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The Review of International Organizations

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01.09.2012

Global governance behind closed doors: The IMF boardroom, the Enhanced Structural Adjustment Facility, and the intersection of material power and norm stabilisation in global politics

verfasst von: Liam Clegg

Erschienen in: The Review of International Organizations | Ausgabe 3/2012

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Abstract

Up on the 12th floor of its 19th Street Headquarters, the IMF Board sits in active session for an average of 7 hours per week. Although key matters of policy are decided on in the venue, the rules governing Boardroom interactions remain opaque, resting on an uneasy combination of consensual decision-making and weighted voting. Through a detailed analysis of IMF Board discussions surrounding the Enhanced Structural Adjustment Facility (ESAF), this article sheds light on the mechanics of power in this often overlooked venue of global economic governance. By exploring the key issues of default liability and loan conditionality, I demonstrate that whilst the Boardroom is a more active site of contestation than has hitherto been recognized, material power is a prime determinant of both Executive Directors’ preferences and outcomes reached from discussions. And as the decisions reached form the backbone of the ‘instruction sheet’ used by Fund staff to guide their everyday operational decisions, these outcomes—and the processes through which they were reached—were factors of primary importance in stabilizing the operational norms at the heart of a controversial phase in the contemporary history of IMF concessional lending.

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Following a recent change to the Fund’s disclosure policy, this embargo time has been reduced to five years. On the broader ‘transparency drive’ at the Fund, see Weaver (2010).

In the most recent ‘official history’ of the Fund, James Boughton (2001: 1031–3) provides only a general account of how a combination of ex ante canvassing and ‘scorekeeping’ during Executive Board Meetings of Directors’ positions by the Secretary serve to enable the institution to function without regular recourse to formal votes.

Pre-launch discussions of the form and function of ESAF took place in late 1987, and in 1999 the concessional lending window was transformed into the Poverty Reduction and Growth Facility.

Access to the full collection of these documents is available through the on-site IMF Archives.

In this article I side-step the epistemological issues raised over the commensurability of the rationalist and constructivist models (e.g., Weiner 2003; Johnson 2002), and follow the approach advocated by Jeffrey Checkel of engaging in ‘middle range theory building’ (Checkel and Moravcsik 2001: 243).

Prior actions are a form of conditionality that must be implemented before the IMF Board approves financing or undertakes a review; structural performance criteria are policy reforms whose implementation is required to ensure continued disbursal of program loans (see IMF IEO 2002: 44–7).

Quoted in Jupille et al. (2003: 11).

Grobe (2010) provides a detailed analysis of competing conceptualizations of the truth seeking characteristics of agents within constructivist scholarship.

With the fate of several billion SDRs-worth of loans at stake, and discussions taking place amongst overtly political actors, ESAF discussions provide a ‘hard case’ for the constructivist approach. Existing analyses have suggested that ‘domains of application’ conditions that push actors towards rationalist rather than constructivist ideal-type behavior include high financial stakes (March and Olsen 1998: 958), the involvement of political rather than technocratic actors (Jupille et al. 2003: 21–2), and a lack of causal knowledge about which of the available options constitutes the most effective policy choice (Grobe 2010). Each of these conditions appears to have been met in the case of Executive Board discussions of ESAF, with the mechanisms surrounding the distribution of several billion SDRs-worth of loans being debated by politically-appointed actors who made repeated complaints about the quality of guidance provided by IMF staffs about how to negotiate the options available (e.g., IMF 1993a: 22; IMF 1993a: 40; IMF 1998a: 4).

I borrow Seabrooke’s (2007b: 372) first-cut definition of ‘economic constructivism’.

See IMF (2007).

This mechanism is akin to the ‘soft economic law’ outlined by the former General Counsel of the IMF, Joseph Gold (1983a: 443).

