The International Anti-Corruption Conference is just opened today to review development, challenges, and successes in the anti-corruption movement.

 Concerns over the undue influence of vested interests which came from the criminal networks of powerful business interests were exposed and debated during a workshop on state capture.

Indonesia provided a profound example through the “nationalization” of private debts in the 1998 financial crisis and recently, the policy of Indonesian government to take responsibility for Lapindo mud flow victims has illustrated how businesses may shift policy against public interests.

What makes state capture possible?

David Kupferschmidt from International IDEA made a blunt remark about the existence of a well-organized and a well-funded interest, either criminal organization in the case of Mexico or powerful business groups in Indonesia. Their control of large media groups, combined with weak law enforcement, contributes to establish a conducive environment to state capture.

“Investment” in political parties through political financing, bribery in law enforcement agencies, combined with the utilization of mass media to influence public opinion and policy making, allow powerful interest groups to use their abundant financial resources in order to be able to halt the opportunities for gaining economic, law, and social benefits. It was also stressed that state capture was not resulted from the conflict between powerful interest groups and state institutions, but it was mainly driven by a powerful driving force.

The growing integration of such interests groups within the political sphere is captured by Colombian economist Luis Jorge Garay. Under the concept of Co-opted State Reconfiguration, he asserted  that the action of legal and illegal organizations, which through illegitimate practices seek to systematically modify from within the political regime and influence the formation, modification, interpretation, and application of the rules of the game and public policies. These practices are undertaken with the purpose of obtaining sustained benefits and ensuring that their interests are validated politically and legally, as well as gaining social legitimacy in the long run, although these interests do not follow the founding principle of social welfare”. This definition seems to particularly fit with the Indonesian context, in which powerful economic interests are increasingly penetrating and co-opting political leadership.

“Investment” in political parties through political or money politics, defined as a process where money is used to place people into office, appears to be the most effective way for business elites to gain influence over political elites such as securing access to credit, public contracts, and business licensing.

Who is benefiting and who are in loss?

The Corruption Eradication Commission (KPK), who has been under constant attack from the police, attorney general office, and parliament members for the last couple of years, remains one of the last rampant against the impunity sought by state capturers. As we have experienced with direct local elections in 2005, surprisingly around 150 regents and mayors together with 17 governors have been jailed, while the others are still lying at the office though some of them have been named suspect in corruption cases.

North Sumatra Governor Syamsul Arifin recently declared that it was a risk of being a leader had to be dealt with, indicating that corruption was part of the job and getting caught was a risk that must be accepted. The trivialization and normalization of political corruption has increasingly become present in the current discourse and decisions of political elites. The decision of Democratic Party to grant asylum” and provide “political protection” to their six Heads of Regencies named as corruption suspects is perceived as a powerful statement in such a way that political corruption is not a fatal misconduct as long as it builds the right alliances.

It is clear that Democratic Party would not take such a political risk if they did not have strong incentives to do so. The reality of Indonesia’s politics is that liberalized elections are extremely costly for political parties. In a country with enormous and demographically heterogeneous charateristics, winning elections requires both securing access to financial resources, and strengthening the presence and visibility of political parties at the local level to mobilize voters. Incumbent leaders clearly have a competitive advantage on both fronts due to their influence on local budgets, their ability to help businesses with close ties to political parties, and their ability to use state resources to build strong support bases, particularly through the allocation of social funds to mass organizations.

At the same time, there is an insidious attempt by political elites to justify money politics by switching the mistake on voters. This view was recently echoed by the Head of the Gresik Regency Election Supervision Committee (Panwaslu), claiming that Political Parties rely on vote buying to secure public office because voters demand it; they see elections as an economic opportunity as they assume that their vote as a valuable commodity. Vote buying also indicates that representatives own those vote and can deny their constituents from political accountability.

So, the question that we further to address is what do voters actually want from their representatives?  

Constituents’ attitudes towards political parties and candidates, and therefore their electoral choices, reflect to a combination of rational and non-rational incentives. Rational choice factors are based on political accountability, meaning that constituents’ assessment is based on legislators and political parties’ policy promises and achievements. Citizens therefore respond these incentives to vote for the candidates that mainly represent their political and economic interests, based on policy programs and previous achievements. At the same time, candidates and political parties should respond those incentives to identify core constituent groups and to advocate the policies that suit the interests of those groups.  

However, such accountability relations between legislators and constituents can be distorted by several non-rational factors:

Emotional variables such as candidates’ charisma or popularity can give an impact on electoral choices, but more importantly, prospects of immediate financial reward for the selection of a particular candidate can also take precedence over rational accountability considerations.  

For voters, electoral choices will amount to a trade off between immediate gains deriving from vote buying, and hypothetical longer-term gains deriving from policy improvement and greater economic opportunities.

The Indonesian political party system is characterized by a growing individualization of weak leadership, by the inability of political parties to identify the champion core of constituent groups and to articulate policy programs. Coupled with weak accountability mechanisms, these tend to create a bias electoral choice towards non-rational incentives.

The absence of strong party contributes in turn to a drastically increase the cost of electoral campaigns as considerable investments in advertising and communication, which are required to build the image and popularity of candidates, while a bidding war takes place to buy votes.

The financing of local elections is the root of political corruption and state capture at the regional level. Besides its direct impact on state resources, it raises more fundamental issues related to political leadership, the strengthening of Indonesia’s political party system, and public trust towards democracy.

How to curb money politics and consolidate democracy?

65 years ago, Seokarno had already fully understood the challenges of political representation in the building of democracy in Indonesia.

During his address to the BPUPKI on 1 June 1945, Soekarno laid down the foundations of the Pancasila, and insisted on the necessity to build a democratic Nation that works for all. “We are building a Nation for all. Not for one person, not for one class, not for aristocrats, nor for the rich, but for all.”

This cannot happen if the electoral process is rigged by money politics. Efforts to curb money politics should focus on two main priorities, namely reforming political parties financial management and strengthening civil society to enforce political accountability.

To decrease their dependence on private financing, institutional reforms should focus on reducing the financial vulnerability of political parties. The government should seriously review Indonesia’s current political financing system mechanisms, enforce strict limitations on donations by party members, put a cap on campaign expenses, and reconsider its current orientation relying on private sector donations. Increasing state subsidies would not solve all the problems by itself, but would foster the institutionalization of political parties, the consolidation of their leadership and positioning at both national and local levels.

A ban or at least less dependence on private sector contributions would eventually decrease the leverage of dominant corporations and interest groups to influence policy making and capture state resources. Moreover, political parties’ dependence on public funding should impose important reforms on political parties, particularly on enforcing stricter standards of transparency and accountability in financial management.

Transparency in financial management is the single most efficient remedy to curb public distrust in political parties as well as to promote fair political competition and the development of cohesive constituencies.

But once again, corruption is political problem that will require strong political commitment and cannot be solely solved with institutional reform. Additional efforts and resources should be directed to strengthen political accountability. Thus, by empowering civil society and constituency groups to demand accountability, we can earn a public policy that does not benefit to vested interests at the expense of public interests and people’s welfare.

The international development community has an important role to play here in order to support the development of a strong and critical civil society.

Bangkok, 10 November