July 1: What is the role of international organizations and do they really matter?

1. July 1: What is the role of international organizations and do they really matter? Abbot, Kenneth and Duncan Snidal. 1998. Why States Act through Formal Organizations. Journal of Conflict Resolution 42:3-32.

2. Last class take-home point • Analytical tool: • Time inconsistent preference problem • A.K.A. (also known as): • Commitment problem • Present bias

3. Do IOs matter?

4. Dramatic action • United Nations Security Council (UNSC) sanctions on Libya • International Atomic Energy Agency (IAEA) inspectors in North Korea • United Nations (UN) peacekeepers in the Middle East • North Atlantic Treaty Organization (NATO) in Bosnia • The Uruguay Round the World Trade Organization (WTO) & the dispute settlement mechanism

5. Ongoing action: • Global health policy (the WHO) • Development (the World Bank) • Monetary policy (the International Monetary Fund) • Participation reduces the chances of war among members • Participation increases the chances of democracy

6. Various sizes: • From: • Asia-Pacific Economic Cooperation forum (APEC) - $2 million budget (pays for their annual meeting?) • To: • European Union (EU) - verging on a sovereign state • World Bank - >10,000 employees from 160 countries (2/3 in Washington) • IMF (Aug. 2008: $341 billion)

7. Specialized agencies: • ILO • http://www.ilo.org/global/What_we_do/lang--en/index.htm • ICAO • http://www.icao.int/icao/en/howworks.htm • FAO • http://www.fao.org/about/about-fao/en/ • Others: • UNEP • http://www.unep.org/Documents.Multilingual/Default.asp?DocumentID=43 • EBRD • http://www.ebrd.com/about/index.htm

8. Finding research on IOs: • Google Scholar!!! http://scholar.google.com/ • ISI Web of Science http://isiknowledge.com/

9. IOs allow for: • CENTRALIZATION • A concrete and stable organizational structure and an administrative apparatus managing collective activities • May allow for immediate action (UN Security Council) • Or for specialization (OECD has >200 working groups) • May have flexible design (IMF voting structure) or be rigid (UN Security Council) • INDEPENDENCE • The ability/authority to act with a degree of autonomy within defined spheres

10. Rational choice perspective: • LEADERS found/use IOs when benefits of cooperation outweigh (sovereignty) costs • IOs produce collective goods in PD settings & solve coordination problems • Coordination problems? • E.g., Battle of the sexes game

11. PD settings? • Prisoner's dilemma • http://www.youtube.com/watch?v=ED9gaAb2BEw&feature=related • http://www.youtube.com/watch?v=p3Uos2fzIJ0

12. Prisoner's Dilemma: • A non-cooperative, non-zero-sum game. (Mixed game of cooperation and conflict.) • Individual rationality brings about collective irrationality.

13. Example… • You're reading Tchaikovsky's music on a train back in the USSR. • KGB agents suspect it's secret code. • They arrest you & a "friend" they claim is Tchaikovsky. • "You better tell us everything. We caught Tchaikovsky, and he's already talking…"

14. You know that this is ridiculous – they have no case. • But they may be able to build a case using your testimony and "Tchaikovsky's." • If you "rat" out your "friend" – they will reduce your sentence. • If not, they will throw the book at you.

16. The same situation can occur whenever "collective action" is required. • The collective action problem is also called the "n-person prisoner's dilemma." • Also called the "free rider problem." • "Tragedy of the commons." • All have similar logics and a similar result: • Individually rational action leads to collectively suboptimal results.

17. Is cooperation ever possible in Prisoner's Dilemma? • Yes  • In repeated settings • Axelrod, Robert M. 1984. The Evolution of Cooperation. New York: Basic Books.

