Money in politics

Eckhart von Klaeden appears distinctly uncomfortable in a video posted online. Wearing a jacket, but no tie, he appeals directly to the camera: “Five, ten, 15 or 20 euros are an important contribution to the stability of our country and electoral success of the CDU.” A few minutes later he cheerfully adds: “You can even pay by credit card!”

The aristocratic von Klaeden serves as treasurer of the Christian Democratic Union and is the CDU's fundraiser in this year's election. Though there's little the CDU or Chancellor Angela Merkel's re-election campaign have in common with Barack Obama or the Democratic Party of the United States, it's clear that someone in the CDU took close notes last fall.

It's impossible to imagine German voters donating anywhere near the one billion dollars that US presidential candidates raised last year. But money in politics is a popular theme in Germany, too. German media reports say the parties could spend over 60 million euros in this year's election cycle and some parties have suggested that the CDU and their preferred coalition partner the Free Democrats are tainted by their financial ties to business.

Pulp Fiction meets campaign finance

The CDU's attempt to apply the Obama approach and woo small donors is particularly striking because the party's opponents are trying hard to paint the conservatives as little more than an appendage of big business. A recent commercial by the Green Party was vaguely reminiscent of a scene from the Quentin Tarantino film "Pulp Fiction".

With classic soul music as a soundtrack, a thuggish-looking character lectures an Angela Merkel look-alike.

“Alright lady, promise the people tax cuts, that will draw them in,” he oozes. “When you win, shove our plan into effect. More money for the banks, no brakes on the stock market, more nuclear energy...”

In the end, a meek Merkel squeaks out a weak “yes.”

It's not subtle but neither was Merkel's rival from the Social Democrats, Foreign Minister Frank-Walter Steinmeier, who, in their only televised debate, all but told Merkel to her face that her party were corporate shills.

“When I look at donations to the political parties, if I remember correctly, the FDP [Free Democratic Party] and the CDU have three million [euros] in donations from banks and corporations while the SPD got 200,000 [euros],” Steinmeier said.

The accusation is clear that money and politics are old bedfellows. But in making that charge, Steinmeier was merely playing to the crowd while ignoring Germany's party financing system, which he knows well from his many years as a leading functionary in the SPD.

“The CDU receives about five percent of its income from business donations,” laughed political scientist Michael Koss. “It's just not that important.”

How the party financing system works

Koss, a researcher at Potsdam University, wrote his doctoral dissertation on the German party financing system. He told Deutsche Welle that unlike in the United States and some other countries, Germany makes no distinction between funds for a political party and campaign funds.

They belong to the same pot of money and are part of a system that resembles a three-legged stool, reliant upon direct government support, corporate and individual donations and party membership dues.

Each year the state sets aside a pool of money for use by the political parties, currently 133 million euros. Much of that money is divided up according to how many votes the parties receive once they pass a rather low threshold - just 0.5 percent at the national level and one percent at the state level.

The newly-founded Pirate Party, which advocates increased online privacy and fewer copyright and patent restrictions, is hoping to achieve over 0.5 percent of the national vote in order to qualify for state financing.

Individual donations to political parties - up to 3,300 euros - are tax-deductible, another state subsidy designed to encourage political involvement. On top of that, such donations are also matched at a rate of 38 cents per euro by the government.

There is, however, no limit to how big corporate donations can be. The main requirement is that donations be reported to the Bundestag, which administers the party finance system, and disclosed on the parliament's Web site.

Marketers and extremists flourish, critics say

It's a generous system and one that none of the parties seem eager to change. But there are critics who say that German political parties live high on government largess.

“When I see the parties stick large amounts of these millions into campaigns where they produce classic merchandising items like soccer balls, balloons and whistles, then I think that money is being improperly used,” Taxpayers Federation head Rainer Holznagel told Deutsche Welle.

Holznagel said his watchdog organization supports the public financing of political parties, but hoped to see less tax money spent on frivolous “marketing” gimmicks.

A more serious charge leveled against Germany's party funding system is that it inadvertently supports right-wing extremism, particularly the far-right National Democratic Party (NPD).

As a legal political party, albeit one under close government surveillance for its many hostile outbursts towards foreigners, that draws single digit support in several German states, the NPD received nearly 1.45 million euros in state funding in 2007.

Politicians from the rest of the political spectrum have tried for years to cut off the NPD's access to state funds, though researcher Michael Koss thinks the attempts do more harm to the democratic parties than to the NPD.

“Compared to the more established parties, the NPD receives a negligible amount of money,” Koss told Deutsche Welle. “Of course, it's painful for a democracy to fund its opponents, but Germany is a democracy and in a democracy the system has to be the same for every party.”

Arguably, the funding system has become a useful tool for weakening the NPD. A bookkeeping scandal has cost the party over a million euros in fines and 300,000 euros in withheld funds.

The value of transparency

The party financing system's rigorous disclosure requirements have trapped more than just the NPD. A funding scandal in the late 1990s helped end former Chancellor Helmut Kohl's term and the resulting legal tsunami eviscerated much of the party's senior leadership at the time, paving the way for Angela Merkel's ascent.

“It's really a system that works well, because all of these scandals prove that the system was working because the scandals were detected,” said Koss.

Although the system has kept German politics relatively free of corruption, Koss said the ability to attract donations of unlimited size can give the appearance of impropriety.

“Most donations aren't that big, so I'd like to see a system where there's a high cap, say 50,000 euros, so that big donors can give money, but that doesn't feel like companies are buying political parties,” Koss said.

Author: Brett Neely

Editor: Rick Demarest