Does the US Really Control the Bretton Woods Institutions?


A basic tenet of realism is that IGOs will reflect the distribution of power in their governance. Great powers will run the institutions and get more of what they want. The classic example of this in current world politics is the division of veto-wielding power in the UN.

Yet in my previous empirical work, interviewing within the IMF and Bank suggested that this is not always the case. In-house managers and institutional leaders had varying amounts of discretion. Day-to-day operations appeared almost exclusively beyond the direction of the GPs. Even some large policy issues seemed to swing in directions other than the apparent preferences of the GPs.

There is a transmission belt effect at work. The balance of power does not exist as a tangible empirical reality. It is reflected within the institutions; it must travel to them from national capitals. This creates room for slippage. Rather than simply suggesting, as neoliberal institutionalists do, that institutions can become sticky or gain self-confidence, I propose some specific hypotheses to explain why and how IGOs can in fact attain enough institutional autonomy to skirt if not openly contravene GP wishes.

H1. The role of GPs in IGOs will be reduced, if the IGO is primarily technocratic. It is not clear at all how America’s wishes differed from even the Soviet Union’s of Nazi Germany’s on the existence of time zones or postal details, for example.

H2. IGOs that can generate revenue internally can reduce their vulnerability to GP interference. The World Bank raises funds through the IBRD on its own. This provides it with some institutional autonomy.

H3. Presidential/managerial entrepreneurship can reshape GPs’ interests to align with the organizations. James Wolfensohn has dramatically reshaped the great power’s sense of the importance of development. A flamboyant, jet-setting advocate of poverty reduction, he oversaw a major expansion of the Bank’s resources, activities and prestige. Even the Bush administration agreed the poverty and AIDS in Africa were challenges it was simply inhumane to ignore.

H4. Great power stalemates create substantial institutional discretion. The split between large borrowing states such as China and Brazil, and donors like Great Britain, in the Bank and Fund over the role of NGOs, has created a stalemate at the Board level of the BWI on this question. The leaves management room to push around on its own, experimenting with how much change the member-state owners can absorb.

H5. Great powers translation of their global stature in policy clout within IGOs requires sustained commitment of resources and interest. It is not clear that many provide that. Even the United States’ Treasury Department only devotes, at most, 50 staff to monitoring the World Bank – an institution of 10,000 staff that turns over $20B per annum in new loans and generates enormous reams of reports. Without devotion to oversight, the reality of military and economic strength does not necessarily entail dominance or control.

H6. Epistemic communities and highly consensual knowledge may overrule the raw national interest of the great powers. The best example of this is the Bank and Fund’s continuing negative statements on OECD states’ agricultural subsidies. The powerful, deeply consensual global norms of poverty alleviation, and free trade seem to have overwhelmed the GPs’ interest in keeping the agricultural subsidies out of IFI discussions. Such ‘speaking truth to power’ requires deeply held and deeply consensual norms, but clearly the intellectual/normative hegemony of the rectitude of free trade and poverty reduction have placed agricultural subsidies regularly now on the IFI/world trade agenda.

H7. Great power indecision creates room for institutional experimentation and pathbreaking. While the logic of a high-profile bail-out to South Korea or Russia may be clear to the US, in many of the places where the Bank and Fund work, it is simply unclear what the GPs’ national interests are. IGO autonomy represents a manner of benign neglect. Does the US really care if Bourkina Fasso receives a dam project? Probably not. And even if it did, one can easily imagine countervailing interests (environmental NGOs vs construction conglomerates) who might undermine the unitary actor assumption.

None of this is not to say that the GPs do not get what they want. Where they are in agreement and show the requisite interest in a topic, they get what they want. As Dave Hunter of CIEL said to me, “if the US really wants something out of the Bank or Fund, it usually gets it.” But there are power translation questions on the transmission belt from the overall distribution of power to IGO outputs.

Little actual work testing the empirics of GP control of IGOs

Does it happen and what are the mechanisms?

Do splits among the GPs create room for IGOs to act autonomously?

Do IGO have some autonomy because without it they would be deserted by others?

So there is a trade-off between control and efficacy?

The US gets a lot of what it wants (in large terms of values, and in small terms of preferred loans or programs) in exchange for a minimal amount of autonomy. Miller Adams says the Bank is a good investment for the US – costs us little and gets us a lot

Process Tracing the Actual Dynamics of GP control of the IOs

Who in the US Treasury, State Department, White House, Congress?

What connection do they have to the Board and management?

How far down into the institution does US flow?

Does it influence on macro-policies and lending picks, or does it influence staffing and staff practices?

“The intense interest of the United States in the IMF sometimes borders on a proprietary interest. More than any other member, the United States has viewed the IMF as an instrument of its foreign policy” (Leo Van Houten, “Governace of the IMF,” 2002, IMF pamphlet 53, p. 42)

The US is so important to the functioning of the BWI that external review of the IMF’s external relations strategy recommended specific liaison with the US Congress (2000 annual report 154) had a section specifically on outreach to the US Congress, and the Bank has had separate meeting with the Congress (and the Bundestag) as well, outside of its normal accountability channels (The World Bank: Its First Half Century, Vol.I, ch.7 & Vol.II, 653ff)

What is the transmission belt of US preferences into BWI policy and does it work?

Interview the US EDs at the Bank and Fund.

Find the number and positions of influence of US nationals in the BWI

Is there a correlation between the US percentage vote at Boards and its influence?

Does the US have more than 17.14% influence? Probably

Why can the US punch above its weight?

How do the Great Powers Control IGOs?

1. GDP-indexed voting

Both BWI have weighted voting which is maintained despite the formalities of sovereign equality through the leverage granted by their status as creditors to the poor. The choice for the developing world is between an IMF and MDBs mostly dominated by the GPs or no IFIs, at all, and NOT as NGOs would have them

think, between the current voting structure and a more democratic one

2. Thorough staffing of the Boards of, and missions to, IOs

See interview with Keith Kozloff and Leo Van Houten, “Governace of the IMF,” 2002, IMF pamphlet 53, p. 15. The GPs have the money and trained staff to fill out their national missions and offices at the IO, as well as build responsible offices within their own executive and legislative bureaucracies. There are offices and staff in the various responsible ministerial department, EBAs and legislative committees overseeing the actions of the IGO. Developing countries frequently cannot compete with this level of oversight. Hence the miss important information and are unable to participate meaningfully in decision-making.

3. Culture of IOs, especially IFIs

All of the major IFIs have their HQs in the North, are financed heavily by the North, are staffed disproportionately by Northern-nationals, are staffed disproportionately by Northern-educated professionals, and have internal codes of conduct that reflect Northern modes of professionalism and business conduct. The IMF feels like another organization in Washington, and is a part of the larger Washington ‘theater of politics’ – including external protests, media attention and close alignment with the Washington political calendar, especially the American budget cycle

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