Strategies to shape the international order: exit, voice and innovation versus expulsion, maintenance and absorption

ABSTRACT

This article describes the strategies of emerging and dominant countries as they struggle over the shape of the international order. The article extends Hirschman’s tripod of exit, voice and loyalty as responses to organisational decline, using Ostrom’s work on social dilemmas. A country’s reaction to the declining legitimacy of the post-1945 international order depends largely on whether it is a traditional OECD donor country or a developing or emerging country from the South. Developing and emerging countries are engaging in selective and partial exit, voice and innovation to change things, while dominant powers are using maintenance, absorption and expulsion to maintain their status.

RÉSUMÉ

Cet article décrit les stratégies des pays émergents et dominants dans leur lutte pour définir l’ordre international. L’article renouvèle le triptyque de Hirschman – la défection, la prise de parole et le loyalisme – comme réactions potentielles à un déclin organisationnel, en utilisant le travail d’Ostrom sur les dilemmes sociaux. La réaction d’un pays au déclin de la légitimité de l’ordre international postérieur à 1945 dépend en grande partie du fait d’être un des pays donateurs traditionnels de l’OCDE ou un pays en développement ou émergent du Sud. Les pays émergents et en développement s’engagent de manière sélective et partielle dans la défection, la prise de parole et l’innovation afin de changer les choses, tandis que les puissances utilisent la maintenance, l’absorption et l’expulsion pour maintenir leur statut.

KEYWORDS:

• Emerging countries
• international order
• social dilemmas
• organisational decline
• institutional change

Introduction

The legitimacy of the post-1945 international order is in decline in the developing and emerging middle-income countries. The reason is simple: both the organisational structure and the written and unwritten rules, or institutions,¹ of that order increasingly fail to reflect the political and economic realities of the twenty-first century. Some parts of the international order, such as the permanent veto-wielding membership of the United Nations (UN) Security Council and the North Atlantic world’s grip on the leadership of the World Bank and the International Monetary Fund (IMF), are unchanged since the 1940s. The developing and emerging countries continue to be subject to norms and standards that they had little or no role in fashioning. For it was the North Atlantic powers plus Japan who created elite clubs like the G7, the Organisation for Economic Co-operation and Development (OECD) and the Bank for International Settlements, which set norms and “best practices” in everything from fishing policy and capital reserve ratios to aid effectiveness and good governance; these organisations still set global policy agendas today. Looking at the world with fresh eyes in the twenty-first century, one is entitled to ask why, for example, Britain or France should be veto-wielding permanent members of the United Nations Security Council (UNSC), but not India, which has more people, a bigger army and a similar number of nuclear weapons. Why have the growing economic hefts of China, India and others not been fully reflected in the voting rights in the international financial institutions (IFIs)? Such questions are being asked with increasing frequency and frustration in the developing and emerging countries.

The marginal changes made to the international order to date have not been commensurate with the underlying shifts in global power relations. The spectacular rise of China and India over the last quarter-century is only part of the story. As Rahman and Baranyi (2018) point out, middle-income countries now outnumber low-income countries by three to one, the inverse of the situation in 1970. These emerging countries today have levels of income, access to local and international capital markets and scientific and technical expertise that were inconceivable only a few decades ago. Many of them claim, and have, status as regional or even global powers. The emerging countries want their increased economic and technical capacity reflected in an international order that better responds to their needs and aspirations and that reflects their newly gained status.

This article is part of a special section of this journal on middle-income countries and international cooperation. The special section goes beyond the trite “rise of the BRICS”² literature to explore the implications of this inversion in the ratio of low- to middle-income countries over the last 40 years for how we think about development and international cooperation. This article extends Rahman and Baranyi’s reflections on international cooperation in this new era to look at how the developing and emerging countries are resisting the current international order and trying to build something new. This article asks what strategies are being used by the emerging and dominant countries as they both try to shape the international order to reflect their respective interests. Rather than going over the usual literature on international relations, this article seeks to make a new contribution to the debates by using theoretical frameworks in socio-economics to update the analytical concepts that we use to understand the emerging countries’ strategies. In so doing, I am suggesting that the decline in the legitimacy of the international order as seen by the South can usefully be viewed as an example of organisational decline. Using this image (Morgan 2006), I start with Albert Hirschman’s (1970) tripod of exit, voice and loyalty as responses to organisational decline. I then modify and extend Hirschman’s tripod, using Elinor Ostrom’s (2009b) more recent work on the evolution of cooperation around “public goods and common-pool resource dilemmas”, also called “social dilemmas” (Ostrom 2009a), as the construction and restructuring of the international order can be seen as such a dilemma.

In this article, I deal with those “public goods and common-pool resource dilemmas” (Ostrom 2009b, 432) that have historically been, and continue to be, of great concern to the developing and emerging nations: international trade, development finance, international financial instability, economic policy advice and international peace and security. This agenda overlaps considerably with the literature on global public goods (Kaul, Grunberg, and Stern 1999), though my concern here is more on countries’ strategies than on the substance of each global public good. I have omitted other public goods and common pool resource dilemmas, such as overfishing, climate change and regulation of the Internet, largely because of limitations of space. The growing strength of the emerging countries in terms of their income per capita, their access to capital markets and their increased scientific and technical expertise will play out differently in different spheres of cooperation and competition. Technical expertise is of great use in international trade negotiations, for example, especially if backed up by a substantial and growing GDP per capita. The drivers of international security cooperation will be different, however. In all fields, though, the emerging countries’ access to capital markets means that they have a hitherto unprecedented scope of action vis-à-vis the traditional donor countries.

