Last Sunday, Uruguay, the small Latin American country of 3.3 million, ensured five more years of center-left party Frente Amplio’s presidential reign and majority in parliament. Despite early predictions that second-largest party, center-right Partido Nacional’s climbing popularity could give them the edge (putting some recently-passed social reforms — including marijuana legalization — in jeopardy), Frente Amplio still garnered 48% of the vote. The results managed to alleviate any fears that Frente Amplio might lose power, but given the financial advantages afforded to large parties, no one should be surprised by the electoral domination of Frente Amplio and Partido Nacional. Strong parties in Uruguay have the infrastructural policy influence to reel in private donors, receive huge amounts of state funding compared to small parties and benefit disproportionately from a new and fragile system of regulation.
Uruguay established earnest measures to regulate political finance right before the 2009 national elections, so last week’s elections mark only the second cycle with any finance reporting or oversight mechanisms in place. These new laws set contribution limits at $832,360 Uruguayan pesos (about $36,000 USD) per year per donor, established what kind of donations are prohibited (for example, corporate donations are allowed, but corporations with government contracts are subject to lower limits than other entities) and granted the Electoral Court power to investigate potential violations. Finally, the law put forth a series of financial disclosure requirements. Candidates and parties are now subject to regular reporting of income and expenditures, including donation sources. Unfortunately, election reports are not made public until 90 days after the election period ends and in a PDF format, so no data from the most recent campaign is yet available for public scrutiny.
In addition to these regulations on private donations, political parties in Uruguay have access to a significant amount of public funding distributed in direct proportion to the amount of votes they’ve received. For the 2014 elections, the state awarded about $10 USD to each party for every valid ballot.
How reliant a party may be on state funds varies. According to Quien paga?, a political finance database scraped and maintained by Sudestada, the small, leftist Asamblea Popular received 93.7 percent of its income in 2009 from public funding. The largest party, Frente Amplio, reported that 87 percent of its income came from public funds. Although both parties claim that most of their incomes came from public sources, the differences in their overall revenue is staggering, in part due to the distribution of public funds. Frente Amplio’s total income, including both public and private funds, topped out at about $12.6 million USD while Asamblea Popular only raised about $124,000 USD from all sources. Asamblea Popular’s entire budget is just a fraction of what Frente Amplio managed to raise from private donors alone. Partido Nacional (considered the “business-friendly” party) reported about $5 million USD in total revenue, only 53 percent of which came from public funds.
The allocation of public funding to parties can sometimes act as a way to level the playing field for small parties, minority groups and women. In Uruguay, the public funding structure as is barely keeps small parties in the game and has done little to boost civic participation for underprivileged groups — in fact, parties are currently being criticized for attempts to curb efforts to correct the gender imbalance within the Uruguayan legislature.
Public reports from this year’s elections won’t be available for months to confirm, but we can speculate that this cycle followed a pattern similar to the previous election: Parties like Asamblea Popular or Partido Colorado (both make up less than 19 percent of parliamentary seats combined) had tiny budgets consisting of public funds and no significant private donations compared to the dominant parties.
Data from Uruguay’s 2009 elections demonstrates that not only do large parties exclusively have the influence to attract significant private donations, but they are also the main beneficiaries of weaknesses in political finance laws that make it possible for special interests to channel money secretly.
By law, parties may receive some donations that they don’t have to reveal to oversight officials or the public as long as they are under $8000 Uruguayan pesos (about $330 USD) and don’t exceed 15 percent of a party’s overall income. This limit isn’t outrageous: In the U.S., parties aren’t required to disclose donor identities for donations under $200 USD. However, in Uruguay, this regulation is widely ignored: In the last election, three of the five major parties blatantly declared anonymous donations that well exceeded the $8000 Uruguayan peso ceiling.
Sudestada’s reports reveal additional violations and other unsettling, yet commonplace, activities that allow monied interests to buy their way into the political system. For example, they’ve seen contributions from government contractors that exceed the legal limit. There are also no requirements to disclose political media ad buys, and there is speculation that media companies covertly contribute to favored parties by charging inconsistently to different parties. None of the 87 total violations that Sudestada discovered during the 2009 election were ever investigated by the Electoral Court, despite being granted the power to conduct oversight just months before these incidents.
These loopholes in regulations and even the political funding structure itself can create opportunities to compound the advantages strong parties have over weaker parties. As the polls from the recent election confirm the sustaining power of these parties in Uruguay, it is important to look not just toward the votes but also the budget and income of the competing players. Access to funding affects campaign strategy, the amount of exposure afforded to a campaign and a whole lot more.
The 2014 elections in Uruguay may not seem particularly noteworthy — they occurred without major scandal and, ultimately, not much changed in the make-up of the government and legislature. However, when investigating the forces shaping the political funding machine, the stagnation in itself is noteworthy. From the allocation of public funding to regulation loopholes, the institutional structure of the political finance system gives strong parties the edge: Dominant parties are destined to stay dominant.