the statute and funding of European political parties and European political foundations, Brussels, 13 September 2017. 35. Council of the EU, Press Release: Funding of European political parties: revised rules get Council approval (107/18), 7 March 2018. 36. Debate in the AFCO Committee on 11 October 2017. 37. See: Council of the EU, Press Release: Funding of European political parties: revised rules get Council approval (107/18), 7 March 2018. 38. European Commission, Proposal for a Regulation of the European Parliament and of the Council on the statute and funding of European political parties and European political foundations, Brussels, 12 September 2012, pp. 4–5. 39. Lowering the co-financing obligation would ‘mitigate the risk that they would use dubious financial practices to reach the required level of own resources’, see Council of the EU, Press Release: Funding of European political parties: revised rules get Council approval (107/18), 7 March 2018. 40. European Commission, Proposal for a Regulation of the European Parliament and of the Council on the statute and funding of European political parties and European political foundations, Brussels, 12 September 2012, p. 11. 41. Debate in the AFCO Committee on 11 October 2017; Council of the EU, Press Release: Funding of European political parties: revised rules get Council approval (107/18), 7 March 2018. 42. See the Minutes of the EP Bureau Meetings of 15 December 2014 (542.763/BUR/rev), pp. 22–23; of 27 April 2015 (PE

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548.156/BUR), p. 46; of 7 September 2015 (PE 559.668/BUR), p. 34. 43. Martin Schulz, Letter D 319870 to the President of the European Commission, Jean-Claude Juncker, 20 November 2015, Brussels. 44. See for example: Manfred Weber, Letter D 307536 to Martin Schulz—President of the European Parliament, 21 April 2016; Gianni Pittella, Letter D 307608 to Martin Schulz—President of the European Parliament on an urgent matter regarding EUfunding going towards fascist party, 21 April 2016. 45. European Parliament, Minutes of the Meeting of the Conference of Presidents of 4 May 2016 (PE 579.193/CPG), pp. 14–15. 46. Joseph Daul, Sergei Stanishev and Hans van Baalen, Letter on proposals for a review of the recently-enacted revised Regulation on the funding of European political parties and Foundations, 22 April 2016. 47. EP Secretary-General, Report on the funding of European political parties and European political foundations (PE 583.246/BUR/ANN), Brussels, 2016. 48. European Parliament, Minutes of the EP Bureau Meeting of 12 December 2016 (PE595.137/BUR/rev), p. 16. 49. Danuta Hübner on behalf of the Committee on Constitutional Affairs, Question for oral answer to the Commission on a review of the Regulation on the statute and funding of European political parties and foundations (B8-0205/2017), Brussels, 31 January 2017. 50. Press Conference of Manfred Weber in Strasbourg on 14 March 2017. 51. European Parliament, Debate on the review of the Regulation on the statute and funding of European political parties and foundations, Strasbourg, 15 March 2017. 52. EP resolution of 15 June 2017 on the funding of political parties and political foundations at European level (T8-274/2017). 53. Proposal for a Regulation amending Regulation (EU, Euratom) No. 1141/2014 (COM(2017)481). 54. In its explanatory memorandum to the proposal, the European Commission stated that ‘based on the extensive input obtained from various stakeholders […] the Commission has therefore decided to propose a limited number of targeted amendments

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to this Regulation. […] The focused changes should be in place before the 2019 European elections’. 55. See e.g. the AFCO Committee meetings of 28 September 2017, 11 October 2017, 23 October 2017, and 21 November 2017. 56. See: European Parliament, Table for the trilogue on the 27/02/2018, Brussels, 27 February 2018; European Parliament, Compromise reached at the informal political trilogue of 27/02/2018, Brussels, 27 February 2018. 57. Regulation No. 2019/493 of 25 March 2019 amending Regulation No. 1141/2014 as regard a verification procedure related to infringements of rules on the protection of personal data in the context of elections to the European Parliament. 58. Similar to the values compliance mechanism, the Authority is thus unable to start the procedure on its own behalf, but can only act following a decision from a national supervising authority. However, in contrast to the values compliance mechanism, the European Parliament and the Council of Ministers do not hold a veto over the Authority’s decision, and an infringement does not give rise to a de-registration of the Europarty or foundation concerned. Yet, a financial sanction does exclude the Europarty or foundation from applying for EU funding in that year. 59. European Council, Leaders’ Agenda: Internal Security, Salzburg, 19–20 September 2018. 60. See: European Commission, Communication on securing free and fair European elections, Brussels, 12 September 2018. 61. European Commission, Proposal for a Regulation amending Regulation No. 1141/2014 as regards a verification procedure related to infringements of rules on the protection of personal data in the context of elections to the European Parliament, Brussels, 12 September 2018, pp. 2, 12, 13. See also recitals 3, 4 and 5 of Regulation No. 2019/493. 62. European Commission, Communication on securing free and fair European elections, Brussels, 12 September 2018, pp. 8–9. 63. AFCO Meeting of 12 November 2018. 64. European Commission, Proposal for a Regulation amending Regulation No. 1141/2014 as regards a verification procedure related to infringements of rules on the protection of personal data in the context of elections to the European Parliament, Brussels, 12

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September 2018, pp. 2, 6, 12. See also recital 2 of Regulation No. 2019/493. 65. Authority for European Political Parties and European Political Foundations, Annual Activity Report 2019, Luxembourg, 2020, p. 18. 66. Council of the EU, Statement by Hungary (7129/19 ADD1), Brussels, 14 March 2019; Council of the EU, Note of the 3682nd meeting of the Council of the EU (General Affairs) (7654/19), Brussels, 19 March 2019. 67. See the explanatory statement of the Proposal for a Council Regulation on the statute and financing of European political parties (COM(2000)898), 13 February 2001. 68. Interestingly, the funding rules do not make explicit reference to the second sentence of Article 2 TEU, which refers to the values of pluralism, non-discrimination, tolerance, justice, solidarity and equality between women and men; for a more in-depth discussion, see Morijn (2019, 634). 69. See: Toby Vogel, ‘MEPs call for funding of ‘xenophobic’ parties to stop’, Politico.eu, 23 January 2013; Press Conference of Manfred Weber in Strasbourg on 14 March 2017; European Commission, President Jean-Claude Juncker’s State of the Union Address 2017, Brussels, 13 September 2017. 70. Although this amendment 8 proposed by the AFCO Committee was not included in the final compromise at plenary level, it gives an indication of the dominant line of thought in Parliament. 71. DG Finance, Guide on the operating grants awarded by the European Parliament to political parties and foundations at European level, 17 March 2011, pp. 9 and 11. In addition, the evaluation of the financial reports of the European parties and foundations is mainly focused on technical-financial issues, and not on compliance with the EU’s founding principles. 72. Rule 235 of the Rules of Procedure of the European Parliament (September 2021). 73. See Amendments 1, 8 and 11 of Pascal Durand in the AFCO Committee on the proposal for Regulation amending Regulation No. 1141/2014 on the protection of personal data in the context of elections to the European Parliament. 74. Minutes of Conference of Presidents, 10 October 2013, p. 10.

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75. APF also applied for EU funding in 2015, but the application was denied due to a lack of parliamentary representation in a quarter of the member states. 76. D. Vergara and A. Quensel, European fascist and neo-nazi association gets vast EU subsidy, Expo, 14 April 2016; M. Färnbo, Swedish MEP to summon parliamentary group to stop EU-subsidy to fascists and neo-nazis, Expo, 15 April 2016. 77. D. Mützel, European Parliament funding of neo-Nazi conference rings alarm bells, EurActiv, 27 April 2016. 78. N. Nielsen, EU parliament mulls funding ban for far-right party, EU Observer, 13 May 2016; The Green group was not in favour of using the procedure against the APF as it could help them demonise the EU against its supporters, and wanted to confront them directly with their proposed policies. 79. Minutes of the Conference of Presidents, Strasbourg, 12 May 2016, p. 15. 80. European Parliament, Activity Report of the Committee on Constitutional Affairs: 8th Parliamentary Term (July 2014–June 2019), Brussels, p. 49. 81. Alliantie voor Vrede en Veiligheid, Statuten van de vzw, 15 September 2015 (Article 3). 82. EP Secretary-General, Note on the funding of political parties and political foundations at European level: grant award decision for the financial year 2017, Brussels, 5 December 2016, p. 4. 83. Cf. Hearing in the AFCO Committee on 9 February 2017. 84. EP Secretary-General, Note on the funding of political parties and political foundations at European level: grant award decision for the financial year 2017, Brussels, 5 December 2016, p. 9. The APF contested this decision at the EU Court of Justice, but lost the case. 85. The deadline for applications was 30 September 2017, while the application for registration was submitted on 19 September 2017 with the Authority. 86. For more details, see Decision of the Authority for European Political Parties and European Political Foundations of 13 September 2018 to remove Alliance for Peace and Freedom from the Register. 87. For more details, see: Decision of the Authority for European Political Parties and European Political Foundations of 26

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November 2020 not to register Alliance for Peace and Freedom ASBL. 88. Decision of the Authority for European Political Parties and European Political Foundations of 29 August 2018 to remove Alliance of European National Movements from the Register; Decision of the Authority for European Political Parties and European Political Foundations of 13 September 2018 to remove Alliance for Peace and Freedom from the Register. 89. Reasoned request to the European Parliament for verification of EPP’s continuing compliance with Article 2 TEU under Article 10(3) of Regulation (EU, EURATOM) No. 1141/2014 on the Statute and Funding of European Political Parties and European Political Foundations as amended by Regulation 2018/673. 90. At that time Article 223a of the Rules of Procedure; anno 2021 Article 235 of the Rules of Procedure. 91. See: Article 3(1)(c) of the Commission proposal for a Regulation on the statute and funding of European political parties and European political foundations (COM(2012) 499), Brussels, 12 September 2012.

References van Biezen, Ingrid. 2008. State Intervention in Party Politics: The Public Funding and Regulation of Political Parties. European Review 16 (3): 337–353. van Biezen, Ingrid, and Petr Kopecký. 2014. The Cartel Party and the State: Party-State Linkages in European Democracies. Party Politics 20 (2): 170– 182. Dakowska, Dorota. 2009. Networks of Foundations as Norm Entrepreneurs: Between Politics and Policies in EU Decision-Making. Journal of Public Policy 29 (02): 201. Dakowska, Dorota. 2011. Vers une politisation du débat public européen?: L’institutionnalisation des “fondations politiques européennes Politique Européenne 34 (2): 167–199. Day, Stephen, and Jo Shaw. 2006. Developing Political Parties in the European Union: Towards a European Party Statute. In Party Funding and Campaign Financing in International Perspective, ed. K.D. Ewing and Samuel Issacharoff. Oregon: Hart Publishing.

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Gagatek, Wojciech, and Steven Van Hecke. 2014. The Development of European Political Foundations and Their Role in Strengthening Europarties. Acta Politica 49 (1): 86–104. Grasso, Giorgio, and Roberto Perrone. 2019. European Political Parties and the Respect for the Values on Which the European Union Is Founded Between the European Legislation and the National Laws. European Public Law 25 (4): 665–688. Jansen, Thomas, and Steven Van Hecke. 2011. At Europe’s Service: The Origins and Evolution of the European People’s Party. Berlin Heidelberg: SpringerVerlag. Katz, Richard, and Peter Mair. 1995. Changing Models of Party Organization and Party Democracy: The Emergence of the Cartel Party. Party Politics 1 (1): 5–28. Koss, Michael. 2010. The Politics of Party Funding: State Funding to Political Parties and Party Competition in Western Europe. Oxford, New York: Oxford University Press. La Raja, Raymond. 2008. Small Change: Money, Political Parties, and Campaign Finance Reform. Ann Arbor: University of Michigan Press. Mendilow, Jonathan. 2012. Introduction: Political Finance, Corruption, and the Future of Democracy. In Money, Corruption, and Political Competition in Established and Emerging Democracies, ed. Jonathan Mendilow. Lanham: Lexington Books. Morijn, John. 2019. Responding to ‘Populist’ Politics at EU Level: Regulation 1141/2014 and Beyond. International Journal of Constitutional Law 17 (2): 617–640. Norman, Ludvig. 2021. To Democratize or to Protect? How the Response to Anti-System Parties Reshapes the EU’s Transnational Party System. JCMS: Journal of Common Market Studies 59 (3): 721–737. Nwokora, Zim. 2014. The Distinctive Politics of Campaign Finance Reform. Party Politics 20 (6): 918–929. Petak, Zdravko and Hrvoje Matakovic. 2015. Party Finance Regulation: Causes, Instruments and Impact. Acta Universitatis Danubius 11 (1): 98–114. Saitto, Francesco. 2017. European Political Parties and European Public Space from the Maastricht Treaty to the Reg. No. 1141/2014. Discussion Paper No. 2/17.

CHAPTER 6

The Regulatory Straitjacket: The Impact on the Functioning of European Political Parties

We are asked to play in the European Champions League. Yet the many restrictions in the current rules compel us to play with a ping pong ball, with our shoelaces tied together and compete on 27 different football pitches at the same time with completely different and often contradictory rules of the game. Luc Vandeputte Deputy Secretary-General EPP

How has the development of the finance regime had an impact on the European political parties and the European party system? This question lies at the heart of this sixth chapter. I will examine how the regulatory framework has provided incentives and constraints regarding the evolution of the number of Europarties and foundations—including the establishment of new organizations—and regarding their internal organization and activities. The first central argument on the evolution of the European party system is that the finance regime initially had an expanding and subsequently an immobilizing effect. In the first decade of the European party system, the availability of funding has led to an increase in both the number of parties as well as the ideological scope. However, the most recent revisions of the funding rules have had a constraining effect: the combination of rules has made it more difficult for new European parties to enter the party system and to obtain public funding, consequently © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 W. Wolfs, European Political Parties and Party Finance Reform, https://doi.org/10.1007/978-3-030-95175-7_6

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favouring the established parties and maintaining the status quo. This will be discussed in the second section of the chapter. The third section looks at the internal organization of activities of European political parties, with the second central argument that while the European parties (and foundations) have gained a substantial degree of autonomy with regard to the EP political groups and have been able to professionalize their functioning, the finance regime has included few incentives for a stronger involvement of citizens. This has resulted in the solidification of Europarties as umbrella organizations of their national member parties. Building on this observation, the third argument entails that the funding rules have prevented the European political parties to fulfil their representational ‘mission’ and increase their visibility among the European public, especially in the context of the European elections. This will be set out in the fourth section of the chapter.