18. So, IOs facilitate cooperation by coordinating states on superior equilibria/outcomes • And lower the transaction costs of doing so

19. Alternatives to the rational-institutionalist perspective

20. Realist theory • States do not cede to supranational institutions the strong enforcement capacities necessary to overcome international anarchy • Thus, IOs and similar institutions are of little interest • They merely reflect national interests and power and do not constrain powerful states • Does realism = rational choice? • Realism focuses on state interests - ignores microfoundations (leader incentives, domestic politics)

21. Constructivist theory • Where to ideas and preferences come from? • Focus on norms, beliefs, knowledge, and (shared) understandings • IOs are the result of international ideas, and in turn contribute towards shaping the evolution of international ideas • Vital for the understanding of major concepts such as legitimacy and norms

22. Abbot & Snidal: States use IOs to… • Reduce transaction costs; • Create information, ideas, norms, and expectations; • Carry out and encourage specific activities; • Legitimate or delegitimate particular ideas and practices; • Enhance their capacities and power

23. Principal-Agent framework • IOs are thus "agents" • Their (biggest) members are the "principals" • Agency slack?  • "bureaucratic" perspective

24. The principal-agent problem • The agent works for the principal • The agent has private information • The principal only observes an outcome • Must decide to reelect/pay/rehire/keep the agent • If standards are too low, the agent “shirks” • If standards are too high, the agent gives up • We need a Goldilocks solution – set standards “just right.” • We may have to accept some an “information rent” • Either pay extra or accept agency slack (corruption?)

26. If reelection criteria are too high, the government will not supply effort when exogenous conditions are bad. • If reelection criteria are too low, the government will not supply effort when conditions are good. • What should you do? • Intuition: It depends on the probability of good/bad conditions & on the difference in outcomes when conditions are good/bad…

27. Solution? • TRANSPARENCY?

28. Public choice/Bureaucratic theory • IOs are like any bureaucracy • Allow governments to reward people with cushy jobs • The bureaucracy is essentially unaccountable • Seek to maximize their budgets • Look for things to do

29. Back to rational-institutionalist view…

30. What do IOs do for their members? • Pooling resources (IMF/World Bank, World Health Organization) - share costs, economies of scale • Direct joint action - e.g., military (NATO), financial (IMF), dispute resolution (WTO)

31. LAUNDERING • Allow states to take (collective) action without taking direct responsibility (or take responsibility with IO support) • Examples: • The IMF does the dirty work • UN Security Council resolutions - a form of laundering? • When an IO legitimates retaliation, states are not vigilantes but upholders of community norms, values, and institutions • Korean War - The United States cast essentially unilateral action as more legitimate *collective* action by getting UN Security Council approval

32. Neutrality • Providing information • Really? http://www9.georgetown.edu/faculty/jrv24/IMFforecasts.html • Collecting information • Really! http://www9.georgetown.edu/faculty/jrv24/transparency.html • Example • Blue helmets: • http://www.youtube.com/watch?v=O0n2-YpwPWY&feature=PlayList&p=BBF5269792FC9ED6&playnext=1&playnext_from=PL&index=15

33. Community representative •  Legitimacy • Articulate norms? http://goodliffe.byu.edu/papers/catcascade2.pdf • Universal Jurisdiction (more than a norm - a legal standard) – The CAT • Honduras and the OAS??

34. Enforcement? • The problem of endogeneity • 100% Compliance may mean the IO is doing *nothing* • Be careful what conclusions we draw from observations • Compliance is meaningful only if the state takes action it would not take in the absence of the IO • IMF/World Bank CONDITIONALITY

35. Answers to today's question: • IO's reduce transaction costs - costs of doing business & coordinate on superior equilibria • Enabling members to have: • LAUNDERING • Neutrality • Community representative • Enforcement • Legitimacy - shared beliefs that coordinate actors regarding what actions should be accepted, tolerated, resisted, or stopped • To these ends IOs are created centralized & independent

36. Analytical tools • Time inconsistent preference problem / Commitment problem / Present bias • Research networking • Prisoner’s dilemma • Principal-Agent framework • Realist theory • Constructivist theory • Public choice/Bureaucratic theory

37. Thank you