Explanatory Memorandum to COM(2021)734 - Statute and funding of European political parties and European political foundations (recast) - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2021)734 - Statute and funding of European political parties and European political foundations (recast). |
|---|---|
| source | COM(2021)734  |
| date | 25-11-2021 |
1. CONTEXT OF THE PROPOSAL
Contents
- Reasons for and objectives of the proposal
- Consistency with existing policy provisions in the policy area
- Consistency with other EU policy provisions
- Legal basis
- Subsidiarity (for non-exclusive competence)
- Proportionality
- Choice of the instrument
- Ex post evaluations/fitness checks of existing legislation
- Stakeholder consultations
- Collection and use of expertise
- Impact assessment
- Fundamental rights
- Freedom of expression and information (Article 11)
- 2. The freedom and pluralism of the media shall be respected.’
- Freedom of assembly and of association (Article 12)
- 2. Political parties at Union level contribute to expressing the political will of the citizens of the Union.’
- Right to vote and to stand as a candidate at elections to the European Parliament (Article 39)
- Equality between men and women (Article 23)
- Implementation plans and monitoring, evaluation and reporting arrangements
- Detailed explanation of the specific provisions 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 at European level, the Treaties stipulate that the citizens of the European Union are directly represented in the European Parliament.
Political parties fulfil an essential role in a representative democracy, creating a direct link between its people and the political system. In line with Article 10 of the Treaty on European Union, European political parties ‘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.
Giving a new push for European democracies is a priority for the Commission. As announced in President von der Leyen’s political guidelines 1 , the Commission Work Programme for 2021 2 includes proposals for clearer rules on the financing of European political parties and for greater transparency in sponsored political content (‘political advertising’). The European Democracy action plan 3 emphasises the need to review the legislation on the funding of European political parties and the need for more transparency in political advertising and communication, as well as in the business activities surrounding it. This is so that voters, civil society and the responsible authorities can clearly see the source and purpose of such advertising.
Regulation No 1141/2014 of the European Parliament and of the Council of 22 October 2014 governs the statute and funding of European political parties and European political foundations 4 . It includes prominently the respect for the values on which the EU is founded, which include democracy and fundamental rights.
Following the European Parliament’s 5 and Commission’s 6 evaluations of the Regulation’s application carried out in accordance with the Regulation’s revision clause (Article 38), a number of loopholes have been identified, which hinder European political parties and foundations from fully fulfilling their mission to contribute to the creation of a European political space.
Furthermore, the current legal framework does not address sufficiently the need for transparency of political advertising, which is essential for a fair democratic debate and free and fair elections. As highlighted, among others, in the Commission’s 2020 report on the 2019 elections to the European Parliament 7 , there is a need to go further.
The Commission is therefore putting forward a proposal to amend Regulation 1141/2014 in order to (i) increase the financial viability of European political parties and foundations, (ii) facilitate their interactions with their national member parties, so that European political parties can more easily participate in national campaigns on EU topics, (iii) close the remaining loopholes regarding sources and transparency of financing (in particular, donations and financing from outside the EU), (iv) cut excessive administrative burden, and (v) increase legal certainty. In addition, specific amendments to the Regulation are proposed in order to guarantee high standards of transparency that address the emerging new environment of online political campaigning and the risk of foreign interference and the infringement of data protection rules in political advertising.
This proposal builds on the relevant experience and cooperation between Member States and EU institutions to promote free and fair elections in the European Union 8 and combat disinformation and other forms of information manipulation and interference in European democracy 9 .
To ensure that the 2024 elections to the European Parliament take place under the highest democratic standards, the amendments to this Regulation need to enter into force and be fully implemented by Member States by spring 2023, i.e. one year before the elections.
This initiative is closely related to the work being done on the other initiatives in the transparency and democracy package of the Commission Work Programme for 2021. It has been prepared under the European Democracy action plan, which includes a number of initiatives to help protect election integrity and promote democratic participation, and is part of the President’s priority to deliver a new push for European democracy.
It builds upon the Commission’s 2018 electoral package 10 and the work of the European Cooperation Network on Elections, which the Commission set up.
It has been prepared in parallel with a Commission initiative in the transparency and democracy package to regulate the transparency and targeting of political advertising. By providing a harmonised high level of transparency of political advertising, this initiative contributes to the functioning of the internal market and helps to remove and prevent barriers to the provision of political advertising services across the Union. It also aims at establishing harmonised limitations on the use of certain targeting techniques when disseminating political advertising to ensure the protection of individuals whose personal data are being processed in this context.
By adding provisions to increase the transparency of paid political advertising, the initiative is consistent with the EU action plan against disinformation.