1

Previous Research and Contribution

At national level, the premise that (changes to) party regulation and finance have an impact on the party system and on the interaction between parties has been well-established. In general, research has found that higher levels of state regulation considerably hamper new party entry (van Biezen and Rashkova 2014). In this respect, barriers for newcomers can include the formal criteria as well as the practical procedures to be followed to be recognized as a political party. Party funding can have a diverse effect: state subsidies can help to reduce structural financial differences between parties by creating a more level-playing field (van Biezen 2008; Koss 2008; Norris and Abel Van Es 2016). Yet, party finance rules can also increase the inequality between parties, and consolidate the status quo by benefiting the larger established parties, penalizing smaller parties or making it more difficult for newcomers to gain access to public funding (van Biezen and Kopecký 2014, 82; Pelizzo 2004, 134–135). Apart from formal criteria for authorization and funding, it is also important to consider how the administrative burdens imposed on parties can, in practice, make thresholds for new entrants higher by for instance requiring parties to establish a considerable organizational capacity to live up to the administrative requirements included in the criteria for recognition and funding (see e.g. Gauja 2015, 236–237). With regard to European political parties, several authors anticipated an increase in the number of European political parties once the funding

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was established (von Arnim and Schurig 2004; Day and Shaw 2003; Lightfoot 2006). Lightfoot (2006, 309–310), for example, described how the fears that the new regulation would lead to a situation where rules prevent new parties from entering the system were mainly unfounded, pointing to the high number of new parties that emerged in the direct aftermath of the introduction of EU funds in 2003. However, he also acknowledged that the ‘main stumbling block for the creation of new parties is likely to be the geographical criterion’ (Lightfoot 2006, 310). The potential barriers of the regulatory framework for new Europarties and foundations, and the effect on the evolution of the European party system will be assessed in the second section of this chapter. Regulatory systems can also shape the internal organization of political parties in far-reaching ways. Rules can include provisions on party finances, party organization and party activities. With regard to our central argument, a regulatory framework can include incentives and constraints for parties to strengthen their links to broader society and to involve citizens, as party members, in their internal functioning. Regulatory systems differ regarding to what extent they require parties to have a certain number of members, or regarding how much influence members should have over the party’s decisions. In some countries, parties can only gain formal recognition if they fulfil minimum membership requirements (Gauja 2015, 236). The underlying rationale is that parties must prove that they have a substantial base of support in society before they can be recognized as acting in a formal capacity as a political party (Casal Bértoa and van Biezen 2014, 302; Pilet and van Haute 2012, 43). Specifically with regard to public funding, some have argued that the establishment of state subsidies has made parties less dependent on traditional membership contributions and—consequently—‘decreased incentives for parties to maintain their strong presence on the ground’ (van Biezen and Kopecký 2014, 84). However, funding rules can encourage parties to strengthen their links in society, by conditioning (the size of) state subsidies on criteria regarding the number of individual members or their rights in internal decision-making (Pelizzo 2004, 134). This latter point is important, since scholars have highlighted how the involvement of members in the internal decision-making processes can contribute to attracting new members, to a stronger party legitimation, and to a better public image of the party (Pennings and Hazan 2001; Scarrow 1999). Furthermore, authors have also argued that intra-party democracy strengthens the participatory links of political parties (Teorell 1999; Wolkenstein 2019).

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With regard to Europarties, most scholars have argued that the most important organizational change has been their increased independence from the political groups in the European Parliament (Day and Shaw 2006; Smith 2014, 113), and anticipated that the subsidies would contribute to the institutionalization of the Europarties (see e.g. Johansson and Raunio 2005, 529; Lightfoot 2006, 308), although this is also questioned by some authors (Van Hecke 2010, 400). Specifically concerning the links with society, Lightfoot (2006, 308) described how the fear existed that if the Europarties were only supported by the EU it might reduce their desire to bridge the EU-citizen gap. Similarly, Hertner (2018, 14–15) stated that European political parties that can financially rely on many MEPs and large member parties might not have many incentives to invest in a grassroots organization. In the third section, I will build on these insights to assess the organizational changes of the Europarties as a consequence of the changing finance regime, and assess the incentives and constraints for the involvement of citizens.

2 2.1

The Expansion and Solidification of the European Party System A Growing Number of European Political Parties and Foundations (2004–2017)

Initially, the finance regime led to an expansion of the European party system, both with regard to the number of European political parties and the ideological scope. Graph 1 shows the number of registered Europarties and Eurofoundations from the establishment of public funding in 2004 until 2021. This number has gradually increased from eight to sixteen Europarties (and fifteen Eurofoundations) in 2017. These are not necessary all party organizations that are active at the transnational level, but those that were registered—and from 2017 onwards gained official EU legal status—by the European Parliament and the Authority. With this increase in the number of European parties and foundations, the ideological scope of the party system has also expanded. In the era before the introduction of Europarty subsidies, only five main Europarties existed: the European People’s Party, a collaboration of Christian democratic and centre-right parties; the Party of European Socialists, bringing together socialist and centre-left parties; the Alliance of Liberals and Democrats for Europe Party, composed of liberal and

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Graph 1 Evolution of the number of registered Europarties and Eurofoundations (2004–2021) (Source Reports of DG FINS [European Parliament])

centrist parties; the European Green Party with parties supporting green politics and the European Free Alliance, made up of regionalist and autonomist parties. In the run-up to the agreement on the finance regime in 2003 and the 2004 European elections, three additional European parties were founded. The Alliance for a Europe of the Nations was already created in 2002 in anticipation of the introduction of European party subsidies (Benedetto 2008, 138–139), as the counterpart of the Union for a Europe of Nations group in the European Parliament. The AEN brought together conservative and Eurosceptic parties, such as the (Gaullist) Rally for France, the National Alliance from Italy, the Czech Civic Democratic Party, the Danish People’s Party, the Polish Law and Justice Party, Order and Justice from Lithuania and Fianna Fail from Ireland (see also Hanley 2008, 180–186). In 2004, the Party of the European Left was established, a collaboration of various national radical left parties. Dunphy and March (2013, 523–524) argued that the availability of funding was a crucial factor that pushed the more transnational-oriented left parties towards the establishment of a European party structure, after years of hesitation. However, some radical left parties—the Communist Party of Greece, the Portuguese Communist Party and the Party of Italian Communists—refrained from joining PEL. That same year also saw the creation of the European

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Democratic Party, an initiative of François Bayrou and Romano Prodi, who had left the EPP out of dissatisfaction with the group’s ideological and strategic choices and joined the liberal group after the 2004 elections (Wolfs and Smulders 2018, 195–196). Because of the availability of funding, they could establish their own European party organization instead of joining the ALDE Party, which allowed them to present themselves as a more socially progressive alternative (Hanley 2008) and avoid the label ‘liberal’, which had substantial negative connotations in France. The number of parties continued to grow. In 2006, two Europarties with links to the Eurosceptic IND/DEM group gained access to European subsidies. The more nationalist and conservative members came together in the Alliance of Independent Democrats in Europe (Hanley 2008, 191). The Europarty relied heavily on the Movement for France, and counted also (Members from) the Northern League from Italy, the League of Polish Families, the Greek Popular Orthodox Rally, the Independent Democrats from the Czech Republic, and a number of independent MEPs. The Europeans United for Democracy—originally named EU Democrats—was another Eurosceptic Europarty founded by members of the IND/DEM group. The Europarty was a collaboration of smaller Eurosceptic parties, individuals and movements. EUD only had a limited number of core member parties, including the Danish June Movement from Jens-Peter Bonde (who was also the Europarty’s first president), the Self-Defence of the Republic of Poland, the June List from Sweden and the Danish People’s Movement Against the EU. In order to reach the representational threshold of seven member states, the Europarty relied on the support of individual Members of Parliament—such as Roger Helmer, UK Conservative Daniel Hannan, Klaus Buchner from the German Ecological Democratic Party and Iveta Grigule from the Latvian Farmers’ Union. These parties and members came from all sides of the political spectrum and seemed only united in their criticism—albeit in varying degrees—of the EU. In the run-up to the 2009 European elections, the Libertas Party also made an application for EU funding. This Europarty originated from the Irish advocacy group that campaigned against the Lisbon Treaty in the 2008 referendum in Ireland (Fitzgibbon 2013, 112). It included the League of Polish Families, former members of the AIDE such as the Movement for France, the Czech Independent Democrats and the Greek Popular Orthodox Rally, a number of smaller or newly established parties

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(under the banner ‘Libertas’) and individual politicians. Libertas just fulfilled the eligibility conditions to gain access to EU funding, until its Estonian representative—Igor Gräzin from the Estonian Reform Party— denied that he had signed a membership document to Libertas. Without his affiliation, the Europarty fell short of the required representation in seven EU countries, after which the Parliament revoked Libertas’ EU grant.1 After the 2009 elections, the number of Europarties further increased to a tentative maximum of 16 in 2017. All these new parties were collaborations of Eurosceptic parties (although with diverse ideological backgrounds), and in all cases, the availability of EU funding was an important reason for their establishment (cf. Chapter 4). In 2010, two new Europarties gained access to EU funding, both linked to the new ECR group in the European Parliament. The first was the European Conservatives and Reformists Party (established as the Alliance of European Conservatives and Reformists), bringing together right-wing and conservative political parties. Its core members included the UK Conservatives, the Law and Justice Party from Poland, the Czech Civic Democratic Party and a number of smaller parties such as the Belgian party List Dedecker and the Latvian For Fatherland and Freedom. Later new parties joined, such as the Sweden Democrats, Vox from Spain and the Brothers of Italy. In 2010, the European Christian Political Movement also gained access to EU funding, although it already existed as a loose network since 2002 and as an association since 2005. The ECPM was founded as a collaboration of outspoken Christian parties and organizations. The Europarty only has had a few affiliated parties with representation in the European Parliament—such as the Christian Union and the Reformed Political Party from the Netherlands, the Family Party of Germany and the Christian Union from Slovakia— and has relied on national and regional Members of Parliament to reach the representational threshold. Similarly, two European political parties linked to the EFD group were established. The first was the Movement for a Europe of Liberties and Democracy, founded in 2011. The Europarty included some of the parties of the defunct Libertas—the Movement for France and the Popular Orthodox Rally—and Members from among others the Danish People’s Party, the Finns Party, the Northern League, United Poland, the Slovak National Party and Order and Justice from Lithuania (with other Members of these parties supporting other Europarties). The

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main absence from the EFD group was UKIP, who established its own Europarty in 2014: the Alliance for Direct Democracy in Europe. Aside from UKIP, this Europarty included Members of the Sweden Democrats, the Czech Party of Free Citizens, and Order and Justice from Lithuania. ADDE also heavily relied on a number of national and regional Members of Parliament to have a sufficient geographical representation. In 2011, radical right forces received EU funding for the first time through the European Alliance for Freedom. In contrast to most other Europarties, the EAF was a collaboration of individual (radical) rightwing politicians, although its formal membership was also characterized by a high degree of volatility. Core members included the first EAF President Godfrey Bloom (UKIP), succeeded by Franz Obermayr of the Austrian Freedom Party and Board Members Marine Le Pen (National Rally), Philip Claeys (Flemish Interest), Jan Timke (Citizens in Rage from Germany) and Kent Ekeroth (Sweden Democrats). Several other Members from those national parties and Jobbik, the Lithuanian Order and Justice Party and the National Democratic Party of Bulgaria became (briefly) affiliated to the EAF, but frequently changed their affiliation to AENM, MELD, ADDE and IDP. After the 2014 European elections, the Members from Flemish Interest and National Rally (and later also the Austrian Freedom party) left to form the IDP. By 2017, most Members had left the Europarty. Although the Alliance of European National Movements was established by the end of 2009, it was only in 2012 that the Europarty secured EU funding. The initial core members included Jobbik (Hungary), the British National Party, National Rally (France) and Tricolour Flame (Italy), supplemented by a number of smaller far-right parties. The involvement of National Rally decreased over time, although several Members of Parliament continued to support the Europarty and party confidant Bruno Gollnisch even remained AENM President until 2014, when he was succeeded by Bela Kovacs of Jobbik. In 2014 Nick Griffin— Vice-President of the AENM—was removed as leader of the British National Party, which also put an end to the affiliation of the national party to the Alliance. Similarly, when Jobbik cut its ties with Bela Kovacs in 2016, the party also ceased its involvement in the AENM. By 2017, its organization thus mainly rested on the participation of individual Members of Parliament.

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After the 2014 elections, a number of radical right parties founded the European political party Identity and Democracy Party (originally named the Movement for a Europe of Nations and Freedom), pending the creation of a separate political group in the European Parliament. The founding members were National Rally, Flemish Interest, the Austrian Freedom Party and the Civic Conservative Party from the Czech Republic. The Northern League and other smaller parties joined later. The Dutch Freedom Party has also participated in most IDP events, although it is formally not a member of the Europarty. The Alliance for Peace and Freedom was founded in 2015, and brought together radical and extreme right parties. It built on the extreme right network European National Front, which existed from 2004 until approximately 2009. The President of the APF since its establishment has been Roberto Fiore, also the leader of the Italian Party New Force. Other members included Nick Griffin (who joined after his removal from the British National Party), the National Democratic Party (Germany), Nation (Belgium), Party of the Swedes (Sweden), Party of the Danes (Denmark), Golden Dawn (Greece) and People’s Party—Our Slovakia. Because most of these member parties lacked parliamentary representation, the APF sought the support from Members of (Regional) Parliament—from among others Forza Italia, Jobbik and National Rally—to gain access to EU funding. The Coalition for Life and Family was eligible for funding only in 2017. This European political party was a collaboration of reactionary religious organizations and politicians, heavily concentrated around the network of the French organization Civitas.2 The European party did not have an affiliated MEP, but was able to gain access to EU funding because of support from national and regional Members of Parliament of among others the Lithuanian Order and Justice, Forza Italia, the National Movement from Poland, People’s Party Our Slovakia, Team Stronach for Austria and Latvian Social Democratic Party ‘Harmony’. This high number of new Europarties also shows the high degree of volatility: of the fifteen European political parties that were established between 2004 and 2017, ten already lost their access to EU funding and/or were dissolved by 2018 for different reasons (Table 1). Similarly, of the sixteen European foundations that were established during that period, ten already disappeared after several years.