An analytical framework

Hirschman (1970) asked how individuals respond “to declines in firms, organizations and states”, interpreted as situations in which customers, employees and citizens feel increasingly dissatisfied with the products, services or policies offered to them. Hirschman answered that people have two options: exit and voice. You can leave (take your business elsewhere, resign, emigrate), or you can engage in political activism (persuasion, debate, lobbying, protest) to change things. When people feel loyalty to the organisation (or their country or political party), the dynamics change somewhat, but the two basic options remain (Hirschman 1970).

Ostrom knew Hirschman’s work, and she put two different twists on it. First, she extended it to look not only at situations of organisational decline, but at the broader set of how “microsituations affect the level of cooperation that participants achieve in social dilemma settings (including both public goods and common-pool resource dilemmas)” (Ostrom 2009b, 432). Second, Ostrom studied how interactions between multiple actors can result in “designing new tools – including institutions – that can change the structure of the worlds they face for good or evil purposes” (Ostrom 2009a, 195). Actors in social dilemmas (and the international order is such a situation) observe each other’s behaviour and can adapt to each other’s behaviour (Levy 1994; Rosenau 1970) in successive rounds of interactions. In this process of mutual adaptation, nations, like “individuals[,] can use reciprocity and reputations to build trust in dilemma situations, [and so] then one can begin to explain both successful and unsuccessful efforts to overcome social dilemmas through collective action” (Ostrom 2009a, 187; italics in original).

Both Hirschman and Ostrom are relevant to analysing both the emerging and dominant countries’ strategies for changing or upholding the current international order. The problems faced in governing the international order are, in many ways, analogous to the problems faced in governing common pool resources: some issues are of concern to multiple actors, but there is no central authority to regulate things; furthermore, the situation is characterised by communication between actors and the complexity of the issues and context.

To this description, we need to add that a small number of dominant countries have, since 1945, effectively monopolised the authority to define the institutions governing those common pool resources and have had an effective monopoly on the creation and management of the organisations that direct various aspects of the international system. These monopolies, however, are contestable (Baumol, Bailey, and Willig 1977); the excessive extraction of monopoly rents will induce competitors to enter the market, provided they can overcome barriers to entry. As the dominant powers in the OECD insist on preserving their 70-year-old monopoly position in institution- and organisation-making on the international scene, they create an incentive for emerging countries to build alternative institutions and organisations, as the emerging countries now have high levels of capital and barriers to entry are no longer a problem.

According to Ostrom (2009b, 432–433), one’s level of participation in the creation of institutional order depends on six factors: (1) communication between participants, (2) the known reputations of participants, (3) high marginal per capita return to participation, (4) entry or exit capabilities, (5) a sufficiently long time horizon to encourage cooperation, and (6) agreed-upon sanctioning capabilities.³ In short, cooperation is likely to emerge and lead to the creation of institutions in which people can communicate with each other, reputations are known, people feel their participation can make a difference, leaving the game is a low-cost option that allows an actor not be played for a sucker and that thereby encourages reciprocity, people know that the problem and the institutional arrangements to deal with it are likely to last a long time, and cheaters can be sanctioned.

In the international order, however, only items (1), (2), (5) and (6) apply. Item (4), exit from the international order, is not a realistic possibility in a globalised world. As for item (3), the high marginal per capita return to participation, the emerging countries increasingly feel that they are not receiving a high return on their participation in existing institutions and organisations. Recent examples include the developing countries’ frustrations at the failure of the 2005 UN reform, the US and Western European refusal to admit outside candidates in the 2012 and 2011 nominations of new chief executives for the World Bank and IMF,⁴ the OECD countries’ rejection of the G77 proposal to create a world tax organisation at the 2015 Financing for Development Conference and (until recently) the US and Canadian refusals to deal seriously with climate change.

From an Ostromian viewpoint, then, efforts to create an efficient and equitable international order are likely to be deficient. The lack of an option for full exit means that some countries can be played for suckers and taken for granted by more powerful players. And the refusal of the dominant Western powers to concede on the key issues mentioned above means that the emerging countries are now looking for new options. In Hirschman’s terms, they have tried voice (to no great effect) and they have no meaningful option of full exit. They are also frustrated with the status quo as they face OECD countries which defend that status quo or which, at best, will allow it to change only in ways that do not threaten their hegemony.

Inspired by Ostrom’s (2009b) emphasis on creativity and institution building through collective action, this paper suggests that exit and voice, modified by loyalty, are not the only possible strategies that can be deployed by dissatisfied players. A third option, which can be combined with exit and/or voice, is innovation. Innovation is the attempt to fashion new organisational and institutional arrangements to complement or compete with the dominant organisation that is felt to be in decline. These new organisational and institutional arrangements often exclude the current dominant powers. Such innovation can usually be practised while still remaining inside the organisational and institutional arrangements of the status quo.

The dissatisfied emerging countries are only half of the story, however; we must also study the strategies of the dominant countries. Motivated by loyalty to the established but declining organisational and institutional order, the dominant countries’ strategies will be expulsion, maintenance and absorption. To a great extent, expulsion, maintenance and absorption mirror the emerging countries’ strategies of exit, voice and innovation. In the case of expulsion, the dominant countries may expel or ostracise those dissident countries that go too far in their use of voice (or in their actions). The dominant countries also reinforce the status quo by various substantive and symbolic acts that uphold the authority and legitimacy of those organisations and institutions which the dominant countries favour; I call this strategy “maintenance”. The dominant countries may also try to co-opt friendly, “responsible” emerging countries as new members of their elite clubs; I call this strategy “absorption”.

In the next section, I consider the developing and emerging countries’ strategies; in the subsequent section, I look at the dominant countries’ strategies.

Developing and emerging countries’ strategies

The developing and emerging countries’ strategies include exit, voice and innovation. Each may be used alone or in combination with the others.

