1. No category

The Political Economy of the
UN Security Council
Presentation by
James Raymond Vreeland
Georgetown University
Co-authors: Axel Dreher & Jan-Egbert Sturm (ETH)
UNSC
IMF/WB project in Ghana
IMF
World Bank
The question:
To gain leverage over one
international institution can a
country use its power in another
international institution?
Yes.
Why?
The US and other powerful countries,
who virtually control the IMF & World
Bank, care about how the UNSC votes.
Plan
What is the UNSC?
What is the IMF/World Bank?
Why are they used to influence the UNSC & how?
Evidence
– Anecdotes
– Large-n
The book project
What is the UNSC?
5 permanent members with veto power
10 elected members (2 year term - limited)
– Nominated by regional caucus, elected by GA
– Africa (3), Asia (2), Latin America (2), Eastern Europe (1),
Western Europe+ (2)
Decisions (open ballot) require 9 votes (5+4)
UNSC votes on
– UN military action against aggressors
– Economic sanctions & arms embargoes
Elected members of the UNSC potentially will vote
on matters of extreme international importance.
Accountability, the UNSC,
& the Paradox of Stability
Accountability
Probability of reelection
Criteria
are too
high!
Criteria
are too
low!
Importance of
UNSC temporary members to the US
Kuziemko & Werker 2006:
– average US aid increases 54%
– average UNDP aid increases 7%
Particularly through UNICEF where the US
provides their largest-share contributions
Why bribe/reward votes?
Voting power?
– Unlikely- O’Neill (1996) shows total voting power of non-permanent
members is <2%.
Supermajority?
– Vote-buying literature shows that over-sized coalitions tend to be
established.
– Pursuing unilateral action is more expensive than buying insurance
votes.
Legitimacy
– There is a premium for getting (near) unanimous votes to win domestic
public support (Voeten).
– Chapman & Reiter (2004) find UNSC support significantly increases the
rally behind the president by as many as 9 points in presidential
approval & the effect is unique among international institutions other
actions by the UN or regional security organizations do not significantly
affect rallies.
Regional influence
– Informational role of committees
– Legitimacy in the region may come from access
Enter
the IMF & the World Bank
Key point about the IMF & World Bank
Involved with developing countries through
“programs”: loans+conditions.
Influence over decisions pegged to economic
size.
Growing evidence that the major
shareholders use their influence for political
reasons (e.g. Stone, Reynaud, Momani,
Kilby).
Especially when they agree (Copelovitch).
IFI arrangements are a
joint decision
Recipient governments negotiate with the IFIs –
business as usual – but when on the UNSC can
negotiate for better terms.
Why use IFIs to influence the UNSC?
– Political benefits (for both actors)
“DIRTY WORK” (Vaubel)
– Leverage benefits (conditionality & loan
disbursements)
– Cost benefits
Mechanism
The goal of the major shareholders of the IMF:
– Get countries under a program – in case
important votes come up.
Godfather-esque: “Some day, and that day
may never come, I'll call upon you to do a
service for me. But uh, until that day, accept
this justice as a gift on my daughter’s wedding
day.”
http://www.youtube.com/watch?v=BIMx_giMeNA
Evidence
Some anecdotes***
Systematic evidence
Gulf War Examples
Zimbabwe – UNSC member 1991-92
– 1992 – 1st IMF arrangement in a decade
– Votes for 2 resolutions against Iraq
– Then abstains…
– And Zimbabwe was threatened with new IMF
conditions
– Subsequently votes for 11 resolutions
condemning Iraq.
Gulf War Examples
Ecuador – UNSC member 1991-92
– 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…
Counter examples?
Gulf War Examples
Cuba – UNSC member 1990-1
– Consistently opposed Iraq resolutions
– IMF arrangement?
– Left the IMF in 1964 – not an IMF member
– (Why? Claimed the IMF was a tool of the US)
Cuba before & after 1961
IMF participation
0.60
0.50
0.40
0.30
0.20
0.10
0.00
Non-member
Member
Non-member
Member
n=11
n=4
n=29
n=1
Cuba pre-1961
Cuba post-1961
Gulf War Examples
Yemen – UNSC member 1990-1
– Voted against Desert Storm – a U.S.
representative was overheard declaring to the
Yemeni ambassador that it was
“the most expensive vote you have ever cast.”
– The US cut hundreds of millions of dollars in aid
– (No IMF arrangement)
A more historical example?
Tanzania: 1961-1974 no IMF, no UNSC
– 1975
UNSC member
First IMF arrangement – exceedingly weak
conditionality (credit ceiling)
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 showing that the anecdotes
are not just coincidence (luck, idiosyncratic)
What do we observe systematically?