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Table 1

Loss of funding of European political parties

European political party

Last year of EU funding

Reason for loss of funding

Alliance of Independent Democrats in Europe

2008

Alliance for Europe of the Nations

2009

Libertas Party

2009

Movement for a Europe of Liberties and Democracy

2015

Alliance for Direct Democracy in Europe

2017

Europeans United for Democracy

2017

Party dissolved in December 2008 (with several Members supporting the Libertas Party) Party dissolved by 2010 (with several Members joining ECRP and MELD) Insufficient representation due to invalid affiliation of Member from Estonia Party dissolved following financial irregularities and insolvency No pre-financing from the EP due to a lack of bank guarantee, causing financial problems No pre-financing from the EP due to a lack of bank guarantee, causing financial problems No pre-financing from the EP due to a lack of bank guarantee, causing financial problems Removed from Register in 2018 due to a lack of member parties in a quarter of the EU member states Removed from Register in 2018 due to a lack of member parties in a quarter of the EU member states Ceased activities by 2018 (losing several Members to ADDE and IDP)

Coalition for Life and Family 2017

Alliance for Peace and Freedom

2017

Alliance of European National Movements

2017

European Alliance for Freedom

2017

In the run-up to the 2009 elections, two of the core members of AIDE—the Movement for France and the Greek Popular Orthodox Rally—left the Europarty to found the new Libertas Party. Consequently, AIDE no longer had sufficient representation in a quarter of the member states and was dissolved. Similarly, following the collapse

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of its corresponding UEN group in the European Parliament after the 2009 elections, the AEN saw most of its members leave to join the new Europarties ECRP or MELD, and no longer reached the representational threshold to be eligible for EU funding. In the course of 2015, MELD became the object of investigations by the European Parliament into misuse of European subsidies. Several expenses of the previous years were denied and many Members left the party organization. By the end of 2015, the Europarty and its foundation FELD went into liquidation. As a consequence, the Parliament was unable to recover the alleged misused funding amounts. Following the incapability of MELD and FELD to reimburse misused European subsidies, the Parliament imposed ‘risk-mitigating measures’ in 2017. Europarties and foundations that were deemed in a precarious financial situation would only receive the pre-financing of their EU funding if they were able to secure an unconditional bank guarantee, valid for at least two years. Seven Europarties and foundations were identified to be in such a position: the EUD, APF and its foundation ETN, CLF and the Pegasus Foundation and ADDE and its foundation IDDE. None of these applicants were able to provide the requested bank guarantee, and consequently they did not receive any pre-financing. Except for EUD, all Europarties and foundations fought the Parliament’s decision at the EU Court of Justice, but their cases were dismissed.3 The fact that they did not receive any EU funding in the beginning of the year caused serious financial problems, and the EUD, CLF and Pegasus, ADDE and IDDE seized their activities in the course of 2017.4 The EAF had also seen most of its members leave in 2015–2017 to join ADDE or IDP. By 2017, the Europarty barely had an active organization left. When the new funding rules required all Europarties to register with the newly established Authority in the course of 2017, both the APF and AENM initially succeeded in gaining registration (although it was too late to secure European subsidies for 2018). In Spring 2018, the revision entered into force that a Europarty’s representation in a quarter of the member states could only be based on member parties. Since both parties failed to prove such party representation, they were again removed from the register in the summer of 2018 and lost access to EU funding. In 2020, the APF submitted a new application with the Authority, but was again denied registration due to insufficient representation in the member states.

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2.2

Towards a Petrification of the European Party System? (2018–…)5

Since 2018, the number of European political parties and foundations has remained stable at ten. Despite this relatively high number of European political parties and foundations that has been established in the first decade of the finance regime, there are a number of aspects in the regulatory framework that make it difficult for new Europarties to enter the party system. In this respect, it should be noted that many of these ‘new’ parties did not represent new movements or ideological positions, but were a mere multiplication of existing political forces, as described in chapter four. Moreover, in most cases, these new Europarties were built from inside the European Parliament: Members of European Parliament—representing national parties that were well-established in the member states—decided to establish one (or more) European party organizations. This substantially differs from the practice at national level, where new parties commonly emerge as extra-parliamentary organizations challenging the existing parties represented in parliament. The regulatory regime for European political parties and foundations yet includes a number of provisions that hamper the emergence of such new Europarties and benefit the established Europarties, especially after the 2014 and 2018 revisions of the rules. First, it is challenging to gain registration as a European political party and, thus, obtain a European legal status. Most of the conditions are relatively straightforward: a Europarty must have a seat in one of the member states, not pursue profit goals, (intend to) participate in the European elections and must observe the EU’s fundamental values. In order to avoid too great an overlap with national party systems or at least prevent sole national parties to claim European subsidies, the rules also determine that an organization must be ‘truly transnational’, operationalized as a minimal representation in a quarter of the member states. However, this representation is specified as either parliamentary or electoral representation. In order to be officially registered, a European political party—or more precisely: its member parties—must be represented in the national or regional parliaments of seven EU countries. A Europarty can thus only gain official recognition after it has successfully participated in the national or regional elections in a quarter of the member states. Alternatively, a European political party can rely on electoral representation: if it (or its member parties) received at least 3% of

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voter support in the last European elections in seven member states, the European party can also be registered. In sum, this means that new European parties can only gain recognition after having received a considerable amount of electoral support in either regional, national, or European elections. Consequently, the rules consider the party system at the European level merely as the sum of the national party systems instead of a party system in its own right. This fits the view of Europarties as umbrella organizations of national parties, as opposed to bottom-up, citizen parties (cf. Sect. 3.3). Such conditions are far more demanding than in any regulatory systems at the national level, where registration usually depends on a limited number of (founding) party members or signatures from citizens expressing their support. Yet the EU finance rules also state that ‘it is crucial to ensure that the conditions applicable to becoming a European political party are not excessive but can readily be met by organized and serious transnational alliances of political parties or natural persons’.6 Particularly the representational criterion—expressed as parliamentary or electoral representation—constitutes an important threshold for new movements to simply be registered as a European political party. The fact that new parties should be able to register easily is based on the idea that the authorization to act as a political party has in itself democratic value. For instance, such recognition may enable political movements to attract new members, private contributions as well as membership fees. Interestingly, the view that formal registration has value in itself has also been acknowledged in the EU’s finance regime: providing European political parties with a legal personality—a European ‘statute’—has been an important aspect of the debate since the 1990s, and was one of the main improvements hailed in the 2014 revision of the funding rules. It would raise their profile and enhance their ability to work effectively as political forces in European politics. However, the EU only awards this legal personality to a rather exclusive group of organizations, that can pass the high hurdles of formal registration. That this could be problematic was already recognized by some MEPs when the finance regime was developed in the beginning of the 2000s. During a debate in the European Parliament on the topic in 2001, Neil MacCormick (Greens/EFA) argued that the rules ‘must not become a device whereby big or established parties use tax payers’ money to protect their near monopoly of parliamentary representation. A democratic system must always be open to new voices and new entrants.

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The tendency of the Schleicher report [on European political parties] to revise thresholds for recognition of European Parties discriminates actively against new voices’ (see also Day and Shaw 2006, 302–303). Second, the funding provisions included in the regulatory framework also favour the established parties. While in many member states access to state subsidies is granted to many parties, including those without parliamentary representation,7 the threshold at European level is relatively high. In the EU finance regime, registration is closely associated with eligibility for EU funding: when a European political party is registered, it almost directly gains access to EU public funding. The only additional criterion is to have at least one MEP in the European Parliament, meaning that extra-parliamentary parties are de facto excluded from public funding. In other words, while formally the registration and the funding of European political parties are decoupled, in practice the two are firmly linked. Such high threshold for public funding have been labelled as ‘detrimental to political pluralism and small political parties’ by monitoring organizations such as the Organization for Security and Co-operation in Europe, Office for Democratic Institutions and Human Rights (OSCE/ODIHR).8 That this could be problematic for party competition, was even recognized by the European Parliament itself. In its 2011 resolution, it stated that ‘tightening the criteria for the funding of European political parties […] amounts to a restriction of party competition at European level as long as the criteria for the legal recognition and funding of political parties are identical’.9 Indeed, in most national systems, the registration requirements are entirely separate from the criteria that need to be fulfilled to be eligible for state subsidies. In addition, the way that the European subsidies are divided among the European political parties has strengthened the position of the larger parties. Only a small part of 15% of the total funding sum is divided in equal shares among the parties and foundations, and this share was even lowered to 10% with the 2018 revision. While this had limited effects on medium-sized parties, it favoured bigger parties over smaller parties. In some cases, this was even a real threat to the survival of the Europarty (Interviews 23, 30). It should be noted that the initial proposal from the Commission, defended by the main political groups, included an even sharper decrease of the flat-rate share to 5%. While the aspect of proportionality in the funding allocation can be seen as mirroring political preferences expressed in elections, it can also be argued that rewarding past electoral success comes at the expense of

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ensuring a level-playing field and allowing less established political movements a stepping stone to introduce themselves into the political arena. In this respect, the 1996 EP resolution was in favour of distributing the subsidies ‘in accordance with the principle of equality of opportunity, with newly established parties given a genuine chance’.10 Similarly, European Commissioner Julian King stated during a debate on this topic in 2017 that the principles of proportionality and equal treatment should be carefully considered, ‘since the rules on party funding should not tilt the balance in favour of incumbents, compared with new political movements’.11 A third and final aspect that decreases the competitiveness of the European party system, are the administrative procedures that have been put in place, which have created additional and particularly tangible hurdles for small and less established parties. The 2014 regulation introduced a new administrative procedure for the registration and funding of European political parties. Compared to the old procedure, this registration process requires substantially more administrative capacity, takes longer and requires a significant increase in the documents demanded by the APPF to support the application (Interviews 29, 31, 32, 37, 38, 39). In addition, once a European political party is recognized, it must comply with an increasing set of administrative requirements. Every year, they must prepare an extensive funding application to be submitted to the European Parliament and provide the Authority with detailed updates about their member parties, statutes, affiliated MEPs, etc. European political parties and foundations are also required to adhere not only to the national accounting standards but also to the International accounting standards, which in practice means they hold two separate systems of financial accounts. In addition, they must go through three separate audit processes: one by the external auditors, a second by the administrative services of the European Parliament and a third by the Authority. Since 2019, European political parties also have to comply with specific rules regarding the protection of personal data, which has required them to take on new specialized staff or outsource these tasks to external companies (Interviews 32, 38, 39). Consequently, European political parties require substantial professionalization, administrative capacity, financial and human resources and must function as small or medium-sized enterprises to even be able to apply for formal recognition. These regulatory changes thus pose challenges even to the established European political parties with limited resources,

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who find it increasingly demanding to comply with all the requirements (Interviews 29, 32, 37, 38, 39). Although the legitimacy of a publicly funded party system indeed requires a high level of transparency, the demanding administrative requirements constitute a substantial hurdle for newcomers. The combination of these elements from the finance regime makes it more difficult for new parties or movements to compete in the Europarty system. Consequently, the current design of the funding rules might lead to a ‘petrification’ of the party system, in which the established and larger parties are benefitted to the extent that it becomes very difficult for newcomers to effectively challenge them (see e.g. Mendilow 2003).

3 The Organization of European Political Parties and Foundations This third section looks into the internal organization of European political parties and foundations. The central argument is that the European parties (and foundations) have gained a substantial degree of autonomy with regard to the political groups in the European Parliament (Sect. 3.1) and have been able to professionalize their functioning (Sect. 3.2), but that the design of the finance regime has resulted in the solidification of Europarties as umbrella organizations of their national member parties (Sect. 3.3). 3.1

Relations with the Political Groups in the European Parliament

European political parties have traditionally depended heavily on their corresponding parliamentary groups or, as Jansen (2000, 25) phrased it, ‘European parties initially were children of the groups in the European Parliament’. Until the introduction of the separate Europarty subsidies, they largely relied on their national member parties and their corresponding political group in terms of financial resources, accommodation and staff. The critical report of the Court of Auditors of 2000 on the accounts of the political groups highlighted that more than e1.4 million was paid to European political parties.12 Following the report, the Parliament’s Bureau decided that the political groups could use a maximum of 5% of their budget to support their affiliated Europarties.13 An overview of the revenue structure of the five existing European political parties in the

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early 2000s shows a similar picture. Table 2 depicts the various sources of income of the EPP, PES, ALDE Party, EGP and EFA from 2000 to 2002. The table shows that group funding constituted an important share of the total income, although there are substantial differences between the Europarties. While the EFA depended almost entirely on group resources, group funds only comprised approximately one-third of the total income of the EPP and the ALDE Party. The numbers also show the substantial differences in terms of budget between the EPP and the PES with the former’s income more than three times the size of the latter’s, while their EP political groups were comparable in size (around 230 seats for the PES group and 290 seats for the EPP group). The PES budget resembled that of the ALDE Party and the EGP, while these groups were a lot smaller in size (around 45 seats for the Green/EFA group and 65 seats for the ELDR group). In other words, the extra-parliamentary party organization of the EPP could fall back on the most substantial financial resources. Not only in terms of funding but also for the provision of accommodation and staff, the political groups played a crucial role for the Europarties in this period. The report of the Court of Auditors stressed that the e1.4 million paid by the political groups ‘[did] not reflect the entirety of the financial support enjoyed by European political parties, which also use offices and staff financed directly from the Parliament’s budget and placed at the disposal of the groups’. The headquarters of most Europarties were indeed located in the offices assigned to their political groups. The only exception was the EPP, which has always had its general secretariat outside of the European Parliament: initially in office space made available by the Christian Democratic International in Brussels,14 and from 1995 in its own premises in the Rue d’Arlon (Jansen and Van Hecke 2011, 166–167). Similarly, most personnel that worked for the Europarties was on the payroll of the political groups. For example, the Secretary-General of the ALDE Party (then ELDR Party) from 1991 to 1999 was paid as a staff member of the liberal group and also had his office in the European Parliament (Smith 2014, 113). After the publication of the Court of Auditors’ report, the Bureau decided in 2000 that the number of staff members that could work for the affiliated Europarty was capped at 10%,15 which constituted approximately 67 staffers (von Arnim and Schurig 2004, 12). In sum, the support from the political groups was important—if not fundamental in most cases—for the organizational survival of the

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Table 2

Income of European political parties (2000–2002) 2000

2001

European People’s Party Political e506,453 28.6% e577,645 33.0% group National e1,259,519 71.0% e1,162,974 66.5% member parties Other e7685 0.4% e7685 0.4% own resources Total e1,773,656 e1,748,303 Party of European Socialists Political e214,000 46.3% e217,000 45.5% group National e248,000 53.7% e260,000 54.5% member parties Other e– 0.0% e– 0.0% own resources Total e462,000 e477,000 Alliance of Liberals and Democrats for Europe Party (European Liberal Democrat and Reform Party) Political e125,000 36.5% e125,000 33.3% group National e215,260 62.9% e250,200 66.7% member parties e1940 0.6% e– 0.0% Other own resources Total e342,200 e375,200 European Green Party (European Federation of Green Parties) Political e65,905 34.3% e258,315 63.9% group National e126,313 65.7% e146,100 36.1% member parties Other e– 0.0% e– 0.0% own resources Total e192,218 e404,415