Exit

Full exit from the international order is not an option for developing and emerging countries. In the 1970s, dependency theorists suggested that the South “delink” from the global capitalist system and engage in “collective self-reliance” (see Patel 1975; Senghaas 1977). These visions proved utopian. Whatever the merits and demerits of globalisation may be, no country today wants to or can isolate itself in the way pre-1960 Bhutan and communist Albania did or DPR Korea does today. More realistic forms of delinking based on global alliance have been proposed (Amin 2013) but have not materialised.

Some forms of exit are practicable, however, albeit on a smaller scale. Partial exit may take the form of withdrawal from an international organisation, for example Zimbabwe’s 2003 withdrawal from the Commonwealth. Partial exits from such second-tier organisations have little impact beyond the political symbolism of the act; despite being billions of dollars in arrears to them, Zimbabwe retained its membership in first-tier organisations like the IMF and the World Bank.

Threats of non-cooperation on issues of importance to dominant countries can have bigger effects. Such selective exits often involve a country with a locational advantage. Post 9/11, for example, Pakistan and several Central Asian countries leveraged their location next to Afghanistan to extract concessions from the United States in its war on terror (Cooley 2012). A country can extract rents from international partners by threatening to say “no” to a proposed infrastructure project that crosses its territory; coastal states routinely use this tactic when negotiating pipeline routes with their oil-rich land-locked neighbours. The impact of these selective exits by non-cooperation, however, is likely to be local in scope.

More important forms of selective exit include refusals to go along with the policies that are important to dominant powers. The increasing reticence of Latin American governments, especially Uruguay, to go along with the US war on drugs is such an example. Even more important are likely to be cases such as the exit of Bolivia, Ecuador and Venezuela from the World Bank’s International Centre for Settlement of Investment Disputes, or Indonesia’s and South Africa’s exit from a number of free trade agreements in order to preserve “policy space” for the government (Negara 2016). Such selective exits have practical consequences and may inspire others to follow. The threat of such selective exits also serves as a bargaining chip in negotiations on other issues; recall Ostrom’s (2009b) point that the exit option is needed to prevent a party from being played for a sucker.

Voice

The developing and emerging countries have long used voice to advance their individual and collective agendas. Ever since the former European colonies started gaining independence in the 1940s, they joined international organisations that operated either by majority voting (the UN) or by consensus (the Commonwealth, la Francophonie). By the early 1960s, the developing countries had a majority in the UN General Assembly (UNGA). In 1964, 77 developing countries signed a joint declaration and the G77 was born. Today, 134 countries belong to the G77, which coordinates common positions on a variety of issues, such as financing for development, international trade and global governance issues.

It is no surprise that the developing and emerging countries put so much stock in the legitimacy of the UNGA, as the one-nation, one-vote system allowed them to use voice to dominate in that forum. The developing and emerging countries have, over the years, frequently passed UNGA resolutions over the objections or in the face of reticence of the Western powers. The G77’'s stance against apartheid South Africa, for example, became the dominant world view largely due to the UNGA’s one-nation, one-vote principle. This principle was also crucial in the 1964 decision to establish the UN Conference on Trade and Development (UNCTAD); at the time, the G77 felt that the Western-controlled General Agreement on Tariffs and Trade (GATT) did not fit their development agenda.

Occasionally, the developing and emerging countries have even embarrassed the Western powers into adopting resolutions that the latter found distasteful, such as the New International Economic Order (NIEO),⁵ the Right to Development Declaration (UN 1986) and the Vienna Declaration on human rights (UN 1993).⁶ The NIEO was a huge rhetorical coup for the G77, but it was never implemented, as the Western countries inflicted death by a thousand cuts on the NIEO agenda (see below).

Similarly, the G77 countries played a key role in the UNGA’s 1970 resolution committing the donor countries to giving 0.7 per cent of their gross national income as foreign aid; this promise has been repeated in dozens of international declarations but, at the insistence of donor countries, never with a firm deadline. Over the past 45 years, only six donor countries have ever met that target and most G7 countries (Canada, France, Germany, Italy, Japan, United States) have never even tried. The hypocrisy of the donors, who keep committing to a goal that they have no intention of reaching, fuels cynicism and frustration in the G77, especially those that are aid-dependent.

At the UN’s 60th anniversary summit in 2005, India and Brazil pushed for reform of the UN Security Council, notably the provision whereby five nations (China, France, Russia, UK, United States) have both permanent membership and veto power. These discussions went nowhere, in the face of resistance from the five permanent members, among other factors.⁷ At around the same time, the Doha Round of international trade talks collapsed. The failure of the NIEO, the donors’ continuing refusal to meet the 0.7 per cent aid target and the collapse of both the 2005 UN reform and the Doha Round all forced the developing and emerging countries to realise the limits of voice as a strategy for changing the international order.

Innovation

For many decades, the developing and emerging countries have not only used voice, but they have tried to change the international order by fashioning new organisations and institutions. I call this process innovation. The earliest example was perhaps the Organisation of Petroleum Exporting States (OPEC), set up in 1960; however, OPEC was never a pan-Southern organisation and it had little impact on the oil market until 1973. The creation of the Non-Aligned Movement (NAM) in 1961 and the G77 (the membership of which greatly overlapped with NAM) in 1964 were the first pan-Southern attempts at innovation. Neither, however, was a formal organisation in the sense of having a written constitution or a permanent secretariat, and so both NAM and the G77 remained forums for voice without being real organisational innovations. The first pan-Southern organisational innovation was the creation of UNCTAD in 1964. As will be explained below under the dominant strategy of maintenance, however, UNCTAD never realised its founders’ vision as a platform for renegotiating the fundamentals of the global economy.

