Iranian and Saudi cash weighs against local parties

Tomorrow's supposedly free and fair elections have been undermined by a wealth of "soft money", an absence of inspectors and no limits to how much candidates can spend.

As a result, parties with links to exile groups have a huge advantage over their rivals.

American officials admit that failing to impose such restrictions was a flaw. A consequence is that groups linked to both Iran and Saudi Arabia have received millions of dollars while "home-grown" Iraqi political parties dependent on donations from their members are struggling.

In recent days, voters in Baghdad have been bombarded with advertising from the wealthiest parties, including the interim Prime Minister Iyad Allawi's coalition and the Shia United Iraqi Alliance. Mr Allawi has been advertising on the al-Aribya network, based in Dubai and owned by interests in Saudi Arabia, where the Prime Minister lived in exile. He is understood to have received large donations from exiles living in Saudi Arabia and elsewhere.

The United Iraqi Alliance has been running non-stop ads on the al-Furat television network, which it owns. Meanwhile, struggling groups such as the National Democratic Party, which has survived for the past six decades, have refused to take donations from non-members.

Under campaign rules, money from insurgents or militia groups is banned, but Harith Mohammad Hassan, deputy director of the Independent Election Commission, recently told the Globe and Mail newspaper that officials were too busy avoiding the violence to pay attention to where parties obtained funding. "Most of the parties say their finances depend on their members ... And we have no ability to check this," he said.

Critics say the financial imbalance further undermines an election they believe has been flawed by lack of security, restrictions on the media and the very presence of an occupying force.

Mark Jason, of the San Francisco-based Global Exchange, a campaign group which organised international observers to monitor the US presidential election, said: "It points to a larger problem. If it's too dangerous for international observers then it's too dangerous for ordinary Iraqis ... There should be a level playing field. It's an issue of concern if you have one candidate with more resources."

He added: "It's like what happened in the elections in Afghanistan where [President] Hamid Karzai clearly had more resources than other candidates - flying around the country in a helicopter."

The US Agency for International Development has spent $80m (£42m) on voter education and training in Iraq through two organisations, the International Republican Institute (IRI) and the National Democratic Institute. Critics of these groups, and those of the National Endowment for Democracy, say they have a long history in places such as Haiti of favouring groups friendly to Washington and undermining "unfriendly" or dissident groups. Les Campbell, IRI Iraq manager, told The Independent his organisation had only spent money on voter training. No money had been spent to fund political parties, he said.