2002 e683,765

34.8%

e1,271,655

64.8%

e7437

0.4%

e1,962,856 e217,000

35.7%

e386,000

63.5%

e5000

0.8%

e608,000 e142,500

31.6%

e308,000

68.4%

e–

0.0%

e450,500 e261,315

64.0%

e146,900

36.0%

e–

0.0%

e408,215

(continued)

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(continued) 2000

European Free Alliance Political e40,000 group National e4000 member parties Other e– own resources Total e44,000

2001

2002

90.9%

e30,000

100.0%

e30,000

100.0%

9.1%

e–

0.0%

e–

0.0%

0.0%

e–

0.0%

e–

0.0%

e30,000

e30,000

Source Külahci (2005) with own additions

European political parties. Although strong links between the extraparliamentary party organization and the parliamentary group can be useful to ensure a smooth communication and ideological coherence, the subordinate position of the Europarties meant that they were unable to develop their own identity and added value, and were largely pulled into the short-term day-to-day politics in the European Parliament (see e.g. Jansen 1998, 12 for a similar argument). Several MEPs emphasized the need for different roles and a clearer distinction between the extraparliamentary party and political group. The rapporteur of the 1996 resolution on European political parties—Dimitris Tsatsos—argued that ‘the party and the body representing it in Parliament, the political group, are naturally closely linked. [They] must, however, each have their own institutional and political role. The political groups’ arena is Parliament. The party cooperates with the political group in this context, but it must also perform its tasks in the run-up to elections and—unlike the political group—seek to inform and engage in public debate and political education in society between elections’.16 The possibility of direct funding for European political parties was seen as a way to give them operational autonomy vis-à-vis the parliamentary groups.17 The introduction of European subsidies in 2003 has indeed made the Europarties more independent from their groups. Moreover, in order to meet the criticism of the Court of Auditors, Europarties have been banned from using group funds since the beginning of the finance regime. Apart from the financial aspects, the relations between European political

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parties and the political groups have yet remained undefined in the rules. The initial legislative proposals did include the obligation for a European party to ‘establish itself as a political group in the European Parliament, or intend to establish one or to participate in an existing group’ in order to be eligible for EU funding.18 This entailed a symmetric relation between a Europarty and a group: either one European party should correspond to one EP group or multiple Europarties should form a joint group. However, such an obligation was never included in the finance regime. It is therefore not entirely surprising that Europarty-group relations have been characterized by a high degree of complexity, with members of one Europarty being scattered over several groups, and vice versa. 3.2

Professionalization of the Europarty Organizations

The increased available public funding and the introduction of an EU legal status for Europarties and foundations were presented as instruments to strengthen and develop these organizations. The European subsidies have indeed allowed them to get accommodation outside the Parliament and to hire or expand their party staff. Before the introduction of public funding, the staff numbers of the existing Europarties were relatively limited. Even the European People’s Party—one of the two largest Europarties—could rely on less than ten staff members before the introduction of European party subsidies (Jansen and Van Hecke 2011, 165–166). While the rising public funding has on average led to more personnel, the effects differ substantially across parties (Graph 2). The expansion is particularly pronounced in case of the EPP and the PES, who saw their number of employees rise from less than 10 in 2004 to 45 and 35, respectively, in 2019. This has enabled them to professionalize their organization. They now have specialized staff members focusing on political affairs, policy analysis, press and communications, external relations (with actors outside the EU), relations with member parties and affiliated organizations, administration and IT and logistical support. The two middle-sized Europarties—the ALDE Party and EGP—also managed to increase their staff: from less than 5 in 2004 to 20–25 in 2019. Aside from these ‘big four’, the other Europarties are characterized by a much smaller workforce: 5 staff members or less. This might not be so surprising for the EFA, the EDP and the ECPM, as they have a budget of less than e1 million, which is rather small in comparison to, for example,

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Graph 2 Personnel of the European political parties (2004–2019) (Source Financial accounts European political parties)

the EPP. Of course, such a modest secretariat cannot fulfil many more functions in addition to the day-to-day management and administration of the European party organization and does not allow for a level of specialization comparable to the big—or even medium-sized—Europarties. The maximum grants for the PEL, ECRP and IDP on the other hand are much more substantial, ranging from e2.5 to e4.5 million in 2019, which is comparable to the greens and liberals. However, in these cases, the modest secretariat is not the result of budgetary constraints, but of a deliberate (ideological) choice to keep the central party organization as small as possible. The evolution of the personnel of the European political foundations is characterized by a similar pattern (Graph 3). The two biggest foundations—the WMCES and FEPS—have been able to build up a significant workforce. Their staff has increased from less than five to 18 (FEPS) or 25 (WMCES). Such numbers have allowed the foundations to dedicate some human resources directly to policy work. The three middle-sized foundations—EFL, GEF and TE—have a staff size of 5–10 people. Their ability to build up internal policy expertise is more limited; their focus has been more on building up a network of organizations and setting up joint events. The remaining five foundations

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Graph 3 Personnel of the European political foundations (2008–2019) (Source Financial accounts European political foundations)

are very limited in size. Such a small workforce is mainly focused on the administrative and financial management of the organization, and—to a limited extent—coordinating activities with affiliated national organizations. In this respect, New Direction and the IDF have a very small staff size in comparison to their (maximum) available budget. Similar to their corresponding European parties, however, such a small central organization has been chosen to keep the centre of gravity with the national member organizations. Consequently, the differences in funding are also translated in the variation in the internal capacity of the European political parties and foundations, although—as is the case with the Eurosceptic Europarties ECRP and IDF and their affiliated foundations—a small central secretariat can also be the result of an ideological choice. The 2014 revision also introduced a new EU legal status for European political parties and foundations, which was hailed as a measure to strengthen European party democracy and foster organizational convergence. Before this introduction, the legal status depended on the member state in which the Europarty or foundation had its seat. In most cases, this was Belgium, as the majority had their headquarters in Brussels, but some Europarties and foundations were also registered in Austria, Denmark,

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France, Germany, Italy, Ireland, Luxembourg, Malta and The Netherlands. This resulted in a wide variety in terms of legal status and national legal obligations. The common European legal status introduced a certain uniformity. In practice, however, this new legal status did not change much about the day-to-day practice of European political parties and foundations. They still had to officially register in the member state where they had their seat, meaning that all countries that hosted a Europarty or foundation also had to introduce a new legal status of European political party or foundation in their national legislation. As a consequence, the Europarties and foundations had to continue to comply with all national provisions regarding registration, administrative and control systems, and their statutes and internal organization. Staff and employment contracts were also still regulated by the national rules. In addition, in terms of accounting and financial reporting, the European parties and foundations still had to follow the laws of the member states where their seat was located. In sum, the practical situation of European political parties and foundations barely changed, and the new European legal status primarily had a symbolic significance. 3.3

The Consolidation of European Political Parties as Umbrella Organizations of National Member Parties19

Although the European subsidies have allowed the European political parties (and foundations) to gain a more autonomous position, the rules did not give rise to a fundamental shift in their internal organizational structure, at least with regard to the involvement of citizens or individual members. Despite the ambitions that the Europarties could play an important role in linking citizens to EU decision-making, they remain to a large extent umbrella organizations of their national member parties. Initially, the establishment of the finance regime in 2003 did evoke a development in some of the existing Europarties towards ‘less confederal and perhaps rather tighter frameworks as “parties” rather than “confederations” or “alliances”’ (Day and Shaw 2006, 318). While the EPP, socialist and liberal Europarties were at that time already characterized by a close collaboration, this was not the case for the greens and regionalists. As a consequence of internal ideological divergence (including on European integration), the green parties had refrained from adopting the label ‘party’ for their European organization and maintained a rather loose

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structure in the ‘Federation of Green Parties’ (Dietz 2000). Similarly, De Winter and Cachafeiro (2002) noted that a strengthening of EFA was problematic for many member parties that were principally focused on the sub-national level. In preparation to the introduction of the finance regime both the Greens and the EFA acquired new statutes (Day and Shaw 2006, 318), and—in line with the requirements of the Regulation— developed more centralized political and financial management structures (Lightfoot 2006, 309). The European Greens even adopted the term ‘Party’, which challenged the green customs of a rotating leadership and the absence of national party leaders meetings (Dunphy 2004, 162). A stronger involvement of citizens in the Europarty organizations remained limited, although it had been an important democratic aspiration behind the introduction of the finance regime. The mission expressed in the treaty article indeed stressed that European political parties ‘contribute to forming European political awareness and to expressing the will of citizens of the Union’ (Article 10(4) TEU). Already in the 1990s, the European Parliament emphasized that European political parties had an important role as an instrument for democratic participation of citizens and the emergence of a genuine European citizenship. To this end, the regulatory regime should require the Europarties to ‘be organized in a way that is likely to reflect the political will of citizens of the Union’.20 These democratic aspirations on citizen participation were however not made explicit in the initial 2003 Regulation. Yet in the subsequent debates and motivations on the revision of the finance regime, a clear focus on the role of citizens in European political parties can be recognized. In its 2005 resolution evaluating the first years of the finance regime, the European Parliament again emphasized the importance of European political parties for the dialogue between citizens and the EU level, and—by extension— the democratic development of the EU. According to the Parliament, European political parties ‘must take on a further role than solely that of umbrella organisations [….] and [work] for genuine citizen involvement not only through European elections, but also in all other aspects of European political life’. To this end, the Parliament advocated the inclusion of provisions on individual membership in the regulatory regime, as well as on the candidate selections and the arrangements for the participation in party congresses and assemblies.21 Similarly, in its 2011 resolution, the Parliament stated that European political parties are essential instruments for democracy by, among others, ‘maintaining dialogue with citizens and enabling citizens to express their

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views’. The Parliament, however, also acknowledged that the European parties were not in a position to play this role to the full because they were still merely umbrella organizations of national parties and ‘not directly in touch with the electorate in the Member States’. According to the Parliament, this could partly be mitigated by introducing direct individual membership and ensuring that the Europarties conformed to the highest standards of internal party democracy by putting in place appropriate arrangements for individuals’ direct or indirect participation in the internal activities and decision-making.22 This was followed by the European Commission in its 2012 legislative proposal, in which it emphasized the important role Europarties play in bridging the gap between national and European politics, and that they should be encouraged and assisted to reach out to European citizens.23 However, despite these clear aspirations of the Parliament and the Commission that European political parties should develop into stronger bottom-up organizations with direct involvement of citizens, the regulatory regime does not include strong incentives to this end: not in the registration criteria nor in the funding conditions or the organizational requirements. In most EU member states, the legal definition of ‘political party’ compels a membership of citizens and/or the official registration of a party requires a certain number of (founding) members or citizens expressing their support.24 Such provisions are almost completely absent in the EU funding rules. The definition of a European political party is a ‘structured cooperation between political parties and/or citizens’ (Article 2(3) of Regulation 1141/2014), thus leaving open the possibility of direct individual membership and citizen involvement. In other words, Europarties can choose whether they introduce individual membership or not. However, the number of individual members—or even whether individual membership is established or not—is not relevant to gain official recognition as a European political party. The Europarty needs to be represented in a quarter of the member states, but, as already mentioned, this is operationalized as parliamentary representation by its member parties (Article 3(1)(b) of Regulation 1141/2014). Similarly, the incentives for the involvement of citizens that are included in the conditions and distribution criteria for the EU party subsidies are limited. Some countries—like the Netherlands—‘reward’ parties for a strong member base, since the height of the party subsidy

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(partly) depends on its number of individual members. A similar mechanism has also been advocated at European level. In its 1996 resolution, the European Parliament stated that Europarties should be given ‘a financial incentive to strengthen their roots in society’.25 Such an incentive is indeed present in the finance regime. Mirroring the German party finance system, the European regulatory framework includes an indirect incentive to improve citizen involvement. European political parties can only receive their European grant if they are able to collect a certain share of own financial resources through member contributions, donations or other sources of revenue. This thus encourages them to strengthen their (financial) ties in society. In the early discussions, several proponents even suggested to adopt the German model, with subsidies that could not exceed the amount of own resources collected by the Europarties (Jansen 1998, 18). Yet, in the European finance regime this incentive has been gradually weakened over time, with the co-financing obligation dropping from only 25% in 2003 to 10%—and even 5% for European political foundations—in 2018. In addition, as shown in chapter three, the European political parties predominantly depend on contributions from their national member parties to collect sufficient own resources. Also in terms of the internal organization of European political parties and foundations, the funding rules contain few incentives for the involvement of individual members. While the regulatory framework includes rather detailed provisions on the administrative and financial organization and on their governing bodies, the requirements in terms of member involvement are limited. The Regulation only stated that Europarties must include ‘the modalities for the admission, resignation and exclusion of its members’ and ‘the rights and duties associated with all types of membership and the relevant voting rights’ (Article 4(2) of Regulation 1141/2014). Whether or not individual membership is introduced, and which rights should be attributed to them is an option left up to the Europarties themselves. In this respect, it should be noted that there have been some suggestions to include more stringent provisions on internal democracy in the finance regime. In its 2012 legislative proposal, the European Commission stipulated that Europarties should guarantee the representation rights of all members (natural and legal persons), should establish a functioning general assembly in which all members are represented and should ensure ‘the democratic election of and democratic decision-making for all other governing bodies’.26 Moreover, failure to comply with these requirements

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was considered a sufficient ground to withdraw the recognition—and consequently also the public funding—of a European political party. These provisions were included ‘to ensure a commitment to and respect for high standards of internal party democracy’.27 However, during the negotiations, most of these references were taken out of the legislative text on request of the Council of Ministers. Consequently, the finance regime in place contains few incentives for the Europarties to involve individual members in their decisions, or even to introduce a substantial form of individual membership. Despite the democratic aspirations behind the finance regime, the rules solidify the existing organizational structure of European political parties as umbrella organizations of national political parties. Only these member parties matter for the Europarty in order to gain authorization and for the size of their subsidy amount. There are, thus, no concrete mechanisms through which a broader and more inclusive engagement with European citizens would be achieved through the regulation. It is therefore not surprising that both the provisions and numbers of individual members of the established European political parties are limited (see also Hertner 2018; Van Hecke et al. 2018, 33–35). While all Europarties have some form of individual membership, in most cases this is restricted to affiliated Members of (European) Parliament. The individual member category in the statutes of the EPP and the EGP is exclusively reserved for Members of the corresponding EP group.28 The ECPM also only allows affiliated Members of (European, national or regional) parliament as individual members.29 The individual members of the ECRP consist of Members of European Parliament and European Commissioners.30 The EDP makes a distinction between ‘individual members’, which consists of members of the EU institutions and national or regional parliaments, and ‘ex officio members’, which are citizens that are members of one of the EDP member parties or—if that is not the case—that have paid a membership fee. However, while the individual members have participation and voting rights in the EDP’s Council, this is not the case for ex officio members.31 A similar distinction exists in the EFA: the Europarty’s individual members must hold an elected office, although ‘under specific circumstances to be agreed by the General Assembly, other individual members can be accepted’.32 In addition, the ‘Friends of EFA’ exists, which are individual supporters of the Europarty that can send a delegate to the General Assembly. Anno 2021, this network is modest