In parallel, the developing countries also established regional or other organisations, such as the Arab League, the African Union,⁸ the East African Community (1967–1977 version), the Organisation of the Islamic Conference and the South Asian Association for Regional Cooperation. What these organisations all share is a high degree of toothlessness. Established to promote lofty ideals like decolonisation, regional integration and peaceful coexistence, they have generally been starved of funds by their own members.⁹ They have also often had sclerotic and highly politicised secretariats and have sometimes fallen prey to infighting among members. The 1960s also saw the South create small regional development banks such as the Corporación Andina de Fomento (CAF), the Caribbean Development Bank and the East African Development Bank. These development banks were similarly starved of funds by their own members for most of their history; only the CAF has become a significant regional player, and then only recently.¹⁰

In contrast, those organisations of developing and emerging countries that have worked well are generally smaller regional groupings built around functional (often economic) issues; for example, the Association of Southeast Asian Nations (ASEAN), the Southern African Development Community, the East African Community (post-2000 edition) and the South American sub-regional trade bloc Mercosur. Such organisations have succeeded in building South–South trade links, regional infrastructure projects, and South–South technical cooperation.¹¹ The Front Line States was a successful example of a Southern-led initiative with a political objective: namely the end of white minority rule in Southern Africa. Important and successful though many of these organisations were (and are), they remain regional in scope.

In recent years, the emerging nations have channelled their efforts into three areas of innovation. The first was pushing for the G20 as a direct rival to the G7/G8. The second has been putting part of their increased wealth and technical capacity to use in large-scale, even global, innovations in development finance, infrastructure and security cooperation. The third is to cultivate practices and create organisations that seek to avoid the need for developing countries to ever have to rely on the IMF.

The idea of the G20 was originally a Canadian government initiative to promote international economic cooperation in the wake of the 1997 East Asian financial crisis. Then Canadian Finance Minister (and later Prime Minister) Paul Martin saw that international financial instability was a social dilemma that required an institutional innovation; that is, a G20 finance ministers’ meeting. From the Canadian point of view, the G20 attempted to absorb the leading emerging countries into the donor countries’ orbit (Valpy 2010) (see section on absorption, below). Martin then wanted a G20 heads of government meeting, but that proposal was resisted by the Bush administration and by Martin’s own Conservative successor as Prime Minister, Stephen Harper, who both feared the G20 would dilute the G8’'s influence. However, the spectacle of the leaders of Brazil, China, India, Nigeria and South Africa sitting in the anteroom of the Gleneagles G8 summit in 2005, while the “real” (that is, G8) leaders met inside, was too colonial to pass muster in the twenty-first century. When the 2008 financial crisis pushed the world to the brink, there was no choice but for the G8 to concede and let the emerging countries inside the room. The G20 leaders’ summit was born. The emerging countries in the G20 had a different agenda than the absorption planned by the G8, however; their thinly veiled agenda was to substitute the more inclusive G20 for the dominant powers’ G8. In this, they were only partially successful.

The emerging powers did not stop at the G20, however. They are now creating new multilateral financing vehicles, notably the Banco del Sur (Bank of the South), the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (formerly known as the BRICS Bank). These new multilateral development banks aim to attain a combined capitalisation (and, hence, lending capacity) similar to that of the World Bank. The initial capitalisation of the New Development Bank, for example, is USD50 billion (Desai and Vreeland 2014) and that of the Banco del Sur has an initial capitalisation of USD7 billion and a maximum of USD20 billion (Andes 2013), while the AIIB will have an authorised capital of USD100 billion and initial capitalisation of USD50 billion (Runde et al. 2015). The World Bank’s subscribed capital in mid-2015 was USD253 billion (IBRD 2015). The emerging countries are also putting more money into older regional organisations that they consider fit for their purposes. CAF, for example, has almost tripled its annual lending between 2005 (USD4.7 billion) and 2015 (USD12.3 billion) (CAF 2009, 2015).

Being owned and driven by the leading emerging countries, these new development banks claim that they will have different priorities and different approaches to policy conditionality from the existing, Western-dominated multilateral development banks. The Banco del Sur promises to focus on social programmes. The AIIB and the Banco del Sur say they will focus on international infrastructure in support of regional economic (even political) integration. All three of them are spoken of as potential rivals to the World Bank and to the older regional development banks, namely the Inter-American Development Bank (IDB) (dominated by the United States) and the Asian Development Bank (dominated by Japan). The rejuvenated CAF now lends more money to Latin American countries than do the World Bank and IDB combined, and has less stringent lending criteria (Beattie 2012).

The emerging countries are also innovating by creating new political organisations that directly or indirectly challenge Western hegemony. In South America, the Union of South American Nations (UNASUR) is in many respects a direct rival to the Organisation of American States (OAS), but without the membership of Canada or the United States.¹² UNASUR’s ambitions are far greater than those of the OAS ever were, and include a continental parliament, a common passport, free mobility of people and a common currency. The Banco del Sur is intended to be the development finance arm of UNASUR. In Eurasia, the Shanghai Cooperation Organisation brings together China, Russia and four Central Asian states plus (in 2017) India and Pakistan in an organisation that emphasises not only regional economic integration but also military and security cooperation, with a decidedly anti-Western bent. The Shanghai Cooperation Organisation is based on opposition not only to Islamic and other religious-based opposition movements but also to Western donors’ efforts to promote democratisation and good governance. As if to make the point, the Shanghai Cooperation Organisation’s website (http://rus.sectsco.org/) is in Chinese and Russian, but not in English.

After the failure of the Doha Round of the World Trade Organisation (WTO), the developing and emerging countries have also innovated by forming or reinforcing a number of regional free trade agreements that either exclude the Western powers (for example, Mercosur, Common Market for Eastern and Southern Africa) or that include them as relatively junior or minority partners (for example, the Regional Comprehensive Economic Partnership). Where the Western powers have tried to lead the creation of North–South free trade areas, such initiatives have often been rejected by the developing countries (for example, Free Trade Area of the Americas).

