Explanatory Memorandum to COM(2017)481 - Amendment of Regulation (EU, Euratom) No. 1141/2014 on the statute and funding of European political parties and European political foundations - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2017)481 - Amendment of Regulation (EU, Euratom) No. 1141/2014 on the statute and funding of European political parties and European ... |
|---|---|
| source | COM(2017)481  |
| date | 13-09-2017 |
1. CONTEXT OF THE PROPOSAL
• Reasons for and objectives of the proposal
Democracy is one of the fundamental values on which the European Union is founded. To ensure the functioning of a representative democracy on the European level, the treaties determine that the citizens of the European Union are directly represented in the European Parliament.
The right to freedom of association and the right to freedom of expression are fundamental rights of every citizen of the Union.
Political parties fulfil an essential role in a representative democracy, creating a direct link between the citizens and the political system, thereby enhancing the legitimacy of the system. The same happens at European level: according to Article 10 of the Treaty on European Union, 'political parties at European level contribute to forming European political awareness and to expressing the will of citizens of the Union'. Article 12(2) of the Charter of Fundamental Rights of the European Union expresses the same principle.
Fostering political debate across Europe on European issues through vibrant European political parties is a long standing Commission objective.
In the run up to the 2014 European elections, the Commission issued a Recommendation 1 , calling on European and national political parties, supported by the institutions and the Member States, to take a number of steps to strengthen the role of European political parties in contributing to forming European political awareness and to expressing the will of the citizens of the Union. One of these steps was the 'Spitzenkandidat'.
European political parties responded to the Commission's call and the 2014 European Parliament elections were fundamentally different from previous ones. For the first time, they established a link between the results of the elections and the choice of the current European Commission President, Jean-Claude Juncker. 'Spitzenkandidaten' or candidates for President of the European Commission, with different political programmes allowed voters to make an informed choice between alternative political platforms for Europe, rather than on exclusively national political issues, thus ‘europeanising’ the elections.
Regulation No 1141/2014 of the European Parliament and of the Council of 22 October 2014 on the statute and funding of European political parties and European political foundations 2 was introduced to increase the visibility, recognition, effectiveness, transparency and accountability of European political parties and their affiliated political foundations.
Political parties and foundations satisfying a number of conditions were offered the opportunity to become European legal entities by registering at European level, and thereby enhancing access to European financial support. These conditions include representation in a sufficiently large number of EU Member States and respect, both in their programme and activities, of the values on which the EU is founded - respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of people belonging to minorities.
An independent Authority for European political parties and foundations ("the Authority") was created, for the purpose of registering, controlling and, if necessary, imposing sanctions on European political parties and foundation, including to consider cases where such entities allegedly fail to respect these fundamental European values. Where doubts arise about whether a party or foundation is observing this requirement in practice, the European Parliament, the Council or the Commission may lodge a request with the Authority for European political parties and European political foundations to verify the situation. Before coming to a decision on whether to de-register a party or foundation, the Authority must consult a Committee of independent eminent persons.
Nevertheless, the Commission’s report on the 2014 European elections 3 found that work remained to be done to increase the participation of citizens and the inclusivity of elections, enhance the European dimension of the political debate, reverse the trend of low turnouts, further enhance the democratic legitimacy of the EU decision-making process, highlight affiliations between national and European parties, and promote political accountability.
Moreover, despite the progress made with Regulation No 1141/2014, the existing rules have loopholes that need to be addressed.
The European Parliament, as well as a number of European political parties, have called for improvements and adjustments to these rules. The European Parliament services in charge of the administration of this Regulation have worked on a number of cases resulting from inappropriate use of funding.
In March 2017, Parliament held a plenary debate and issued an oral question inviting the Commission to respond both on the timing of any changes and on certain specific changes which concerned the level of co-financing, the possibility of multi-party membership of European Parliaments' Members, the number of members required for funding, the financing of referendum campaigns, the introduction of a financial capacity criterion and allowing the building of financial reserves.
In this debate, the Commission expressed its willingness to engage with the Parliament, along with the Council, in monitoring the early stages of implementing the new rules. On 15 June 2017, Parliament adopted a resolution 4 calling upon the Commission to propose a revision of the current legal framework as soon as possible to address its shortcomings, especially with respect to the level of co-financing requested, and of the possibility of multi-party membership of European Parliaments' Members.
Parliament and its political parties wrote to the Commission to restate their call for changes; a call elaborated in a comprehensive report provided to the Commission.