This initiative addresses the financing, preparation, placing and dissemination of political advertising by European political parties. It covers both online and offline activities and complements existing EU rules including the General Data Protection Regulation 11 , which sets high data protection standards that apply to political advertising and provides for specific requirements that apply to European political parties in terms of responsibility and accountability.
It also complements the proposal for the Digital Services Act 12 , which includes certain general transparency obligations for online intermediaries as regards the transparency of online advertising and the wider EU framework for the digital services market.
13 The initiative provides stronger protection of the Union’s financial interests by eliminating the 3-month period between a de-registration decision by the Authority and the decision’s entry into force. In addition, the European Parliament identified the limited categories of revenues acknowledged by Regulation 1141/2014 as one of the reasons for financial irregularities by European political parties and foundations. The introduction of an additional category of revenues (‘own resources’) will address this problem.
The proposed initiative is in synergy with the efforts led by the EU externally in support to political parties, representative democracy and political pluralism, transparency and accountability, as reflected in the “EU Action Plan on Human Rights and Democracy 2020-2024” 14 and the “Thematic programme for Human Rights and democracy 2021-2027” 15 . EU Election Missions observe and report on electoral campaigns, political party and campaign financing and may recommend measures to partner countries to improve their regulatory framework in this regard.
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
The proposal is based on Article 224 of the Treaty on the Functioning of the European Union, which confers to the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, the power to lay down the regulations governing political parties at European level referred to in Article 10 i of the Treaty on European Union, in particular the rules regarding their funding, and on Article 106a of the Treaty establishing the European Atomic Energy Community 16 .
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 not a relevant option.
The EU level is the only level at which rules governing the statute and funding of European political parties and European political foundations can be laid down. Therefore, the proposed focused changes fully comply with the principle of subsidiarity.
In setting out possible reform measures, the Commission has been careful to reflect the principles contained in Protocol No. 2 to the Treaties.
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 making European political parties and European political foundations more effective and accountable democratic actors.
The proposal therefore complies with the principle of proportionality.
Given the necessity to update language, obsolete references and provisions, it is appropriate to recast the Regulation.
Since this proposal is to recast a Regulation of the European Parliament and of the Council, the same legal instrument is the most appropriate.
3. RESULTS OF EX POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS
The legislative proposal is based on the evaluation report prepared by the Commission, pursuant to Article 38 of Regulation 1141/2014.
It also takes into consideration the European Parliament own initiative report pursuant to Article 38 of Regulation 1141/2014.
In preparing the current proposal, the Commission has been in close dialogue and consultation with the relevant stakeholders, including European political parties and foundations.
The Commission has held several meetings with representatives of the political parties and foundations at European level, the European Parliament (Members, political groups and services), and the Authority for European political parties and European political foundations, as well as national experts and representatives of national competent authorities.
The legislative proposal also draws on the outcome of the open public consultations on the European Democracy action plan 17 , on the revision of Regulation 1141/2014 18 and on the transparency of political advertising 19 .
In preparing this proposal, the Commission contracted two external expert studies; an evaluation of the current Regulation and a study on the possible impacts of its revision.
Furthermore, the Commission consulted informally the Authority for the European political parties and foundations, as well as the European Parliament’s Authorising Officer.
Two impact assessment reports were prepared; one on the revision of Regulation 1141/2014 and a second one on the transparency of political advertising.
Both received a positive opinion with reservations from the Regulatory Scrutiny Board, on 27 September and 1 October 2021 respectively.
All measures envisaged in this revision have a positive impact on fundamental rights.
The revision of Regulation 1141/2014 is fully compatible with, and gives effect to, the fundamental rights laid down in the Charter of Fundamental Rights of the European Union as regards political participation. Namely:
‘1. Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers.
The envisaged measures will increase transparency and hence accountability and will not negatively affect freedom of expression, since the initiative does not interfere with the content of political messages. This more transparent and accountable disclosure of political ads also has positive repercussions on the protection of vulnerable groups from manipulation.
‘1. 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.
2. Political parties at Union level contribute to expressing the political will of the citizens of the Union.’
By clarifying the financial rules governing European political parties and strengthening their relations with their national member parties, European political parties will be able to increase their activities. This in turn will support Article 12 (2) of the Charter.
‘1. Every citizen of the Union has the right to vote and to stand as a candidate at elections to the European Parliament in the Member State in which he or she resides, under the same conditions as nationals of that State.
2. Members of the European Parliament shall be elected by direct universal suffrage in a free and secret ballot’.
Greater transparency will ensure that this right is respected and that people have the ability to check if their political will is expressed by the party they support at EU level as stipulated in Article 12 and 39.