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in size, counting less than 50 people. This form of ‘light membership’ can also be found with the PES, which has a form of indirect individual membership: all members of PES member parties are automatically also members of the Europarty. In addition, these individual members can register themselves as ‘PES activists’, which gives them the ability to put forward policy proposals during the PES Congress.33 Yet, they do not have any voting rights. The PEL has a form of direct individual membership. However, since the national member parties of the PEL can choose whether or not to allow this possibility, they can act as important gatekeepers for individual Europarty membership in their country. These individual PEL members can propose amendments and participate in the Europarty meetings, but cannot vote.34 The two Europarties with the most extensive form of individual membership are the IDP and the ALDE Party. According to the IDP statutes, individual membership is not limited to public officeholders. These individual IDP members have the right to participate in meetings of the General Assembly, to make policy proposals and have voting rights.35 Yet, this provision largely remains a theoretical possibility, as the number of IDP individual members is only one (Table 3). In the ALDE Party the possibility of direct individual membership was included in the Europarty’s statutes in 2004, but only used in practice almost a decade later. The national member parties of ALDE had for a long time resisted this possibility, fearing it could cause rival loyalties among their supporters (Hanley 2008). The introduction of direct individual membership served both an ideological as well as a strategic goal: it was seen as the ALDE Party’s contribution to the development of a European public sphere and European democracy, in line with the Europarty’s traditional pro-European attitude. From a strategic perspective, it allowed to strengthen the ties with citizens that are prone to the liberal policy platform but do not have a (significant) liberal party in their country (Wolfs and Van Hecke 2019, 273). The individual ALDE members elect a delegation every two years that participates in the internal party decision-making and has voting rights in the main party bodies. Consequently, aside from the ALDE Party, the involvement of individual members and grassroots politics remains overall quite restricted. In most cases, citizens only have the option of indirect or light membership, with only limited possibilities to participate in the Europarty’s deliberations and decisions on the internal affairs or the policy positions. A similar situation can be recognized with regard to the nomination of the

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Table 3 Number of individual members and national member parties of the registered European political parties (2019)36 European political party European People’s Party (EPP) Party of European Socialists (PES) Alliance of Liberals and Democrats for Europe Party (ALDE) European Green Party (EGP) Party of the European Left (PEL) European Free Alliance (EFA) European Democratic Party (EDP) European Conservatives and Reformists Party (ECRP) European Christian Political Movement (ECPM) Identity and Democracy Party (IDP)

Number of individual members

Number of national member parties

13 14

81 57

4177

68

7 385

44 37

9 3

46 17

10

43

39

22

1

9

Source Website of the European Parliament and the Authority for European political parties and European political foundations

Spitzenkandidaten, the only candidate selection process controlled by the European political parties. Also this practice was almost completely dominated by the (representatives of) national member parties. Only the EGP organized an inclusive, online primary in the run-up to the 2014 European elections to decide on their lead candidate duo, open to all citizens that supported the green policy platform. However, by 2019, this instrument was abandoned, and the Spitzenkandidaten were appointed by the green member parties (Put et al. 2016; Wolfs et al. 2021). When considering the numbers of individual members among the European political parties, it is clear that strong citizen participation remains an exception. In most cases, the number of individual members is even lower than the number of national member parties (Table 3). Only the ALDE Party has a relatively sizeable individual membership base, counting more than 4000 members. The limited citizen involvement in the established European political parties is rather remarkable if you consider some of the more recently

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established transnational European parties or movements, such as Volt Europe or Democracy in Europe Movement 2025 (Diem25). Both have developed a rather inclusive mechanism for individual member participation. Volt Europe consists of an EU-level party organization, divided into national ‘chapters’. Citizens can become a direct member of both the European organization and the national chapter, and they all can participate and vote in the General Assemblies of both levels. Diem25 has a more horizontal structure: it only has one transnational organization. Citizens can become a direct member, which includes the rights to participate and vote in internal decision-making. Interestingly, both organizations have more members than any of the established Europarties: Volt has over 5000 individual members, and Diem25 has over 100,000 individual members with membership rights. In this respect, it is rather remarkable that neither of these two comes even close to be officially registered as a European political party.

4

The Limits of Transnational Campaigns

The raison d’être of political parties is competing in elections to obtain political power and change the direction of policy. In theory, the European elections could indeed provide a unique opportunity for Europarties to ‘contribute to forming European political awareness and to expressing the will of citizens of the Union’, as they can increase their visibility. However, the road to effectively participate in the elections to the European Parliament has been a path filled with obstacles and hurdles for Europarties. The third main argument of this chapter is that despite the important electoral function that Europarties were deemed to fulfil, the regulatory framework imposes substantial limits on their possibilities to conduct transnational campaigns. This discussion principally concerns European political parties: European foundations are entirely excluded from conducting electoral campaigns, because of their specific aspired purpose of long-term programmatic work and political education. The finance regime offers a contradictory framework to European political parties with regard to their engagement in the elections to the European Parliament. On the one hand, participating in these European elections has been one of the conditions that needs to be fulfilled in order to be eligible for EU funding. The growth in the public funding sums for European political parties has elevated their potential to play an important role in the European elections. In fact, raising their ability to campaign

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has been an important motivation to substantially increase the Europarty subsidies in 2013–2014 and 2019. On the other hand, the funding rules include several provisions that substantially limit the campaign activities of the Europarties. The use of EU subsidies for electoral campaigns was not even included in the initial finance regime; only the 2007 revision of the rules explicitly allowed the Europarties to spend their public funding on campaigns in the context of the EP elections. Nevertheless, von Arnim and Schurig (2004, 35) have even argued that as long as the European Electoral Act states that ‘the electoral procedure shall be governed in each Member State by its national provisions’, the funding of electoral campaigns is forbidden for European political parties. Their argument is based on the 1984 ruling of the European Court of Justice, in which it stated that election campaign expenses of the EP political groups were not allowed since ‘electoral procedure’ also encompasses the reimbursement of election campaign expenses.37 The 2009 European elections were thus the first in which the European political parties were formally allowed to conduct campaigns. In the run-up to these elections, the campaign expenditure of the European political parties was still low: only e1.25 million for all parties combined (Table 4). In 2014, the total expenses equalled e4.2 million and in 2019 Table 4

EPP PES ALDE EGP PEL EDP EFA ECPM ECRP IDP AEN MELD EAF AENM Total

Expenditure electoral campaigns European political parties 2009

2014

2019

e754,000 e188,521 e107,272 e0 e162,944 e0 e51,082

e1,748,836 e196,971 e419,975 e1,020,559 e60,171 e88,511 e64,611 e99,623 e97,956

e5,685,703 e2,358,380 e623,550 e2,247,775 e118,741 e229,104 e246,999 e316,954 e431,423 e135,992

e0

e1,263,819

Source Financial accounts European political parties

e331,123 e72,676 e0 e4,201,011

e12,394,621

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all Europarties spent an amount of e12.4 million on their campaigns. In comparison with national campaigns, these are very modest numbers. For example, in the last three national elections in Germany, the parties jointly spent more than e60 million, and the campaign expenses of Belgian parties amounted on average to more than e30 million. In comparison, e12.4 million is very limited for a continent-wide campaign, especially considering that the EPP accounts for almost half of that amount. The campaign expenditure of the other Europarties was low in 2019, except for the PES and the EGP. Even when the rules allowed expenditure on electoral campaigns, a number of factors have consistently hindered the Europarties’ proper involvement in the European elections. First, there is no pan-European electoral district: all Members of the European Parliament are elected in national constituencies.38 Consequently, both the selection of the candidates and the conduct of the campaigns have remained predominantly a national affair (see e.g. Marsh 2020; Nielsen and Franklin 2017). This lack of a pan-European district has to some extent been mitigated by the lead candidate—or Spitzenkandidaten—system, which entails that the European political parties put forward their candidate for the leadership of the European Commission. The candidate that can secure a majority in the European Parliament consequently becomes the Commission President. The main rationale behind the system was that a personification and politicization of the European elections would increase the perceived stakes of the elections and boost turnout (Hamˇrík and Kaniok 2019; Hobolt 2014). The Spitzenkandidaten would present their Europarty’s ideological policy project for the future of the EU, and function as the political personification of the Europarty. Consequently, the system provided an important opportunity for European political parties, as the Spitzenkandidat could serve as the main face of a truly EU-wide campaign. However, even with the Spitzenkandidat system in place, the finance regime imposed a number of severe limitations on the Europarties’ campaign activities. The rules explicitly state that the European subsidies ‘shall not be used for the direct or indirect funding of other political parties, and in particular national parties or candidates’, as was discussed among state leaders in the context of the Nice Treaty.39 On the one hand, such a provision—especially the ban on direct funding—seems reasonable in order to avoid interference of European political parties in national elections. It would indeed be problematic if European parties

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could transfer their European subsidies directly to their national member parties in order to influence the outcome of national elections. This entails the risk that European parties become nothing more than vehicles for the distribution of campaign resources. On the other hand, prohibiting—especially indirect—support to national parties impedes the important linkage role that European parties are expected to fulfil, because it severely limits their ability to campaign in the context of the European elections and creates legal uncertainty. While ‘direct funding’ is clear—the transfer of money from European to national parties—the definition of ‘indirect funding’ leaves more room for interpretation, especially since European political parties and foundations are allowed to co-organize events or activities with national parties or foundations. The European Parliament has put forward five main criteria that activities must fulfil in order to comply with the rules: (1) an activity must be European in scope, meaning that it must be carried out in several member states. Activities that are concentrated in only one or two member states are not in line with the rules; (2) the content of the activities must be genuinely European, which means that activities that focus on purely national or regional topics are not allowed; (3) the authorship of the European party must be clear, meaning that its name and/or logo must be clearly visible. In other words, the impression should not be created that the activities are run or financed by the member parties; (4) the ownership of the activity must clearly lie with the European party: they should be able to demonstrate that the activity is in their interest; and (5) the campaign activities must be in line with the applicable national legislation on the topic. This does not mean that the activities that do not correspond to all these criteria automatically fall outside the rules: an activity that is substantially co-financed by the European party and national party can be allowed. The main consequence of these rules, however, is that Europarties must tread carefully when campaigning with their member parties in the European elections. Joint activities that are (mainly) financed by the European party and that benefit the national party can indeed be considered as indirect support and thus misuse of EU funding. For instance, even trainings organized by a European party or foundation that were attended by national politicians were considered as a form of indirect support. Consequently, joint rallies, posters with both the European and national party

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logo or a joint campaign tour have to a large extent been avoided by the European parties to ensure that their expenses would not be rejected by the European Parliament. However, European political parties can only directly participate in the European elections through their national members: only these can gain seats in the European Parliament and constitute the main basis on which the Europarty’s Spitzenkandidat can be elected. Consequently, the campaign activities can in practice not always be separated easily. The formal barrier that is imposed between European and national politics consequently diminishes the Europarties’ (already limited) electoral role. The ban on (in)direct support not only applies to national parties but also national candidates, including in the context of the European elections. This has the remarkable implication that European political parties can make campaign expenses for their Spitzenkandidat in every member state, except the country where he or she has been placed on the electoral list for the European elections. For example, during the 2014 elections, the PES could not finance any campaign activities for its lead candidate Martin Schulz in Germany, as he was on the candidate list of their member party SPD. The consequence was that all campaign activities in Germany with the involvement of Martin Schulz were directly paid by the SPD (Interview 32). Even if the European political parties deploy electoral activities, they are confronted with a diverging plethora of national campaign (finance) rules, making the European elections formally a sum of 27 national elections. As stipulated in the EU Regulation, European political parties need to adhere to these national funding provisions when campaigning in the member states (Article 21 of Regulation 1141/2014). Yet EU countries differ widely in how they regulate electoral campaigns in terms of spending limits and principles, the start of the official campaign period, third party campaigning and caps and rules regarding revenue. While some member states—like Denmark or the Netherlands—hardly regulate political campaigns, other countries—such as Croatia, Ireland, Romania or Slovakia—have put far-reaching rules in place. According to a report on the 2019 European elections, ten EU member states do not even allow the financing of national campaigns by European political parties in the elections for the European Parliament.40 In other words, even if the door of joint campaigns between European and national parties would be opened at European level, many member states have firmly locked it on their side.

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Over the past decade, campaign activities have to a large extent shifted to the digital arena. Political advertising on the internet—and in particular on social media—has become substantially more important. Digital campaigning also constitutes an opportunity for European political parties, as it is an efficient way to reach and adjust the political message—for example in terms of language—to voters in different countries. In this respect, the possibilities of digital campaigns could compensate for the limitations that are imposed on physical campaigning. In its report on the 2014 European elections, the European Commission acknowledged how ‘the use of interactive social media as campaigning tools made it easier than before for voters to engage directly in the campaign’ and thus facilitated pan-European election campaigns. For the 2019 elections, the Commission repeated this message and emphasized the essential role played by European political parties in this respect.41 The possibilities of pan-European digital campaigning were however significantly thwarted in the run-up to the 2019 elections when European political parties learned that Facebook imposed important limitations on cross-border campaigning. The social media platform introduced new rules that required all advertisers to physically register in the country where they wished to purchase political advertising as a measure to tackle foreign interference in the European elections. For most European political parties, which had their registered headquarters in Brussels, this meant that they could only campaign digitally in Belgium. Consequently, also the ‘digital’ campaigning arena was no longer an option for transnational campaigns. Only after substantial pressure from the three EU institutions—including a joint letter from the Europarties, a joint letter from the Secretaries-General and a phone call from EP President Antonio Tajani—Facebook agreed to make an exception for the European political parties (and the EU institutions) from April 25.42 This provided the Europarties a window of one month before the elections to conduct online campaigns. It is therefore not surprising that the digital campaign expenses in the run-up to the 2019 elections were overall relatively modest (Table 5). Only the European Greens spent over e270,000 (around 12% of the total campaign expenditure) on advertisements in 19 EU countries. This amount is nonetheless dwarfed by the cost of the electoral information campaign of the European Parliament, amounting to more than e3.2 million. Except for the EPP and—to a lesser extent—the EFA, the online expenditure of the other parties was very limited. Even Volt Europa and

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Table 5

Expenditure online campaigns European political parties (2019) Facebook expenditure

EPP PES ALDE Party EGP PEL EDP EFA ECPM ECRP IDP VOLT DIEM25 Total

e47,600 e4290 e3401 e272,440 e2434 e0 e20,951 e6114 e752 e0 e38,104 e24,803 e420,888

Google expenditure 16 countries 6 countries 10 countries 19 countries 1 country / 5 countries 6 countries 3 countries / 6 countries 1 country

e20,700 e0 e0 e0 e0 e0 e0 e0 e0 e0 e23,700 e0 e44,400

Source Google and Facebook Ad Libraries

Diem25—the two transnational movements without Europarty recognition—spent more than most of the established Europarties. Overall, the total cost of the transnational online campaigns of the registered Europarties is comparable to some national parties: Flemish Interest (Belgium) spent more than e360,000 on Facebook advertisements in the run-up to the 2019 elections; Podemos (Spain) even close to e550,000. In sum, despite the strong aspirations embedded in the regulatory framework on the important role European political parties should play in the context of the European elections, the finance regime imposes a number of substantial constraints that render genuine transnational campaigns almost impossible in practice.