Clearly these new organisations are still works in progress. At the time of writing (December 2016), the Banco del Sur has yet to begin operations, while the AIIB and the New Development Bank have only just begun lending. What is new, however, is that the emerging countries are now putting substantial financial resources and technical expertise into these new organisations. Even the sceptics see that the Chinese, in particular, have put down a diplomatic “marker” with the creation of the AIIB (Bestani 2015).

Another novel element is that these new organisations have been designed to have teeth: the authority, funding and technical capacity to carry out their mandates. UNASUR promises to send observers to monitor elections in South America, in direct competition to the OAS. The Shanghai Cooperation Organisation has led to a substantive coordination between the security services of its member states, with the objective of frustrating both Islamic and liberal democratic opponents of the incumbent regimes. The emerging countries have put billions of dollars into AIIB, the New Development Bank and CAF.

The third area of innovation by the emerging countries has been in both the policy of accumulating large foreign exchange reserves (especially in East Asian countries) and the simultaneous creation of foreign exchange pooling mechanisms such as the Chiang Mai Initiative Mulilateralisation (CMIM) of the ASEAN+3 group, the Fondo Latinoaméricano de Reservas (FLAR) and the Eastern Caribbean Currency Union. Sometimes these are formal organisations (like FLAR) and sometimes they are arrangements mandated by treaties and thus institutions (CMIM). All of them, and the associated practice of countries accumulating large foreign exchange reserves, are direct challenges to the IMF and a reaction to the perceived overkill practised by the IMF and the World Bank during the 1997 Asian Financial Crisis (Best 2014; Stiglitz 2003). To the extent that these innovations also allow developing and emerging countries to escape the influence of the IMF in any future crisis, they may also be seen as part of the strategy of partial exit.

The emerging nations seem to have learned from the costly lesson of the earlier generations of innovation, namely that effective organisations require more than high ideals and political ambitions. They need clear mandates, consistent political support, legislative or similar powers, implementation capacity, adequate finance and technical expertise.

What, then, of the future? Will the new organisations displace or replace the incumbents? Will the New Development Bank, for instance, provide an alternative to the World Bank’s view of what constitutes good economic and social policy? Certain UN funds, programmes and agencies have long striven to provide this, but they could not back it up with funding on the scale of the IFIs (Jolly 2004, 138–168).¹³

Dominant powers’ strategies

Meanwhile, the dominant Western countries of the OECD have not been idle. They have been seeking to maintain the intellectual hegemony and the programmatic importance of the core international organisations that they control, they have been co-opting those whom they see as responsible members of the developing and emerging countries into those organisations, and they have on occasion sought to ostracise countries which they deem to be irresponsible. I refer to these three strategies as maintenance, absorption and expulsion.

Maintenance

Western countries attempt to uphold the international order by seeking to maintain the intellectual hegemony of the organisations that they favour – and largely control – securing the dominance of those organisations in programmatic and policy terms, principally through funding allocations and the nomination of chief executives. The objective is hegemony; that is, the ability to set the agenda, not detailed control of each and every situation.

Although maintenance has been the dominant strategy, this does not mean that nothing has changed since 1945. The United States once controlled 60 per cent of the votes at the World Bank; today it is 16 per cent. Much of what was the United States’ share was distributed to Western Europe and Japan from the 1960s to the 1980s; in the most recent redistribution, China and India gained shares, but not nearly in proportion to their current share of global trade or GDP. The World Bank presidency remains a US appointment, however, and the tradition of consensus decision making at the Bank’s Executive Board means that the US delegate has effective veto power.¹⁴ Maintenance does not imply an absence of conflicts between the dominant Western powers. Germany’s and Japan’s bids for permanent membership of the UN Security Council in 2005 were opposed by France, the UK and the United States. The G7 has split over the AIIB, too.

Many tactics are deployed in support of maintenance. At the level of symbols and ideology, tactics include support to the authority, expertise and legitimacy of the organisations that the Western powers dominate (Bank for International Settlements, European Central Bank, the EU, IMF, NATO, the OECD, the World Bank and the main regional development banks) vis-à-vis those organisations that they do not control (the African Union, ASEAN, G77, NAM, Organisation of Islamic Cooperation, the Shanghai Cooperation Organisation and UNASUR) and those to which they are ambivalent (the UN, except for the Security Council).

Thus, for many decades, it was a meeting of donors, the OECD’s Development Assistance Group (OECD-DAC; now the Development Co-operation Directorate), that decided what good development aid should be. The recipients were simply not present for these debates. When this donors-alone approach became politically untenable in the early 2000s, it was the OECD, not the recipient countries, that organised a series of international conferences to validate the OECD-DAC’s conclusions. While the developing countries accepted the conclusions of this process (after some debate and modifications), they were often unenthusiastic about the results. They have used forums such as UNCTAD to express their dissatisfaction at the “limited scope for developing countries to fully articulate and reflect their needs and priorities [as] the aid effectiveness agenda has been donor-driven” (G77 2010).¹⁵

In economic policy, the Western powers continue to promote the IMF and the World Bank as the core source of economic policy expertise. They receive intellectual and sometimes financial support in this task from the US Treasury, the Federal Reserve, the European Central Bank and the OECD. As a former official involved in debates about the allocation of Canada’s aid budget, for example, this author has often heard officials from the Department of Finance state that the World Bank was simply the most effective way to spend Canada’s aid budget. No evidence was ever offered in support of this assertion, but it carried authority as it came from the most powerful department in the Canadian government. Implicitly devalued in this process of glorifying the IFIs is the expertise of groups promoting even moderately divergent views on economic policy, such as the ILO (International Labour Organisation), the UN Department of Economic and Social Affairs and the UN Development Programme (UNDP).