‘Equality between men and women must be ensured in all areas, including employment, work and pay. The principle of equality shall not prevent the maintenance or adoption of measures providing for specific advantages in favour of the under-represented sex.’
Adding a gender dimension to the revision of the Regulation ensures compliance with Article 23 by guaranteeing a balanced representation of both genders in political parties. The principle allows for measures that lead to a better representation.
The proposed provisions in Articles 3, 4, 18 and 27 of the Regulation to increase the transparency of gender parity will support Article 23 of the Charter.
4. BUDGETARY IMPLICATIONS
The lowering of the cofinancing rate for European political parties from the current 10% to 5% and the new 0% cofinancing rate for the year of the elections to the European Parliament, may require the provision of additional financial resources for European political parties and foundations. However, this will be for the budgetary authority to decide on annual basis.
The budgetary implications for the Authority for European political parties are detailed in the Legislative Financial Statement attached to this proposal. This should be made through the redeployment of existing resources, and will require the modification of the contributing institutions’ establishment plans.
The Commission could procure, on behalf of the Authority for European political parties and foundations, a pilot of the Repository foreseen in the amendment to Article 7 of the Regulation. For this, it could use resources from the Citizens, Equality, Rights and Values (CERV) programme, if the necessary funds cannot be made available in time for the 2024 elections to the European Parliament.
5. OTHER ELEMENTS
Article 38 of the Regulation currently provides for the subsequent use of the evaluation and revision mechanism every five years. In view of the current experience, this provision will be slightly modified in order to better allocate the time needed to carry out such evaluation process.
It is also intended to have a separate evaluation process as regards the implementation of the procedures on transparency of political advertising, in order to preserve the coherence with Regulation (EU) 2022/XX [on transparency and targeting of political advertising].
The changes operated in the legal framework as a result of this revision will be monitored based on the indicators in the impact assessment report 20 .
In order to fulfil their role as defined by Article 10 i TEU, European political parties have to be able to carry out cross-border campaigns in the European Union. The definition of ‘European political party’ in Article 2(3) will be amended to incorporate this notion.
The definition of European political foundation in Article 2 i will be amended to allow for the organisation of capacity building activities that could help form future political leadership in Europe.
In order to ensure the transparency of paid political advertising, Article 2(16) and (17) will introduce a definition of political advertising and of political advertisement by referring to Regulation (EU) 2022/XX on [transparency of paid political advertising].
The current Regulation has a very restrictive definition of revenue sources, limited to either contributions or donations, which creates difficulties for European political parties and foundations when trying to categorise and do a proper accounting of autogenerated resources. A new Article 2(9) will therefore introduce a third category of revenue sources linked to financial income created by the party or foundation activity. Article 23 will be amended to cap the revenue from this new category so that that it does not become overdimensioned in relation to this entity’s overall budget.
Moreover, a new Article 2(10) will be introduced in order to clarify the notion of indirect funding and the fact that its prohibition should not prevent European political parties and foundations from engaging with their member parties and organisations.
Article 3(1) point (e) and Article 3(2) point (d) will be added to clarify that the obligation to comply with values on which the Union is founded, as stated in Article 2 of the Treaty on the European Union, not only applies to European political parties and foundations but that these European political parties and foundations should also ensure that their member parties and member organisations respect and observe such values.
European politics should reflect the diversity of its societies. In particular, to promote gender equality, European political parties will be required to include their internal rules on gender equality in their statutes under Article 4. In addition, Article 21 will be amended to request evidence from European political parties on gender representation when applying for EU funding. Article 30 will be amended to include sanctions if a European political party fails to provide such evidence. The European political parties are also encouraged to provide information in relation to their member parties’ on inclusiveness and representation of minorities.
Article 4 stipulates that the statues of the European political party must include internal rules for the use of political advertising.
Article 5, which lays down the transparency requirements for political advertising, will be inserted in the Regulation. This article provides for obligations applicable to European political parties, namely: (i) the providers of political advertising services with whom they work must fully comply with their obligations provided in Regulation 2022/xx, (ii) for each political advertising that they sponsor or publish directly, appropriate information must be included in the repository managed by the Authority for European political parties and foundations, and (iii) a policy must be established for the use of political advertising. Furthermore, if they use targeting or amplification techniques involving the processing of personal data for political advertising, they must ensure compliance with Article 12 of Regulation 2022/xx.
Article 5 also establishes an obligation for Member States to designate national regulatory authorities competent to supervise compliance of the requirements set out in the Article, and empowers the supervisory authorities referred to in Article 51 of Regulation (EU) 2016/679 to oversee of the using of targeting or amplification techniques involving the processing of personal data by European political parties. Finally, Article 5 provides a basis for the adoption of delegated acts to amend the information transmitted to the repository managed by the Authority for European political parties and foundations, and the information included in the policy for the use of political advertising.
