2008 PARLIAMENTARY ELECTION CAMPAIGN FINANCING

UNCLAS SECTION 01 OF 03 TBILISI 001066

SIPDIS

STATE FOR EUR/CARC AND DRL

E.O. 12958: N/A
TAGS: PREL PGOV GG
SUBJECT: 2008 PARLIAMENTARY ELECTION CAMPAIGN FINANCING


1. Summary: Pursuant to campaign funding disclosure
requirements, all four parties that crossed the 5 percent
election threshold in the May 21 parliamentary elections
have submitted campaign funding reports to the Central
Election Commission (CEC). An audit group contracted by
the CEC studied the reports and approved them as adequate.
The United National Movement (UNM),which received 59.18
percent of votes in the election of proportionally
distributed seats in Parliament, reported spending GEL 12
million (USD 8.33 million). The United Opposition (17.73
percent of votes) spent GEL 481,800 (USD 334,583).
Christian Democrats (8.66 percent) spent GEL 241,500 (USD
167,708),and the Labor Party, GEL 284,000 (USD 197,222).
The reports do not include spending by individual
candidates for majoritarian seats in Parliament, thus
revealing only a portion of the overall campaign financing
picture. End Summary.

Election Fund and Mandatory Disclosure Requirement
-------------- --------------


2. The Election Code of Georgia mandates disclosure of
funds spent by parties and election blocs, and that the CEC
develop additional procedural requirements. Information
concerning campaign contributions is required to be
reported to the CEC and made publicly available. The law
requires political parties to set up an election fund and
provide an accounting for it. They must also report all
goods and services obtained free of charge (at estimated
market prices). Free air time received from television and
radio is exempted from the rule. Majoritarian candidates,
special interest groups established by parties and special
interest groups for election of local self-government
bodies report voluntarily. Individual campaign
contributions are limited to GEL 30,000 (USD 20,833) for
individuals and GEL 100,000 (USD 69,444) for corporations.
Election subjects may not use any funds other than their
election campaign funds. Foreign contributions from
citizens or legal entities from foreign countries, persons
with no citizenship, international organizations and
movements, non-entrepreneurial legal entities, religious
organizations and Georgian companies in which the state
owns a share are prohibited.


3. No later than one month after the publication of
election results, parties and election blocs must submit to
the CEC a report on expenditures, together with an audit
report by and independent auditor, stating the sources of
the campaign funds and accounting for expenditures.
Parties and election blocs, who according to preliminary
data received the necessary number of votes, must report
not later than eight days after Election Day.

National Movement
--------------


4. The United National Movement (UNM),as the ruling party,
was able to conduct a more lavish campaign than other
parties, and did not suffer from lack of donors. The UNM
reported spending GEL 12 million (USD 8.33 million). After
the presidential election, the UNM was the only party that
disclosed any companies openly supporting its campaign. 52
companies contributed, including Aldagi BCI (an insurance
company),Galt & Taggart, Bank of Georgia, Center Point
(construction),Aword Capital (construction),Teliani (wine
producer),and Georgian Mint. The UNM contributed GEL 9.5
million (USD 6.60 million) from its party funds, 80 percent
of their total cash spending for the election. The UNM
spent only half as much on the parliamentary election as it
did on the presidential campaign in January, suggesting
that either the party was confident of victory or that it
could not afford higher spending. There is also a
widespread suspicion among the population, the print media,
and the opposition that the UNM's actual spending was much
higher than reported, and that access to administrative
resources gave the ruling party significant advantage over
its rivals. Presentations of new governmental programs,
especially those with social and economic benefits, were
timed to coincide with the elections and added the polling
results of the ruling party.


5. GEL 386,000 (USD 268,055) or 3.2 percent of the UNM's
spending went to salaries for campaign activists. GEL 1.1
million (USD 763,889) or 9 percent was spent on public
opinion surveys. The rest was used for purchase of goods
and services, which includes production of commercials,
organization of meetings, TV and radio advertisements, and
production of printed materials.