191 countries*
(“World” minus the 5 permanent UNSC members)
Years: 1951 or Independence –through– 2004
A total of 7,606 country-year observations
Dependent variable:
– IMF participation (SBA, EFF, SAF, ESAF/PRGF)
– 26.7%
Principal independent variable:
– UNSC member
– 6.3%
% of obs. participating in IMF programs
Figure 1: Participation in IMF programs
by rotating membership on the UN Security Council
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
Non-members
Members
mean=0.26
mean=0.33
std dev.=0.44
std dev.=0.47
(n=7129)
(n=477)
UN Security Council Membership Status
0.60
0.50
0.40
0.30
0.20
0.10
n=1669 n=95 n=1119 n=47 n=1254 n=100 n=591
Africa
Asia & S.
Pacific
LA & Carib.
n=36 n=814
E. Europe
Member
Nonmember
Member
Nonmember
Member
Nonmember
Member
Nonmember
Member
Nonmember
Member
0.00
Nonmember
% of obs. participating in IMF programs
Figure 3: Participation in IMF programs
by UN Security Council Membership and Region
n=51 n=998 n=108
Middle East & Industrialized
N. Africa
Countries
UN Security Council Membership Status and Region
A potential endogeneity problem?
If selection onto the UNSC is non-random,
some outside factor could cause both UNSC
membership & participation in IMF/World Bank programs
Election to the UNSC is idiosyncratic with respect to
most determinants of IMF participation
– The most robust predictor: Past experience (negative
effect)
– Also: Country size – population, GDP (positive effect)
– Contributions to the UN also matter (positive effect)
– Largely a normative story!
Estimated effect
Systematic evidence
1. Five statistical models:
1.
2.
3.
4.
5.
6.
Pooled Logit
Fixed country effects
Fixed regional effects
Fixed country & year effects
Fixed regional & year effects
Conditional Logit with regional dummies and
temporal splines
7. Simultaneously cluster the covariance matrix by
country and by year
Control variables:
–
–
Selection of variables follows Sturm, Berger, de Haan
(2005)
Additional variables following previous literature
Table 1: The effect of UNSC on IMF participation
Pooled
Logit
Pooled
Logit with
Regional
Effects
Year
Fixed
Effects
Country
Fixed
Effects
Conditional
Logit with
Temporal
Splines
UNSC
0.34**
0.50**
0.57**
0.24**
0.30**
Robust
SE
(0.10)
(0.11)
(0.10)
(0.12)
(0.15)
Africa
0.19**
0.18
Robust SE
(0.09)
0.13
Asia
-0.59**
-0.55**
Robust SE
(0.10)
0.15
M.E./N.Af
-1.17**
-1.10**
Robust SE
(0.12)
0.16
LA
0.35**
0.47**
Robust SE
(0.09)
0.19
Industrial
-2.67**
-2.59**
Robust SE
(0.18)
0.29
7,532
5,694
5,694
53
137
137
Constant
-1.03**
-0.74**
Robust SE
(0.03)
(0.08)
# of obs.
7,606
7,606
# of groups
With 95% confidence, we can say
UNSC membership increases
rates of IMF participation
between 7% and 52%.
Table 3: Controlling for Additional Predictors of IMF Participation
Pooled Logit
Country Fixed
Effects
Regional Fixed
Effects
Year Fixed
Effects
Temporal
Splines
UNSC
0.59**
0.83**
0.56**
0.51**
0.64**
(Robust std error)
(0.24)
(0.29)
(0.26)
(0.22)
(0.29)
Foreign Reserves
-0.15**
-0.005
-0.13**
-0.13**
-0.04
(Robust std error)
(0.03)
(0.07)
(0.03)
(0.03)
(0.08)
Debt Service
0.02**
0.02
0.03**
0.03**
0.02**
(Robust std error)
(0.01)
(0.01)
(0.01)
(0.01)
(0.01)
Investment
-0.06**
-0.08*
-0.05**
-0.04**
-0.05
(Robust std error)
(0.01)
(0.05)
(0.01)
(0.01)
(0.04)
Past Participation
2.47**
2.42**
2.45**
2.27**
2.00*
(Robust std error)
(0.26)
(0.45)
(0.27)
(0.34)
(1.13)
Lagged Election
-0.02
-0.06
-0.07
-0.11
-0.11
(Robust std error)
(0.16)
(0.18)
(0.16)
(0.17)
(0.21)
Budget Surplus
0.01
0.06**
0.01
-0.003
0.06**
(Robust std error)
(0.02)
(0.03)
(0.02)
(0.02)
(0.03)
Inflation
-0.0002**
-0.0003
-0.0002*
-0.0003**
-0.0001
(Robust std error)
(0.0001)
(0.0002)
(0.0001)
(0.0001)
(0.0002)
Current Account
-0.01
-0.001
0.01
0.01
-0.002
(Robust std error)
(0.01)
(0.02)
(0.01)
(0.01)
(0.02)
BOP
-3.89*
0.19
-2.89
-2.09
0.05
(Robust std error)
(2.07)
(3.17)
(2.09)
(2.07)
(3.22)
GDP/capita (1995 PPP)
-0.00003
-0.001**
-0.0001*
-0.0001**
-0.001**
(Robust std error)
(0.00003)
(0.0002)
(0.00004)
(0.00004)
(0.0002)
Growth
-0.001
-0.003
-0.003
-0.002
-0.004
(Robust std error)
(0.005)
(0.02)
(0.004)
(0.004)
(0.02)
Regime
0.04
0.32
0.18
0.18
0.26
(Robust std error)
(0.19)
(0.39)
(0.20)
(0.18)
(0.41)
log(checks)
0.08
0.13
0.16
0.07
0.06
See page 19 of
Dreher, Axel, Jan-Egbert Sturm, and James Raymond
Vreeland, 2006, Does membership on the UN Security
Council influence IMF decisions? Evidence from panel
data, KOF Working Paper 151, ETH Zurich.
