A Case for Realism: Funding International Organizations

International organizations lack the capability to enforce policy, judgment, or custom without funding.International organizations lack the capability to enforce policy, judgment, or custom without funding.

In 1989, the WHO sought to recognize the Palestinian Liberation Organization (PLO) as a member.[i] Twelve years later, Conservation International sought labor rights protection for coffee growers in Central America.

What do these two international organizations have in common?

Actually, the more accurate question would be what they don’t have in common: money.

By late 2001, Conservation International had partnered with Starbucks, which resulted in importing solely fair trade coffee beans by 2010. Meanwhile, the WHO had balked at granting member status to the PLO when its funder, the United States, had threatened to revoke one-fourth of its 1990 budget.

Effective vs. moral slack

International organizations lack the power to enforce judgment, policy, or custom without funding. When a principal assigns purpose to an international organization (IO) that requires enforcement of judgment, policy, or custom, the IO cannot deviate without the principal revoking funding.[ii] Effective slack, or the deviation of an IO from a purpose requiring enforcement, is therefore impossible. By contrast, moral slack, or the deviation of an IO from a purpose not requiring enforcement, is possible and occurs often in international organization without funding.

Several international organization authors have discussed agent strategies by which IOs seek to engage in slack, thereby gaining autonomy from their principals.[iii] This issue brief addresses these agent strategies as counter-arguments to the notion that effective slack is impossible. The central claim of this brief when addressing agent-strategy counter-arguments is that while they may hold in instances of moral slack, they do not hold in instances of effective slack.

Funding is essential for enforcement

A review of how funding is used in an IO is beyond this article’s scope. However, the following can all be considered funding: direct funding to an IO, indirect funding such as principal enforcement of IO policy, and enforcement by a third-party IO, which in turn receives funding. This is a non-exhaustive list. IOs, unlike states or for-profit entities, cannot benefit directly from tax or business revenue. Their charters rely upon the good faith of states or for-profit entities to fund their organizations.

The question of whether or not an IO needs funding is tied to its intended purpose. For example, an IO’s purpose to change behavior of another individual, group, or organization through judgment, policy, or custom requires funding because the purpose entails enforcement. IOs that carry this type of ambitious purpose will be relieved of their funding as soon as they try to deviate (effective slack). For this reason, funding is indispensable for IOs to enforce judgment, policy, or custom.

The ICC: the impossibility of effective slack

The International Criminal Court (ICC) encapsulates both effective slack’s impossibility and moral slack’s prevalence.[iv] Before the ICC was officially formed in 2002, discussions surrounding the Rome Statute in the 1990s left negotiating states at odds.[v] According to some states, the ICC should be a self-executing treaty without jurisdiction over state’s constitutions or states that are not party to the treaty. However, discussions in the 1990s led to a deviation in the purpose of the ICC, which included such jurisdictional claims. As a result, some states, including the U.S., never ratified the Rome Statute and withdrew from the ICC. These withdrawals had a crippling effect on the ICC.

In effect, the withdrawal of these states, particularly the U.S., revoked funding for the ICC. The “funding” in this case was the principal enforcement of IO judgment, or the financial and legal contributions by the U.S., to commission its military in enforcement of ICC warrants. By 2009, the ICC had issued arrest warrants for both Joseph Kony of Uganda and Omar al-Bashir, President of Sudan. Both of these individuals are still at-large in 2015, with al-Bashir still in power in Sudan. Clearly, the ICC had lost the power to enforce its judgments because its principals had revoked funding.

Nevertheless, the ICC has engaged in a great deal of moral slack through its Rome Statute deviation. Since 2002, the ICC has supported ratified states that have taken steps toward violence reduction and has criticized non-ratified states such as the U.S., even entertaining warrant requests for high-ranking U.S. officials in the wake of the 2003 Iraqi invasion. These actions are all evidence of moral slack; however, because the funding member-states of the ICC’s principal withdrew upon ICC deviation, the ICC will never be able to enforce any of these warrants.

Analyzing an IO’s purpose in terms of enforcement allows a student of international organization to measure the impact of purpose deviation even before an IO forms. In the ICC case, the purpose deviation occurred during the Rome Statute discussions. This led to funding revocation even before official formation of the ICC in 2002. Its purposes deviated from its funding member-states’ preferences and thereby gutted the ICC’s future power to enforce its own judgments. This typifies the impossibility of effective slack.

Addressing counter-arguments

IOs employ strategies and take advantage of their characteristics to engage in slack and gain autonomy from their principals. Hawkins and Jacoby underscore third-party permeability and principal monitor buffering as strategies.[vi] Cortell and Peterson highlight the characteristics under which IOs are more likely to engage in slack, namely discretion, staffing, and voting rules.[vii] However, none of these agent strategies or characteristics make effective slack by an IO possible.

          Third-party permeability

A possible challenge to the claim that effective slack is impossible is third-party funding. Hawkins and Jacoby state that an IO will seek third-party permeability as a strategy to gain autonomy from its principal. In terms of funding, third-party permeability refers to an IO seeking third-party funding to pursue a purpose other than the intended purpose of its principal.

Third-party funding is not evidence of effective slack because the IO ultimately fulfills the purpose of the third-party funder. An IO would deviate from its principal’s preferences if it sought to pursue a different purpose. However, the IO is merely changing hands between principals; this actually underscores the necessity of funding when IOs seek to enforce judgment, policy, or custom and is not evidence of effective slack.

          Principal monitor buffering

Another challenge to the impossibility-of-effective-slack claim is principal monitor buffering. According to Hawkins and Jacoby, slack may exist when an IO buffers the principal’s attempt to monitor its actions. In terms of funding, as soon as the principal delegates funding to the IO, the IO could take advantage of hidden information and hidden action and engage in slack. In this way, a principal would not be able to discern whether or not its IO is carrying out its intended purpose.