By preferentially funding the IFIs over the UN,¹⁶ the Western powers have for generations reinforced the relative power and influence of the former over the latter. When World Bank President James Wolfensohn announced in 1995 his intention to turn the Bank into a “knowledge bank” and subsequently poured millions of dollars into the Bank’s research programmes, one effect was to reinforce the Bank’s position as the pre-eminent source of advice not only on economic policy but also on social and other policies as well (Bazbauers 2015). This was the capstone on a long process that saw the technical expertise of the UN’s functional agencies (for example, the ILO, the Food and Agriculture Organisation [FAO], the United Nations Educational, Scientific and Cultural Organisation [UNESCO] and the World Health Organisation [WHO]) decline vis-à-vis their counterparts in the World Bank in fields such as agriculture, employment, education, health and nutrition (Jolly 2004).

Occasionally, the dominant countries use their own national administrative apparatuses as parallel or substitute sources of expertise at the global level. The US Department of Agriculture, for instance, has become the setter of criteria for “organic” food around the world. The US Centers for Disease Control have become a parallel source of expertise on global public health alongside the WHO.¹⁷

Faced with the weight of the G77’'s voice in forums such as the UNGA, Western countries found ways to neuter the resolutions these forums passed, as part of their strategy of maintenance. In particular, the West has been adept at directing the technical discussions on implementation of these resolutions into organisations that were more amenable to Western influence. Global trade negotiations, for example, were conducted under the auspices of the GATT (until 1994) and the World Trade Organisation (after 1994), rather than UNCTAD. When a few emerging and developing countries refused to bend in the WTO’s Doha Round of negotiations in 2003–2008, Western powers developed a taste for bilateral and mega-regional free trade agreements, such as the Trans-Pacific Partnership and the Comprehensive Economic and Trade Agreement (CETA), instead of global trade negotiations.

Though the UN General Assembly adopted the Declaration on the New International Economic Order in 1974, follow-up to that resolution was consistently blocked by the Western powers. The UN Centre on Transnational Corporations, established as part of the follow-up to the NIEO resolution, was starved for funds and eventually closed; the only UN agency ever to be abolished. The trade and investment elements of NIEO were directed to the GATT, not UNCTAD, and the monetary elements were managed at the IMF. This was maintenance in action.

Maintenance is an ongoing strategy, routine and quotidian, used in ways big and small, in funding decisions and daily utterances of support for some and scepticism towards others. It is so normal that it often passes unnoticed.

Absorption

A second strategy favoured by the dominant Western powers is absorption. Absorption means the incorporation of selected emerging countries into existing organisations that are favoured and controlled by the dominant countries. The most obvious examples are the expansion of NATO, the OECD and the EU into Eastern Europe after the Cold War. Other examples include the admission of Chile, Mexico and South Korea into the OECD, and the slow but steady expansion of WTO membership.

This absorption, or co-optation as some might call it, of emerging countries as members of the Western-controlled organisations is more than a question of numerical expansion. Simply put, only those emerging countries judged capable of meeting certain standards are allowed to join. In other words, because membership involves adherence to a set of norms and behaviours, and the creation and upkeep of a certain policy framework, this absorption also amounts to institutional change; that is, a change in the rules of the international game. To join the EU or NATO, Eastern European countries had to adhere to EU norms of democracy and good governance. To join the WTO, nations must prove they have a “market economy”.

The strategy of absorption is deliberate. The eastward expansion of the EU and NATO in the noughties was a deliberate move to curb Russian influence, and was done in violation of assurances given by the French, German and UK governments to the Soviet Union at the time of German reunification. The conditions put on WTO accession are designed to promote a liberal, market-based economic system. Whether such objectives are laudable or reprehensible is not the point here. The point is that they are deliberate, all the more so since everyone knows that nations that join the EU, NATO or the OECD cease to be members of the G77.

Expulsion

A final, and more rarely used, strategy of the dominant countries is expulsion. Expulsion means not only the literal expulsion or suspension of a nation from an international organisation, but more metaphorically the practice of politically, economically and socially ostracising, marginalising and denigrating certain nations. Terms such as “rogue state” and “outlaw state” have been applied in such cases. The United States has been particularly apt to use this strategy, even sometimes imagining, as with President Bush’s “axis of evil” speech in 2002, that these nations were actually in league with each other. Other tactics designed to exclude, temporarily or otherwise, a country from access to international trade, finance or technical cooperation, including sanctions, also fall under the category of expulsion.

During the Cold War, expulsion was a favoured option for countries that went out of the Western orbit and into the Soviet orbit (or vice versa, or into radical non-alignment, like Albania). Cuba was suspended from the OAS in 1962 and economic sanctions were applied to Allende’s Chile when it nationalised the copper mines. In more recent times, support to terrorism (Iran, Libya, Syria), widespread human rights violations (Burma, Zimbabwe) or threats to international peace and security (North Korea, Iran) have been used to justify such Western sanctions and the accompanying moral and political denunciations. Some sanctions, such as loan cut-offs, are triggered automatically, as when a country defaults on a loan from the World Bank or IMF.

Perhaps the most spectacular expulsion was that of the Russian Federation from the G8 in 2014. Following the collapse of the Soviet Union, the G7 powers (Canada, France, Germany, Italy, Japan, UK, United States) sought to cultivate free-market and liberal democratic interests in Russia. Eventually, the G7 convinced itself that Russia had become a market economy and a functioning democracy and was thus eligible as a great Western power for absorption into the new G8. But Russia’s policy in Ukraine, and its turn to more authoritarian rule, prompted the original G7 members to expel Russia from the G8.

The strategies compared

The strategies of the emerging and dominant countries reflect and interact with each other. From an Ostromian viewpoint, this is not surprising, as the actors can both observe each other’s behaviours and communicate with each other, then adapt accordingly.