5

Conclusion

The findings of this chapter show that the finance regime provides a set of incentives and constraints for both the development of the European party system and the internal organization of European political parties. With regard to the Europarty system, the availability of public funding has incentivized all main ideological families to become involved in the Europarty system. It has even led to a process of Europeanization of the Eurosceptic political forces. While the mere presence of these

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different ideological tendencies has inevitably provided a sense of legitimacy to the principle and practice of public Europarty funding, the increased volatility of the party system as a consequence of the practice of Europarty instrumentalization raises questions at the same time about the finance regime. In addition, the findings also demonstrate that the conditions to become officially registered as a European political party (which is the portal to public funding) have been heavily modelled on the existing European parties, effectively hindering the emergence of new—i.e. non-parliamentary—political forces in the European party system. Similarly, the finance regime has provided opportunities and restrictions on the internal organization of European political parties. While the availability of separate subsidies has substantially increased the Europarties’ autonomy vis-à-vis their political groups, on the one hand, their decision-making remains to a large extent dominated by the national member parties. As such, the funding rules work to consolidate the Europarties in the organizational identity that has characterized them from their origins, as no incentives are included to encourage the involvement of individual citizens in their internal functioning. This stands in sharp contrast with the democratic aspirations that were attributed to the European political parties in the debates on the finance regime, in particular their role in bringing citizens closer to EU politics. At the same time, the rules have created substantial barriers for Europarties to increase their presence and visibility with the European citizens during European elections.

Notes 1. Judith Crosbie and Simon Taylor, Parliament says ‘Yes’ then ‘No’ to funding for Libertas, European Voice, 4 February 2009. 2. Alain Escada was both the chairman of CLF and Civitas. One of the other founding members of CLF, François-Xavier Peron, was the spokesperson of the organization. The third founding member, Stefano Pistilli, was a member of Forza Nuova from Italy, a member party of the APF. 3. See: Case T-118/17, IDDE v EP; Case T-48/17, ADDE v EP; Case T-16/17, APF v EP; Case T-13/17, Europa Terra Nostra v EP; Case T-57/17 Pegasus v EP; Case T-54/17 CLF v EP.

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4. Note of the EP Secretary-General, Financing of European political parties and European political foundations: Irregularities discovered and remedies applied, reinforced risk reduction, Brussels, 28 March 2018. 5. This part is partly based on Norman and Wolfs (2022). 6. Recital 23 of Regulation 1141/2014. 7. See for example BVerfGE 24, 300; Conseil Constitutionnel, Décision No. 89–127 DC, 11 January 1990. 8. See for this issue paragraph 185 of OSCE Office for Democratic Institutions and Human Rights (ODIHR), Guidelines on Political Party Regulation, adopted by the Venice Commission on 15–16 October 2010. 9. EP Resolution on the application of Regulation (EC) No. 2004/2003 on the regulations governing political parties at European level and the rules regarding their funding, 18 March 2011. 10. Article 6(b) of the EP resolution on the constitutional status of the European political parties, 30 October 1996. 11. Debate in the European Parliament on 15 March 2017 on the review of the regulation on the statute and funding of European political parties and foundations. 12. See in particular paragraphs 46–50 of the Special Report No. 13/2000 of the Court of Auditors. 13. Decision of the EP Bureau of 2 October 2000 on support from the European Parliament for European political parties (PE 293.437/BUR/end). 14. The first location of the EPP headquarters was on the Rue de la Madeleine, from 1978 onwards on the Place de l’Albertine, and later (until 1995) on the Rue de la Victoire in the ‘Centro Aristides Calvani’, home to the General Secretariat of the Christian Democratic International (Jansen and Van Hecke 2011, 166–167). 15. Decision of the EP Bureau of 2 October 2000 (PE 293.437/BUR/end). 16. See the explanatory statement of the EP Resolution on the constitutional status of the European political parties, 30 October 1996. 17. See in this respect point D of the EP resolution on the application of regulation 2004/2003 (T7-0143/2011), 6 April 2011. 18. Article 1(b) of the Commission proposal for a Council Regulation on the statute and financing of European political parties (COM(2001) 343).

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19. This part is partly based on Norman and Wolfs (2022). 20. See in particular Recitals A, B and C, and Articles 1 and 3 of the European Parliament resolution of 30 October 1996 on the constitutional status of the European political parties (the ‘Tsatsos Report’). 21. See in particular Articles 2 and 5 of the EP resolution of 23 March 2006 on European political parties. 22. These aspirations were formulated in Articles 1–5, and 26 in the European Parliament Resolution of 6 April 2011 on the application of Regulation (EC) No. 2004/2003 on the regulations governing political parties at European level and the rules regarding their funding. 23. European Commission, Proposal for a Regulation on the statute and funding of European political parties and European political foundations, Brussels, 12 September 2012, pp. 2–3. 24. For an complete overview of all EU member states, see: European Parliament, ‘Criteria, conditions, and procedures for establishing a political party in the Member States of the European Union,’ Brussels, 2012, pp. 78–84. 25. Article 6(e) of the European Parliament Resolution on the constitutional status of the European political parties, 30 October 1996. 26. Article 4(2) and 22(1) of the 2012 Commission proposal. 27. Recital 11 of the 2012 Commission proposal. 28. Article 5(4) of the EPP Statutes, as approved by the EPP Congress on 20–21 November 2019 in Zagreb; Article 4.3.4. of the Statutes of the EGP, as amended at the EGP Council in Karlstad on 26 November 2017. 29. Article 4 of the Statutes of the ECPM, as agreed on 22 June 2017. 30. Article 6 of the Articles of Association of the ECRP, as adopted by the Council on 27 June 2019. 31. Article 7 of the Statutes of the EDP, as amended by the Council in Paris on 29 November 2019. 32. Article 8 of the Articles of Association of the EFA, as adopted by the General Assembly on 8 March 2019 in Brussels. 33. A policy proposal requires the signatures of three hundred PES activists from a least a quarter of the (full or associate) member parties, see Article 21.6. of the PES Statutes, as adopted by the 11th PES Congress on 7 December 2018 in Lisbon.

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34. Articles 8 and 10 of the PEL, as amended by the General Assembly meeting in Brussels on 30 September 2018. 35. Articles 6.1. and 6.2. of the Statutes of the IDP, as amended on 30 August 2019. 36. The number of individual members refers to direct individual membership in accordance with Article 32(2) of Regulation (EU, Euratom) 1141/2014, meaning natural persons with direct representation (i.e. voting rights) in the internal party bodies. This excludes indirect members—individual members of member parties that are also indirectly considered as members of the European party—and volunteers; the number of member parties includes all types of national member parties (full members, associate members, observer members and candidate member parties). 37. See in particular paragraphs 50–54 of the Judgement of the Court in Case 294/83 of 23 April 1986. 38. The organization of the elections to the European Parliament is, however, not directly part of the finance regime of European political parties and foundations (Regulation 1141/2014), but is stipulated in the European Electoral Law. Nevertheless, these provisions have a substantial impact on the opportunities (and limitations) of Europarties with regard to their electoral function. 39. While the Nice Treaty established the required legal basis for the establishment of EU public funding for European political parties, Declaration 11 attached to the treaty explicitly stated that this funding could not be used to finance—either directly or indirectly—national political parties. 40. These countries are Bulgaria, Estonia, Spain, France, Croatia, Hungary, Latvia, Poland, Slovenia and Slovakia, although the State Council in France has made an exception, see: Election-Watch.eu, Elections to the European Parliament 23–26 May 2019: Final Report, 2019, p. 20. 41. European Commission (2018) Communication from the European Commission: Tackling Online Disinformation—A European Approach, Brussels, p. 3; European Commission (2018) Roadmaps to implement the Code of Practice on Disinformation, Brussels, pp. 2–3. 42. Letter of Klaus Welle, Jeppe Tranholm-Mikkelsen, Martin Selmayr to Nick Clegg (D 200794), 16 April 2019; Letter of the EPP, PES, ACRE, ALDE Party, EGP, PEL and EFA to Mark Zuckerberg,

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18 April 2019; Mark Scott, Laura Kayali and Maia de la Baume, Facebook to cave to EU pressure after row over political ad rules, Politico.eu, 18 April 2019.

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CHAPTER 7

Conclusions: Funding Democracy?

1

European Political Parties and Party Finance Reform

The findings of this book show that the changing finance regime has been the result of an interactive process between the institutional framework and its implications on the one hand, and the actions of the European political parties and (Members of) their corresponding groups in the European Parliament on the other hand. The funding rules have provided incentives and constraints for Europarties and foundations, which steered (but not determined) their behaviour. At their turn, the parties have also attempted to (re)shape the regulatory framework. These actions were induced by a combination of strategic interests and normative considerations. In some cases, they were confronted with trade-offs between conflicting preferences, while in other situations the normative convictions were in consonance with their strategic interests and one dimension was instrumental to the other. Such consonance could be recognized in the long process towards the establishment of the finance regime in the 1990s (Chapter 2). The leaders of the three main European political parties—the EPP, the Socialists and the Liberals—took action to convince the heads of the state and government to include a reference on European political parties in the Maastricht Treaty. Their strategic interests of strengthening their party organizations matched their normative aspirations of developing (party) © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 W. Wolfs, European Political Parties and Party Finance Reform, https://doi.org/10.1007/978-3-030-95175-7_7

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democracy at European level. This was also the case when the party article was amended in the run-up to the Treaty of Nice following pressure from the leadership of the five existing European political parties at that time. However, as similar but unsuccessful attempts in the preceding process of the Amsterdam Treaty illustrate, the effect of their actions depended on the institutional (decision-making procedures) and situational (composition and preferences) context: the government leaders were rather unresponsive to the appeals to amend the party article as their priorities for the Amsterdam Treaty lay elsewhere. The importance of the institutional and situational context was also clear during the efforts to introduce the Regulation on the funding of European political parties. While the first attempt in 2001 failed due to the unanimity requirement in the Council, in 2003 a quick agreement could be found because the report could be agreed using Qualified Majority Voting after the entry into force of the Nice Treaty. In terms of the content of the Regulation, the main actors involved could build on the proposals made in the past, although the time pressure to finalize before the 2004 European elections led to a regulatory framework that was narrow in scope. Strategic interests can however also be in conflict with the actors’ normative considerations, as the behaviour of Eurosceptic parties has demonstrated (Chapter 4). The attitude of most Eurosceptic parties was characterized by principled opposition against the concept of European political parties and their subsidies. However, the growing available funding created a dilemma: setting up their own European political parties would be in conflict with their own normative considerations, as it would provide an implicit legitimation for the development of a European party system. On the other hand, remaining true to their principled opposition would burden them with a strategic disadvantage, since they would miss out on the growing Europarty subsidies. Most Eurosceptic parties therefore took a pragmatic attitude and established Europarties of their own. Some aspects of the regulatory framework served as important incentives in this respect: the growing available funding in combination with the zero-sum distribution mechanism, which meant that more subsidies for them would result in less funding for their political competitors. However, the institutional framework also included important constraints: the EU funding could not be used to support national parties. Yet, because of their ideological position, the Eurosceptic parties were not interested in setting up an extensive European party organization, which theoretically reduced the utility of the public funding. These constraints should

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not be considered deterministically, however, as the practices of some Eurosceptic parties of channelling (some of) the European funding to the national level prove. In this fashion, the funding could be used in a way that was more in line with their ideological position, although it concerned actions that were barely within—and even in breach of—the funding rules. Similarly, the finance regime also provided clear incentives and constraints for the income of European political parties (Chapter 3). The co-financing obligation included in the rules created internal budgetary pressures among the European political parties and foundations to collect more own resources if they wanted to receive their entire grant amount, especially in the context of the growing total funding sums. The various Europarties and foundations have however reacted differently to this pressure, with some increasing their membership fees, diversifying their income structure or spending their financial reserves. Some Europarties and foundations pushed the limits of the rules—or even broke them—by relying heavily on contributions in kind or setting up donation carrousels to collect sufficient private income. These incentives and constraints embedded in the regulatory framework are not necessarily static, since European political parties are collectively capable of changing the funding rules through their affiliated MEPs and/or representatives in the Council—within the institutional and situational limits of the decision-making procedures (Chapter 5). The subsequent revisions of 2007, 2014 and 2018 show that they have indeed been able to alter the finance regime, partly in response to the effects that the rules have had. The main European political parties found allies in the European Parliament to strengthen their own position by introducing separate funding for European political foundations, creating more financial flexibility and lowering the co-financing obligation to ease their internal budgetary pressures. They were also able to respond to the strategic pragmatism of the Eurosceptic parties and the funds for far-right parties by altering the funding conditions and distribution. On other points, the positions of the responsible MEPs or the member states in the Council did not align with the interests of the main European political parties and resulted in unfavourable outcomes, such as the increased administrative workload or the limited usefulness of their EU funding in the context of campaigns for the European elections. Overall, the dynamics surrounding the reform of the finance regime for European political parties have in a way ‘matured’. Considering the

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interactions of the European political parties and the regulatory framework purely from a strategic perspective, a shift can be recognized for both the main pro-European parties and the Eurosceptic parties. Figure 1 presents these shifts visually and depicts a two-dimensional policy space: the horizontal axis shows actors’ attitudes towards the financial resources of the political opponents and the vertical axis represents actors’ attitudes towards their own financial resources. Initially, the Eurosceptic parties were positioned in the bottom left corner of the figure, as they were opposed to public funding for European political parties. The pro-European parties were situated in the upper right corner of the figure: they followed a revenue-maximizing strategy, which resulted in increasing both their own financial resources as well as

Fig. 1 Position of European political parties towards the public funding regime

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the resources of their political opponents. Subsequently, more and more Eurosceptic parties became involved in the Europarty process and, as such, their attitude shifted more to the upper left corner of the figure. Using the practice of inconsistent Europarty membership and the establishment of a large number of European political parties, they were able to maximize their own funding while decreasing the funding of the main pro-European political parties (because of the zero-sum nature of the distribution mechanism). The revision of the party finance rules in 2018 signified a shift in the position of the main pro-European parties. In a reaction to the practices of the Eurosceptic parties, they made it more difficult to establish European political parties, which meant that fewer (Eurosceptic) Europarties were eligible for funding. At the same time, they increased their own revenue by lowering the co-financing obligations, which makes it easier to receive their (higher) grant amounts. The distribution key was also changed, which resulted in a higher subsidy for the two largest parties EPP and PES, and because of a political compromise the grants for the middle-sized parties like ALDE and the EGP were at least kept at the same level. However, as the analysis has shown, party attitudes were not solely based on strategic considerations, but the strong normative narrative surrounding the revisions also played an important role from the start. The subsidies had to contribute to building up a party democracy at European level to help overcome the EU’s democratic deficit. This normative argument has remained almost consistently part of the debates on the funding for European political parties: the separate subsidies for European political foundations were motivated by emphasizing their contribution to the ideological debate and democratization of the EU, and the increased funding in electoral years was considered a way to allow European political parties to campaign with their lead candidates, which would make the European elections more democratic.