However, it is impossible for an IO to hide action from the principal when the purpose entails enforcement of a judgment, policy, or custom. Principals can always track the enforcement of a judgment, policy, or custom because it attempts to change the behavior of an individual, group, or entity in the international community. Such a change is observable outside of the IO. Therefore, in this case the IO lacks any ability to conceal its actions.

          Discretion, staffing, and voting rules

When the WHO directly warned travelers away from states with SARS in 2003, it violated a contract with SARS-infected states.[viii] In this case, voting rules for over 100 member-states and an epistemic staff of doctors empowered the WHO to deviate from SARS-infected member states’ preferences. Cortell and Peterson contend that this is evidence of effective slack by the WHO.

Two contentions, whether evidence of enforcement exists and whether funding member-states of the collective principal objected to the warning, undermine the authors’ argument for effective slack occurring. First, without evidence of enforcement, the WHO’s action is moral slack, but not effective slack. A “warning” issued by the WHO is similar to a report of criticism but is not necessarily enforcement of a judgment, policy, or criticism. Second, the funding member-states within the collective principal, such as the U.S., allowed the WHO to issue the warning. The member-states that had their WHO contracts violated were not significant contributors to WHO funding. This supports the notion that effective slack is impossible because the WHO never deviated from the funding member-states’ preferences.

Implications

          Collective principal: poorer states subject to richer states’ preferences

Qualitative evidence exists that poorer member-states could be subject to the preferences of richer member-states even when they have an equal vote in the same collective principal. In the WHO example, the WHO deviated from the preferences of SARS-infected states and published warnings to travelers. The SARS-infected states were also the member-states of the WHO’s collective principal that contributed the least amount of funding to the WHO. At the same time, the WHO never received threats to revoke funding by richer member-states that could credibly do so. This leads to the implication that poorer states could be subject to the preferences of richer states, even when both have equal voting rights within, and are members of, the same IO.

          Replacing INGOs? The trend of transnational corporations

The rise of activist investors and transnational corporations (TNC) threaten the current INGO regime by playing an increased role in many issue areas that INGOs cover, including human rights, animal rights, and environmental protection. Given the importance of funding to enforce judgment, policy, or custom, a 21st century trend sees TNCs funding their own purposes regarding such issue areas, effectively cutting out the INGO. Recent examples include the safari game bans and religious liberty embargo threats by American Airlines. This trend calls into question the survivability of the current international nongovernment organization (INGO) regime, which has historically relied upon its corporate sponsors to fund its purposes. Now, what is keeping Starbucks from continuing fair trade without Conservation International?

To qualify, this implication refers specifically to INGOs. Intergovernmental organizations (IGO) such as the UN play an important governing role in the international community and are therefore unlikely to be replaced by activist investors or TNCs. Still, the INGO regime appears to be threatened by this trend.

Conclusion

Many authors that employ the principal-agent model in international organization endow IOs with varying degrees of slack. This seems to impute IOs with an arbitrary and at times capricious level of autonomy. They also often fail to fully define slack and clarify where it can and cannot exist within IOs.

Effective slack, which deviates from an IO’s enforcement-laden purpose, is impossible given the funding requirement. However, moral slack, which can be thought of as soft power, is an IO’s action of drawing positive or negative attention to an issue or raising criticism or support for an existing regime. Moral slack can and does exist without funding.

Despite this argument’s simplicity and obviousness, it is surprisingly understated in the field of international organization. This issue brief uses the principal-agent model and its rationalist approach to international relations. The findings present a case for a return to realism within international relations as international organizations alone lack the capacity to fund enforcement of their own policy. Therefore, national interest and realism would remain the most valuable and accurate lens to study international relations.

[i] The World Health Organization. Cortell and Peterson (2006) pp. 267-8. Then Director-General Hiroshi Nakajima “negotiated a compromise” when the U.S. promised to withhold its contribution, one-quarter of the WHO’s annual budget, if the PLO’s membership application was approved by the WHO.

[ii] Hawkins, Lake, Nielson, and Tierney (2006) pp. 3-4. Within international organization, states are the principal, and IOs are their agents. IOs deviate at times from their principal’s preferences and “appear to be institutional Frankensteins.” This deviation is called slack. This article views states, in addition to for-profit entities, as principals.

[iii] Hawkins and Jacoby (2006) pp. 205-206. Principals have incentives and control mechanisms when delegating to IOs, according to Hawkins et al (2006), Pollack (2003), and Moravcsik (2000). To counter, agents employ strategies to gain greater autonomy and engage in slack. These agent strategies include mission interpretation, third-party permeability, and principal monitor buffering.

[iv] Simmons and Danner (2010) pp. 225-226. By 2002, the Rome Statute had led to the formation of the ICC, despite varying levels of opposition by Russia, China, India, the U.S., and France.

[v] Schaefer (2005) Both the Clinton and the Bush Administrations concluded that the ICC is a seriously flawed institution that the U.S. should not join. Regrettably, the Rome Statute establishing the ICC broke with long-standing international legal prece­dent by asserting ICC jurisdiction over nationals and military personnel from states that are not party to the treaty. This forced the U.S. to take unusual steps to protect its people from the ICC.

[vi] Hawkins and Jacoby (2006) pp. 212-215

[vii] Cortell and Peterson (2006) determine characteristics of IOs that make slack more likely. Chief among them are voting rules, staffing, and discretion.

[viii] Cortell and Peterson (2006) pp. 268-271. Authors state that discretion alone cannot lead to slack by an IO. However, discretion, expanded voting rules in a collective principal, and an epistemic staff comprise the characteristics of an IO that may engage in slack.

Image: Wikimedia Commons/ICC

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