1. Money & Politics on the International Stage: The Political Economy of the UN Security Council

4. Cooperation & Change

5. A more historical example?
Tanzania
no IMF, no UNSC
1975
UNSC member
First IMF arrangement – exceedingly weak conditionality

6. IMF reply in the Washington Post (November 1, 2006):
An IMF spokesman said “the [Tanzania] evidence is anecdotal and circumstantial.”
To convince people, we need
many more anecdotes
statistical evidence (it’s not just luck)

7. (non-UNSC: n=5719) (UNSC: n=339)
Descriptive data
(non-UNSC: n=5719) (UNSC: n=339)

8. Enter the IMF & the World Bank

9. Two Key points about the IMF & World Bank
Involved with developing countries through “programs”: loans + conditions.
Influence over decisions pegged to economic size.

10. Why use IFIs to influence the UNSC?
Political benefits (for both actors)
“DIRTY WORK” (Vaubel)
Leverage benefits
Conditionality & loan disbursements
Cost benefits

12. World Bank evidence
“It is true that during the Cold War years aid was politically motivated.”
“Now however, aid is being delivered to countries most in need and to those who show they are determined to use it well.”
(World Bank, FAQ,

13. Average # of World Bank projects by UNSC membership
If politics mattered during the Cold War, but not after,
this bar should be above the line,
and this one should be at/below the line…
UNSC members continue to get more World Bank programs
2.5
2.0
1.5
1.0
0.5
0.0
avg=1.29
std=1.95
avg=2.13
std=2.93
avg=1.29
std=1.95
n=5333
Non-
member
1st.year
2nd year
Over time
avg=2.06
avg=2.19
std=2.75
std=3.11
n=176
n=181
avg=1.28
avg=1.30
std=1.96
std=1.93
avg=2.15
avg=2.10
std=2.96
std=2.92
Non-
n=5333
n=357
member
Member
Total sample
n=2638
n=183
n=2695
n=174
Non-
member
Member
During the cold war
After the cold war

14. Is this a US-thing?
Regional Organizations
Regional Hegemons

15. Asian Development Bank
Daniel Yew Mao Lim, Class of 2011

16. Table 5.6: The effect of UNSC membership on African Development Bank lending
Pre-1982
1982 and onward:
UNSC Member
-0.104
1.717***
(0.06)
(3.55)
Pariah state
6.193***
0.904
(4.43)
(0.48)
War
0.072
-1.519**
(0.04)
(2.05)
ln(GDP per capita, PPP)
6.582**
1.368
(2.14)
(0.90)
Political regime
-0.043
0.026
(0.29)
(0.44)
Number of observations
355
1,338
R-squared
0.39
0.07
Notes: All regressions include country and year fixed-effects and regional quartics (for North Africa and Africa South of the Sahara). Numbers in parentheses are the absolute values of t-statistics.

17. Reading regression tables: The cheat sheet
What is the dependent variable? (Maybe in the title)
Consider the number of observations
What is the unit of analysis?
What are the “explanatory”/independent variables?
Consider the coefficient for each variable
Is it positive/negative?
(Don’t be too persuaded by the magnitude – the real effect depends on how the variable is measured… and whether the model is “linear”)
Consider the SIGNIFICANCE
Standard error < about ½ the size of the coefficient
|T-stat or Z-stat| > 1.96
P-value < 0.05
Or… lots of * (stargazing!)

18. The cheat sheet for reading quantitative social science articles
Study the abstract
Read intro & conclusion
Study the stats tables
Look up the definitions of variables
Skim the rest
Read the abstract one more time

19. Summary Observation by Russian Student
Bribes – no surprise
Trade money for votes
But the US & allies bribe…
with a loan
must be repaid!
Impressive!

20. Who is surprised?

21. DISCUSSION

22. DISCUSSION: Will China play the foreign aid game?
How China might use its powerful position in international politics to try to obtain its foreign policy goals?
Dalai Lama?
Caribbean recognition of PRC vs. ROC?
Chiang Mai alternative conditionality?