2 European Political Parties as Vehicles for EU Democracy? European political parties have come a long way since they were first mentioned in the Treaty of Maastricht in the beginning of the 1990s. In this period of more than three decades, they have gone through a process of substantial organizational development. Several authors have tried to conceptualize this process. Niedermayer (1983) differentiated

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between three subsequent stages: (1) the contact stage, in which there is only sporadic interaction between the national member parties and there is no permanent transnational organization; (2) the cooperation stage, which is characterized by a permanent transnational interaction, which also requires the establishment of a small permanent headquarters; and (3) the integration stage, in which a level of sovereignty is transferred from the member parties to the European party organization. Taking a rather deterministic position, Niedermayer as well as Dietz (2000) have argued that one can only speak of a true Europarties if they have reached the third stage. This integration stage is characterized by regular meetings between the member parties, the use of common symbols, own Europarty staff and own resources (Dietz 2000, 203; Lightfoot 2006, 304). From this perspective, the finance regime has contributed to the development of European political parties. The ample public funding has enabled them to secure their own headquarters and staff. This has made them more autonomous from their corresponding political groups in the European Parliament, on which they so strongly relied until the beginning of the 2000s. However, the autonomy vis-a-vis their national member parties can be questioned. Whether or not Europarties are eligible for EU funding depends on the parliamentary or electoral representation of their member parties. In addition, while it is true that the European subsidies constitute by far the largest share in the total Europarty income, the co-financing obligation requires that these are ‘matched’ with sources of own revenue. In most of the established European parties, these own resources have come almost exclusively from the national member parties, as they were unable—or opted not—to attract donations or other financial resources. This has kept (at least to some degree) their financial dependence on their member parties in place. Other authors have conceptualized the organization of European political parties not as a process, but in terms of the instrumental value and objective of their members (see e.g. Pittoors 2020). In this respect, Day and Shaw (2006, 297–298) developed a three-fold typology of Europarties. A first type are party organizations that mainly act as facilitating bodies for national party leaders. Such Europarties are not autonomous actors but function as mere arenas for multilateral relations and discussions. A second type are ‘value added’ meta-networks with a political and organizational reach aimed at reducing transaction costs of cooperation (in particular for small parties). The centre of gravity remains firmly with

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the member parties, as the European party organization should only fulfil those tasks that they cannot (separately), such as cooperating to influence EU decision-making. Finally, a third type are European political parties ‘as representative vehicles for an emerging European demos’. This type thus builds on the mass-type party qualities that exist(ed) at national level, with a strong role for individual members. This corresponds to the ideas of Dimitris Tsatsos—one of the principal advocates of Europarties in the European Parliament in the 1990s—who stated that following the inclusion of the party article in the Treaty of Maastricht, one could consider three models of parties at European level: the confederal model, conceived as confederations of national parties, the federal model, as associations of citizens and a supranational model, as supranational parties (Saitto 2017, 10), although it is unclear what he exactly meant with this latter category. Such a functional categorization seems more suitable than the (often deterministic) developmental alternative to capture the organizational dimension of European political parties. Especially considering the involvement of Eurosceptic parties in the European party system, which corresponds to a confederal type: the European party organization is instrumentalized to solely serve the interests of the national member parties. The central organization—in terms of headquarters and staff—is kept minimal and the EU funding is mainly used to finance initiatives from the national member parties. Some Eurosceptic parties have even taken this practice to its extremes. Most of the established proEuropean Europarties correspond to a federal model, although not in the meaning of Tsatsos. They have built up an—in some cases—extensive central Europarty organization that provides an added value for its member parties, mainly as a result of the European public funding that has been made available. However, even in these Europarties the centre of gravity remains with the member parties. A third supranational model corresponds to the mass-party type, characterized by extensive individual membership and bottom-up policy-making. Although some recognized European parties—in particular the ALDE Party—have a developed form of individual membership, the organizations that come closest to this type are Volt Europa and Diem25. Yet these two relatively new transnational organizations are—despite their strong emphasis on grassroots politics— far from fulfilling all eligibility criteria to even be officially registered as a European political party.

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Ironically, it is also this third type that most closely resembles the aspirations expressed for European political parties in the regulatory regime. European parties should provide a strong linkage between citizens and the EU institutions. To achieve this, the involvement of citizens in the internal functioning of the European political parties—as individual members and through democratic, bottom-up decision-making—has been frequently emphasized in the debates and texts of the finance regime. However, as extensively shown in the sixth chapter, the way the regulatory framework has been designed by no means provides any incentives for the involvement of citizens and consequently does not contribute to their development into ‘representative vehicles of a European demos’. This observation is also illustrative for the clear discrepancy between the normative-functionalist and empirical-functionalist consideration of European political parties. From a normative perspective, authors have highlighted functions that political parties (should) fulfil in a democratic system (see e.g. Heywood 2019; Hofmeister and Grabow 2011; Roskin et al. 2016). This can be linked to the narrative that has dominated the origins and in particular the first phase of the finance regime at EU level. The discourse was characterized by a view on European political parties as public utilities that are functional—often even considered essential—for the development of democracy at European level (Chapters 2 and 5). However, these aspirations can be contrasted with empirical research that has examined which functions European political parties actually fulfil in the EU’s political system. Structuring the vote: Political parties provide structure to elections through the presentation (of groups) of candidates linked to a specific political programme in combination with large-scale campaigns. The electoral role of European political parties is however limited: the seats of the European Parliament are contested in national electoral districts by national political parties. As Katsaitis (2020, 2) argued, this nationally based electoral setting provides little incentive for the creation of panEuropean parties outside of the EP’s policy-making space. Although we could consider the national parties as an extension—‘the party on the ground’ (Bardi et al. 2010, 2014)—of the European party, this is only sensible if the link between the national and European party is clear for voters. This is, however, not the case. Although allowed by the European Electoral Act, only a handful of member states included information on European political parties on the electoral ballots during the 2019 elections (Auel and Tiemann 2020, 74–79). In addition, national parties

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hardly highlighted their Europarty affiliation in their campaign material, or made reference to the Spitzenkandidat of their European political party during their electoral activities (Auel and Tiemann 2020; Braun and Popa 2018; Braun and Schwarzbözl 2019). The 2018 revision of the finance regime also introduced the obligation for the member parties to display the logo and political programme of their Europarty on their website ‘in a clearly visible and user-friendly manner’. This provision was particularly aimed at increasing the visibility of the European political parties at national level. Recent research, however, has shown that in many cases these references were absent or not clearly visible.1 Socialization and mobilization of the public: Political parties are also an important link in the process of socialization in which citizens acquire social attachments to the parties and—as a consequence—the political system as a whole. Parties debate policy problems on the basis of their ideological beliefs, which familiarizes citizens with societal challenges. In addition, parties propagate the dominant values and norms of the political system to the broader public. Socialization can further lead to mobilization, i.e. an active participation of citizens in the political decision-making process. This can take many forms: voting in elections, participating in party congresses or other party activities, or even campaigning on behalf of the political party. Such a function can hardly be fulfilled by the European parties, as their overall recognition among the European population is very low (Mair and Thomassen 2010; Van Hecke 2010). Political debates—including on the European Union—are predominantly settled between national political parties, and citizens cannot vote directly for European political parties. The finance regime does not provide many incentives to alter this situation. Europarties are barely stimulated to strengthen the involvement of citizens in their organization and activities, which is illustrated by the limited rights for, and low numbers of, individual Europarty members. There are, however, limited exceptions: the ALDE party has introduced a full-fledged individual membership scheme, and the PES has made an attempt with the ‘PES Activists’ to mobilize citizens in their electoral campaigns, especially in the 2009 and 2014 European elections (Hertner 2011, 2018). Yet, research has also shown that the internal selection procedures for the Spitzenkandidaten have even become more exclusive between 2014 and 2019, with less influence from (individual) party members (Put et al. 2016; Wolfs et al. 2020, 2021).

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Recruitment of political personnel and political leaders: Political parties play a crucial role in determining who will occupy positions of power in political institutions. While voters in elections make the final decision who will be part of the parliament—and to some extent also the government—, political parties recruit, (potentially) train and select candidates for public office. By composing the electoral lists, they control the chances of getting elected. Furthermore, when in government, parties have an important role in the selection of ministers. The selection of political personnel at European level is, however, not a key function of European political parties. The selection of candidates for the elections to the European Parliament is firmly under the control of the national political parties. Similarly, the nomination of candidate European Commissioners is controlled by the majority parties in the national governments, while the European political parties have no role in this process. The only exception is the Spitzenkandidaten system, in which European political parties select their candidate for the presidency of the European Commission. While the 2014 elections proved successful in this regard—with the candidate of the largest Europarty, Jean-Claude Juncker, becoming the Commission president—the Spitzenkandidaten system failed in 2019 when Ursula von der Leyen and not one of the lead candidates took the reins of the European executive. Not only does the European Electoral Law pose severe limitations on the Spitzenkandidaten system, the funding rules also hamper truly transnational electoral campaigns. This makes it more difficult for the European political parties to increase the visibility, the recognizability and ultimately the legitimacy of their candidate for the Commission presidency. Articulation and aggregation of interests, and the formation of public policy: An important representative function of political parties is to channel demands and interests from (groups of) citizens in society to the political system. They prioritize these different interests and demands, weigh them against their ideology and aggregate them in a relatively consistent political programme. This programme also contains concrete proposals to solve societal problems, which they subsequently try to achieve by influencing public policy. The most prominent group that provides input in this process are the members of a political party. Von Arnim and Schurig (2004, 27) described how ‘political parties are supposed to aggregate the different opinions of the citizens and bring

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them to political effect. Political parties therefore have to consist of citizens and have to have a democratic internal structure’, and argued that such a mechanism is barely present with the European political parties. The finance regime indeed offers little incentives for the advancement of this function with European political parties. The only requirement included in the rules is that a Europarty must have a ‘political programme setting out its purposes and objectives’. This provision yet has only limited practical effects, which can be illustrated by the fact that the programme of several European political parties was very short and contained only a limited number of paragraphs. In addition, no conditions are included in the funding rules with regard on how this programme should be developed. It is therefore not surprising that the involvement of citizens in the composition of the policy platform is limited in most cases. This does not mean that European political parties do not perform any aggregating function. In most Europarties, the political programme is the result of discussions and votes among its member parties. In other words, European political parties aggregate the demands and interests of their national member parties (which in turn articulate the interests of citizens at the national level). This constitutes consequently a form of indirect interest aggregation of societal interests. However, the extent that European parties also prioritize among these interests and demands is rather limited. Many scholars have highlighted that the political programmes of Europarties represent the lowest common denominator of the positions of the national member parties (see e.g. Hertner 2011; March 2021; Sigalas and Pollak 2012). In addition, the affiliated political groups in the European Parliament do not always follow the political manifesto of their Europarty (Hix 2002). The 2007 revision introduced separate funding for European political foundations, which gave rise to the establishment of such entities linked to all Europarties. They were attributed an important role to act as a catalyst for new ideas, analysis and policy options, and turn Europarties into ‘policy-seeking entities’. This would indeed contribute to the creation of a European public sphere. In practice, there are substantial differences in how closely European foundations work with their affiliated Europarty, their programmatic activities and whether they emphasize civic education and democracy-building or ideological partisan work (Gagatek and Van Hecke 2014). More research is needed, however, in how their activities contribute to policy formation in Europarty politics and if—and how—they are able to strengthen links with European citizens.

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Exercising political power and organization of government: Political parties compete for power by participating in elections and have an important function in structuring the relations within and between institutions. European political parties do seem to play a rudimentary role in organizing government at the European level. Their affiliated political groups—the ‘party in public office’ (Bardi et al. 2010, 2014)—structure the political organization and activities in the European Parliament. In addition, there is a growing tradition—especially in the larger Europarties—to hold coordinating meetings with partisan figures from the Commission and the Council of Ministers, such as summits with the affiliated heads of state and government before the meetings of the European Council, or meetings with the affiliated national ministers mirroring the configuration of the Council of Ministers (Johansson 2009; Lord 2010; Van Hecke 2010). These meetings mainly serve as a platform to have an exchange of views and to coordinate positions among the party affiliates. The EU public funding has had a facilitating role in this respect, as it has provided the required financial resources to set up these coordinating meetings. External democracy promotion: a function that is specifically attributed to Europarties and their affiliated foundations is democracy promotion in neighbouring countries of the EU. European political parties can play an important role in new democracies or during democratic transitions by socializing the political elites of these countries with democratic norms and values. Research has shown that European political parties have indeed made efforts in the candidate countries preceding the 2004 and 2007 enlargements with regard to democracy promotion and partisan linkage (Bressanelli 2014; Day and Shaw 2006, 19). But also after this round of post-Cold War enlargements, the Europarties have continued to fulfil an important democratic function in countries of the Western Balkans and the Eastern Partnership, although partisan interests have also complicated this process (Chryssogelos 2017, 2021). While the European finance regime provides the necessary financial resources to Europarties to conduct such activities, it seems merely a function taken up by the larger European political parties. In addition, the decision of the European Parliament in 2018 that non-EU parties could no longer be considered as full members of Europarties has potentially jeopardized the linkage function with regard to these parties. Democracy promotion in third countries was also an important aspiration for European political

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foundations (in analogy to, for example, the German political foundations). More research is needed, however, to verify to what extent these Eurofoundations conduct such activities outside the EU. Democratic dysfunctions: Several scholars have argued that political parties not only fulfil democratic functions, but can also be dysfunctional to democracy. These dysfunctions are often the dark side of their democratic functions. For example, when aggregating societal interests, parties can deliberately keep important issues from the political agenda. Similarly, the function of organization of government can easily turn into a capture of government, when strong partisan links hamper checks and balances between the institutions. This has also been the case at European level. While the European Parliament has organized hearings during the appointment process of the European Commission to verify the suitability and integrity of the candidate-Commissioners, political groups have often refrained from criticizing—or have even actively protected—‘their’ candidates with the same Europarty affiliation (see e.g. Deckarm 2017). In this respect, political deals between groups not to veto each other’s candidate have inhibited a proper assessment of the candidate’s credentials. Similarly, scholars have argued that partisan links at European level have prevented stronger action against democratic backsliding at national level. European party families have blocked measures against member states that failed to uphold the core EU values of democracy pluralism and the rule of law (as enshrined in Article 2 TEU). The EPP protected the Hungarian government led by its member party Fidesz against EU sanctions. Similarly, the Law and Justice Party from Poland could count on the support of the ECRP, although the latter had a less dominant role in the EU political system (Kelemen 2017, 2020; Wolkenstein 2021). Although the finance regime for European political parties includes specific safeguards against non-compliance with the EU’s fundamental values such as democracy and the rule of law, the discussion of the values compliance mechanism in the fifth chapter of this book has demonstrated how it suffers from serious limitations that have hampered its effectiveness. Providing legitimation for the political system: the combination of the aforementioned functions brings about an important legitimizing function of the entire political system. This is mainly related to the important linkage function that political parties perform. European political parties are also aspired to perform such a role in many aspects. Especially in a multi-level political system, this linkage function comprises many

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dimensions: Europarties and foundations should link various national political forces to each other, link citizens to the EU political system, provide a bridge between the different EU institutions, and even link partisan actors in third countries to the EU. Given the discussion of the previous functions, this legitimizing role of European political parties is only modest at best. With few exceptions, the finance regime provides more barriers than incentives to improve these democratic functions for European political parties. Consequently, while the finance regime for European political parties and foundations has the ambition and potential to contribute to the development of European party democracy, more efforts are needed in order to truly make a ‘democratic leap forward’.