Given the above and based on the extensive input obtained from various stakeholders (see section 3), the Commission has therefore decided to propose a limited number of targeted amendments to this Regulation. These aim to close the loopholes, improve transparency, to ensure the appropriate allocation and expenditure of limited resources from the EU budget, and thereby to strengthen the genuine electoral representation of European citizens by European political parties. The amendments will ensure that the existing rules are not circumvented or its provisions misused.
The focused changes should be in place before the 2019 European elections. They will help address the challenges identified by the Commission in relation to the 2014 European elections, in particular in relation to the affiliations between national and European parties and increased political accountability.
• Specific issues addressed
In the first place, the current rules are prone to abuse regarding the issue of who can sponsor the registration of a European political party, because they allow the required level of representation (i.e. in seven Member States) to be met either (i) by support from member parties represented in regional parliaments, a national Parliament or the European Parliament; (ii) by support from individual members of such parliaments or (iii) by a mixture of the two.
In the first years after the introduction of funding for European political parties, most of the beneficiaries were alliances made up of national parties coming from the same political family. However, several European political parties created in recent years are composed mainly of individual politicians and/or strongly dominated by one or two national political parties. There are several cases of different members of a single national party sponsoring more than one European political party; in some extreme cases, a single member has sponsored more than one party.
The Authority has also been confronted with practical problems linked to the multiparty membership. It is often unclear how to avoid double counting for representation, how to deal with prior memberships, and how to make a connection between the representation and funding criteria - including the issue of a Member of the European Parliament counting for different European political parties as regards, on the one hand, registration and, on the other hand, funding.
The second issue of concern regards proportionality of the EU funding received to representation in the European Parliament. Currently, European political parties can apply for funding if they are represented in the European Parliament by at least one Member. A number of European political parties as well as the European Parliament's administration, have asked to increase the threshold of representation to three Members, to prevent the misuse of public funding via 'one-man parties'.
However, the practical impact of such a change would be minimal, as at present even the least represented European political parties eligible for funding currently have 3 Members 5 (see graph). More importantly such a change would raise serious legal concerns related to fundamental rights of freedom of association and equality of opportunities for parties presenting candidates for elections and would unduly limit the pluralistic nature of European politics.
There is another way of addressing this concern by changing the distribution key for the funding of the eligible European political parties and the European political foundations. Currently, 15% of the total amount available is distributed equally to all parties which meet the one Member threshold, leaving 85% to be distributed in proportion to each party’s share of elected Members (the same distribution key is used for foundations). This leads to a rather unbalanced reflection of the electoral representation in Parliament. The tables below 6 , provided by administration of the European Parliament, show the effect of changing the fixed portion of funding compared to the portion related to the level of representation in Parliament. Lowering the set aside amount to 5% could help restore a more proper balance and thus lead to a fairer and better reflection of electoral representation in Parliament.
In the third place, next to abuse and proportionality issues, European political parties and – to a larger extent – the political foundations have difficulties meeting the current co-financing threshold of 15%. The European Parliament services have also been confronted by some dubious practices in this respect, such as some parties seeking to meet the letter of the co-financing requirement via circular financial flows. As regards financial capacity, in the financial year 2015, the Parliament's external auditor flagged concerns in 8 out of 28 reports. This indicates that the beneficiaries’ own resources are not sufficient.
In many cases, the shortfall in own resources from membership contributions and donations can only be balanced by the use of contributions in kind. In 2015 parties received contributions in kind amounting to €238,009 and foundations to €283,649. The objective evaluation of these contributions poses significant problems. In several cases, the Parliament's administration has been unable to verify this valuation in detail and ascertain whether the contributions were actually necessary for and directly related to the activity mentioned, and to determine whether the underlying activities were in the interest of the European party exclusively or possibly shared with a partner organisation.
Fourthly, there is a lack of clarity and transparency in the existing rules regarding the steps to be taken in cases where a party or foundation ceases to comply with the registration criteria or is found to have been registered on the basis of incorrect information.
Fifthly, based on the experience of Parliament's administration, there is a need to extend the scope of possible measures to recover funds misspent by parties and foundations.
