Ukraine’s voters are going to elect a new parliament on October 26th. It is one of the most corrupt countries and this election might become one of the most corrupt ever, additionally it takes place in a contentious environment due to the current conflict. So it’s worth having a closer look at it. This post focuses on financing and costs of campaigns since this is a crucial factor shaping the election’s outcome.

Officially the cost of this year’s parliamentary election is USD 73.6 millions [1], this is cheaper than the election in 2012 when officially USD 75 millions were spent on campaigning. The money will be allocated from the reserve fund of the government.

It’s not clear how much candidates and parties spend in real for campaigning, but all estimations are way higher than the official figures. (This is common in many countries having elections.) My best guess assumption, based on the the various estimations, is that at least USD one billion is usually spent on elections. [2] The most trustworthy source on this speaks about USD two billions usually spent [3] – or over 1% of Ukraine’s GDP and two-thousand times more (in relation to GDP) than US election campaigns. [4]

Most of the political spending that goes on in Ukraine is unofficial and illegal, but nobody can be elected without buying lots of expensive television advertisements. Before Yanukovych fled, he was rumored to have gathered a war chest of $3 billion in preparation for the scheduled March 2015 presidential election. Every party needs a large secret fund, or obshchak. The word is also used to refer to the common funds that organized criminal gangs maintain. In fact, the parties’ need to raise illicit campaign cash has led them to share many features with organized crime. Each party has a “gray cardinal” whose job is to be in charge of its obshchak. He (they are all men) is usually a parliamentarian and a prominent businessman, though the top businessmen refuse to indulge in this dirt. [3] Aslund, 2014: 67.

For candidates and parties not in power it’s more difficult to gather enough money for elections than it is for members of the ruling party sitting next to the honey pot. Doing business in such a league implicates activities from economic raiding, taking bribes or good old cheating. Therefore a increasing demand of capital leads to a attempt to squeeze the lemon a bit more. The cost of a safe seat in parliament can make up to USD five millions. [3]

Businessmen spending such an amount for doing politics might give us an idea how profitable such a seat is. – Some hundred years ago in then feudal Switzerland it was common for nobles to buy the regency of a certain area for two years, tax the subjects to cover the costs and tax them a little more in order to make profit. Back to Ukraine, where ”Businessmen were known to buy seats and then trade them to the winning party at a profit.” [3: 67]

The former Director General of the Committee of Voters of Ukraine Oleksandr Chernenko was recently interviewed on the coming election:

According to his calculations, the price of a vote in these elections in a number of constituencies doubled. “Today, a vote costs UAH 200-500 [USD 15-38],” he added. Noteworthy is that according to the data of the CVU, the average price of a vote in the parliamentary elections in 2012 was UAH 50-300. [5]

Although this happens in a systematic and informal institutionalized manner, so far nobody in the entire history of independent Ukraine has been found guilty for bribing voters. The future will show if Poroshenko will (and is able to) use the election’s outcome to liberate institutions from corruption or if this election is simply to get rid of his political opponents.

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[1] TASS, 30/8/14 [I tried to find a non-Russian source for this. In the articles I have seen weeks ago, this number was mentioned, but either they have been edited or my memory cheats me. Nevertheless the amount is comparable to previous costs of elections and therefore seems to be correct.]

[2] Wikipedia, 15/10/2014

[3] Ånders Aslund, 7/14 The Maidan and Beyond: Oligarchs, Corruption, and European Integration. Journal of Democracy, Volume 25, Number 3. [For those interested in corruption in Ukraine, this paper gives brief and content close overview.]

[4] Ukraine had a high inflation over the last years. This explains to some degree the rising costs of election campaigns. The price of votes might inflation-protected, since payments are often done in form of commodities.

[5] Yuri Shkolyrenko & Denis Rafalskiy, 7/10/14 for capital.ua