Parliament passed with its second reading on December 27 amendments to the law on political parties, envisaging new regulations for party funding.

Among the key provisions of the planned new regulations are banning legal entities, including business organization, to finance political parties; doubling donation cap that a single individual person can provide to a party from current GEL 30,000 to GEL 60,000 per year; a cap of GEL 1,200 for party membership fee annually from each member; putting state audit agency, Chamber of Control, in charge of monitoring party funding; measures for increasing transparency of party funding.

• New Regulations for Party Funding Endorsed 
• Gov't Mulls New Party Funding Regulations

Opponents of the proposal say new regulations have been introduced by the authorities in order to tighten billionaire politician Bidzina Ivanishvili’s ability to finance his planned political party and an opposition coalition he is establishing.
 
Ruling party lawmakers say one of the major principles behind the proposal is to link party funding and the political processes in general in the country to number of supporters and not to a single or a small group of wealthy sponsors.

It emerged last week, that in November-December, 2011 four opposition parties, picked by Ivanishvili as his political partners – Republican Party; Our Georgia-Free Democrats (OGFD); Conservative Party and Party of People, received GEL 4.1 million in donations, including GEL 3.3 million from companies and a charitable foundation affiliated with Ivanishvili; rest of the sum, GEL 800,000, was donated by two companies affiliated with footballer Kakhi Kaladze, who is Ivanishvili’s supporter; in late November Ivanishvili’s Tbilisi-based Cartu Bank bought 8.67% shares in Kaladze’s Progress Bank.

These donations were made by total of twelve entities with each of them donating GEL 100,000 to the parties cooperating with Ivanishvili; GEL 100,000 is the maximum that a single legal entity is allowed to donate to a political party per year according to the existing regulations.

Such donations from legal entities will become illegal after the new regulations go into force.

Before Ivanishvili’s going into politics, only the ruling party enjoyed with generous corporate funding; GEL 4.1 million is regarded to be a significant funding for an opposition coalition in Georgia.

Five parties and election blocs, which cleared 5% threshold in the May 30, 2010 local elections spent total of about GEL 16 million for their electoral campaign, but 92% of that amount was spent by a single, ruling National Movement party. At the time the Republican Party and OGFD (now Ivanishvili’s allies), together with New Rights Party, were part of a single electoral bloc, which spent only GEL 136,600 for its election campaign, which also included a campaign of OGFD leader Irakli Alasania who was at the time running for Tbilisi mayoral race.

President Saakashvili spent up to GEL 23 million during his re-election campaign in late 2007 and early 2008, while his major competitor in the January, 2008 snap presidential elections Levan Gachechiladze spent GEL 720,000 for his campaign.

In September, 2011 when the ruling party tabled initial draft of new election code, it envisaged increasing of electoral campaign funding by legal entities, including from business organizations from current GEL 100,000 to GEL 200,000. The plan, however, was dropped and in November the authorities put forth new regulations banning legal entities to finance political parties and thier electoral campaign.

New election code passed with its third and final reading on December 27, envisages GEL 1 million funding from the state budget for parties and election blocs, which will clear 5% threshold in the parliamentary elections, in order to cover their election campaign cost. GEL 300,000 out of this sum will specifically be used for covering TV advertisement cost.