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Article Excerpt
Ever since the reintroduction of democratic rule in 1998, Indonesia's political parties have been the target of harsh criticism by the media, academic observers and the electorate. In opinion surveys, voters have invariably ranked parties among the most corrupt institutions in the country, and a large number of corruption cases brought against party politicians both confirm and reinforce this trend. "Money politics" has become a household phrase in Indonesia to depict the moral decadence of party politicians, describing their dual practice of accepting bribes from patrons and distributing money to gain or maintain office. Echoing these popular sentiments, domestic and foreign observers have described the parties as rent-seeking entities, driven by oligarchic interests and personal greed. With their legitimacy in decline, parties are generally seen as the weak link in Indonesia's consolidating democracy. This perception, in turn, has fuelled demands for non-party figures to play a greater role in political life.
There have been few attempts, however, to critically explore the motivations behind the political corruption of political parties. In general, two different approaches have been used to analyse the problem. To begin with, proponents of the neo-Marxist paradigm have argued that political parties and their leaders are agents of global and local capitalist interests, with the "predatory" behaviour of Indonesia's parties reflecting developments in other parts of the world (Robison and Hadiz 2004). In this model, parties are corrupt because they are by definition part of the struggle of oligarchic elites to hijack democratic institutions and perpetuate the capitalist system. The other interpretation uses a more anthropological approach, and is based on what Jonathan Hopkin (2004, p. 629) has called the "assumption of self-interested utility": politicians are, like all other human beings, largely interested in maximizing their own benefit, with political parties only constituting vehicles for increasing their wealth, influence and social status. The latter interpretation has been the most popular one in Indonesia, where a certain measure of corruption is often viewed as an integral feature of human nature.
This focus on either neo-Marxist or anthropological imperatives has distracted observers from looking at the problem of party corruption in Indonesia as an analytical issue with highly complex implications for the country's political system. Most significantly, there have been very few detailed analyses of the critical roles that state subsidies and illicit fund-raising play in Indonesia's party financing mechanism. In particular, the causal relationship between the low level of state funding for parties and the increase in their corrupt practices has not been sufficiently researched. Similarly, while there are numerous reports of corrupt politicians and their rent-seeking activities (Johnson Tan 2006; Choi 2004), very little has been said about the high costs of holding and maintaining political office in Indonesia. As a result, other reasons for political corruption beyond oligarchic agency or individual greed have not found their way into the literature on Indonesian political parties and their crisis of legitimacy.
Addressing this gap in the existing literature, the following study discusses financing and expenditure patterns of political parties in Indonesia. It begins with an overview of the various income sources of parties, showing that legal and direct state subsidies were reduced dramatically in recent years--and that parties compensated for this decline in revenue by corrupting even more public monies than was already the case before the cut. The article will then analyse the expenditures made by political parties and their functionaries in gaining and defending public office, demonstrating that the decline in state subsidies was accompanied by exponentially growing costs. In concluding, the discussion weighs the benefits and disadvantages of public party financing. While the most recent literature has argued that such subsidies increase the dependence of parties on the state and isolate them from civil society (Biezen and Kopecky 2007), the case of Indonesia suggests that the reduction of public funds for political parties has led not only to an increase in illicit financing activities and other forms of corruption, but has also aggravated already existing institutional defects in the democratic system. Thus the benefits of providing stronger public funding for political parties seem to outweigh the drawbacks.
Party Financing: State Subsidies and External Contributions
In the scholarly discussion of party financing, the funding mechanism used by mass parties is typically considered the ideal form of financial party management (Katz 1997). Mass parties are mostly funded through membership fees and small contributions made by their supporters, who work voluntarily in party offices and are actively engaged in running electoral campaigns. The supply of funds by a motivated and ideologically cohesive support base reduces the dependence of the party on state subsidies on the one hand and donations by politically interested sponsors on the other. The problem with this concept is that mass parties have become an extremely rare phenomenon. Mass parties dominated the political landscape of Western Europe until the 1970s, when their rapid decline began. Ultimately, they were transformed into electoral elite parties--the party type already predominant in much of the developing world after 1945. Today, the vast majority of parties cover only small parts of their expenses through membership fees and internal donations, with most of their income provided by state subsidies and contributions from business corporations.