The partial and selective exit occasionally used by some developing and emerging nations mirrors the expulsion strategy occasionally used by the dominant powers. Both strategies are rarely used and tend to be newsworthy when deployed. Their deployment indicates that the situation has deteriorated to the point at which voice no longer works and continued membership is intolerable. Each side keeps the exit and expulsion options open, as they are necessary to prevent one from being played for a sucker. To limit the risks of these strategies, however, the developing and emerging nations often practise partial or selective exit, and the dominant powers often practise limited and conditional expulsions, with a door open to return provided certain conditions are met.

The voice strategy used by the developing and emerging countries mirrors in important ways the maintenance strategy of the dominant powers. Both are routine, quotidian and often practised in private or in specialist forums, such as UN committees, to which only a few experts pay attention. Occasionally, they are practised in public, through major conferences, UN resolutions and public pronouncements by leaders.

In recent years, the developing and emerging countries have learned that voice, while necessary to maintain a position or to put an issue on the global agenda, has declining marginal utility in terms of forcing concrete change on intransigent dominant powers. Hence, the emerging countries are shifting to innovation as a way to get what they want from the international order. Partial and selective exit are used only occasionally.

The response of the dominant powers to such innovation is maintenance coupled with absorption. In fact, the dominant countries’ only proactive strategy is absorption, but absorption has its limits. As the incorporation of new members into elite clubs dilutes the power, prestige and influence of existing members, middle powers like Canada under the last Conservative government were unenthusiastic about the creation of the leaders’ G20, knowing that their influence in the group would be smaller than their influence in the G8. In this case, innovation and absorption mirror each other less perfectly than do either exit–expulsion or voice–maintenance.

Innovation combined with effective use of voice may be the strategic combination with the most promise; as Sun-Tzu taught us millennia ago, the general who picks the time and place of the battle usually wins. Increasingly, the emerging countries are setting the time and place of the battle. Maintenance and expulsion are essentially defensive strategies for dominant players in relative decline, and the pace of absorption may not be fast enough to allow the dominant powers to regain the initiative.

What is more, the emerging countries’ innovation has shown increasing strategic maturity. They have learned the need to equip these new organisations with robust mandates and adequate technical and financial resources. The dominant powers increasingly find themselves on the outside of these new organisations looking in. Sometimes this is by design (the New Development Bank, UNASUR) and in others it is the dominant powers’ own hesitance that has kept them out so far (the AIIB). How these dynamics will play out in the coming years will be very important.

Finally, loyalty to key international organisations remains important for all parties. However dissatisfied countries in both North and South may have been with the UN and the IFIs over the years, membership in these bodies is now effectively mandatory for all nations; since 1945 exit has been extremely rare. Indeed, non-members (Palestinian Authority, Puntland, Western Sahara) are often desperate to join. Loyalty is likely based on the fact that membership allows nations to engage in face-to-face communication, which Ostrom (2009a) identifies as key to resolving social dilemmas.

A proviso

Not surprisingly, this article has focused on contention rather than cooperation. There is, however, both ongoing and emerging cooperation between emerging and dominant countries. Examples are the Trans-Pacific Partnership, scientific and academic cooperation and mutual learning on issues as diverse as migration, fisheries, post-conflict security and public health.¹⁸

In some cases, such as the AIIB, the emerging countries’ innovation has succeeded in splitting the G7. Canada, France, Germany and the UK have joined the AIIB, while Japan and the United States have not. The decision of four G7 powers to join the AIIB may be the harbinger of a new strategy by the dominant countries; namely accommodation of the demands of the emerging powers. Whether, how and under what circumstances maintenance may morph into accommodation will be an interesting avenue for research in years to come. Accommodation may also take the form of changing the priorities and strategies of the now-dominant organisations like the IFIs; the World Bank Group’s 2013 strategy may be an example of such accommodation, which might also be categorised as adaptation (World Bank Group 2013).

A final proviso relates to the rise of the radical populist Right in Europe and the United States in recent months. Donald Trump and his ilk now portray the dominant countries as the victims of the international order, not its masters. They say they will tear down large parts of the neoliberal consensus, especially in international trade. What new strategies this portends is hard to tell; even harder to tell is the reaction of other G7 countries not in the thrall of the populist Right wing (Canada, France, Germany, Japan).

Conclusions

What remains is an assessment of the divergent and interacting strategies of the emerging and dominant countries as they try to shape the international order. Neither Hirschman nor Ostrom leads one to believe that the outcome of the struggle will be optimal, but neither do they lead us to believe that failure, especially in the form of the tragedy of the commons (Hardin 1968) is inevitable.

Any assessment at this point must be preliminary, but this much is clear: history is on the side of the emerging countries, in that their recent and likely future economic growth gives them an ever more prominent role on the world stage. The dominant Western countries still have effective veto power over many fundamental changes. One may expect to see marginal changes in voting rights at the IFIs, but no change of the permanent membership of the UN Security Council. The dominant countries’ strategies of maintenance and expulsion, however, being essentially defensive, only prolong the struggle; they cannot guarantee a win. Ironically, by insisting on preserving their control over their preferred organisations and institutions and keeping them central, the dominant Western countries may be ensuring the marginalisation of those very organisations and institutions, and possibly even their eventual demise.

The reason is twofold. First, the dominant countries’ preferred organisations are monopolies in contestable markets, open to new entrants who have enough capital, technical firepower and political will. Second, the emerging countries’ strategies are not defensive, but creative (innovation). The dominance of the OECD, World Bank and the IMF in economic policy advice is inherently contestable; all the more so since countries that did not follow those organisations’ advice have often made rapid progress in recent decades.¹⁹ By creating their own organisations and institutions, the emerging countries are attempting an end-run around the dominant countries’ preferred institutions, and undermining those contestable monopolies.