Coding is a technique developed to facilitate the quantitative analysis of interview transcripts, which is increasingly being transferred to assist the analysis of official documents. For further information on the method, see Auerbach and Siverstein (2003). It is through the innovative work of Lou Cabrera and Amin Samman, former colleagues at the University of Birmingham, that I was first introduced to the technique. See Cabrera (2010), and Samman (2011).

In total, approximately 800 pages of minutes were analyzed, containing some 37,000 lines of text. The discussions took place within 16 meetings, which were clustered around the period immediately preceding the launch of ESAF in late 1987, the 5-year review of ESAF operations in 1993, and the 10-year internal and external reviews in late 1997 and early 1998 respectively.

Table 1 provides a snapshot of quotas in 1987, and does not account for subsequent reforms in 1993 and 1997. In addition, in order to generate comparable longitudinal data, the new members admitted in 1992 are excluded from analysis.

See IMF Official Website, at http://www.imf.org/external/about/govstruct.htm. Accessed 22/09/10.

The ratio in 1946 was approximately 2:1, but by 2010 had rocketed to almost 10:1. The largest constituencies in recent years have been the two main Africa groups, in which over 20 states are represented.

IMF Articles of Agreement: Article XII, Section 5, Paragraph (c). See IMF Official Website, available at http://www.imf.org/external/pubs/ft/aa/aa12.htm#3. Accessed 15/09/10.

For a detailed commentary on the evolution of the Fund’s concessional lending, see Boughton (2001: 637–704).

Quoted by Boughton (2001: 663).

It should be noted that, as Executive Directors change on average every 4 years, these findings on preference stability relate to the office rather than individuals per se. The existence of stable preferences in the face of changing individuals raises questions over the agency enjoyed by Directors, and broadly these findings reflect Momani’s (2010a) suggestion that Executive Directors commonly enjoy relatively low levels of ‘room for manoeuvre’.

The Managing Director’s Summing Up serves to record the ‘mood of the meeting’ or ‘points of agreement’ reached at the conclusion of the Board’s formal discussions. This statement provides guidance to staff on key operational matters, and in many cases holds the same legal force as a formal decision (see Chelsky 2009: 209–12).

For an overview of the evolution of this norm in the sovereign debt regime, see Broome (2009) and Barry and Tomitova (2007).

Indeed in 2005, almost three decades after the 1978 Amendments restricted the use of gold at the IMF, the Fund held the third largest gold reserve in the world (Kapoor 2005).

A good illustrative example comes from the contribution of the Italian Director, who simply suggests that ‘In paragraph 2 of the decision establishing the Trust, reference should be made to the possibility of using or mobilising the Fund’s gold to protect creditors’ claims’ (IMF 1987b: 42).

According to their interpretation, gold sales would have to flow into the Fund’s general lending resources, and as such could not be channelled back to individual states on the basis of contributions to the ESAF Trust.

For detailed overviews of the role of NGOs in the extension of multilateral debt relief, see Broome (2009) and Busby (2007).

As Meltzer (2011) has recently argued, with the Fund’s current burst in lending activity the relationship between its resources and sovereign default could over the medium term again become a key issue in the global economy.

Interestingly, Felgenhauer appears to raise the same procedural to the use of gold sales for this purpose as LMP Directors, regarding the operational restrictions placed on the use of gold at the Fund.

This was done most forcefully by the Iranian Director, with his injunction that ‘I… insist on having any change in our operations based on a formal decision on changing the guidelines on conditionality—a decision which should be duly approved by the Executive Board, rather than reflecting the first reactions of two or three Executive Directors’ (IMF 1987c: p.32).

See Momani (2010a: 166).

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Titel: Global governance behind closed doors: The IMF boardroom, the Enhanced Structural Adjustment Facility, and the intersection of material power and norm stabilisation in global politics
verfasst von: Liam Clegg
Publikationsdatum: 01.09.2012
Verlag: Springer US
Erschienen in: The Review of International Organizations / Ausgabe 3/2012
Print ISSN: 1559-7431
Elektronische ISSN: 1559-744X
DOI: https://doi.org/10.1007/s11558-011-9133-6

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