The Register established in Article 8 will include a repository for the disclosures to be made by the European political parties to the Authority pursuant to Article 5.
Regulation 1141/2014 currently contains a loophole regarding whether or not an expenditure is eligible for EU funding during the 3-month period when de-registration decisions have been made but have not yet entered into force. Articles 10 and 19 will therefore be amended to eliminate this 3-month period to protect the Union’s financial interests.
Article 13 will be inserted establishing an obligation for the Authority to annually draw descriptive reports of the decisions taken during the course of the previous year by national regulatory authorities finding that a European political party has violated Article 5 of this Regulation.
Currently, Regulation 1141/2014 sets out a cofinancing rate of 10% and 5% for European political parties and foundations, respectively, that they must match to benefit from the maximum amount of the contribution from the EU budget available for them. Since some European political parties, in particular the smaller ones, face difficulties in collecting the necessary resources to match the co-financing rate, Article 20 i will be amended to reduce the rate for European political parties to 5%, in line with the rate for European political foundations.
Article 20 i will also be amended to allow for a 0% co-financing rate in the year of the elections to the European Parliament.
Article 21 will be amended to clarify the requirements for displaying the logo of the European political party that a member party is affiliated to in order to increase the visibility of European political parties at national level. Article 30 will be amended to include sanctions in case a European political party fails to provide evidence in its application for EU funding that its logo is displayed by its member parties.
Article 21 it will also contain the obligation for a European political party to include evidence that it complies with Article 5 of this Regulation at the time of applying for funding of the budget of the European Union. It must also include evidence that it maintains an updated policy on for the use of political advertising and that it has implemented this policy throughout the 12 months preceding the final date for submission of applications.
In order to close loopholes in the transparency regime for donations, Article 23 will introduce a due diligence mechanism for donations above EUR 3 000. In addition, Article 23 will also be amended to empower the Authority for European political parties and foundations to request additional information directly from donors where it has grounds to believe that a donation was granted in violation of the Regulation. The amendment of Article 36 will bring greater public transparency by requiring the Authority for European political parties and foundations and the European Parliament to publish information in an open, machine readable format, and to publish the weekly reports on donations and their expenditure received by the Authority from the European political parties in the 6-month period ahead of elections to the European Parliament.
Regulation 1141/2014 does not explicitly allow European political parties and foundations to collect contributions from members whose seat is outside the European Union. The judgement of the General Court of 25 November 2020 in Case T-107/19 confirmed that a party outside the EU did not fall under the definition of a ‘political party’ under Regulation 2004/2003, as it was not ‘recognised by, or established in accordance with, the legal order of at least one Member State’. Consequently, the Court ruled that payments from members located outside the EU could not be considered as contributions, only as donations. This prohibition, however, prevents European political parties and foundations from developing stronger ties with likeminded members outside the EU. Articles 23(9) and (10) will therefore be amended to allow European political parties and foundation to collect contributions from members located in countries belonging to the Council of Europe. To mitigate the risk of foreign interference and to ensure proportionality, contributions from members outside the EU will be capped at 10% of total contributions (which, in turn, are capped to 40% of the annual budget of the party or foundation). This cap, together with the requirement for European political parties to ensure that their member parties outside the Union observe values that are equivalent to those of Article 2 TEU, should provide for the necessary safeguards as regards foreign funding.
In order to enable European political parties to foster debates at national level on European matters, these parties will be allowed to use the funds from the EU budget in national referendum campaigns on issues related to the implementation of the Treaties, under the amended Article 25.
Article 30 will be amended to modulate the sanctions that the Authority for European political parties and foundations imposes. In case of non-quantifiable infringements of the Regulation to make the sanctions regime more proportionate and fit for purpose.
Article 32 will be amended to strengthen the cooperation between the Authority and the Authorising Officer of the European Parliament on the implementation and interpretation of the Regulation, thereby improving legal certainty for European political parties and foundations. Article 33 should be clarified and explicitly refer to the right to be heard of European political parties and foundations before sanctions are imposed. This is particularly important given that, currently, the Regulation does not provide for an administrative appeal to the Authority’s decisions. In addition, the first evaluation report following the adoption of the recast Regulation will assess the eventual necessity of introducing an intermediate level appeal against the decisions of the Authority.
Article 40 is amended to include delegation powers in relation to Article 5(2) and (3). Finally, Article 44 on transitional provisions is also amended to establish transitional provisions concerning Article 5(3) and Article 21, point i and point (5).
1141/2014