Interest Groups: Some say donations others say bribes – What is the money really for?

By Nicola Mc Grath

The European Parliament (EP) has been able to amend legislation since the entry into force of the Single European Act in July 1987, thereby incorporating certain interests and policy aims in the decision making process. Since 2008, the European Union’s (EU) political parties and foundations can receive private financial donations as a part of their annual budget (Katsaitis, 2018). A myriad of actors across Europe are engaged in lobbying activities, looking to influence and inform public decision-making. This can become a very dangerous game when the powerful influence over policy making falls into the wrong hands – using the example of Germanys car industry, I will show how this rings true. The recent surge in lobbying activities can be connected to the growing role of the EU as a policy maker, expanding their regulatory competence in areas that are of interest to corporations, businesses and individuals. It is often argued that tighter regulations on interest groups and lobbying will cripple industries or limit the abilities of politicians to do their job – but I do not believe this to be the case.

Official recognition of lobbying within the EU dates back to 1988 with the ‘Cecchini Report’ undertaken by the European Commission recommended that business interests participate more actively and directly in EU decision making. In 1995 the European Parliament (EP) set up a register for lobby groups. In 2008 the European Commission (EC) also set up a register, these were then merged in 2011 which became known as the Join European Transparency Register (European Parliament, 2015). The Lisbon Treaty was brought into force in 2009, which attempted to create a more centralized leadership and foreign policy. It also provided a legal framework for interest representation in the form of Article 11 of the Treaty on European Union. Despite the increased regulation of party financing in most European countries, effective enforcement has not necessarily followed suit.

Lobbyists will choose to donate to political players closer to their position hoping to increase their chances of impacting legislation (Brunell, 2005). This can lead to settings of polarization within political agendas. This is clearly evident in Germany, one of the EU’s longest standing members, where the automobile industry has influenced political parties over the last number of years.While the identity of donors of all contributions above €500 must be recorded in Germany, public disclosure of the donor must only be made in the annual financial statement of the party if the contribution exceeds €10,000 per year (EU PAM, 2020). As a result, many political parties abuse this system by accepting donations just below this limit so as to keep them secret, thus displaying that Germany does not have a robust ethical set of rules for lobbyists or lobbying. In particular, there is a lack of comprehensive, binding, transparent, and punishable rules that apply to everyone.

As of December 2011, all cars sold in Germany must bear the new energy efficiency label based on CO2 emissions. The Deutsche Umwelthilfe (DUH), an environmental and consumer protection organisation, claims this legal ordinance was largely drafted up by Verband der Automobilindustrie (VDA) and not by the political parties (Deutsche Umwelthilfe, 2013). The DUH’s request to access the files that document the close coordination of a legal regulation between Rainer Brüderle (FDP), Germans previous economic minister, and the automotive industry was denied by two of Germanys federal ministries (Speth, 2014). They were only disclosed by virtue of a decision by the European Court of Justice in June 2013. The published documents show that the associations and companies had already been involved in the legislative process a draft co-ordinated interdepartmentally had been published. This clearly contravenes the provisions of the Ministries’ Joint Rules of Procedure (GGO).

Another worrying scandal that broke out within Germanys political sphere is the large donation given by the owners of BMW, one of Germanys most successful car manufacturers, to Angela Merkel’s political party. Donations amounting to €690,000 were given just before the German chancellor personally intervened in a decision that was to be made in Brussels on the EU’s new standard for CO2 in car exhausts, which would favour smaller cars that are manufactured in France and Italy, not Germany. One in every seven university graduates gets a job in the car industry, it is a huge employer and economic mainstay. Ensuring its car company’s flourish is therefore of great importance to government in Berlin – but is it worth the mistrust in government, with the secret meetings and donations? (Transparency International , 2012).

There is no one-size-fits-all approach to controlling the amounts of contributions by individuals and corporations. However, increasing transparency in the realm of party financing is an important step towards safeguarding the integrity of national political systems and restoring citizens’ trust in them. Recent research has found that tackling the extent of state capture, and other forms of ‘legal corruption’, has a positive effect on fiscal deficits, very similar to that of lowering traditional forms of corruption (Kaufmann , Jones, & Hellman, 2009). The European union are making tracks towards larger amounts of transparency from all member states, with the European Commission proposing it to be mandatory in 2016. Article 352 of the Treaty on the Functioning of the European Union would be an adequate legal base for making the TR a mandatory register,although this would require unanimity within the Council (Nettesheim, 2013).

When looking at political parties within the EU’s member states there are certainly issues with interest groups donations to them and what the real reason behind the money is. Tighter legislations need to be put in place by the European Commission that all member states can be held accountable to. The scandals caused by the lack of transparency within Germany and many other countries in the EU have cost the governments money and time. It will be evidently seen as an improvement if the European commission brings in the mandatory register of interest groups and lobby groups for all member states. A survey commissioned by the NGO in 2015 found that 78 per cent of Germans would like to see a lobby register that forces lobbyists to disclose their activities. It is clear that the lack of regulation around lobbying groups on political parties is having adverse affects on society today. The transparency of these donations will instil trust back in political parties and ensure that all issues faced, environmental or business related, are looked at in a fair manner.

Bibliography 

Brunell, T. L. (2005). The Relationship Between Political Parties and Interest Groups: Explaining Patterns of PAC Contributions to Candidates for Congress. Political Research Quarterly, 681-688.

Deutsche Umwelthilfe. (2013, 09 11). Deutsche Umwelthilfe. Retrieved 10 2020, from https://www.duh.de/presse/pressemitteilungen/pressemitteilung/?no_cache=1&tx_news_pi1%5Bnews%5D=2593&tx_news_pi1%5Bcontroller%5D=News&tx_news_pi1%5Baction%5D=detail

European Parliament. (2015). Transparency of Lobbying at EU Level.European Union.

Katsaitis, A. (2018). Assessing Interest Groups’ Financial Donations to the European Union’s Political Parties & Foundations.OECD Global Anti-corruption & Integrity Forum.

Kaufmann , D., Jones, G., & Hellman, J. S. (2009). “Seize the State, Seize the Day” : State Capture, Corruption, and Influence in Transition.Washington: World Bank.

Nettesheim, M. (2013). Interest representatives’ obligation to register in the Transparency Register: EU competencies and commitments to fundamental rights.Retrieved from https://www.europarl.europa.eu/RegData/etudes/etudes/join/2013/493038/IPOL-AFCO_ET(2013)493038_EN.pdf

Speth, R. (2014). Lobbying in Germany.Transparency International Deutschland e.V.

Transparency International . (2012). Money, Power and Politics. Corruption Risks in Europe .Global Corruption Report 2013 . Berlin: Transparency International.

Biography

This blog post was written as part of the coursework for INRL20160 – Introduction to EU Politics.

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