Christian Democratic Movement
--------------

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6. The Christian Democratic Movement reported donations in
the amount of GEL 241,570 (USD 167,708). Corporate
donations were not reported; 13 individual donors filled
the purse of the newly created political party. Individual
donations ranged in size from GEL 335 (USD 232.64) to the
maximum GEL 30,000 (USD 20,833). Top contributors were
from the party leadership. However, no contribution was
disclosed from party leader Giorgi Targamadze.


7. As for spending, 66 percent, or GEL 159 thousand (USD
110,416),was paid for goods and services, mostly fuel, as
well as purchase of cell phone cards. Campaign commercials
consumed over GEL 26,000 (USD 18,055) or 11 percent,
billboard and newspaper advertisements cost GEL 11,000 (USD
7,639),and production of campaign materials such as
posters, leaflets and brochures took another GEL 38,450
(USD 26,701) or 16 percent. TV advertising time purchased
by the party accounted for GEL 19,000 (USD 13,194). No
spending is reported for public opinion polls, election-
related surveys or campaign advisors.

United Opposition
--------------


8. The United Opposition built up GEL 481,800 (USD 334,583)
in its election fund. As was the case with other
opposition parties, all 24 of its donors were private
individuals. Prominent members of the opposition coalition
such as David Gamkrelidze, David Saganelidze, Mamuka
Katsitadze, Paata Davitaia, Pikria Chikhradze and Irakli
Iashvili, who were running for the parliamentary seats,
contributed from GEL 20,000 (USD 13,889) up to the allowed
maximum of GEL 30,000 (USD 20,833). However, the list does
not include Levan Gachechiladze or Goga Khaindrava, two
wealthy and prominent opposition leaders.


9. The United Opposition's expenditures included printed
materials (25 percent of total spending). 12 percent was
spent on ads and commercials; three percent was used for
billboards and newspaper space, and 19 percent on
organization of public events and meetings. Though the
United Opposition claimed to have a full-scale picture of
public opinion and party ratings during the election
campaign period, in fact it spent no more than GEL 510 (USD
354),or 0.1 percent of its available funds, for canvassing
public opinion. Spending patterns disclosed another
interesting fact: the United Opposition relied on the free
time provided by the leading channels and did not spend its
party funds to buy time on the air on the three nationwide
channels. It did spend GEL 54,525 (USD 37,864) to put
commercials on regional TV channels and Tbilisi's local
Kavkasia TV, the latter accounting for 60 percent of the
United Opposition's spending for television. They reported
no spending on campaign activists. Most likely the bloc
relied entirely on volunteers.


10. Compared to the presidential elections, the United
Opposition's campaign spending decreased by 33 percent.
Composition of the election bloc has changed. It does not
include the Republican Party now, but includes the New
Rightists who brought with them bigger campaign coffers.
During the presidential election campaign earlier this
year, "Gachechiladze's Society", donated 13 percent of the
United Opposition's total cash contributions. It is
unknown whether or not this group still operates as they
reported no donations for this election.

Labor Party
--------------


11. Eighteen individual persons, most of them party
leaders, contributed GEL 283,962 (USD 197,196) to Shalva
Natelashvili's Labor Party. However, as usual, none of the
contributions came from Shalva Natelashvili's own pocket.
Almost all of Labor's money, 98 percent, was used for
printing materials, campaign activists were paid GEL 300
(USD 208). The party helped to construct a church at
Kharagauli by contributing GEL 500 (USD 347) from its
campaign fund. Apparently, Natelashvili was more
persuasive with potential donors this time, because Labor's
funding for the parliamentary election increased eight-fold
compared to the presidential elections.

Price Per Vote
--------------


12. On a per capita basis, the ruling UNM paid the highest
price to attract voters: GEL 11.5 per voter (still much
less than the GEL 21.68 (USD 15.05) per voter the UNM spent
in the presidential election). Next was Shalva

TBILISI 00001066 003 OF 003


Natelashvili's Labor Party, which traditionally claims the
title of Georgia's poorest party. It paid GEL 2.15 (USD
1.49) or 7.7 times more than during the presidential
election. The United Opposition and Christian Democrats
spent only GEL 1.52 (USD 1.05) and GEL 1.56 (USD 1.08) per
voter, respectively.

TEFFT