Note 1. European Democracy Consulting, The Logos project, April 2021.

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List of Interviews

Number

Date

Name

Position

1

19-11-2015

Anonymous 1

2

22-01-2016

Sabine Dechamps

3

05-02-2015

Martin Leveneur

4 5 6 7

05-02-2016 11-02-2016 18-02-2016 25-02-2016

Armin Traute Günther Dauwen Richard Milsom Yasmine Dehaene

8

02-05-2016

Marije Laffeber

9 10

16-03-2016 30-01-2017

Richard Byfält Luc Vandeputte

11

27-11-2017

Anonymous 2

12

22-01-2018

Anonymous 3

13

13-02-2018

Eider Gardiazabal-Rubial

Administrator—Political Structures Finance Unit European Parliament Head of Office ALDE Party Executive Manager EDP Financial Manager EGP Director EFA Chief Executive ECRP Executive Director ADDE Deputy Secretary-General PES Secretary-General EUD Deputy Secretary-General EPP Former Policy Advisor BUDG EPP group Former Policy Advisor BUDG ALDE group Coordinator Budget S&D group (continued)

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 W. Wolfs, European Political Parties and Party Finance Reform, https://doi.org/10.1007/978-3-030-95175-7

293

294

LIST OF INTERVIEWS

(continued) Number

Date

Name

Position

14

26-02-2018

Anders Vistisen

15

01-03-2018

Stanislaw Zoltek

16

20-03-2018

Younous Omarjee

17

22-03-2018

Bernd Kölmel

18

22-03-2018

José Manuel Fernandes

19

28-03-2018

Gérard Deprez

20

28-03-2018

Marco Zanni

21

25-04-2018

Anonymous 4

22

03-05-2018

Indrek Tarand

23

07-06-2018

Anonymous 5

Shadow rapporteur EP Budget ECR group Coordinator Budget ENF group Shadow rapporteur EP Budget GUE/NGL group Coordinator Budget ECR group Coordinator Budget EPP group Coordinator Budget ALDE group Coordinator Budget EFDD group Policy Advisor European Commission Shadow rapporteur EP Budget Greens/EFA group Policy Advisor Mercedes Bresso S&D group Policy Advisor S&D group President APF Member AFCO Committee ALDE group Director European Commission Director-General DG FINS European Parliament Administrator—Political Structures Finance Unit European Parliament Administrator—Political Structures Finance Unit European Parliament Administrator—Political Structures Finance Unit European Parliament Financial Advisor PEL

Anonymous 6 24 25

14-06-2018 21-06-2018

Roberto Fiore Maite Pagazaurtundua

26

02-08-2018

Enrico Forti

27

29-08-2018

Didier Klethi

Anonymous 7

Anonymous 8

Anonymous 9

28

07-09-2018

Daniel Sheffer

(continued)

LIST OF INTERVIEWS

295

(continued) Number

Date

Name

Position

29 30

10-09-2018 10-09-2018

Armin Traute Josep-Maria Terricabras

31

11-09-2018

Mathieu Camescasse

32

14-09-2018

Marije Laffeber

33

17-09-2018

Philip Claeys

34

20-09-2018

Ulrike Lunacek

35

26-09-2018

Klaus Welle

36

27-09-2018

Rainer Wieland

37

11-10-2018

Sabine Dechamps

Financial Manager EGP Member AFCO Committee Greens/EFA group Executive Manager EDP Deputy Secretary-General PES Former Board Member EAF EP Vice-President (Greens/EFA Group) Secretary-General European Parliament EP Vice-President (EPP Group) Head of Office ALDE Party Secretary-General ALDE Party Deputy Secretary-General EPP President IDP Policy Advisor of the Council of Ministers Member AFCO Committee Socialist group

Jacob Moroza-Rasmussen 38

20-11-2018

Luc Vandeputte

39 40

05-12-2018 15-09-2021

Gerolf Annemans Anonymous 10

41

16-09-2021

Jo Leinen

Index

A actor-centred institutionalism, 8, 9 Adam, Michael, 188 Ahtisaari, Martti, 209 Alemanno, Alberto, 219 Alternative for Germany, 143 Amsterdam Treaty, 26, 42, 278 Andreotti, Giulio, 24 Annemans, Gerolf, 137 Austrian Economics Centre, 104 Austrian Freedom Party, 121, 143, 209, 215, 241 Austrian People’s Party, 209 B Bannon, Steve, 155 Baron Crespo, Enrique, 24 Bayer Monsanto, 101 Bayrou, François, 238 Belgian Council Presidency, 31, 32 Berlusconi, Silvio, 43 Berthu, Georges, 126 Bonde, Jens-Peter, 122, 125, 238 Bontes, Louis, 154

Booth, Graham, 125 Bresso, Mercedes, 200, 204 Brexit, 73, 153, 155, 202 British National Party, 215, 240 Brok, Elmar, 29 Brothers of Italy, 239 Buchner, Klaus, 238 C Cambridge Analytica, 202–204 Caruana Galizia, Daphne, 105 Cassar, Etienne, 105 Cassola, Arnold, 28 Castaldo, Fabio Massimo, 65 Cavaco Silva, Anibal, 25 Christian Democratic and Flemish, 143 Christian Union, 239 Cignetti, Valerio, 148 Civic Democratic Party, 237, 239 Civitas, 241 Claeys, Philip, 134 co-financing obligation, 36, 52, 75, 76, 90, 106, 179, 196

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 W. Wolfs, European Political Parties and Party Finance Reform, https://doi.org/10.1007/978-3-030-95175-7

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298

INDEX

Committee of Independent Eminent Persons, 193, 203, 208, 209, 212, 217 Communist Party of Greece, 125, 131, 134, 237 Conservative Party (UK), 33, 121, 155, 156, 239 Cook, Robin, 34 Cotelle, Christian, 148 Council of Europe, 79 Court of Auditors, 28, 38, 96, 248, 249, 251 Cretu, Corina, 141

D Danish People’s Party, 33, 150–152, 158, 237, 239 Daphne Project, 105 Daul, Joseph, 198 De Clercq, Willy, 23 Dehaene, Yasmine, 149, 154, 155 Delors, Jacques, 24 Deprez, Gerard, 72 de Villiers, Philippe, 127 Diem25, 262, 268, 283 Dimitrakopoulos, Giorgos, 29

E Eastern Partnership, 288 Emma Bonino List, 121 European Anti-Fraud Agency (OLAF), 2, 153, 154

F Facebook, 102, 202, 267 Family Party, 239 Farage, Nigel, 153 Feio, Diogo, 187 Ferrari, Laure, 155 Fianna Fail, 237

Fidesz, 219, 289 Finns Party, 239 Fiore, Roberto, 137, 217, 241 Flemish Interest, 121, 143, 157, 215, 241 Forti, Enrico, 204 Forum for Democracy, 104 Frahm, Pernille, 125 Free Democratic Party, 157 Freedom Party (Netherlands), 131, 158, 241 Freedom Party of Austria, 33, 104 Friedrich Ebert Stiftung, 181 Friedrich, Ingo, 179 Friedrich Naumann Stiftung, 181 Frowein, Jochen, 209 G Gebhardt, Evelyne, 65 German constitution, 39 German Constitutional Court, 76 German party foundations, 178 German political foundations, 7, 289 Golden Dawn, 143, 159, 216, 241 Gollnisch, Bruno, 128, 148, 240 Greater Romania Party, 158 Greek Council Presidency, 32, 33 Green Party of England and Wales, 125 Griffin, Nick, 136, 240, 241 Grigule, Iveta, 238 Guillaume, Sylvie, 65, 187 H Hannan, Daniel, 122, 125, 127, 238 Hans Peter Martin’s List, 131 Harmony, 143 Hautala, Heidi, 65 Hayek Institute, 104 Heinrich Böll Stiftung, 181 Helmer, Roger, 126, 136, 238

INDEX

Hohlmeier, Monika, 67 Hübner, Danuta, 199, 200 Hunting, Fishing, Nature and Traditions, 121

I Imbrasas, Juozas, 152 Irish Council Presidency, 32 Italian Council Presidency, 32

J Jacobsson, Stefan, 217 Jens-Peter Bonde, 126 Jobbik, 156, 159, 215, 240 Juncker, Jean-Claude, 2, 198–200, 207, 286 June List, 238 June Movement, 121, 158, 238

K Karlsson, Rikke, 150, 152 King, Julian, 200, 247 Klethi, Didier, 64, 71 Kohl, Helmut, 24, 28, 42 Kolm, Barbara, 104 Konrad Adenauer Stiftung, 181 Korˇcok, Ivan, 211 Kovács, Bela, 148 Kurski, Olgierd, 127

L Labour Party, 79 Law and Justice Party, 104, 105, 151, 155, 220, 237, 239, 289 League of Polish Families, 238 Legrip de la Rozière, Laurent, 148 Leinen, Jo, 29, 33, 41, 179, 181 Le Pen, Marine, 101, 240 Loyola de Palacio, Ignacia, 41

299

Lubbers, Ruud, 24, 25 Lunacek, Ulrike, 197, 200

M Maastricht Treaty, 23–26, 28, 39, 41, 43, 120, 277, 281 Macron, Emmanuel, 101 Maes, Nelly, 28 Martens, Wilfried, 23–25, 28, 39, 43, 101 Meijer, Erik, 125 Mélenchon, Jean-Luc, 128 Méndez de Vigo, Inigo, 29 Messerschmidt, Morten, 152, 153 Mitsotakis, Konstantin, 24 Modrikamen, Mischaël, 154, 155 Moedas, Carlos, 211 Mölzer, Andreas, 126 Movement for France, 121, 148, 238, 239, 242

N National Alliance, 237 National Democratic Party, 149, 159, 216, 241 National Liberal Party, 143 National Rally, 121, 143, 145, 148, 157, 158, 215, 240, 241 New Force, 216, 241 Nice Treaty, 28–30, 32, 33, 37, 42, 43, 278 Northern League, 33, 121, 238, 239, 241

O Order and Justice, 143, 152, 237, 239, 240 Oreja, Marcelino, 209

300

INDEX

P Paksas, Rolandas, 152 Party of Great Romania, 123 Party of Italian Communists, 134, 237 path-dependence, 9 Patriotic Front, 143 Pech, Laurent, 219 People’s Movement Against the EU, 121, 238 People’s Party (Belgium), 149, 154 Pittella, Gianni, 65, 216 Plan D for Democracy, Dialogue and Debate, 181 Popular Orthodox Rally, 123, 238, 239, 242 Portuguese Communist Party, 134, 237 Portuguese presidency of the Council, 184 Pöttering, Hans-Gert, 184 Priestley, Julian, 180 Prodi, Romano, 28, 133, 238 Prosperous Armenian Party, 77, 78 public utilities, 12 R Rally for France, 121, 237 Rasmussen, Anders Fogh, 43 Reformed Political Party, 239 revenue-maximizing strategy, 12, 51, 53, 73, 106, 280 S Santer, Jacques, 25 Sassoli, David-Maria, 65 Scharping, Rudolf, 28 Schembri, Ryan, 105 Schleicher, Ursula, 40 Scholz, Helmut, 127 Schonard, Pascal, 188

Schulz, Martin, 198, 199, 211, 216, 266 Schüssel, Wolfgang, 43 Scottish National Party, 79 Selimovic, Jasenko, 204 Slovak Presidency of the Council of Ministers, 211 Social Democratic Party of Germany, 91, 266 Socialist People’s Party, 121 Spitaels, Guy, 23 Spitzenkandidaten, 71, 264, 286 Stanishev, Sergei, 198 Straw, Jack, 34 Sweden Democrats, 143, 215, 239, 240 Swoboda, Hannes, 207

T Tajani, Antonio, 267 Telicka, Pavel, 65 The Movement, 155 Thulesen Dahl, Kristian, 151 Timmermans, Frans, 198, 200 Toutenhoofd, Willem, 154 Treaty of Lisbon, 40 Trump, Donald, 155, 202 Tsatsos, Dimitris, 27, 29, 40, 251, 283

U UKIP, 121, 136, 158, 240 Ulvskog, Marita, 216 United Poland, 151, 239

V van Baalen, Hans, 198 van den Broek, Hans, 24 Van Laethem, Hervé, 149 Van Orden, Geoffrey, 135

INDEX

Verhofstadt, Guy, 216 Vidal-Quadras, Alejo, 65 Vistisen, Anders, 135, 152 Volt Europa, 262, 267, 283 von der Leyen, Ursula, 2, 286 Vox, 239 W Wallström, Margot, 178, 181

Weber, Manfred, 199, 207, 216 Welle, Klaus, 64, 65, 71 Western Balkans, 288 Wieland, Rainer, 197, 200

Z Zanni, Marco, 71 Zimmer, Gabriele, 216

301