23. So what should we do? Reform debate focuses on:
NUMBER of representatives
elected
permanent
No discussion of accountability

24. Accountability, the UNSC, & the Paradox of Stability
Criteria are too high!
Criteria are too low!

25. Suggested reforms:
Do away with term limits
Let regions elect

26. Typical debate on reforming the UNSC:
Not focused on accountability
Focused on representation:
How many elected seats?
Expanded from 6 to 10 in 1966
How many permanent members?
Various (so far failed) proposals to include the “G4”: Brazil, China, Germany, India

27. Role playing! REFORMING the UNSC Options: Status quo
Increase number of elected members
Increase number of permanent members
(Variants allowed – e.g., permanent with/without veto power)

28. Actors (networking time!)1 2 3 4 5 6 7 8 9 10 11

29. Actors Argentina Brazil China Germany India Italy Japan
Republic of Korea
Pakistan
United States
African Union (53 countries)

30. Discussions
1st within groups
Then as plenary

31. Actors Japan, Germany, Brazil, India Korea, Italy, Argentina, Pakistan
African Union (53 countries)
United States
China

32. Take-aways from this discussion
Great powers
Strengthened by expansion of elected seats, but don’t need it
Strengthened by non-veto permanent seats - iff allies!
Weakened by expansion of veto-permanent seats
Rising powers
Helped if they get permanent seats (veto or not)
Hurt by expansion of elected seats
Middle powers
Hurt if permanent seats go to regional rivals (veto or not)
Helped SYMBOLICALLY by expansion of elected seats
Small countries
Don’t get much out of expanding permanent seats
Short-run foreign aid benefits
Long-run foreign aid benefits?
Or do we get minimum winning coalitions?
Status quo bias – changing the United Nations Charter requires
5 permanent member unanimity
At least 4 additional votes at UNSC (total of 9 votes)
2/3 majority of General Assembly

33. What does the G20 world look like?

34. G20 Calls for a reevaluation of the BWI vote shares
Why care about the G20?
Doesn’t do anything
Arbitrary membership (out of date)
Represents the arrival of the emerging markets!
More representative?
Who is the G20?

35. Who is the G20? G7 + BRIC + EU + MAKTISAS 11 down, 9 to go?
NO! Only 8 to go.
Only 19 countries in the G20.

36. Who’s missing?

37. Wrong guesses EU Europe The bad guy Large populations Big economies
Spain, Poland, Netherlands
Europe
Switzerland, Norway
The bad guy
Iran
Large populations
Pakistan, Bangladesh, Nigeria
Big economies
Thailand, Taiwan, Malaysia, Venzuela, Egypt,

38. The G20 World

39. Thank you WE ARE GLOBAL GEORGETOWN!

41. Note Ecuador’s IMF participation pattern above
Gulf War Examples
Ecuador – UNSC member
IMF arrangement in 1991
Of course Ecuador is a regular IMF customer: 1961, 1962, 1963, 1964, 1965, 1966, 1969, 1970, 1972, 1983, 1985, 1986, 1988, 1991, 1994, 2000
Voted for all but 2 Iraq resolutions
Note Ecuador’s IMF participation pattern above
Countries participate in IMF programs about 25% of the time (including ALL countries).
Typical pattern: 5 years in, 5 years out, 5 years in, etc…

46. Nature reveals local politics b Member Member
Request aid
No request
Donor
No offer
Offer aid, set a>0
Nature reveals local politics b
Member
Member
Vote against
Vote with
Defect
Comply
Member: b
Donor: 0
Member: 0
Donor: v
Donor
Donor
Cut
Disburse
Cut
Disburse
Member: b
Donor: 0
Member: b+a
Donor: –a
Member: 0
Donor: v-r
Member: a
Donor: v–a

47. Is this a US-thing?
Regional Organizations
Regional Hegemons

49. Implications for governance reform of the IMF:
Q # 1: Is this a bad thing?
Q # 2: Is it in the US interest to change things?
Perhaps not – Short-run political gains.
Long-run economic development?
Elected to the UNSC 6 times
15 IMF arrangements since 1958
32 out of 48 years (66% of the time)

50. In the meantime: The actual governance reform of the IMF
Increase the voting power of:
China, South Korea, Brazil, Mexico and Turkey
How will this address the political manipulation of the IMF?
It won’t.
“It is the correct thing to do, but probably won’t make much difference.”
[personal conversation with Pres. Henrique Cardoso, Brazil & Pres. Ernesto Zedillo, Mexico]