In this dynamic situation, several things remain unclear, and these may form the basis of future programmes of research. For example, what will be the relationship between the new development banks and the existing ones? Where will developing and emerging countries seek loans in the future? How will new regional organisations such as UNASUR compete or cooperate with existing ones such as the OAS? And what are the limits of the emerging countries’ organisational and institutional innovations? For example, while the emerging countries may be trying to marginalise the traditional multilateral development banks, they have not tried to create new global entities for international peace and security. In short, how these innovations will work out, both individually and in competitive or cooperative relationships with the existing bodies, will fundamentally shape the international order in the coming decades.

Acknowledgements

I wish to thank Begench Yazlyyev for his research assistance. I also thank Joan O’Donoghue, Syed Sajjadur Rahman, three anonymous reviewers from this journal and two Canadian diplomats for their constructive comments and suggestions. Any remaining errors are mine alone.

Additional information

Notes on contributors

Lauchlan T. Munro

Lauchlan T. Munro (PhD, University of Manchester) teaches at the University of Ottawa’s School of International Development and Global Studies. He previously worked at Canada’s International Development Research Centre, as Director of Policy and Planning (2004–2009) and as Vice-President (2008–2012). In 2000–2003, Munro was UNICEF’s Chief of Strategic Planning, after working for nine years with the organisation in DR Congo, Uganda and Zimbabwe. From 1985 to 1987 he served in the Royal Bhutanese Civil Service.

Notes

1 I use the term “organisation” to mean (more or less) hierarchical entities that “aggregate and articulate interests” (IPPG 2010, 9) and that typically have formal rules, budgets and professional or volunteer staff. I use the term “institution” as it is used in the new institutional economics; that is, “the rules of the game in a society or, more formally, the humanly devised constraints that shape human interaction” (North 1990, 1).

2 BRICS stands for Brazil, Russia, India, China and South Africa.

3 All of these, especially (1), (2), (3), (4) and (5), are consistent with Hirschman (1970), whom Ostrom cites.

4 The appointment of nationals of Brazil, China and Egypt to senior management positions in the World Bank and the IMF since 2011 was meant to assuage the emerging countries, but was only partially successful.

5 One of the NIEO's principles was the regulation of transnational corporations in the interest of the countries in which such corporations operate. The NIEO resolution also posited that the sovereignty of UN member states included the right to nationalise natural resources “and all economic activities” (UN 1974). The donors fought back with a series of bilateral and multilateral treaties containing investor-state dispute settlement mechanisms, and with the Multilateral Investment Guarantee Agency. Together, these measures effectively gave preferential status to foreign direct investments.

6 The latter two had the effect of establishing the equality of economic social and cultural rights with civil and political rights, a position that the United States has long opposed.

7 China joined the other four permanent members of the UNSC in resisting change. In particular, China resisted India's bid for a permanent seat.

8 And its predecessor, the Organisation of African Unity.

9 The new headquarters of the African Union was financed and built by China.

10 The CAF has operated since 1970, but for its first 20 years it had only five members and a small loan portfolio. Starting in 1990, Mexico, Brazil, Chile and Argentina joined. CAF is now the largest multilateral development lender to Latin America (Beattie 2012), with a loan portfolio of USD20.8 billion and paid-in capital of USD4.5 billion (CAF 2015).

11 Other regional organisations, such as the West African Economic and Monetary Union, have a more mixed record.

12 Mexico and the Central American and Caribbean states are not members of UNASUR either.

13 One paradox is that the developing and emerging nations have not promoted UN agencies as alternatives to Northern hegemony. The one-nation, one-vote principle has often helped UN organisations to keep their distance from the Western donors’ orthodoxies. ILO's promotion of basic needs and “another development” in the 1970s, critique of structural adjustment in the 1980s and 1990s by the United Nations Children's Fund (UNICEF) and its promotion of child rights in the 2000s and UNDP's promotion of human development are examples of the UN's relative autonomy from the dominant powers (Jolly 2004). Such examples have not, however, appealed to the developing and emerging countries, perhaps due to traditional donors’ continued domination of these UN organisations. The head of UNICEF has always been from the United States, for example, and only one head of UNDP has ever come from a developing or emerging country. Furthermore, the funding for the UN's development arm has mostly come from OECD donors. Of UNICEF's top 20 donors in 2014, for example, only three were emerging nations: Kuwait (#15), Republic of Korea (#17), and the UAE (#20); together, they contributed less than 3 per cent of UNICEF's total income (UNICEF 2015).

14 The IFIs’ tradition of recruiting largely from the top-ranked US universities also promotes US influence.

15 While he served as a UN official, the author often heard the Indian delegation to the UN voicing its opposition to donors using OECD norms for evaluating development assistance. India insisted that the recipient country's own norms should apply.

16 In 2013, the combined lending of the World Bank Group (International Bank for Reconstruction and Development [IBRD], International Development Association [IDA] and International Finance Corporation [IFC]) was USD37.2 billion. In 2013, the combined annual spending of the main economic and social development components of the UN system – the UN Secretariat (which includes UNCTAD and the Department of Economic and Social Affairs) plus UNDP, FAO, ILO, United Nations Environmental Programme (UNEP), Human Settlement Programme (UN-Habitat), UNICEF and WHO – was USD20.2 billion.

17 The incompetence of some UN agencies has occasionally helped relegate them to second place. WHO's initial response to the 2014 Ebola outbreak was to downplay the emergency for fear of offending West African governments; this delayed much-needed action and allowed the US Centers for Disease Control to seize the initiative.

18 In this special section of the journal, García (2018) discusses post-conflict cooperation and Rahman and Baranyi (2018) health cooperation.

19 Even the IMF now admits that austerity is a flawed measure for reducing high government debt (IMF 2012). See Fanelli (2008).