The decline of the mass parties was accompanied by the introduction of public party financing around the globe. In 75 per cent of all liberal democracies in the world, the state provides financial assistance to political parties, with no significant differences between old and new democracies (Biezen and Kopecky 2007, p. 244). India, Switzerland, New Zealand and the United States are the only liberal democracies which do not allocate public funds for political parties, but even in some of these countries, state support is available for individual candidates. The region with the lowest level of state financing for parties is Africa, where only 44 per cent of all democracies offer public funds for parties. Thus it appears that the more consolidated a multiparty democracy' the more likely it is to view public party funding as the best available option to maintain the independence and professionalism of its parties.
In Indonesia, however, the trend has moved in the opposite direction. While the Indonesian state provided quite generous public funding to political parties between 2001 and 2005, it has recently cut this support by as much as 90 per cent. Although corruption in Indonesian political parties has certainly been a chronic and multilayered phenomenon since the founding days of the Republic, the reduction in subsidies after 2005 aggravated the problem. Parties are now increasingly encouraged to seek their own funding, which they do by intensifying their internal and external fund-raising activities. These efforts include asking their legislators for increased contributions, exploiting alternative state funds, selling nominations for public office to affluent non-party figures and, most recently, establishing party-owned companies. This development, in turn, has reinforced the public's view of Indonesian political parties as inherently corrupt; yet only a few observers make the connection between this corruption and the small amount of state subsidies provided to political parties.
Direct State Subsidies
After the fall of the authoritarian New Order regime in May 1998, the problem of party financing became an issue of immediate urgency for all parties, including those that had operated under Soeharto's rule. Even Golkar, the cashed-up electoral machine of the New Order, was confronted with severe financial difficulties after Soeharto stopped funding the party in July 1998. The former president, who still controlled a party fund of Rp 900 billion (around US$100 million) at the time of his resignation, had demanded continued influence over Golkar in exchange for further financial assistance. The new party leadership under Akbar Tandjung declined that request, however, and Soeharto suspended all payments as a result. (1) While benefiting from a government decision that all New Order parties were allowed to keep their assets and party offices, Golkar found itself in the unusual situation of having to raise funds from external sources. Another party that enjoyed the advantage of an existing party infrastructure was the Islamic PPP (Partai Persatuan Pembangunan, United Development Party), but since it had been barred from political activity below the district level throughout the New Order period, it now needed money for its post-1998 expansion to the sub-districts and villages. Finally, the secular-nationalist party of Megawati Soekarnoputri, PDI-P (Partai Demokrasi Indonesia Perjuangan, Indonesian Democratic Party of Struggle), lost its claim on the party assets owned by the Soeharto-endorsed PDI after a long and protracted court battle. Accordingly, it had to rely on former PDI cadres and their resources in order to build up an effective party network.
The financial challenges for newly established parties were of course significantly greater than for those groomed by the New Order. The law on general elections passed in 1999 set high thresholds for parties that intended to participate in elections, requiring them to open offices in half of the country's provinces and in half of the districts in those provinces. While this regulation was designed to prevent the emergence of localist parties and limit the number of contenders in the 1999 general elections, it put a heavy financial burden on the new parties. Consequently, out of the 200 new parties formed after 1998, "only" 48 qualified for the 1999 elections. This included a number of parties that managed to recruit personnel and assets from large religious organizations. For example, the newly founded PKB (Partai Kebangkitan Bangsa, National Awakening Party) profited from its close relationship with the traditionalist Muslim group NU (Nahdlatul...
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