• Consistency with other Union policies
In its 2017 Report on EU Citizenship Rights 7 , the Commission recognised that the functioning of the EU is founded on representative democracy. This requires transparency and an accessible, accountable political culture, supported by an effective electoral system and an informed and engaged electorate. To that end, the Commission has committed to intensifying Citizens’ Dialogues and taking further action to explain its policies to citizens, as highlighted by Commission President Jean-Claude Juncker in his 2016 State of the Union address; to conducting, ahead of the 2019 elections, an EU-wide information and awareness-raising campaign on EU citizenship rights, including on electoral rights; to organising in 2018 a high-level event on democratic participation with a focus on encouraging best practices to increase the participation of young people and vulnerable and underrepresented groups; and to promoting best practices that help citizens vote and stand for EU elections, including practices that allow citizens to retain the right to vote when moving to another Member State, facilitate cross-border access to political news, and support turnout and broad democratic participation in the perspective of the 2019 European elections. 8 The current proposal is aligned to and complements these priorities and in addition to the issues set out in the previous section therefore includes some changes to enhance the transparency of the link between parties at Member State level and the European parties with which they are affiliated.
A number of initiatives are indirectly linked to this revision, in particular the Commission Recommendation 9 on enhancing the democratic and efficient conduct of the elections to the European Parliament and the reform of both the 1976 European Electoral Act and of the European Council decision on the composition of the European Parliament 10 .
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
• Legal basis
The proposal is based on Article 224 of the Treaty on the Functioning of the European Union, which states that 'the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall lay down the regulations governing political parties at European level referred to in Article 10 i of the Treaty on European Union and in particular the rules regarding their funding' as well as on Article 106a of the Treaty establishing the European Atomic Energy Community 11 .
• Subsidiarity
Since the existing Regulation provides for an EU-level system, including a specific European legal personality for parties and foundations and funding from the EU budget, any shortcomings in this system can only be remedied through EU legislation. Action by Member States alone is therefore not a relevant option.
The proposed focused changes therefore fully comply with the principle of subsidiarity. The EU level is the only one at which rules governing the statute and funding of European political parties and European political foundations can be laid down. In setting out possible reform measures, the Commission has been careful to reflect the principles contained in Protocol No. 2 to the Treaties.
• Proportionality
As explained in Section 5, the targeted measures proposed do not go beyond what is necessary to achieve the long-term objective of developing and strengthening European democracy and the legitimacy of the EU institutions, by seeking to make European political parties and European political foundations more effective and accountable democratic actors. In particular, The proposal therefore complies with the principle of proportionality.
• Choice of the instrument
Only a Regulation can amend an existing Regulation.
3. STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS
• Stakeholder consultations and collection and use of expertise
In preparing the current proposal, the Commission has been in close dialogue and consultation with the relevant stakeholders. It has held several meetings with representatives of the political parties at European level, political groups in the European Parliament, Members of the European Parliament, services of the European Parliament, the Authority for European political parties and European political foundations as well as national experts.
A hearing was held on 12 July 2017 in the European Parliament's Committee on Constitutional Affairs 12 . The Committee members, together with the Director of the Authority, the Director-General for Finance of the European Parliament and a representative of the Commission debated the possible changes to the current Regulation. There was broad consensus that there is a need to close certain loopholes in the Regulation before the upcoming European Parliaments' elections. The focused changes would increase the level of transparency and help close the loopholes that allow the objectives of the current Regulation being circumvented or its provisions misused .
European political parties and foundations, the Parliament services as well as the Authority have also identified other potential shortcomings of the current Regulation, however these were considered less urgent.
Interested parties have provided input based on their experience and expertise with regard to the current rules governing the political parties and political foundations under both Regulation (EC) No 1141/2014 and the Financial Regulation.
• Impact assessment
The proposal is expected to improve the effectiveness with which Regulation 1141/2014 achieves its objectives by closing some of the existing loopholes. It is based on the extensive input obtained from various stakeholders as set out above and the analysis of a limited number of targeted solutions.
This proposal is not accompanied by a specific impact assessment as it is not expected to have wider significant economic, social and environmental impacts.
• Fundamental rights
Article 2 of the Treaty on European Union (TEU) provides that “The Union is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities. These values are common to the Member States in a society in which pluralism, non-discrimination, tolerance, justice, solidarity and equality between women and men prevail.”
Article 10(1) and (2) TEU provide that “The functioning of the Union shall be founded on representative democracy” and that “Citizens are directly represented at Union level in the European Parliament”. Subparagraph 4 of the same provision stipulates: “political parties at European level contribute to forming European political awareness and to expressing the will of citizens of the Union”. Articles 11 and 12 of the Charter of Fundamental Rights of the EU enshrine the right to freedom of expression and of association. In particular, Article 12 of the Charter of Fundamental Rights of the European Union reads that “Everyone has the right to freedom of peaceful assembly and to freedom of association at all levels, in particular in political, trade union and civic matters, which implies the right of everyone to form and to join trade unions for the protection of his or her interests. Political parties at Union level contribute to expressing the political will of the citizens of the Union”.
