Informal Governance Flashcards
What is informal governance?
Governance through systematic departures from formal rules.
Systematic departure ≠ non-compliance
Legalization
- Obligation
- Nonlegal norms —> biding rules
- Precision
- Vague principle —> highly elaborated rules
- Delegation
- Diplomacy —> international organization
What effect do formal institutions have on efficiency and power?
- The IMF is less efficient but it gives the US more control in emergencies
- But other countries are satisfied with the situation because they have more control in peace times because the US abstains
Informal Governance and Compliance
- Enforcement seen even when there are no formal enforcement provisions
- There is informal enforcement
- Distribution of power —> great powers act unilaterally
- Empowering domestic actors interested in enforcement
Types of Informal Governance
Power-based institutionalism:
- Large states may act unilaterally outside the rules, informal governance allows powerful states to avoid commitments occasionally
Political uncertainty:
- Uncertainty about domestic political support for compliance. Informal governance serves to accommodate governments under unexpected pressure for defection
Political exchange:
- Governments reciprocally refrain from enforcing formal rules against one another, informal governance among states with intense preferences
Power-Based Institutionalism: Germany and the Stability and Growth Pact (SGP)
- Germany proposed that the EU nations should form a SGP that limits the government deficit to 3% of GDP, and sovereign debt to 60% of GDP
- But when Germany fell on hard times they violated the SGP, and it prevented the Commission from enforcing the excessive deficit procedure against it
- How did Germany waive these rules that they established?
-Power story: Germany’s options outside the Eurozone are more credible than economically weaker members - Sets a bad precedent for enforcing EU rules
Political Uncertainty: Council of Ministers
- Council of Ministers represents the executive governments of the EU’s member states
- Member states refrain from overruling one another when a government can legitimately claim to be facing problems selling or implementing the law at the domestic level (win-set logic)
- Informal involvement of government experts ensure that EU laws that threaten to stir up domestic resistance are cut off
- This ensures enforcement since laws, which cannot be
implemented domestically, are dropped
Political Exchange: Business Cycle in the EU
- There are monetary transfers from the EU to the member states, little evidence that these transfers take place for economic needs
- A States’ average budget share systematically increases by 10% in an election year
- Governments reciprocally funnel monetary transfers to each other when they face domestic elections, since it makes these governments appear competent to voters
-Since every EU nation is democratic they will all need this favour at some point - Sets a bad precedent for enforcing EU regulations
Power-Based Informal Governance: The IMF
- How can the the US control the IMF with only 17% of the votes
- Control what?
-Which countries get loans
-Size of IMF loans
-Conditions attached to loans
-Enforcement of loans - There is US dominance in these lending decisions
The IMF (Stone, 2011)
(Make sure I get argument and deficits of paper too)
- Powerful states have viable options outside of international organizations
- They have incentives to act unilaterally when urgent strategic interests suddenly override their long-run interest in the institution - But, acting unilaterally comes with material and legitimacy costs
So in normal time —> formal voting rights are favourable to smaller states
- The US can save resources and preserve the legitimacy of the IMF
But when important interests are at stake —> smaller states allow the US to assume control of the IMF
- Otherwise the IMF would act unilaterally anyway
- Power asymmetries explain why small member states tolerate a large state circumventing formal rules to exert informal control over institutions
- This is against the argument that institutions are efficient by design and are designed to minimize transaction costs
Criticisms
- Since this is not a formal rule some smaller countries may still oppose, and by the US acting unilaterally in certain cases regardless of the IMF decisions they are undermining IMF legitimacy
Informal Governance and IMF Control
- Agenda control —> US intervention prior to the executive board meeting and the managing director’s proposal
- Once proposals reach the executive board meeting, most states in opposition abstain rather than vote against the US
- “Norm of deference” (Stone 2011)
Informal Governance and Effectiveness
- Due to universal representation, the executive board has too many divergent interests for progress to occur on significant issues, so decisions get stalled
- US intervention and agenda control streamlines the process and serves as a means of interest aggregation
- Stone argues that the executive board is deliberately ineffective to give informal power to the US
Principle-Agent Perspective on Bureaucracies
- States delegate authority to independent international bureaucracies
- Independent bureaucracies seek more autonomy from the member states
- States set up control mechanisms in order to prevent “bureaucratic drift”
Control and Gains from Exchange
- If states’ preferences are homogenous, states can control their bureaucracy, but if states’ preferences are in conflict, states have difficulty to control their bureaucracy
- Governments refrain from exercising their right to control over the bureaucracy when they care less about an issue, so that next time other countries will do the same in their favour
Making Exchanges Credible
- What if gains from exchange do not accrue simultaneously?
- Politicians trade political property rights in order to render their exchanges more credible
- Governments tolerate institutionalization of special control on different parts of administration - EU Commission exhibits “national fiefdoms” influenced by countries with special interests in a specific jurisdiction
- Eg. trade across international organizations, IMF informally under US control, World Bank informally under EU control