Further checks:
Trends over time 
Pre/Post Cold War
Extreme Bounds Analysis
Number of policy conditions
Public wages & salaries
– (with Irfan Nooruddin – Ohio State)
(Loan size)
Figure 1: Participation in IMF programs by non-permanent UN Security Council Membership
over time
% of obs. participating in IMF programs
50%
40%
30%
20%
10%
0%
Nonmembers
Members
Other years
4 years
before
3 years
before
2 years
before
1 year before
1st year
member
2nd year
member
mean=0.28
mean=0.34
mean=0.28
mean=0.28
mean=0.31
mean=0.33
mean=0.32
mean=0.35
mean=0.34
1 year after 2 years after
mean=0.30
mean=0.28
st.dev.=0.45 st.dev.=0.48 st.dev.=0.45 st.dev.=0.45 st.dev.=0.46 st.dev.=0.47 st.dev.=0.47 st.dev.=0.48 st.dev.=0.48 st.dev.=0.46 st.dev.=0.45
(n=6684)
(n=462)
(n=5405)
(n=178)
(n=196)
(n=215)
(n=236)
(n=236)
(n=225)
(n=234)
(n=221)
UN Security Council Membership Status
The horizontal line shows the average IMF participation rate across our entire sample. The dots reflect the results where only low and lower-middle income countries are included.
World Bank evidence
Average # of World Bank projects
2.5
2.0
1.5
1.0
0.5
0.0
avg=1.29
avg=2.13
avg=1.29
avg=2.06
avg=2.19
avg=1.28
avg=2.15
avg=1.30
avg=2.10
std=1.95
std=2.93
std=1.95
std=2.75
std=3.11
std=1.96
std=2.96
std=1.93
std=2.92
n=5333
n=357
n=5333
n=176
n=181
n=2638
n=183
n=2695
n=174
Nonmember
Member
Nonmember
1st.year
member
2nd year
member
Nonmember
Member
Nonmember
Member
Total sample
Over time
During the cold war
After the cold war
Regional differences?
8
7
6
5
4
3
2
1
0
n=263
n=23
n=602
n=14 n=1010
n=75
n=411
n=30 n=1503
n=93
n=490
n=22 n=1054 n=100
Non- Member Non- Member Non- Member Non- Member Non- Member Non- Member Non- Member
member
member
member
member
member
member
member
South Asia
East Asia
Latin America
Caribbean
Middle East
/North Africa.
Sub-Saharan
Africa
Eastern Europe Western Europe
Summary
International institutions do represent their most powerful
members & to see the extent of control one must look across
institutions.
UNSC members are about 20% more likely to receive IMF
programs than non-members.
Fewer conditions.
Loan size appears unaffected.
We find similar results with respect to the World Bank.
– Non-members receive about 1.5 new Bank projects per year,
UNSC members get almost 3.
– Using a battery of different statistical models and control
variables, we find UNSC membership robustly increases the
number of new Bank projects by about 10%.
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)
A Solution
Insulate the IMF Executive Board from politics
Like independent central banks
The IMF directors should be appointed for long
terms
Represent the long-run interests of their home
countries.
Recall Keynes: Appoint Cautious
(Independent) Central Bankers
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]
Snapshot of the book project:
The Political Economy of the UN Security Council
Chapter 1: Who gets elected?
Chapter 2: Is there favoritism?
– IMF
– World Bank
– International trade
– Foreign aid
Chapter 3: Buying votes
– Do loan disbursements follow voting patterns?
– What happens when great powers disagree?
Chapter 4: The effectiveness of UNSC action
– Cases
– Generating counterfactuals: UNGA voting patterns
Chapter 5: The effectiveness of aid to UNSC members
– Does aid foster growth or prop up rent-seeking governments
Chapter 6: Reforming international institutions?
Thank you
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