The amendments which are the subject of this proposal pursue the objectives of these provisions, and are thus compatible with and give effect to the fundamental rights guaranteed by Article 12 of the Charter.
4. BUDGETARY IMPLICATIONS
The EU funding provided to European political parties and European political foundations will continue to come from the budget of the European Parliament. No change to the amounts allocated is proposed by virtue of this proposal. The present proposal has no significant implications for the EU budget.
5. OTHER ELEMENTS
• Evaluation and reporting arrangements
The present proposal is for limited and focused reform of the existing Regulation which itself provides for a more comprehensive review. It is proposed to change the timetable for that review to allow it to be based on substantial evidence of the operation in practice of both the existing Regulation and the amendments proposed here.
• Detailed explanation of the specific provisions of the proposal
To further provide for a genuine European dimension to the European political parties and to increase transparency while ensuring that European funding is well spent, the Commission proposes a limited set of focused amendments to Regulation (EC) No 1141/2014, to address who can sponsor the registration of a political party, to have an allocation of funding which is more proportionate to the representativeness of European political parties in the European Parliament and to address difficulties faced by European political parties and foundations in meeting the co-financing threshold. Such changes will close the loopholes of the existing rules which make them prone to abuse.
To address the issue of 'multiparty membership' several options were considered: (i) to prevent Members of the European Parliament from the same national party from sponsoring different European parties; (ii) to no longer allow regional parliamentarians to sponsor the registration and (iii) to allow for national parties sponsoring only. The last was considered the most effective option as it achieves the same objective as option (i) but in a manner which is more objective and fair, and easier to enforce.
The Commission therefore proposes to amend Article 3(1)b to allow only parties, and no longer individuals, to sponsor the creation of a European political party. This would make it harder for entities without substantial representation within Member States to be created as European level parties, and receive European funding once they meet the threshold of one Member of the European Parliament.
This change does not preclude European parties from allowing individual membership, only that such membership would no longer be relevant to the registration criteria. No change is therefore proposed to the definition of a political party or alliance.
To deal with European political parties' and foundations' difficulties in meeting the current co-financing threshold of 15%, it should be lowered enabling more of the public funding set aside for European parties and foundations to be directed appropriately, for example in election campaigns. It would also reduce incentives for questionable practices. Following the consideration of several options, the Commission decided to propose to lower the co-financing requirement foreseen in Article 17.4 to 10% for European political parties and 5% for European political foundations.
The level of transparency in European elections has always been a vital factor for the Commission. By making a clearer link between national and European political parties clarity and transparency can be enhanced. This is particularly important, as this proposal aims to allow sponsoring of European political parties by parties only. 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. It is proposed to require an additional condition for a European political party to receive funding, by inserting a new Article 18.3a which would require it to report on the publication, on its member parties' websites, of its political programme and logo as well as and information on the gender representation among the candidates at the last elections to the European Parliament and its members of the European Parliament.
It is proposed to improve the proportionality of EU funding by linking it more clearly to the representation in Parliament, by amending the distribution key for financing foreseen in Article 19.1. It is proposed to lower the fixed amount to 5%, thereby increasing the share which is distributed in proportion to the members elected to Parliament. For the reasons set out above, the alternative option of increasing the threshold of representation needed to be eligible for funding was rejected.
When a European political party or foundation ceases to comply with whichever of the registration criteria, including in particular of representation and participation in European elections, or where registration was based on incorrect/misleading information, the Authority should be empowered to de-register them. The case law of the Court of Justice admits the possibility of retroactively withdrawing a favourable administrative act within a reasonable period and whilst respecting the legitimate expectations of a beneficiary of the measure, who has been led to rely on the lawfulness thereof. Changes made in Article 27 clarify this, to allow the Authority to enforce the rules more effectively.
To protect EU financial interests and the Union’s reputation, the authorising officer of the European Parliament must be able to recover amounts unduly paid, from individuals having committed illegal activities detrimental to the financial interests of the European Union for their own benefit, or for the benefit of other entities or individuals. The Commission therefore introduces changes to Article 30.
Finally, alongside transitional measures, the Commission proposes that the revision clause in the current Regulation should be adapted to allow for the evaluation report to be published in the first part of 2022 and thus also to assess the amendments proposed in the present Regulation.